Entrepreneurial Strategy

Executive Summary

The corresponding research essay would be deliberative about the key elements and cornerstones of the entrepreneurial strategic capabilities and current strategic position of a selected SME of the UK. The problem statement in this context has been the relative in appropriate measure of research involvement regarding the determination of the influence of volatile and rapidly changing market conditions on the strategic capabilities of any SME at UK. To this purpose, the Equilibrium Asset Management has been selected to be focused upon. Within the discourse of the subsequent study, the identification and evaluation of the theoretical models would be undertaken through which the strategic capabilities of the EAM could be gauged along with analysis of the strategic position concerning the associated business environment. To this purpose, the organisational position would be determined by PEST analytical tool. The process would entail the evaluation of entrepreneurial capabilities of the selected organisation through the Threats, Opportunities, Weaknesses and Strengths (TOWS) evaluative tool. The application of the Porter’s Five Forces analytical model of the external influences of the business environment would also be performed to this end.

Introduction

Entrepreneurial strategic capabilities formulate the constituent basis on which developed strategic operational policies of small and medium entrepreneurial business organisations are applied and the outcomes could be measured in terms of the fulfilment of organisational objectives. Concerning the evaluation of entrepreneurial organisational strategic capabilities and the subsequent positioning of such organisations within the concurrent business environment, it is of vital significance that employment of different evaluative approaches has to be augmented with the involvement of assessment of the strategic decision formulation and implementation methods from a multipronged perspective.

For the purpose of the progression of this subsequent study, the selection of the UK based SME of Equilibrium Asset Management (EAM) has been undertaken.The SME is currently located at the Brooke Court, Wilmslow, Lower Meadow Road, Handforth Dean, Cheshire, SK9 3ND. EAM currently provides expertise concerning investment and wealth asset management as well as estate management planning strategies. Long term operational planning, involving both the tactical as well as strategic domains, is developed by the organisation for the purpose of materialisation of a positive difference through which better productive management of the concerned assets of the clientele could be achieved. Currently, the EAM oversees assets which are worth £750 million with a particular focus on the delivering of themost qualitative and exceptional services to the engaged clientele (eqllp.co.uk, 2019).

Kotusev (2019) have observed that the utilisation of Enterprise Architecture Artifacts (EAA) could be perceived to be the primary strategic method through which the strategic operational capabilities of EAM could be ascertained. This involves the description of the organisation under consideration from multiple perspectives which has to be inclusive of the various factors which could be influencing the strategic decision formulation methods (Clark and Harrison, 2019). Specific sets of practices and competencies are involved within an operational structure in this context. Johnson (2016) has outlined that the adoption of any approach in this context, has to entail the development of a coherent and unambiguous objective driven strategy. Such a strategy could be reflective of supporting the growth of the EAM through retaining the existing clientele and capturing of greater numbers of new clients.

This model has been further elaborated by Brosius et al (2018) to be inclusive of three critical strategic capabilities concerning the operational proficiency and outcome parameters of any such asset management organisation such as the EAM. The initial one is asset acquisition capability. This involves provisioning of services which could transcend the generalised boundaries of the asset management and investment support market disciplines. For an instance, evaluation and outlining of various tools to be utilised by the global retailers for the purpose of optimisation of the performance of their online assets, could be considered to be one such innovative and entrepreneurial methods of acquisition of organisational assets (long term and preferably, permanent clientele).

Furthermore, the company could also benefit from the furtherance of efforts by asset managers regarding enhancement of services through consulting intermediaries (Stokvik, Adriaenssen and Johannessen, 2016). This is a vital prospect of institution asset acquisition since the intermediaries, such as preliminary referral generating organisations for clientele with serious asset management issues, could provide the context of automatic marketing for the EAM. One particular instance could be the close co-operation with centralised information repositories which could be based on cloud data analysis so that analysis of potential and prospective clientele could be performed accurately at a prime time management basis. This method, Alwadain et al (2016) have observed, is a definitive element of entrepreneurial strategic asset acquisition procedure on which a growing number of SMEs are focusing consequently.

The next strategic capability is associated with organisational portfolio management capacity of the EAM. Brosius et al (2016) have specified that, for asset management SMEs such as the EAM, it is always of considerable significance to access the various emerging platforms through which the capitalisation of crowd sourced ideas could be secured to be utilised to be translated to the asset management and investment strategies. One instance could be highlighted as the utilisation of geosynchronous satellite data feeds so as to measure the growth momentum of various immovable assets, such as retail properties and real estate as well as functionary production units.

The third strategic capability is associated with the pervading asset administration which involves the front, middle and back office operations. For the EAM, this involves the organisational components such as the Front Office, the Middle Office and Back office and the proper management of the functionalities of each of such organisational components. The constituents and responsibility scenario of these office components are demonstrated in the following Figure 1, detailing the asset administration mechanism structural composition and associated functionalities of the Equilibrium Asset Management:

Front Office operations at the EAM involve the tasks of Investment Management (Camerinelli, 2016). This could be subcategorised into business portfolio modelling and development, market research and development of strategic advisory, investment decisions with service development. Furthermore, the front office operates the transactions through processing the transactional order executives, cash and currency based support mechanisms management and regulatory compliance ensuring. The Middle Office of EAM operates data and risk management as well as reporting responsibilities (Schachtebeck, Groenewald and Nieuwenhuizen, 2018). These tasks could be further subcategorised into data pricing, management of transactions and holdings as well as management of securities to protect confidential data. The risk management process involves the subcomponents of measurement of performance, management of clientele reports and risk related declarations and regulatory compliances involving business transactions (Ventura and Soyuer, 2017). Furthermore, the tasks of collateral and asset value management, tax accounting and investment alternative management, trading support and securities pricing with currency management are also involved in the operations regarding assets management. Baruah and Ward (2015) have observed that the Back Office based responsibilities of EAM asset management operations involve primarily the dual tasks of transactions settlement with associated data processing and administration of inventory based assets on a regularised basis so as to put them in the working order and perform their management with respect to prioritisation perspectives. Garud, Gehman and Tharchen (2018) have outlined that transaction settlement and data processing tasks are performed through the procedures such as attaining of confirmations of involved stakeholders, asset value based transaction authentication and processing of such transaction data and finally, the complete settlement of the specifics of asset trading such as benchmark retention price delineation and payment instalment negotiations with the involved stakeholders including the intermediaries. Finally, Hsiehand Wu (2019) has determined that the responsibility of asset administration is executed through administration of fund raising operations and through performing the periodical accounting processes of such funds. This further entails studying the asset components and then filing of statutory reports regarding asset valuation management procedures.

Political factors influencing EAM strategic capability:

1: Political stability is of high value for the EAM for progressive enhancement of financial asset value of the targeted clientele. This entails greater profit margins for the company. The current status of the political conditions is comparative stability.

2: Contract enforcement is influenced by the political and legal stability factor. In case of the EAM, the Contracts (Rights of Third Parties) Act 1999 is of primary significance since this outlines the provisioning for third party based enforcement of contractual terms including the payment remission aspects.

3: Trading conditions are dictated by the political orientation of governing establishments. The current situation entails greater emphasis by EAM on asset valuation and trading within the territorial extent of UK since most of the government regulations on asset management disciplines have been curtailed to foster greater stimulation of this sector in response to Brexit based conditions.

Economic factors

1: The economic policy orientation of the governing systems at UK determines the asset market volatility. Government contributions in terms of incentives are non-existent. EAM generally operates on the basis of evaluation of future value of such assets.

2: Asset valuation and dividend generation for the EAM are regulated by economic factors in the concurrent UK market such as service tax rates. The company has to take into account both historical and conditional volatility of asset values.

3: Exchange rate parameters are determined also by the economic factors and this is a source of concern for the EAM since the fluctuations of the Pound Sterling in comparison to the Euro could affect the asset transfer based commercial values. The standard deviations on monthly returns within the financial year, for EAM, are calculated through the consideration of holding periods based values. This involves the current value of equities. Financial instrument assets such as bonds and stocks outline the relative risks of volatility in this context.

4: Minimum wage regulations are stipulated on the basis of the national financial conditions. The current EAM employee average salary is £35000.

Social factors

1: Educational levels of the population determine the availability of necessary employees within the EAM. The average staff turnover rate is 17% (per annum).

2: Social hierarchy and class structures of UK determine the measure of possession of immovable and financial assets in general of the current clientele of EAM.

Technological factors

1: Significance of Information Technology enabled operations regarding the cost management by the EAM.

2: Digital applications such as VFX and other virtual tools based marketing prospects for EAM determine the service offering and client outreach of the SME.

Porter’s Five Forces analysis

Bargaining power of suppliers

Status: Considerably high

Reasons: Position of dominance in terms of referral generation for EAM and high power of negotiation.

Methods of management for EAM: 1:Efficiency of supply chain enhancement through multiplicity of suppliers.

2: Emphasising on third party suppliers and referring organisations to develop dedicated supplier base.

Bargaining power of buyers

Status: High

Reasons: The buyers often prefer to avail the best of the assets to the minimum of prices. This imparts additional pressure on EAM concerning discount management.

Methods of management for EAM: Diversification of the asset management offerings, expansion of customer base and greater emphasis on innovation based approaches.

Threats of substitute products

Status: Relatively low

Reasons: The asset profiles, which could be managed, are relatively constricted in number.

Methods of management for EAM: Greater orientation on service management efficacy.

Threats of new entrants

Status: High

Reasons: The asset management industry is a lucrative destination for multiplicity of organisations.

Methods of management for EAM: Economies of scale formulation to curtail the costs, expanding organisational capacity to simultaneously manage movable and immovable as well as financial and non-financial assets and, provisioning of new value propositions for the clientele.

Rivalry amongst existing organisations

Status: Intense

Reasons: The hypercompetitive market scenario of UK asset management industry and the relatively constricted numbers of different asset portfolios available (including financial assets).

Method of management for EAM: Sustainable differentiation strategy employment.

Business objectives

1: Greater efficiency in the trade execution of EAM.

2: Betterment of market oversight in EAM.

3: Effective picking of stocks in the asset management process.

4: Betterment of portfolio management within limits of risks concerning the strategic approaches.

5: Real estate based asset management regulatory compliance improvement.

6: Better understanding of the needs of portfolio management.

7: Better trading capabilities regarding asset classes and evaluation of drawbacks and benefits concerning service derivatives and asset trading.

8: Better leveraging of trading functions.

Development of implementation strategy in consistence with identified objectives

Implementation strategic methods for objectives fulfilment

1: Regulatory compliance management through clarified assigning of responsibilities and roles to the company portfolio managers and trade functionality executives. This requires agreement formulation on information and service prerogatives.

2: Asset acquisition and administration have to be conducted exclusively by executives and generated market intelligence has to be forwarded to company portfolio managers.

3: Close co-operation between business executives and portfolio managers is required so as to enable the asset managers to advantageously position the SME offerings regarding strategic investment of assets in the current market scenario.

4: Clarified distinction between commoditised, standardised trade assets and high touch complicated assets. This is necessary to determine the extent of manual intervention.

5: Formulation of high touch asset management desk to provide asset managers extensive internal advisory.

6: Development of alternate asset investment structure through evaluation of service derivatives by analysis of service cross-over opportunities (from real estate to market securities such as purchased corporate shares and public issues).

7: Utilisation of centralisation of decision formulation concerning improvement of trading in commodities across the asset classes. This would be a scalable approach.

Conclusion

At the conclusive stage, it could be observed that the specifics of business strategic capabilities of the EAM are affected by the usual complications related to national and regional economic volatilities and the increasing competitive pressure from market rivals concerning the asset management discipline. The most significant observation has been the necessity to achieve greater gross profitability ratio as well as the requirement diversifies the service offerings so as to achieve effective service differentiation. The strategic capability analysis has also revealed the relative high impact from bargaining powers of suppliers and clientele on the EAM. The capability objectives have been formulated on the basis of such observations and the subsequent recommendation development has been the outcome of such assessments. The emphasis has been on to formulate a set of particular capabilities for the progression of the business enterprise within the current market discourse.

Reference List

• Alwadain, A., Fielt, E., Korthaus, A. and Rosemann, M., 2016. Empirical insights into the development of a service-oriented enterprise architecture. Data & Knowledge Engineering, 105, pp.39-52.
• Baruah, B. and Ward, A., 2015. Metamorphosis of intrapreneurship as an effective organizational strategy. International Entrepreneurship and Management Journal, 11(4), pp.811-822.
• Brosius, M., Aier, S., Haki, K. and Winter, R., 2018. Enterprise Architecture Assimilation: An Institutional Perspective. Association for Information Systems.
• Brosius, M., Haki, K., Aier, S. and Winter, R., 2016, December. A Learning Perspective on Enterprise Architecture Management.Association for Information Systems.
• Camerinelli, E., 2016. Measuring the value of the supply chain: linking financial performance and supply chain decisions.Routledge.
• Clark, C.M. and Harrison, C., 2019. Entrepreneurship: an assimilated multi-perspective review. Journal of Small Business & Entrepreneurship, 31(1), pp.43-71.
• Garud, R., Gehman, J. and Tharchen, T., 2018. Performativity as ongoing journeys: Implications for strategy, entrepreneurship, and innovation. Long Range Planning, 51(3), pp.500-509.
• Hsieh, Y.J. and Wu, Y.J., 2019. Entrepreneurship through the platform strategy in the digital era: Insights and research opportunities. Computers in Human Behavior, 95, pp.315-323.
• eqllp.co.uk (2019) equilibrium [online] Available at:https://www.eqllp.co.uk/ (Accessed on: 01.11.2019)
• Kortelainen, H., Räikkönen, M. and Komonen, K., 2015.Corporate asset management-a semi-quantitative business-driven approach to support the evaluation of improvement options. International Journal of Strategic Engineering Asset Management, 2(2), pp.208-222.
• Kotusev, S., 2019. Enterprise architecture and enterprise architecture artifacts: Questioning the old concept in light of new findings. Journal of Information Technology, 34(2), pp.102-128.
• Schachtebeck, C., Groenewald, D. and Nieuwenhuizen, C., 2018. Assessment of entrepreneurial and intrapreneurial orientation constructs: An analysis of past research. Journal of Business and Retail Management Research, 13(2).
• Stokvik, H., Adriaenssen, D.J. and Johannessen, J.A., 2016. Strategic entrepreneurship and intrapreneurial intensity.
• Ventura, K. and Soyuer, H., 2017. Enabling entrepreneurial practices with market-oriented approach: A case study. Marketing and Branding Research, 4, pp.179-191.