Is there a real opportunity here? Does is make sense for Bernstein and Usluel to forego more secure employment?
Setting up a startup is one of the most challenging undertakings of entrepreneurs. As significant number of startups collapse after a few years of being operational. Therefore, Bernstein and Usluel would face certain risks in their quest to set up the ILinc. From the information provided in the case it is clear that there is a real opportunity in the industry. The growth of interactive learning among organizations would provide the company with a growth opportunity. Despite the fact that demand for interactive learning in university is currently low, it is expected to increase in the near future. Therefore, Bernstein an Usluel should forego secure employment as the company has limitless opportunities for growth.
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In addition, it would provide them with the freedom that is not available in secure employment. Setting up a startup would also enable Bernstein and Usluel have more responsibility. They would be part of a small team. They would provide the startup with unique skills set. They would approach the problems facing the startup differently, which would ultimately help in improving its competitiveness and profitability. Being part of a small team would also make Bernstein and Usluel be more versatile, reliable and productive. If they worked in a large company they may not have been the opportunity. The large company may not rely on them on the work they do. Therefore, Bernstein and Usluel would be critical members of the small team. This would help in improving their job satisfaction.
Evaluate the business plan – strength vs weakness
Strengths
All the members of the ILinc have valuable experience in the industry
The members of the companies have extensive experience in the multimedia industry.
The company can offer different types of products. Therefore, failure in one product line would not have a significant impact on the company’s bottom line.
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Improvement in computer technology would lead to a reduction in the hardware prices. This would lead to a significant increase in the market for software training tools.
Fortune 1000 companies would provide the primary target market of the company. However, ILinc also acknowledges the fact that small companies would also provide it with a huge market segment. The company intends to use GlobaLinc to target smaller companies.
Weaknesses
Lack of total commitment by Wilson, who would act as the company’s CEO. Lack of commitment by the CEO would reduce the ultimate competitiveness of the company.
ILink targets Fortune 1000 companies who would create a niche market for the company. However, it is a fact that acquiring these customers would be very difficult as there is stiff competition from other companies who provide similar services.
Bernstein has expressed some doubts about the company. It is wrong for anybody to set up a business with doubts in the mind. Failure to trust the business idea would ultimately lead to the collapse of the company.
ILink’s source of primary financing would be from primary sales. Therefore, lack of primary sales would stunt its growth.
It is would be difficult for the company to dominate the market. This is due to the fact that anybody with basic computer skills can create a multimedia coursework.
Have they created the right organizational structure?
They have created the right organizational structure. ILink has a functional organizational structure. Bernstein, Wilson, and Usluel are in charge of different functions of the organization. They are experienced in the functions they have been assigned to undertake. This ensures that they would ensure that there is efficient functioning of the organization. The organization structure would also ensure that there is specialization among different departments of the company. Specialization would ensure that the employees perform their tasks at a high level of speed and efficiency, which would ultimately improve the productivity of the company. Employees who have intricate knowledge of their jobs can undertake the activities confidently and with minimal mistakes. They would also have clear career paths. This would help in motivating the employees to advance their careers by reaching the next level on the corporate ladder, which would also make them be more productive (Lewis, Goodman & Fandt, 2006).
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Having a functional organizational structure would also lead to minimal duplication of efforts. Departments would only undertake certain functions. This reduces the need to establish departments that undertake similar work. This would enable ILinc to utilize its human resources and other types of resources more effectively (Lewis, Goodman & Fandt, 2006).
A functional organizational structure would also facilitate the training of employees of employees of the company since it would focus on a limited range of skills. For instance, employees in the finance department would only be trained on various financial issues.
A functional organizational structure would also ensure that all functions have the same weight. This would help in reducing conflicts among different departments (Lewis, Goodman & Fandt, 2006).
Assuming that each partner has $10,000 to invest in the start-up, but each brings a different set of skill set and contacts, how should they divide the equity of the firm?
If all partners have $10,000 to invest in the company, they should ensure that they divided equity equally among all partners. This is due to the fact that they are all vital in the operations of the company. They all bring unique capabilities that would ensure the ultimate competitiveness of the company. Sharing equity equally among all partners should ensure that there is mutual respect among all the partners. They would feel they are all vital to the ultimate success of the company.
What options do they have for financing their start up?
ILinc may look for venture capital from various investors. However, this would involve bringing an outside partner. This would dilute the control of the partners on the organization. The company may also use initial sale of products to finance the startup. This would enable the maintain control of the company. However, initial sales of products would provide the company with limited capital. This may stunt the growth and profitability of the company. The partners may also use their savings to finance the startup. However, this would provide the partners with limited capital (Leach & Melicher, 2014).
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The partners may also finance their startup with funds from friends and family. However, it is vital for the partners to ensure that they are committed to the venture before seeking financial assistance from people they know. The money may be in the form of a gift or soft loan (Leach & Melicher, 2014).
The partner may also take bank loans to finance the startup. Small Business Administration (SBA) is one the best sources of loans in the U.S. It has provided small businesses with loans worth tens of billions of dollars. It is vital for the partners to ensure that taking the loan would not put them in great financial distress (Leach & Melicher, 2014).
Have they figured out their market?
ILink has figured out its market. The company targets Fortune 1000 companies as its primary target market. The Universities and learning institutions would also be the target market of the company. The company also targets small companies through GlobaLinc. It would use GlobaLinc to develop special training classes for certain companies.
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