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You have read about Ronald Shaichs entrepreneurial success with Panera and Tony Tan's achievement with Jollibee. Compare and contrast the entrepreneurial efforts of the two food services entrepreneurs.
How are the two companies different?
What similarities do they have?
What do you think is the key factor in Shaichs success? Is it right timing? What about Tony? Was his success due to his vision? Can you think of more reasons for their success?
Ron Kaufman is a veritable treasure chest of customer-service stories, some of which help shape this chapter. For example, he tells an insightful story of Italian food, Filipino style, for the Filipino prosumer that illustrates how important it is to develop products for local tastes, even if-especially if-you work for a global company.
"This month I spoke for the store managers and franchisees of Jollibee (hamburgers) and Greenwich (pizza-pasta) restaurants in the Philippines. These guys are really good at what they do, holding the No. 1 and No. 2 positions in the national quick-service market." (McDonalds runs third, Pizza Hut fourth. These multinationals have not been closing the gap!)
DB - Intrapreneurial Revolution at 3M:
You have read about the history of innovation at 3M. Now, assess the intrapreneurial revolution at 3M by responding to the questions given below.
What, in your view, are the key characteristics of 3M that have made it intrapreneurial over the course of its history?
It has adopted a bottom-up approach in its strategy that encourages innovation. Furthermore, innovation is part of the organisation culture. The culture of the organisation provides that freedom of action and opportunities to explore new ideas but nevertheless still guided by operational and financial discipline. Thus, from the very early in its history, 3M developed a system for betting on a team rather than just management's evaluation of an idea. This fundamental shift helps to explain 3M's long history of innovation success. Even today, innovation still continues to be the driving force at 3M.
What are the similarities and differences between intrapreneurship at 3M and the kind of entrepreneurship with which you are most familiar?
Generally intrapreneurship at 3M is the same as most entrepreneur where they are innovators with brilliant ideas that exploit and pursuit opportunities to create economic value regardless of the availability of the resources. They create their own future and take calculated chances but embrace failure as a learning experience.
Unlike entrepreneur, an intrapreneur works for organisation and subjected to the rules and regulation within that organisation. In an organisation perspective, innovation may be considered a waste of time and resources. Accepting something new may meet resistance from some organisation sector. Moreover, the innovation must be aligned to the overall organisation strategy. One of the issues on innovation is that the original ideas may not be able to describe in detail. To make matter worst, after the ideas goes through many iterations, it often has little relation to the original. In an organisation, the level of passion on new ideas may be difficult to transfer to the vast majority of employee. It depends on a specific type of individual-one who will not take no for an answer, one who has the drive to pursue a goal in spite of a possible negative career impact, one who is willing to put in personal time and effort toward reaching a goal. Not too many people will pursue an effort when they are told to stop by someone in authority. Also, not every person has the same capacity to disregard the criticism often associated with pursuing a new idea. Nonetheless, entrepreneurs are subjected to more risks and uncertainty
Finally, innovation is about change and change creates high levels of discomfort. Someone's ox is bound to be gored. A manager who comes from the technical side of the business may be very sceptical about market innovation. Likewise a manager with a background in marketing may be very skeptical about promoting a new product idea that is based on non-traditional technologies. A CEO who comes from the financial side of the business may only be concerned about the numbers. On the other hand, an entrepreneur has lesser office restriction and more freedom to pursue his/her opportunities without much organisation restrained or bureaucracies.
What recommendations would you make to the top managers of your company to become as intrapreneurial as 3M?
Radical changes like bottom-up innovation that encourages employees not only to take the initiative to generate ideas but are also empowered to implement at least some. Also often culture either stimulates or inhibits performance of the organization from meeting its purposes. Hence, the culture of the organisation must provide that freedom of action and opportunities for staff to explore new ideas without been bogged down in structure, policies, procedures, and risk averseness. Additionally, designed a program to teach managers to acdt more like entrepreneurial leaders. Finally, the company must be prepared to change, be ready for the excitement, motivation, and entrepreneurial productivity which it engendered. It must be ready to deal with the power of the creative mind and the energy of the impassioned heart. When people get "switched on" to play the entrepreneurial leader role, they need some place to apply that newfound energy and focus. The organization must be prepared to deal with this reality. Thus, having an entrepreneurial strategy and structures, processes, and procedures that support such activity is required.
Ernest Gundling, The 3M Way to Innovation (Tokyo: Kodansha International, 2000), p. 180
DB - Economic Freedom and Policy :
You will analyse the policy factors that affect economic freedom rankings in this discussion activity.
Where does your own country or region rank, and what are the key policy factors that make the difference?
Singapore has been constantly ranked in the top five under the global competitiveness index report conducted by World Economic Forum. In fact, it was ranked third for the year 2009-2010. There is no doubt that it has the necessary infrastructure, policy and culture that allow business to prosper. More that often, it is the first choice for entrepreneurs planning to incorporate their company. Besides, excellent location(key central position in Asia), efficient transportation, multi-cultural and efficient workforce, its policy like Free Trade Agreements (FTA) in Asia, it has a network of double taxation avoidance agreements that involved 50 countries to ensure impartial taxation of those companies incorporate here. Moreover, there are 35 Investment Guarantee Agreements (IGAs) that are in placed to protect companies here from non-commercial risks in their overseas investments. In addition, several statutory boards were setup like the Singapore Economic Development Board (EDB), International Enterprise (IE) Singapore and SPRING Singapore to encourage company to root itself in Singapore. It is noted that there is tax exemption on all profits sourced outside of Singapore. Furthermore, within the first three years of business activity post incorporation, the first S$100,000 of corporate profits sourced within Singapore are 100% legally tax exempt with 50% tax exemption on the next S$200,000 of locally sourced corporate profits. Due to this favourable tax policies, it was ranked the 11th lowest tax misery in the world by Forbes rates. Singapore is among the best place in Asia for the protection of Intellectual Property rights according to IMD World Competitiveness Report. Hence companies can be assured that Singapore's strict IP law will be enforced to protect their ideas and innovations.
With many favourable key policies that encourage business establishment in Singapore, entrepreneurs looking to incorporate their business here can definitely take advantage of the many incentives Singapore provides serving as a central location for all business services, and benefit from the reputable image a Singapore company will provide in promoting to investors, suppliers and customers.
Do you think the rankings are an accurate reflection of your understanding of economic freedom in your area?
Generally, the ranking is an accurate reflection of the economic freedom. For example, Singapore was ranked 2nd  after Hong Kong in Economic Freedom Index 2009. As stated in Economic Freedom Index, economic freedom means individual are free to work, produce, consume and invest in any way they please and that freedom is both protected by the state and unconstrained by the state .
Governmental agencies other than the privatization agency can assert influence via formal institutions. Industrial regulation and competition policy have a particularly profound influence on market structure and, therefore, on post-privatization performance (Uhlenbruck and De Castro, 1998). Privatization-related acquisitions from the late 1990s onward have been primarily in sectors that require substantive governmental regulation, such as telecommunications, banking, and utilities. In these industries, the regulatory frame is key to privatization negotiations as the privatized firm may hold a monopoly position. Vigorous industry liberalization and competition policy would not be in the interest of a foreign investor that took over an incumbent firm.
Governmental influence is most explicit where the state retains a minority equity stake. Many acquisitions in the privatization process occurred in a staggered pattern, and were thus registered as joint ventures although from the beginning the investor attained management control and envisaged the acquisition of full ownership. Such an arrangement permits acquisitions in a particular institutional context, and has little in common with conventional joint ventures. A temporary minority stake of a government may offer advantages to both partners. The government obtains some control over the firm's restructuring, and thus externalities created for the local economy, while capitalizing on the probable appreciation of the share value as the transition economy becomes less uncertain. Governments may also be reluctant to transfer control over firms deemed strategic, or those trading with governmental institutions (Wright, Thompson, and Robbie, 1993).
Investors normally aim for full control of acquired businesses not only to reduce transaction costs but also to enforce faster turnaround. In this respect, foreign investors may dislike the possible government interference in strategic decisions, but would appreciate the risk sharing, the lower amount of capital to be raised at the outset, and the access to local institutions and networks. If the acquirer attains management control, the influence of the co-owner on operational management may be limited.
Furthermore, the interests of the regional or local authorities may become more aligned with those of the acquiring firm if they share the profits. This should reduce undue bureaucracy and regulatory interference, while providing access to important public and private networks. Such informal networks are vital for businesses in transition economies, especially in Russia (Puffer et al., 1996; Holden, Cooper, and Carr, 1998) and China (Peng and Heath, 1996).
Hence, minority government ownership can have contradictory effects. In mature market economies, firms in mixed ownership may generate lower profits because governments aim at social rather than financial returns. Yet this does not translate to transition economies, where for example Tian (2003) finds an inverse-U-shaped relationship between state-ownership stakes and corporate performance. Residual state ownership thus has both positive and negative effects.
Even without equity stakes, the authorities may retain rights in the privatization process. The privatization contract can create a principal-agent type relationship between the government and the acquirer beyond the privatization (Stark, 1992). Deal terms can, for instance, stipulate employment guarantees, investment commitment, partial local ownership, or that the management team be staffed with nationals. The enforcement of such contracts, which were widely used for instance by the East German Treuhandanstalt, is, however, problematic and may lead to ongoing negotiations.
Informal institutions may moderate the new owners' control over the acquired business. Public opinion and, in consequence, political agents frequently take an interest in formerly state-owned firms. This may trigger governmental intervention if the new owner's actions are thought not to be in the country's best interest. In addition to social objectives, politicians and bureaucrats may pursue personal objectives and engage in various form of rent-seeking behavior. This may foster corruption, as seen in Russia. Foreign investors have to distinguish legitimate social concern from individual rent-seeking behavior.
Acquirers thus have to be aware of potential conflicts with political agents, and of the social consequences of their corporate activity. Where legal and regulatory frameworks are not yet fully developed, politicians may feel called upon to interfere in former state-owned firms in case of social conflicts.
In conclusion, foreign investors entering CEE by privatization-acquisitions typically have to negotiate with multiple stakeholders in the firm, the government, and society. The relationship between government and the foreign investor extends beyond the time of formal takeover of the firm as acquirers pursue the often necessary deep restructuring of the acquired firm, while governments or political groupings are concerned with the social consequences of such restructuring processes.
MNEs aiming to enter a foreign country by acquiring a local firm thus are most concerned with the institutions governing markets for corporate control, which in CEE implies privatization policies, and policies vis-à-vis privatized enterprises. They are also concerned with a range of other policies, such as regulatory policies vis-a`-vis market incumbents, and informal means of exerting political influence on business.
What changes would you make in national policy to make your area more economically free and entrepreneurial?
Key Factors for Entrepreneurship
I would promote a set of social and cultural values, along with appropriate social, economic and political institutions, that legitimatize and encourage the pursuit of entrepreneurial opportunity for the country. Another area would be to make funding more easily availability and to increase government assistance to potential entrepreneurs.