ASSIGNMENT 1 FRONT SHEET

Qualification BTEC Level 4 HND Diploma in Business

Unit number and title Unit 9: Entrepreneurship and Small Business Management

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I. Introduction
Entrepreneurship and small business management are the most important aspects of any economy.
They both complement each other because business management cannot be successful without good
entrepreneurship. The aim of this report is to present, define and evaluate different aspects of
entrepreneurship. Also this report will present and document the variances between different types of
entrepreneurial ventures. Throughout this report, examples of entrepreneurial enterprises will be
provided and linked to the theoretical definitions and concepts

II. Different types of entrepreneurial ventures:

Small business

Small business is defined as a privately owned corporation, partnership, or sole proprietorship that has
fewer employees and less annual revenue than a corporation or regular-sized business. Depending on
your industry, a small business could be defined as business with a maximum of 250 employees or a
maximum of 1,500 employees. The definition of "small"—in terms of being able to apply for government
support and qualify for preferential tax policy—varies by country and industry. The U.S Small Business
Adminstration defines a small business according to a set of standards based on specific industries.
(WHAT IS A SMALL BUSINESS, 2020)

According to the 2018 annual report of Smart Invest Securities Joint Stock Company, the total revenue in
2018 reached 73,9 billion VND while the number of employees was 28 people as of December 31, 2018.
Smart Invest is an enterprise in the field of commerce and services, satisfying the annual revenue of less
than or equal to 100 billion VND and the average number of employees participating in social insurance
does not exceed 50 people (Smart Invest, 2019)

Scalable start-up

Scalable startup entrepreneurship can be defined as a business model where an organization is started
on the basis of a unique idea and concentrate from the start on delivering new products or services. It
involved everything that ranges from creating a plan to all the way up launching the business. This form
of Entrepreneurship involved a great sort of work, education, and experience. This type of
entrepreneurship commences with a vision that they can make some changes in the world. Their
investment comes from the venture capitalist as well as by employing efficient employees. Their goal is
to find out the repeatable and scalable business model. Once they find that model, they further started
raising funds from venture capitalists for the growth of the business (What is Enterpreneurship, 2019)

A prime example of a scalable startup is McDonald's. A prime example of a scalable startup is

McDonald's. McDonald's Corporation is an American fast food company, founded in 1940 as a
restaurant operated by Richard and Maurice Mcdonald, in San Bernardino, California, United States.
They rechristened their business as a hamburger stand, and later turned the company into a franchise.
Making great progress, McDonald's rapidly experienced strong growth and become the world's largest
restaurant chain by revenue, serving over 69 million customers daily in over 100 countries across 37,855
outlets as of 2018. The McDonald's restaurant chain is tied by a common thread based on a repeatable
and scalable business model. . McDonald’s is expanding and adding new markets as well as new stores
every year. With at the core of its successful business is a strong business model which is enjoying
continuously faster growth. McDonald's has shaped the chain fast food business. They has dominated
the United States with its standardized model of menus and store layout. Not stopping there,
McDonald's offers a drivethru model, a model that helps customers not have to leave their cars but only
need to drive around a McDonald's to buy food. In particular, McDonald's often does not directly hire
store managers, but most of its managers come from low-level employees working by the hour. This
makes the company own a large number of managers who are very knowledgeable about the
advantages and disadvantages of the store, about the local market as well as thorough human resources
at the store. The above model helped McDonald's be successful for decades, bringing the company into
international markets and became an indispensable name in the fast food market. (McDonald's, 2020)

High growth firms

The OECD takes a slightly broader view and defines a high growth business as ‘a firm of 10 or more
employees that grows either its employees or turnover by an average of more than 20 per cent per year
for three consecutive years. (OECD, 2010). In short, a High Growth Firm is a company that is growing
faster than companies in the same industry or economy as a whole. Their growth typically refers to
financial metrics such as revenue or book value per share. However, it can also refer to non-financial
measures such as growth in a company’s user-base.

Amazon.com first entered the US e-commerce trading arena in 1995 under the ownership of Jeff Bezos,
operating, as many do, from the comfort of home. As part of an emergent growth strategy, within ten
years Amazon expanded at an alarming rate and penetrated the markets of several countries, basing
fulfilment centres in the US, Europe and Asia with the aim of managing the product distribution process
from supplier to consumer. Amazon.com Inc. registered its most profitable quarter ever in the three
months ended Sept. 30 as its North America revenue increased by 39.3% year over year amid the surge
in online shopping driven by the COVID-19 pandemic, the company announced Thursday. Amazon’s sales
of merchandise it owns, which it refers to as first-party sales, increased 32.8% globally. Fees Amazon
collected from sellers on its ecommerce marketplaces increased even more dramatically, by 54.7%.
Those fees includes the commissions Amazon collects from marketplace sellers and revenue from its
Fulfillment by Amazon warehousing and delivery service, among other items. Overall, Amazon’s revenue
increased 37.4% to a record $96.15 billion. Its net income also set a quarterly record at $6.33 billion, an
increase of 196.7% over the third quarter of 2019. These are all ideal numbers to confirm that Spotify is a
High-Growth firm (Davis, 2020)
Social enterprise

A social enterprise or social business is defined as a business that has specific social objectives that serve
its primary purpose .Social enterprises seek to maximize profits while maximizing benefits to society and
the environment. Their profits are principally used to fund social programs. (Barone, 2020). Social
enterprises often provide social services and jobs to disadvantaged groups in both urban and rural areas.
In addition, social enterprises also provide community services, in the fields of education, culture,
environment.

KOTO is the name of a social enterprise in Hanoi, Vietnam and this enterprise is a not-for-profit social
enterprise. KOTO offers a 2-year holistic hospitality training program for empowers at-risk and
disadvantaged youth, aged 16-22. KOTO continues to be acknowledged as a leading unique not-for-
profit social enterprise, not only in Vietnam but also internationally. Today, KOTO provides 200 at-risk
and disadvantaged youth in Vietnam an opportunity to undertake our 24-month holistic hospitality
training program to end the cycle of poverty and truly empower our trainees to realise their dreams. The
training program aims to help these young people with skills and experience in the service industry as a
means for them to work in restaurants, hotels and cafes later. (KOTO, 2020)

III. Similarities and differences between entrepreneurial ventures:

1. External environment

Political

IV. Impacts of micro and small businesses on the economy:

Micro and small business are the backbone of a country’s economy and accounting for 98 percent of all
enterprises. (Das, 2017) This data shows that the business market in Vietnam is largely small and micro
enterprises. These business drive economic development of country by delivering goods and services
and creating job opportunities. In Vietnam, micro and small business plays a very important role in the
development of the country's economy, it contribute dramatically to total national output, creating jobs
for workers, and keep the economy developing dynamically and stably. Some of the major impacts that
these businesses have on the economy of a local level are explained below.
Micro and small business create job and contribute to economic growth

According to the General Statistics Office, in 2019 out of a total of 517,900 registered enterprises, the
number of operating enterprises with turnover and tax payment to the state budget is 505,000
enterprises which are operating efficiently and profitably. The rest of the enterprises are newly invested
and have not come into production or still weak which account for 2%. Although the number of
enterprises increases, there are only 10,100 large enterprises, accounting for a modest proportion of
1.9%. However, number of Micro and small business accounted for 98% which can be said that the micro
and small account for a large number of the total number of companies in Vietnam. Moreover, large
companies in Vietnam contribute only 40% of GDP in 2019 while small and micro enterprises contribute
up to 60% in the same period. The rapid growth of micro and small enterprises in recent years has made
the contribution to GDP increasing rapidly, in 2017 accounted for 47%, in 2019 accounted for over 60%
(MPI, 2019).Therefore, we can see that micro and small enterprises are more effective than large
enterprises in Vietnam and also contribute a large part to GDP growth

These business have created jobs for more than 4 million workers. In which, micro business attracted
1.45 million workers, up 14.2% in 2017 and Small business attracted 2.84 million workers over the same
period (General Statistics Office of Vietnam 2019). From the data has shown Micro and small business
are the main source of job creation in all sectors. Moreover, micro and small companies have created
many more jobs for Vietnamese workers as well as reduced unemployment rate significantly. However,
the GDP of micro and small business contribute is still lower than Medium business. Micro business have
the lowest income with 6.72 million VND/month; small business with an income of 7.76 million VND, and
Medium Business with 8.28 million VND (General Statistics Office of Vietnam, 2019). Thereby, we can see
that micro and small business enterprises play a very important role in creating the majority of jobs in
Vietnam, meeting the employment needs of the people, contributing to income generation, improve
living standards for people and these business is the main force generating revenue for the State budget

Small and micro enterprises stabilizing and promoting the economy

According to The While Book of the General Statistics Office of Vietnam, in 2018, total net revenue of
small and micro business is 4.144,78 million billion VND, accounting for 17.5% of all Vietnam business net
revenue . In which, small businesses achieved net revenue of 3.53 million billion VND, accounting for
14.9%, up 10.9%; micro enterprises reached 614,78 trillion VND, accounting for 2.6%, up 6.6% (MPI,
2019). In the period 2015 - 2017, this business sector contributed over 30% of the state budget revenue,
45% of the implemented investment capital of the whole society (GSO, 2017). It can be seen that the net
revenue of micro and small business is still lower than the rest of other business types, but still
contributes greatly to the state budget revenue. Furthermore, the statistic show that the net revenue of
micro and small business is go up significantly, so the growth of these business will bring the creation of
a larger volume of goods and services, richer, better quality, replacing many imported goods, making an
important contribution to improving and enhancing domestic consumption and increasing exports,
therefore the contribution of Micro and small business to the total output of the economy is very large.
That is also a factor to keep the economy stable and developing over the years.

Small and micro enterprises exploit and promote local resources, contributing to economic
restructuring

In the economy, there are always remote areas, underdeveloped areas, with unfavorable natural
conditions or underdeveloped infrastructure. If the economy only exists with large enterprises, which
tend to be concentrated in cities, towns and industrial zones without small businesses, there will be an
imbalanced development between regions., not making full use of national resources, reducing the
efficiency of the economy. Meanwhile, with small investment capital, compact and easy-to-start
organizational structure, Micro and small business can participate in many markets to exploit their
potentials and strengths in land, resources and labor of each region, especially the agriculture - forestry -
seafood industries and the processing industry. Micro and small business are also the most active actors
in the maintenance and development of traditional industries such as bamboo, rattan, ceramics, textiles.
Therefore, it can be said that Micro and small business play a very important role in the work. Rural
industrialization and modernization contribute to narrowing the development gap between urban and
rural areas, at the same time promoting the development of trade, service, and small businesses,
contributing to economic restructuring.

V. IMPORTANCE OF SMALL BUSINESSES AND START-UPS

Create new jobs

Since small and micro participate in business in all industries and sectors of the economy with a wide
variety of products, they can secure job opportunities for many different types of workers in different
regions. On the other hand, due to production and business characteristics that do not require high
qualifications, it is possible to employ workers in remote and underdeveloped areas. Especially when the
economy falls into recession, while large enterprises often have to lay off workers to cut costs, small and
micro business, with their flexibility and dynamism, can adapt quickly. With the volatility of the market, it
is possible to stand without having to cut workers, or to quickly re-engage the workforce when the
economy goes into a cycle of recovery. Furthermore, these type of business also reduce unemployment
rate and it will raise the life standard of people

Promote dynamic economy

An economy that puts an excessive proportion of resources and labor into large enterprises will slow
down the economy due to its large scale resulting in big management apparatus with slow business
decisions. In contrast, with an appropriate proportion of small-scale, easy-to-adjust businesses, the
economy will become more dynamic, flexible, adaptable to market fluctuations, to catch up with the
trend of world economy.

Diversity and promote the economy growth

With the advantages of low investment capital and abundant labor force, in recent years, small and
micro business have grown rapidly and account for an increasingly large share of the total number of
enterprises. Small and micro business provide the market with a variety of products in all sectors of the
economy, creating many choices, meeting all consumer needs, thereby promoting consumption of the
economy. Therefore, the contribution of micro and small to the total output of the economy is very
large.

VI. Conclusion
These types vary based on who owns the business, what the business does in the market and how it
operates. Each type of Entrepreneurial Ventures has different characteristics. The internal and external
business environment affects the business and impacts its survival. Especially, these businesses also
influence and play an important role in the development of the economy - the sustainability of the
society

OECD. (2010). High-growth enterprises: What governments can do to make a difference, OECD studies
on SMEs and entrepreneurship. Paris: Organisation for Economic Co-operation and Development.

McDonald's (2020) McDonald's. Available at: https://www.mcdonalds.com/us/en-us/aboutus/our-

history.html (Accessed 20 September 2020).

SmartInvest, 2019. Báo cáo thường niên 2018, Hà Nội:

General Statistics Office of Vietnam (2019) Statistical Yearbook of Vietnam, Hanoi: Statistical Publishing
House.

General Statistics Office of Vietnam (2017) Statistical Yearbook of Vietnam, Hanoi: Statistical publishing
House.
General Statistics Office of Vietnam (2017) Vietnamese enterprises in the first 15 years of the century
(2000 - 2014), Hanoi: Statistical Publishing House.

MPI (2019) The While Book: Part II. Overview of Vietnam's business development in 2018 and 2016-2018
period.. 1st ed. Hanoi: Statistical publishing House.