**4. Creating business in a turbulent environment**

Entrepreneurs are challenging existing competitive assumptions by creating value for consumers through new forms of business. This created value may lead to consumer willingness to (i) pay for a new benefit, (ii) pay more for something perceived as better, or (iii) receive a previously available benefit at a lower cost. Consequently, value translates the willingness of the consumer to purchase a product or a service, at a certain price, for recognizing attributes that contribute to their satisfaction of needs, fulfillment of wishes, or resolution of a problem [12].

The constant value creation imposed by increased competition is changing management practice by redefining operational activity in the fields of production, sales, and distribution of products and services. This competitive reality stems from an unstoppable, complex change in which advances in technology combine with the development of suppliers and customers. We can identify eight major areas of change in the competitive environment:


This change has important implications for business, as many entrepreneurs struggle more to survive than to achieve sustained growth. Stakeholders are constantly changing (customers, suppliers, distributors, alliance partners, and regulators). As the required resources (physical, organizational, technological, and human) have become increasingly specialized and less predictable in terms of the

**165**

*Business Incubator and Economic Development DOI: http://dx.doi.org/10.5772/intechopen.88562*

**4.1 How to get a sustainable competitive advantage**

employees can contribute to increases in competitiveness.

opting for their acquisition.

market [13].

strands, namely:

• Lower costs than competitors

• Offer superior product quality

• Addition of new product features

• Providing better customer services

for maintaining market competitiveness.

focus of their core business.

deliberations.

reinvent business and can come from five key capabilities:

tributors, suppliers, financiers, and regulators).

services, and technologies, aiming at market leadership.

duration of their competitive relevance, entrepreneurs tend to contract in the short term the use of resources subject to greater competitive obsolescence, instead of

Thus, entrepreneurs have, in general, a lack of control over their competitive environment. And the size of business is not an unequivocal condition of success. However, the exploitation of valuable, rare, and inimitable resources generates a sustainable competitive advantage and, consequently, a superior performance in the

Turbulence in the competitive environment has caused and forced a transformation in management operations. Traditional bureaucratic models, hierarchical management systems, and a philosophy of controlling the company's operations are not feasible in the contemporary competitive environment. However, it is not clear what gives us assurances of working well, but management must consider that the organizational structure, leadership style, and ways of rewarding and motivating

There is also a positive side to the competitive environment as it becomes more complex and dynamic, as there are opportunities to serve customers who are dissatisfied. Traditionally, competitive advantage was achieved through a number of

At present, the continuous improvement of these aspects is a minimum criterion

The pursuit of competitive advantage requires entrepreneurs to continually

1.*Adaptability*: timely adjustment to new technologies, customer needs, regulatory rules, and other changes in competitive conditions without losing the

2.*Flexibility*: design strategies, processes, and operational approaches that can simultaneously meet the diverse demands of stakeholders (customers, dis-

3.*Speed*: act quickly on emerging opportunities, develop new products and

services more swiftly, and make critical operational decisions without lengthy

4.*Aggressiveness*: a focused and proactive market approach in order to differentiate itself from competitors, retaining customers and motivating employees.

5.*Innovation*: continuous priority of development and launch of new products,

*Business Incubator and Economic Development DOI: http://dx.doi.org/10.5772/intechopen.88562*

*Intellectual Property Rights - Patent*

change in the competitive environment:

actors

labor relations

in use) of a product or service

associated compliance costs

to consumer willingness to (i) pay for a new benefit, (ii) pay more for something perceived as better, or (iii) receive a previously available benefit at a lower cost. Consequently, value translates the willingness of the consumer to purchase a product or a service, at a certain price, for recognizing attributes that contribute to their

1.*Technological environment*: accelerated development of new technologies, rapid product obsolescence, and greater difficulty in protecting intellectual property

2.*Economic environment*: unpredictability of prices, operating costs, exchange

3.*Competitive environment*: highly innovative competitors, competition from nontraditional strategies, and threat of new competitors who may also be customers or business partners—which sets up a competition between economic

4.*Work environment*: shortage of skilled employees, greater mobility and less employee loyalty, increased employee costs, and contractual obligations in

5.*Resource environment*: increasing scarcity of resources, increasingly specialized resources, limited alternative sources, and rapid obsolescence of resources

6.*Customer environment*: greater demand through varied channels, more complex customers in markets that are more fragmented or atomized (more competitors), more segmented (greater variety of customers) and focused on creating value for the consumer—which stems from an innovation process that establishes or enhances the consumer's assessment of the consumer benefits (value

unlimited product liability, increasing regulatory compliance costs, increased emphasis on free and fair trade, and increased environmental regulation and

8.*Global environment*: real-time communication and production, distribution to anywhere in the world, suppliers as business partners, customers and competitors more sophisticated and located anywhere in the world, and obtaining a competitive advantage, for example, by means of outsourcing and strategic

This change has important implications for business, as many entrepreneurs struggle more to survive than to achieve sustained growth. Stakeholders are constantly changing (customers, suppliers, distributors, alliance partners, and regulators). As the required resources (physical, organizational, technological, and human) have become increasingly specialized and less predictable in terms of the

7.*Legal and regulatory environment*: more aggressive regulation, virtually

rates, interest rates, tax incentives, and shorter business life cycle

satisfaction of needs, fulfillment of wishes, or resolution of a problem [12]. The constant value creation imposed by increased competition is changing management practice by redefining operational activity in the fields of production, sales, and distribution of products and services. This competitive reality stems from an unstoppable, complex change in which advances in technology combine with the development of suppliers and customers. We can identify eight major areas of

**164**

alliances

duration of their competitive relevance, entrepreneurs tend to contract in the short term the use of resources subject to greater competitive obsolescence, instead of opting for their acquisition.

Thus, entrepreneurs have, in general, a lack of control over their competitive environment. And the size of business is not an unequivocal condition of success. However, the exploitation of valuable, rare, and inimitable resources generates a sustainable competitive advantage and, consequently, a superior performance in the market [13].

## **4.1 How to get a sustainable competitive advantage**

Turbulence in the competitive environment has caused and forced a transformation in management operations. Traditional bureaucratic models, hierarchical management systems, and a philosophy of controlling the company's operations are not feasible in the contemporary competitive environment. However, it is not clear what gives us assurances of working well, but management must consider that the organizational structure, leadership style, and ways of rewarding and motivating employees can contribute to increases in competitiveness.

There is also a positive side to the competitive environment as it becomes more complex and dynamic, as there are opportunities to serve customers who are dissatisfied. Traditionally, competitive advantage was achieved through a number of strands, namely:


At present, the continuous improvement of these aspects is a minimum criterion for maintaining market competitiveness.

The pursuit of competitive advantage requires entrepreneurs to continually reinvent business and can come from five key capabilities:


The most adaptable, flexible, fast, aggressive, and innovative entrepreneurs are best positioned not only to adjust to a complex, threatening, and dynamic competitive environment but also to create the change in that environment. Entrepreneurs must affirm themselves as agents of change by leading clients instead of following them, creating new markets and defining new competitive rules [14].

Entrepreneurship is the main source of sustainable competitive advantage through the production and/or marketing of products and services that are more advanced than the competition, i.e., unique in the market compared to the value supplied to consumers.

#### **4.2 Change as an opportunity for small businesses**

Although competitive instability is most felt in some sectors, none is immune to its challenges. Increasingly, competitive conditions in markets become unpredictable beyond the short term. This economic landscape has implications for entrepreneurs, which can turn in their favor.

A measure generally adopted in the face of aggressive price pressure from competitors is to reduce costs to the lowest possible levels. The goal of this cost reduction effort is often the workforce (the employees), but the need to produce the product or provide the service remains. Hence, suppliers are used to perform the operational tasks eliminated via downsizing, engaging in outsourcing, which has become a business opportunity for small businesses, which include small and microenterprises.

The threats that large companies experience offer small business opportunities. In addition to receiving outsourcing requests, a small business can also compete in another market based on subcontracting services to other companies.

In reality, a small business can establish partnerships (strategic alliances or joint ventures) with a variety of suppliers covering value chain activities and thus can enter into markets it might not otherwise be able to achieve. In practice, we are talking about a virtual company, that is, a company that does not have the (own) resources needed to compete in a particular market segment but has the possibility of forming partnerships with other companies in order to perform the key management functions to the pursuit of the own business [15, 16].

Another change that is happening in the markets is their continued fragmentation (increase in the number of competitors) or the development of niches. Within the markets there are small groups of consumers who value a set of unique attributes in a product, which is a niche market. Many niches do not interest large corporations because they are small in terms of turnover, providing small businesses with business opportunities. To benefit from these opportunities, entrepreneurs must focus on a clearly identified market niche so that they understand and meet the expectations of these consumers.

#### **4.3 Advantages of small businesses**

Small businesses have important advantages that enable them to be successful, namely, their sensitivity to market conditions and trends, which derives from their close relationship with customers, enabling them to understand their needs.

The existence of a personal relationship with customers ensures that the entrepreneur is the first to perceive the changes in consumer preferences that will affect the market as well as gives him the possibility to convey the message that interests the customer. This small business communication process encourages market learning by expressing interest in the business of customers.

**167**

improvement.

entrepreneurs.

*Business Incubator and Economic Development DOI: http://dx.doi.org/10.5772/intechopen.88562*

resource [17, 18].

Another factor that distinguishes successful small business from typical large enterprises is their ability to innovate. The entrepreneurial company has a quick reaction when changes or opportunities arise in the market. While large corporations recognize the need to change quickly, the burdens of bureaucratic procedures slow them down. The ability of small businesses to innovate encompasses product innovation (new relevant features), process innovation (improvement of the production process), and service innovation (offering something new in the service). It should be noted that innovation is related to organizational flexibility, which comes from personal attitude and organizational practices based on the creation of knowledge as the main competitive

In addition, small businesses tend to invest less than large companies in rigid

Together, responsiveness, organizational flexibility, and innovation practices

Small businesses can be developed within the family universe, translating into

A small business is not necessarily a family business. In the family business, ownership and management are concentrated in the family members, predominantly a family-based intraorganizational relationship. Family nature issues are prioritized against other objectives. For example, the company's property control by the family will not be sacrificed to fund the development and growth of the business. Indeed, family property is not diluted to include non-family investors. Therefore, the available financial resources are those generated by the company and those of the family itself. However, credit may be used with banking institutions to

The uniqueness of the family business lies in the integration of family and business in the same context. The collaboration of the family members in the company may be an indication that the admission criteria are not governed by the higher academic and professional qualifications, which are more suitable for the performance of duties [19]. However, instead of prevailing the replacement of generations in the management of the company, the owners can choose to hire professional managers to create wealth but preserving the intra-family relationship in the company. On the other hand, family firms often find it difficult to attract and retain highly skilled managers, partly because of the limitations of career advancement and the absence of personal reward policies, as well as the lack of goal-oriented professional management and continuous

There are immense advantages and disadvantages of self-employment (being your own boss), and the entrepreneur must be aware of both before starting a busi-

1.*Autonomy*: the need for independence and freedom to make decisions are the main advantages. The feeling of being your own boss is very satisfying to most

make small businesses more competitive in a rapidly changing environment.

production equipment. This enables greater agility in changing.

family businesses, or constitute a situation of self-employment.

**5. Family businesses and self-employment**

**5.1 Self-employment: advantages and disadvantages**

ness. We start by highlighting the three main advantages:

finance the growth of the business.

*Business Incubator and Economic Development DOI: http://dx.doi.org/10.5772/intechopen.88562*

*Intellectual Property Rights - Patent*

supplied to consumers.

microenterprises.

neurs, which can turn in their favor.

expectations of these consumers.

**4.3 Advantages of small businesses**

The most adaptable, flexible, fast, aggressive, and innovative entrepreneurs are best positioned not only to adjust to a complex, threatening, and dynamic competitive environment but also to create the change in that environment. Entrepreneurs must affirm themselves as agents of change by leading clients instead of following

Entrepreneurship is the main source of sustainable competitive advantage through the production and/or marketing of products and services that are more advanced than the competition, i.e., unique in the market compared to the value

Although competitive instability is most felt in some sectors, none is immune to its challenges. Increasingly, competitive conditions in markets become unpredictable beyond the short term. This economic landscape has implications for entrepre-

The threats that large companies experience offer small business opportunities. In addition to receiving outsourcing requests, a small business can also compete in

In reality, a small business can establish partnerships (strategic alliances or joint ventures) with a variety of suppliers covering value chain activities and thus can enter into markets it might not otherwise be able to achieve. In practice, we are talking about a virtual company, that is, a company that does not have the (own) resources needed to compete in a particular market segment but has the possibility of forming partnerships with other companies in order to perform the key manage-

Another change that is happening in the markets is their continued fragmentation (increase in the number of competitors) or the development of niches. Within the markets there are small groups of consumers who value a set of unique attributes in a product, which is a niche market. Many niches do not interest large corporations because they are small in terms of turnover, providing small businesses with business opportunities. To benefit from these opportunities, entrepreneurs must focus on a clearly identified market niche so that they understand and meet the

Small businesses have important advantages that enable them to be successful, namely, their sensitivity to market conditions and trends, which derives from their close relationship with customers, enabling them to understand their needs.

The existence of a personal relationship with customers ensures that the entrepreneur is the first to perceive the changes in consumer preferences that will affect the market as well as gives him the possibility to convey the message that interests the customer. This small business communication process encourages market learn-

another market based on subcontracting services to other companies.

ment functions to the pursuit of the own business [15, 16].

ing by expressing interest in the business of customers.

A measure generally adopted in the face of aggressive price pressure from competitors is to reduce costs to the lowest possible levels. The goal of this cost reduction effort is often the workforce (the employees), but the need to produce the product or provide the service remains. Hence, suppliers are used to perform the operational tasks eliminated via downsizing, engaging in outsourcing, which has become a business opportunity for small businesses, which include small and

them, creating new markets and defining new competitive rules [14].

**4.2 Change as an opportunity for small businesses**

**166**

Another factor that distinguishes successful small business from typical large enterprises is their ability to innovate. The entrepreneurial company has a quick reaction when changes or opportunities arise in the market. While large corporations recognize the need to change quickly, the burdens of bureaucratic procedures slow them down. The ability of small businesses to innovate encompasses product innovation (new relevant features), process innovation (improvement of the production process), and service innovation (offering something new in the service). It should be noted that innovation is related to organizational flexibility, which comes from personal attitude and organizational practices based on the creation of knowledge as the main competitive resource [17, 18].

In addition, small businesses tend to invest less than large companies in rigid production equipment. This enables greater agility in changing.

Together, responsiveness, organizational flexibility, and innovation practices make small businesses more competitive in a rapidly changing environment.

Small businesses can be developed within the family universe, translating into family businesses, or constitute a situation of self-employment.
