THE TOP ITTIPAT’ ENTREPRENEURIAL SUCCESS STORY IN BUILD TAO KAE NOI BRAND: AN ANALYSIS BASED TIMMONS MODEL

CHAPTER 1
INTRODUCTION

1.1 Background

Young entrepreneur

Young entrepreneur emerges from the changing of economic situation in each country. According to International Labor Organization (ILO), as many 73 billion young people are being unemployed in 2013.[1] The number indicates that a significant increase in young people as a percentage of the total population. Many countries are experiencing stagnant or slow growth, and it will reduce the opportunities to the increasing number of young people looking for employment. Schumpeter in Setyorini (2010) said that the importance of entrepreneurship as a major vehicle to move the economy in order to advance from the static equilibrium through various innovations and directing the creative process that is destructive, examine existing structures and change the balance of the economy.[2] Anyone who performs these functions is an entrepreneur, regardless of whether the person is independent or whether the person is working in a company.

Nowadays, the emerging of young entrepreneur is increasingly developing by promoting new concept of innovation and creativity. The young entrepreneur is more confident to run the business, moreover it create jobs over years. Many countries believes that the youth people have the capability and the opportunity to develop their business and being competitive with the others prior business that have been leading to the world. World now must acknowledge that young entrepreneurs encourage the economic growth for each countries. It has been studied in some researcher that young entrepreneur give positive impact for the diversity on national economic growth. Verheul & Stel (2008)[3] revealed that in less developed countries, older and higher educated entrepreneurs are important for enhancing economic growth. However, for developed countries, younger entrepreneur are more important to stimulate economic growth.

Entrepreneur is taken from the French language which means to musical or performance leader (Jhingan, 1999: 425). Term of entrepreneur is mostly used overlapping with the self-employed. In economy aspect, an entrepreneur means to the people who has ability to get successful opportunity. The entrepreneur can be higher educated, trained and has skills even illiterate but he has a skill in particular field obtained from the live experience not from the formal education generally. Then, for the youth entrepreneur it means to the young people who has ability to get successful opportunity and change it into commercial business.

Since 14 years ago, Southeast Asia shows the fastest growing economies in the world. Thailand, Indonesia, Philippines, Malaysia and Singapore are developing countries that become pioneers for the young entrepreneurs to exist in the business field.[4] Thailand after rising from the political turmoil shows the impressive growth of the business fields include from the young entrepreneur activities. According to the Shrestha (2008), the youth by age 15 – 24 years old) comprise 16% of total population in Thailand. Based on the report, youth unemployment rate is 5% compare to average 16,9% in South East Asian and 7.8% in East Asian. In 1995 – 2005, the number is 2 to 3 times higher than adult employment rate. Therefore, it can be stated that the share of youth to the total unemployed is 50%, among the highest in the region. Fortunately, Thailand raises youth entrepreneurship and sel-employment rate at 30% constantly. This is become a challenge for the young entrepreneurship to access financial, in particular for disadvantage backgrounds.[5]

Entrepreneurial motivation

Motivation owned by young entrepreneur actually is not based on their education background. Because there are many young entrepreneurs who have less educated but they are successful in growing their business. Entrepreneurial motivation is meant as an encouragement individually to be brave to take risk upon the activity he does. In the discussion about motivation, then entrepreneurial motivation tends to close to the performance motivation as stated by McClelland (1971).[6]

The entrepreneurial motivation is a person interest, pleasure, and willingness to do self-business activity based on the capability, strength and skill he belongs. Basically, the motivation is based on the personal needs that have been not fulfilled.  The requirement is the need for achievement, need for power and the need for affiliation. These needs can be the underlying motivation of the individual to have entrepreneur. Simultaneously need for achievement, power requirements, and the needs of affiliated significant effect on entrepreneurship motivation. Partially need for achievement and power needs significant effect partially on entrepreneurship motivation, and partially affiliated needs turned out to have no significant effect partially on entrepreneurship motivation (Dhani, in 2013) [7]

Entrepreneur is a capability to be creative and innovative as basis and resources to obtain successful opportunity (Suryana, 2006). Creativity is a ability to develop idea and new ways in problem solving and finding out opportunity (Suryana, 2006). Innovation is an ability to apply creativity in problem solving and finding out opportunity (Suryana, 2006). The fundamental characteristics of the role of entrepreneurship (McClelland, 1961 in Suyanto, 1987) include entrepreneurial behavior, which includes bear the risk is not too great as a result of skill and not by accident, vigorous activity and / or inventive, responsibility personally, as well as knowledge of the results of the decision; money as a measure of the results.[8]

Other characteristics is an interest in entrepreneurship jobs as a result of dignity and ‘pose risk’ them. An entrepreneur is a risk taker. Risk taker means that an entrepreneur in making decisions need to calculate the risk of bear. This role is executed because he makes decisions in uncertainty times. The entrepreneurs is risk taking moderately, not too high (as a gambler), nor too low as the passive (Hanafi, 2003). From his research, McClelland (1961) states that in a state that risks are not too large, the performance of self-employment will depend on the achievement of expertise or – compared to other jobs.

An entrepreneur for innovation or renewal needs spirit and to be active. They can work for a long period, for example 70 hours to 80 hours per week. Length of time is not important, but because of his zeal they stand working for a long time. For individuals who have high achievement is not so interested in public recognition of their success, but they really need a way to measure how well you have done. From his research, McClelland concluded that the achievement of satisfaction comes from making the initiative to act so successful, and instead of a general recognition of the personal achievement. In addition, we concluded that people who have a high n-ach are less affected by the exchange of money, they are interested in achievement. The standard for measuring success for entrepreneurs is clear, for example, profit, market size or growth rate of sales.

Timmons model

Timmons defined entrepreneurship as a process of thinking and reasoning. Timmons wrote his doctorate thesis at Harvard University together with Zacharakis and Spinelli in 2004 about the Timmons Model of Entrepreneurship in the field of Entrepreneurial process. In their noble work, they develop entrepreneurship model considers opportunities, teams and resources as the three critical factors available to an entrepreneur and concludes that success depends on the ability of the entrepreneur to balance these critical factors. There are three elements to the Timmons Model that illustrate for further:

This research used Timmon’s model to analyze the successful of Tao Kae Noi. Tao Kai Noi is a Thailand’s business which produces Tao Kae Noi fried seaweed snacks and distributes it not only in Thailand but around the world. The owner is a Itipat Peeradechapan or Tob, a successful young entrepreneur from Thailand. Tob, as entrepreneur doesn’t wait for something to happen. His principle bring him into successful globally proven by  Taokaenoi Food & Marketing PCL last month that raised 1.4 billion baht ($53 million) in an initial public offering to fund the plant; its shares begin trading in Bangkok today.[1]

1.2 The Case Summary

Tao Kae Noi fried seaweed snacks product for last few years have graced the display shelves in a number of modern stores such as Seven Eleven, convenience stores, hypermarkets, cash & carry, supermarket, and a number of entertainment centers. Tao Kae Noi packaging illustrates the uniqueness of the product and the concept that became one of the critical success factors seaweed snack on the market. The success is not obtained as easy as turning the hand, but full of twists struggle, Ittipat Tob, a 19-year-old Thai youth who has a strong entrepreneurial spirit since he was in high school. Tob is someone who dared to try, creative, not easily discouraged, and have lots of business ideas, although his education neglected when in college. He did not want to attend classes, because he was not interested in continuing to pursue a bachelor, he is more concerned with the continuation and development of its business (The Billionaire, 2011).[2] Research is a fraction of the work done by the founder of Tao Kae Noi to study the behavior of consumers and innovation so as seaweed snack products have achieved success until now.

Due to the entrepreneur depends on the inovation, Tob did some inovation in his business, starting from bullying and selling weapon on the online game, selling DVD player, selling chessnut, until finding out seaweed snacks and finally become the popular products and sold in many countries. Tae Kao Noi. Tob also used machine to produce more efficiently on the chessnut business and applied technologi in packaging Tae Kao Noi. The giving brand name of Tae Kao Noi by Tob was inspired by himself which means “young entrepreneur” (Antara News, 2013).[3] Tae Kao Noi is meaningful for Tob, because  he experienced many sacrifice in order to be able to sell the product prefered by the people very much, even more than the packaging seeweed that has been oustanding in the market before.

Vision and mission of Tae Kao Noi is a commitment to develop high quality product to the global market, that is encouraged by the mission to generate nutritious product for the consument; produce the product to fullfill the consumens’ needs; develop inovative product by using modern production technology, build brand awareness to create consument’s interest; and treat the consumers, suppliers, and employers as his family (Taokaenoi, 2014).[4]

Logo and packaging Tao Kae Noi at the first time was not as colorful and interesting as now. Before getting into 7-eleven, logo Tae Kao Noi was only a Tao Kae Noi logo only writing and drawing of the Chinese with red and white composition, which was very monotonous and not attracting attention, so it was less inspiring and did not give the image to the customer that the product was manufactured properly and safely. Therefore, Tob needed to create a logo and a flapping more attractive and could give the impression to its customers.

As a distribution channel, Tob chose to sell their products first by partnering with 7-Eleven, a strong convenience store chain in Asia. By cooperating with the 7-eleven will simplify and reduce the cost of Tob for marketing, distribution, target customers, and the sales Tae Kao Noi. Because 7-Eleven is a retail store that is famous and has a value in the market, all products there have a greater opportunity to be purchased by the customer.

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