Australian Entrepreneur Ecosystem
Volume: 21 pages Style: Harvard Type: Dissertation Chapter 1 Discussions 1.1Introduction (200 words) According to Isenberg (2014), entrepreneur ecosystem refers to the fostering of entrepreneurship as an economic development strategy, either by a business, an organization or a country. Other authors have provided different meanings for entrepreneur ecosystems. In Manimala and Wasdani (2015)’s view, entrepreneur ecosystem is the systemic and collective nature of entrepreneurship. Manimala and Wasdani (2015) added that new firms emerge due to employee efforts and the presence of an environment or ecosystem made of private and public players, thus making the work of an entrepreneur easier. Manimala and Wasdani (2015) however noted that an ecosystem can hinder entrepreneurship, especially in the case of the public sector due to corruption, mismanagement and other unethical practices within the new venture. In the same fashion, Feld (2012) noted that entrepreneurial ecosystems consist of elements that can be classified into six domains. These classifications allow the entrepreneurs to understand better all the aspects of a particular market (Feld 2012). From these classifications, the government can evaluate whether it has a good entrepreneur ecosystem and identify the procedures that need to be applied to improve these ecosystems, knowing well that each entrepreneurial ecosystem is unique and that all elements of the ecosystems are interdependent (Isenberg 2014). References
1.2 The Australian market (800 words)
Bangs and Halliday (2001) observed that a market analysis studies the attractiveness of a particular market to provide an entrepreneur with a better and deeper understanding of the markets in which they plan to start and operate a business. According to Bangs and Halliday (2001) technology has brought about a change in the Australian market by increasing market speed, capacity, sophistication and automation of trading for the market operators. It has also introduced new participants into the market thus boosting the Australian economy. The government has introduced regulations and policies to ensure that the financial and other markets are fair and efficient with modern market innovations (Bangs and Halliday 2001). Gal (2009) however noted that the Australian money market may be in a global crisis due to its liquidity. Since 2007, the functioning of money markets declined globally since many participants of the money markets placed a greater value on retaining liquid assets. From then, the recovery of the money markets has been critical, with many countries experiencing this significant challenge.
Gal (2009) noted that market integrity is an important aspect of the Australian market. Gal (2009) added that the integrity rules are adopted to address the emerging risks from the developments in market structure, including the growth of automated trading and the changing nature of dark liquidity. The Australian government implemented several legislative rules to address the market integrity rules. The Australian Securities and Investments Commission (ASIC) was tasked with developing the integrity rules (CCH Australia Limited 2011). The legislation instruments addressed various aspects of the Australian market. Bangs and Halliday (2001) noted that the ASIC discussed the rules for competition in the exchange market which noted the integrity rules for extreme price movements, pre-trade and post-trade transparency and enhanced data for market surveillance. It also provides guidance on systems and controls for the holders of an Australian market license (Bangs and Halliday 2001). Similarly, the Australian Securities and Investments Commission proposed market integrity rules and policies that must be followed in Australia’s market. These rules related to enhanced data for supervision; volatility controls for extreme price movements, and product scope of best execution (CCH Australia Limited 2011). Similarly, they addressed the automated trading that included high-frequency trading and also the pre-trade transparency and prime formation in the market (CCH Australia Limited 2011).
Arup and Wishart (2002) noted that Australia makes use of competition laws that are aimed at promoting competition per se. Arup and Wishart (2002) added that competition policies seek to facilitate effective competition to foster economic growth and increase efficiency while accommodating situations whereby competition does not interfere with other social objectives. Competition policy deals with the extent and nature of competition in an economy. It encompasses the legislation and government actions that influence the permissible competitive behavior by firms and the remedy offered in case of such violations. According to Arup and Wishart (2002), the Australian market makes use of policies and regulations to protect consumers from exploitation and misuse of market power. Australia’s legislation laws prohibit a corporation with substantial market powers from taking advantage of the market power for a prohibited purpose (Arup and Wishart 2002). Arup and Wishart (2002) also noted that the prohibited use includes the prevention of entry into the market, damaging or eliminating a competitor and deterring or preventing a person or entity from participating in the market. These laws are mainly developed to prevent market misuse especially by corporations, parastatals, and monopolies (Arup and Wishart 2002). In CCH Australia Limited (2011)’s view, the legislative laws as highlighted under section 46(1) helps in determining whether a company has substantial market power and if it is possible for a corporation to have significant market power. CCH Australia Limited (2011) added that majority of cases regarding misuse of market power have failed due to lack of sufficient evidence to prove this element. In response to these decisions, the Trade Practices Legislation Amendment Act of 2008 provided some guidance on the arbitration of cases regarding taking advantage and misuse of market powers. This law protects the interest of people and firms when entering a particular market.
Guzman (2011) observed that the main bodies governing market competition in Australia are the Australian Competition and Consumer Commission and the Australian Trade Practices Commission (TPC). The bodies are aimed at considering the market aspects and implement laws and policies to ensure efficiency and economic growth (Guzman 2011). Some of the mandates of these commissions include price surveillance, protection of the rights of consumers, business and preventing the illegal anti-competitive behavior. Additionally, they have the obligation to perform an industry regulation and price monitoring (Guzman 2011). CCH Australia Limited (2011) added that the ACCC regulates certain industries such as telecommunication and energy industries as well as granting access to the national infrastructure system. The ACCC also educates consumers and businesses on their rights and responsibilities under the Act (CCH Australia Limited 2011).
1.3 Political, economic and social culture variables (800 words)
According to the observations presented by Pricewaterhousecoopers (2013), the businesses environment is affected by political, social and economic variables. Pricewaterhousecoopers (2013) noted that there are some micro-environmental factors associated with the operation of the company, in physical and organizational manner. These factors are connected to a part of the behavior of the employees, supplier, and other intermediaries. Equally important, Pricewaterhousecoopers (2013) noted that the most important factors are the macro-environment that are inevitable in the firm and cannot be controlled by the organizational management and they have an enormous impact on an organization. For a firm looking to invest in Australia’s market, these factors are inevitable and have to be considered before formulating the business plan. These factors are located at global and national levels that lie under the physical, organizational influence of the firm. In the same fashion, Mazzarol, Volery, Doss and Thein (1999) noted that the business must consider these factors both in the long run and after a short period and analyze the effects on the firm in the near future. In the case of international expansion, Pricewaterhousecoopers (2013) observed that the firm has to consider more factors, especially those surrounding foreign direct investment. Cohen (2007) defined foreign direct investment as a system whereby residents of a particular country acquire interests and ownership of assets and other activities in a firm in another country. The investor has an interest in the operations of the business and has a purpose of having a say in the activities of the enterprise Cohen (2007).
The political and legal factors are vital for setting up a business in any country as they can affect the different opportunities and threats that are faced by an industry and the entities operating within (Carpenter and Dunung 2011). These factors influence the competitive laws adopted, the regulations governing the entry of a new firm in the sector, tax incentives, good transportation and telecommunication facilities and worker-training support packages. Australia is characterized by political stability and the absence of violence and terrorism. These are important considerations in setting up a business as they affect the likelihood that the government will be destabilized, thus affecting the economy and the performance of the enterprise (Carpenter and Dunung 2011). In Arup and Wishart (2002)’s view, Australia is one of the most politically stable countries that transpire to the ease of conducting business in the country. The legal systems protect the rights of the citizens such as the freedom of speech and religious tolerance. By the same token, Arup and Wishart (2002) noted that the Australian government is characterized by low corruption that is suitable for the growth of businesses. Brown and Ulijn (2004) noted that corruption leads to a slow economic growth. Carpenter and Dunung (2011) however contrasted with these observations and pointed out that the effects of corruption on growth are more specific to a firm and affect the quality of governance, political regime, and the legal, institutional framework. Additionally, the government of Australia provides tax incentives for new businesses to encourage job creation and investments into the economy. Commonwealth Bank (2011) added that the Australian government would provide a 5% tax discount to unincorporated enterprises with a yearly turnover of less than 2 million dollars from July 2015. This would help Australia’s small businesses to grow and also deliver a tax cut of over 1.8 billion dollars over the next four years (Commonwealth Bank 2011).
Weele, Steinz, and Rijnsoever (2014) pointed out that Australia is a country with considerable cultural diversity. They added that the cultural diversity has boosted the economic performance in Australia due to the variety of the labor skills and knowledge. Another advantage of cultural diversity as presented by Weele, Steinz, and Rijnsoever (2014) is increased creativity and productivity. Another advantage is increased language proficiency that are invaluable in today’s expanding global economy. There is also the development of new processes and new ideas as people with diverse knowledge, and expertise come together and collaborate with a common objective Pricewaterhousecoopers (2013). Pricewaterhousecoopers (2013) added that the high levels of migration in Australia contributes to social diversity, enhances the economy by connecting markets and filling the labor gaps with new and diverse skills. Pricewaterhousecoopers (2013) also noted that migration encourages foreign investors to participate and enter the Australian market. The immigrant entrepreneurs also play an invaluable role in directing trade and investments through their home countries, hence increasing cross-culture markets and improving the economy and productivity of their host countries (Carpenter and Dunung 2011). The Australian community is friendly, ethical and very hard working and straight forward in conducting business. The community appreciates modesty, thus eliminating the need for applying aggressive sales and marketing techniques (Carpenter and Dunung 2011). Additionally, Carpenter and Dunung (2011) asserted that Australia has an extensive, reliable and professional labor force hence making it suitable for a new firm to the market.
1.4 Institution, public policy and regulatory systems (800 words)
According to Sanyal (2015) and CCH Australia Limited (2011), there are several institutions and regulatory systems in place in Australia to regulate the operation of the business in Australia. One of these bodies is the Australian Prudential Regulation Authority (APRA). This organization was formed in 1998, and its primary purpose was to promote the prudent management of financial institutions (Sanyal 2015). Its regulatory functions extend to the supervision of credit unions, banks, life insurers, building societies, superannuation funds, and friendly societies. Sanyal (2015) noted that APRA has the mandate of requesting the financial organizations to observe prudential standards and may intervene in extreme cases to protect the interests of policyholders, depositors or members. Other powers of the APRA are investigation, intervention and administration. Another body as identified by Sanyal (2015) is the Australian Securities Exchange Limited (ASX). The body was formed in 1987, and it has markets trading in derivatives, equities and future and fixed interest’s securities (Sanyal 2015). Its purpose is to ensure that firms follow the provisions regarding the shareholder’s rights such as the necessity of consulting the shareholders over major decisions as listed in the company’s constitution (Sanyal 2015). It also ensures that companies maintain certain standards with respect to the provision of information and market awareness (Sanyal 2015).
The Australian Competition and Consumer Commission has a role in implementing the competition and consumer laws (Sanyal 2015). Sanyal (2015) noted that the act aims at promoting competition, fair trading and provide for consumer protection from exploitation. It covers company mergers or acquisitions, third party access to facilities of national significance, anti-competitive and unfair markets and product safety and product liability (CCH Australia Limited 2011). By the same token, CCH Australia Limited (2011) noted the Australian Taxation Office (ATO) which has the overall responsibility for implementing the Australian income tax system. CCH Australia Limited (2011) added that the ATO is the body responsible for administering the federal taxation plan in Australia. It outlines the laws governing the taxation of goods and services in Malaysia as well as the systems applied in the collection of tax for the government. In addition, CCH Australia Limited (2011) noted that the ATO conducts an annual self-assessment by conducting random audits to verify the company and individual assessments. The ATO also has a responsibility for the financial regulation of Australia’s superannuation system. The ATO also collects exercise duty on tobacco, alcohol, fuel and petroleum products, administering the Public Health and Insurance debate and the Higher Education Loans Programme (CCH Australia Limited 2011).
On the other hand, CCH Australia Limited (2011) noted that the Australian Securities and Investments Commission (ASIC) is the sole regulator of registered companies and is also a financial regulatory body. CCH Australia Limited (2011) added that the ASIC is responsible for law regulating the incorporation, operation and the management of registered companies in Australia. It is also responsible for supporting the integrity and fairness in financial markets and company affairs and also regulates the conduct of corporations in Australia. The ASIC protects consumer interests by regulating the advising, disclosing and selling of financial products and financial services to consumers (CCH Australia Limited 2011). In the same fashion, the Reserve Bank of Australia (RBA) performs the central banking service role and is governed by the Reserve Bank Board and the Payment System Board. The Bank is owed by the federal government and has two primary functions, financial stability and monetary policy (CCH Australia Limited 2011). CCH Australia Limited (2011) added that the financial stability policy aims at avoiding the effects of monetary disturbances in an economy and preventing excess risks. On the other hand, monetary policy is aimed at maintaining inflation levels at the level that is best for sustainable growth (CCH Australia Limited 2011). The RBA also has the responsibility of maintaining the efficiency of the financial systems and payment systems and is responsible for issuing Australian Currency notes and foreign exchange control (CCH Australia Limited 2011).
Another institution as presented by Sanyal (2015) is the Foreign Investment Review Board. Sanyal (2015) asserted that the body is tasked with providing foreign policy advice to the Australian Federal Government and the Treasurer. It has a function of assessing the investment proposals submitted by foreign entities and make suggestions to the Treasurer on the consonance of those plans with government policy. Sanyal (2015) added that the FIRB has a responsibility of providing information regarding government policies to local and foreign investors and any other interested entity. In addition, Sanyal (2015) noted that the IP Australia is responsible granting rights in patents, trademarks, and designs in Australia. IP Australia operates independently and is part of the Department of Industry, Climate Change, Science, Innovation, Tertiary Education and Research (Sanyal 2015). Lastly, the .AU Domain Administration (AUDU) is a nonprofit-oriented company and is the policy authority and industry self-regulatory body for the .au domain space (Sanyal 2015).
1.5 Entrepreneurial culture in Australia (650 words)
Wong (2014) defined entrepreneurial culture as the environment whereby a person is encouraged to innovate, create or take a risk in a business. Wong (2014) noted that entrepreneurial culture has been used to describe a country’s or society’s attitudes towards entrepreneurship. Wong (2014) added that the entrepreneurial culture concept has been used to characterize a broader organizational culture that champions and supports entrepreneurship. In addition, Wong (2014) noted that the creation of entrepreneurial culture is aimed at arming the young innovators with the tools and skills necessary to translate their innovation, knowledge and creativity to market-based solutions that can be used to increase productivity. Australia is ranked in the top five among the G20 countries due to its favorable environment for entrepreneurial activities. Brown and Ulijn (2004) observed that more can be done to foster entrepreneurial businesses and provide a strong and diverse foundation for Australia’s economic growth. Brown and Ulijn (2004) added that entrepreneurial activities will be essential for the sustainable growth of the Australian economy and in job creation, considering the fall of the mining investment boom. Brown and Ulijn (2004) added that the biggest challenge facing entrepreneurship is the lack of funding, access to relevant skills and the perception of entrepreneurship as a viable career choice.
According to My Business (2014) small capital markets is a crucial hindrance to entrepreneurship in Australia and has attracted lower equities. Similarly, My Business (2014) noted that young entrepreneurs are particularly vulnerable to difficulty in accessing funds. In My Business (2014)’s view, Australia was ranked 5th among G20 countries in terms of entrepreneurship culture. 48% of the people believed that Australia has a suitable entrepreneurship culture, down from 80% in 2011. Australia has a positive entrepreneurship culture as noted by My Business (2014) due to the intense innovation, low insolvency costs, research culture and higher than average media attention devoted to entrepreneurs. Despite the above strengths in the sector, there has been a significant decline in sentiment since 2011. My Business (2014) noted that these findings coincide with the changes in the confidence in the local economy as well as the decline in the overall economic growth in Australia. This has also reflected in the decrease of the mining investment boom and Australia’s vulnerability to a significant downturn in China (My Business 2014).
Brown and Ulijin (2004) observed that the government, entrepreneurs, and corporations need to work together to continue creating an entrepreneurial cultural environment. Brown and Ulijin (2004) found that local entrepreneurs would like to witness an increase in tax subsidies focused on incentives and also receive government funding. The government has however taken several steps to promote an entrepreneurial culture. The government has increased entrepreneur-specific courses in universities, colleges and business schools to attract new entrepreneurs (My Business (2014). My Business (2014) added that the government has simplified the process of opening up a business in Australia. My Business (2014) also noted that it takes approximately two days to set up a business in Australia against an average of 22 days in other G20 countries. In addition, My Business (2014) poised that the government was improving start-up programs such as providing tax incentives to new and existing businesses for a period of two years. My Business (2014) added that companies, corporations, and the government are trying to improve student’s perception of entrepreneurship by providing success stories. In the same fashion, My Business (2014) noted that entrepreneurs and the government have adopted mentoring opportunities to encourage young innovators and entrepreneurs. In addition, students should be granted access to specific training to become entrepreneurs in the future. Brown and Ulijin (2004) concurred with the arguments presented by My Business (2014) and poised that the new entrepreneurs should receive support from the government, corporations, and existing businesses by providing them with good ideas and capital to develop them. Additionally, Brown and Ulijin (2004) asserted that the emergence of a new platform designed to facilitate connections and collaborations offers another means for businesses to access the resources and ideas they need.
1.6 Infrastructures (for startup development) in Australia (750 words)
According to O’Donnell (2013), Australia has a modern infrastructural system. O’Donnell (2013) added that infrastructure is critical to the development of an economy and future prosperity of a country. The transport network is well connected to serve the entire country, with over 300 airports and a world class road network. The country also has a railway network connecting different states to increase mobility. O’Donnell (2013) noted that there is a heavy reliance on road transport due to the low population density in Australia. O’Donnell (2013) added that the reliance upon road transport is also attributable to the fact that the railway network has not been adequately developed for freight and passenger requirements. The road per capita is greater in Australia than in Asia or Europe.
Australian Labor (2015) contrasted with the findings presented by O’Donnell (2013) and noted that the Australia’s infrastructure problem is significant. Australian Labor (2015) observed that Australia has an infrastructural deficit that is as a result of underinvestment in infrastructure, which is expected to reach 53 billion dollars a year by 2031. The government acknowledged this critical challenge and established a reform to encourage the investment in infrastructure. This will have several effects on the economy of Australia. In Australian Labor (2015)’s view, infrastructure investments will promote the creation of new jobs now and in the future and also expanding the productive capacity of the economy. Some of the vital infrastructural networks that require investments to increase productivity growth and future prosperity include investments in energy, transport, communications and water infrastructures (O’Donnell (2013). O’Donnell (2013) asserted that capital investment by the government into infrastructure is declining which has resulted in the collapse of the investments. O’Donnell (2013) added that the construction sector is experiencing under-investment, and the government needs to intervene to increase investments in the infrastructure network needed to drive the economic activities, create jobs and lift the economic productivity. One of the strategies that can be implemented by the federal government is encouraging public investment in the industry that would support demand, insure against downside risks and take pressure off monetary policy (O’Donnell 2013).
Australian Labor (2015) also noted that Australia faces an infrastructure conundrum whereby there is a need for long-term physical assets to underpin the future growth of the country. Australian Labor (2015) also noted that the government is not able to fund all these projects, thus calling for the private sector to intervene. Australian Labor (2015) added that there is a domestic pool of capital in superannuation that is searching for a stable form of investment over extended periods of time. In Australian Labor (2015)’s view, the government should look for a way to solve this conundrum to improve the economic prosperity of the country. Equally important, Australian Labor (2015) noted that we should provide support for infrastructural investments through a bankable, consistent and independently assessed infrastructure pipeline. However, Australian Labor (2015) pointed out that the federal government is reluctant to bring its projects to the markets due to fiscal constraints, limited space and limited funding. In the same fashion, O’Donnell (2013) observed that infrastructure investments may be unsuitable for long-term equity investors. Some of the reasons provided include forecasting errors, commercial risks, exorbitant bid costs, high development and construction costs, long procurement, and uncertain processes. In addition, the current arrangements are poorly planned and interests between the government, investors and constructor is misaligned. To bridge this gap, Australian Labor (2015) proposed a number of core elements. The first element as presented by Australian Labor (2015) is improving the way projects are developed, assessed and structured to secure a bankable infrastructure pipeline. The second part is ensuring that key projects are sufficiently funded and also providing market signals to encourage the development of more projects. The third part involves addressing issues surrounding the bid process to mitigate the high cost. Lastly, certainty and independence in the infrastructure development should be provided (Australian Labor 2015). Additionally, the infrastructure funding decision should be well-structured, long-term and based on a firm economic foundation.
1.7 The Australian economy (650 words)
Australia has had a continuous expansion in its economy for the last 25 years. Anderson (2012) observed that Australia enjoys one of the largest mixed market economies in the world which is dominated by the service sector. RBA (2015) noted that the inventory to sales ratio is at a record low. The Bureau of Statistics noted that the economic output of production by firms is at all-time low, which is characterized by empty store rooms. In the same fashion, the RBA (2015) noted that employers are trying to cut down the production costs by applying pay cuts. The RBA (2015) added that this is a positive sign since it indicates that Australia’s labor market is flexible enough to respond to the deteriorating economic climate. Lakos (2015) concurred with these findings and noted that the restrained wages growth and the weakening of the dollar will make the Australian exports more attractive hence increasing the chances of another pay rise. In addition, Lakos (2015) noted that that payroll and pay-as-you-go tax receipts are growing at a reasonable rate. The rate of savings has increased despite the weaker wages, thus reducing the rate of spending and thus staggering the growth of the economy. Anderson (2012) contrasted with the arguments presented by Lakos (2015) and asserted that a decrease in the amount of money spend overseas translates to increased expenditure on domestic holidays and shopping. The unpredictability of the weather also has an impact on the Australian economy. In Anderson (2012)’s view, good weather boosts the economy of Australia by increasing the resource exports, and the vice versa is also true.
However, the RBA (2015) noted that economic reform in inevitable as Australia is increasingly exposed to lower economic growth and a declining living standards of the working population. The RBA (2015) added that Australia is experiencing the longest sustained period of sub-trend growth in over 50 years. The Australian economy is experiencing increased unemployment, flagging productivity and a decline in the standard of living (RBA 2015). In Lakos 2015’s view, the economic softness may result in an economic crisis in Australia and could also become a structural weakness. Intervention is inevitable to lay the foundation for enhanced productivity that is essential for growth and development of the national economy, maintaining the standards of living and creation of job opportunities (Lakos 2015). By the same token, the RBA (2015) noted that the wage premiums in Australia are shrinking in comparison with other parts of the world.
The Reserve Bank of Australia noted that Australia’s unemployment rates fell to 6.2%, down from 6.3% in the previous month but up from 5.8% over 18 months ago. The Commonwealth Bank (2015) noted that unemployment rate has been increasing over the recent years. Commonwealth Bank (2015) added that this serves as an indicator that the economy is not operating as it should, and it is consistent with the economy being quite subdued. In addition, the Commonwealth Bank (2015) observed that business investment has been falling for the last three years and that the expected business investment is negative. One of the sectors that have dragged the economy is mining industry since there are no new mines being constructed. In addition, Commonwealth Bank (2015) observed that the decline in business investment saw the RBA reduce its economic forecasts and indicating that the interest rates are likely to remain low. The Australian key cash rate is at a record low of 2%, marking a 5.25% of cut since 20008 in reaction to the global financial crisis. Commonwealth Bank (2015) also noted that consumer confidence is on the negative side, meaning that users have been pessimistic. Commonwealth Bank (2015) added that consumer confidence is used to measure consumer spending and retail sales that gauge the consumer’s views on the household finances and economic outlook.
1.8 Startup in Australia (1000 words)
Australian Government (2015) argued that the government has a responsibility of creating a conducive environment where entrepreneurship can flourish by providing public investment into the infrastructural systems and other industries to encourage investment by local and foreign entrepreneurs. The technology adopted in Australia is world class, and the infrastructural networks connect every corner of the country. The presence of a vast road network and the airports increases mobility within the country (Weele, Steinz and Rijnsoever 2014). Australia is suitable for opening up a business due to the good infrastructural network. Weele, Steinz and Rijnsoever (2014) added that Australia is an important tourist attraction region, and hence diversifying its economy and increasing the target market. Australian Government (2015) added that the tertiary education system is exceptional, despite some of its flaws and is developing bright minds and hard workers. This indicates that the Australian market has a qualified labor force that is diverse due to cultural diversity in place. In addition, Weele, Steinz, and Rijnsoever (2014) noted that the presence of world-class technology, especially in the urban areas makes an investment into the industry easier. However, the Australian government has been widely criticized for dragging its feet in the creation of a viable business environment. Failure by the Australian government to head to the warning signs may see Australia fall further in its economy. Australian Government (2015) noted that the government is ignorant and thinks that it is making progress without looking at the economies of other countries. Australian Government (2015) added that Australia is falling behind in start-up scene when measured against other states. Australia is a high-wage and high-cost economy thus increasing the operational costs of conducting a business.
In Weele, Steinz and Rijnsoever (2014)’s view, there was a clear market failure despite Australia having the world’s fourth largest pool of superannuation funds standing at 2 trillion dollars. Weele, Steinz, and Rijnsoever (2014) noted that startupAus wants the Australian government to create an agency for innovations that will be responsible for promoting entrepreneurship programs focused on transitioning companies to acknowledge economy. These programs will boost the number of people starting their own businesses. According to the estimates by startupAus, there are over 1200 technology start-ups in Australia or 0.06% of all companies (RBA 2015). In addition, the Australian, state, territory governments and local council government has developed several grants and assistance programs that are aimed at developing new businesses and fostering economic development. In addition Australian Government (2015) noted that the government has adopted the accelerated depreciation incentive that is aimed at providing immediate tax reduction to small businesses for an individual asset that is purchased t a cost of less than 20,000 dollars. The small companies can apply this rule to as many individual items as they may wish and is planned to proceed for the next two years.
Australian Government (2015) observed that the government has offered wages subsidies to support employment. This is by providing wage subsidies with flexible payment arrangements to employers offering job seekers an ongoing job opportunity. Australian Government (2015) also noted that the government is providing tax cuts by reducing the tax rate for more than 90% of incorporated businesses with an annual turnover of less than 2 million dollars. In addition, Australian Government (2015) noted that the government will offer a 5% tax discount to unincorporated entities with a yearly turnover of less than 2 million dollars, starting 1st July 2015. This will deliver a tax cut of 1.8 billion dollars over a span of four years.
In addition to the findings presented by Weele, Steinz and Rijnsoever (2014), Mazzarol, Volery, Doss and Thein (1999) added that there are other important factors that should be considered when considering the start-up of a new business. One of the reasons presented by Mazzarol, Volery, Doss and Thein (1999) is to determine the profitability of opening a business in a particular economy. In Pricewaterhousecoopers (2013)’s view, the profitability of the market in Australia is individualized depending on the type of business, its location and other factors affecting the business. Mazzarol, Volery, Doss and Thein (1999) also noted that new entrepreneurs should seek advice from successful business owners in Australia to gather adequate information regarding the profitability. Pricewaterhousecoopers (2013) contrasted with these findings and poised that business in Australia is risky but highly profitable if the entrepreneur applies the right strategy. Another important factor to be considered is the managerial skills in running a business and qualification of employees. In Pricewaterhousecoopers (2013)’s view, Australia has a highly competent, skilled and qualified labor force. This is also backed by a quality education system that produces highly skilled employees, and that encourages the development of an entrepreneurial culture.
In the same fashion, Mazzarol, Volery, Doss and Thein (1999) added that the availability of finances is a major factor for the start-up of a business. This, according to Mazzarol, Volery, Doss and Thein (1999) determines the type of franchise that the entrepreneur can afford. The kind of loan depends on the capital requirements of a business and the availability of collateral to secure the loans. Weele, Steinz, and Rijnsoever (2014) noted that the grants offered by the Australian government for small business startups are not automatic. Weele, Steinz and Rijnsoever (2014) added that the number of denied applications exceeds those that have gone through, thus making it difficult for small businesses to thrive in Australia. Similarly, Weele, Steinz and Rijnsoever (2014) observed that businesses are subjected to lengthy approval processes that take a lot of time for the entrepreneur. By the same token, Mazzarol, Volery, Doss and Thein (1999) noted that the market demand needs to be considered. Pricewaterhousecoopers (2013) noted that Australia has a relatively large population with cultural diversity that translates to a high market demand. However, Pricewaterhousecoopers (2013) added that the entrepreneur should determine the level of competition in the market for the line of products he is planning on dealing with.
1.9 Judgment of the Australian entrepreneurial ecosystem (550 words)
The Australian entrepreneurial ecosystem is poorly funded and implement. The government and the businesses in Australia should take steps to ensure the success of this aspect. To achieve this, Weele, Steinz, and Rijnsoever (2014) noted that the government should encourage the investment of the foreign investors and local businesses into infrastructure. Weele, Steinz and Rijnsoever (2014) observed that this will ensure increased productivity in the future and secure more employment opportunities for the population. Weele, Steinz and Rijnsoever (2014) also noted that the government has a role in encouraging venture capital and getting the tax settings right to promote industries in the near future. In addition, Anderson (2012) noted that the government should invest in public goods so as to create wealth and opportunity, especially for the businesses. To do so, Anderson (2012) observed that the government should invest in the education systems to provide qualified talent that’s necessary for start-ups. According to Anderson (2012), the government should plan effectively for the location of infrastructure networks and proper town planning. The government can encourage investments by businesses through proper planning. In addition, Anderson (2012) added that the government should provide scholarships to students each year to enable them to start their own businesses.
Anderson (2012) noted that the government should reduce the interest rates on loans to make borrowing easier for aspiring entrepreneurship. The government can also provide funds such as women, youth and persons with disabilities funds to support the minorities in the society. This will increase the number of start-up businesses in Australia and steer the national economy. Anderson (2012) added that this would reduce the dependency ratio and increase job opportunities in Australia which will drive the economic growth of Australia.
Entrepreneurs should take advantage of the entrepreneurs programs in place that provide guidance to aspiring entrepreneurs (Bangs and Halliday 2001). Bangs and Halliday (2001) observed that these programs provide guidance on the strategies that can be implemented and the factors to be considered when setting up a business. The entrepreneurs should also consider the grants and assistance offered by the government such as incentives for research and development and the assistance for industries in transition and support for small businesses (Bangs and Halliday 2001). In addition, Bangs and Halliday (2001) poised that these inventions and technology support the development in businesses by fostering collaboration between industries and researchers.
Mazzarol, Volery, Doss and Thein (1999) noted that entrepreneurs should take the responsibility of consulting established business owners about their journey towards success. They poised that this would encourage the entrepreneurs by informing them of the challenges faced in operating their businesses. Mazzarol, Volery, Doss and Thein (1999) also added that entrepreneurs need to have the best mindset when making a business plan. They should consider all market factors and also keep an open mind when considering a semi-absentee opportunity. The entrepreneur should consider his passion, talents, skills and aspirations when deciding on the type of franchise to be undertaken (Anderson 2012). In addition, Bangs and Halliday (2001) noted that entrepreneurs should consider investing in technological advancement and infrastructure to ensure the sustainability and development of Australia in the long run. Bangs and Halliday (2001) added that infrastructure investment will promote all economic sectors in Australia, starting with the employment and production areas.
1.10 Conclusion (200 words)
In conclusion, the literature presented in this study illustrates that Australia has an attractive market that is able and willing to buy new products introduced into the market. Australia enjoys political stability and social peace that is suitable for the establishment of new businesses. Similarly, the diverse culture of the Australian people is appropriate for the labor force as it provides a broad range of skills that are invaluable in a business. The researcher can conclude that the Australian economy has slowed down in the recent past. In the same fashion, the infrastructure of Australia faces an imminent challenge due to the deficit that is as a result of a reduced investment in infrastructure. The government has taken an initiative to promote an entrepreneurship culture by encouraging students to consider entrepreneurship through special training, giving success stories and through mentorship programs. The Australian government has supported start-up of new businesses through the provision of incentives such as tax subsidies for new and existing businesses. Australia has however been slow in the response to promoting start-ups and creating a suitable business environment as compared to other countries and regions such as Israel and Silicon Valley. The Australian government should implement appropriate start-up policies to encourage local and foreign investors into the market thus increasing the economic development of the country.
Sources 15 to 20 sources (mainly 2005 to 2015)
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