Part 4.1 Strategic Entrepreneurial Growth
Strategic Positioning
(The entrepreneurial edge) 1. The process of perceiving new positions that attract customer 2. Requires creativity and insight
Confronting the Growth Wall
Internal constraints such as lack of growth capital, limited spans of control, and loss of entrepreneurial vitality occur in growth firms that struggle to survive versus those that successfully achieve high growth.
Strategic Planning Includes...
It includes defining the venture's mission, specifying achievable objectives, developing strategies, and setting policy guidelines.
The Entrepreneurial Mind-Set
It is important for the venture's manager to maintain an entrepreneurial frame of mind.
Venture Development Stages
Life cycle stages of an enterprise 1.
Managing Growth
May be the most critical tactic for the future success of the business enterprises.
Strategic Emphases
Quality verses cost innovation - rapidly growing firms strive to simultaneously control costs, enhance product quality, and improve product offerings.
Lack of Strategic Planning
Research has shown a distinct lack of planning on the part of new ventures.
Entrepreneurial Strategy Matrix Model
Researches Sonfield and Lussier developed an entrepreneurial strategy mix that measures risk and innovation.
New Venture Development: Business Stabilization
Sales begin to stabilize and the entrepreneur must begin thinking about the enterprise will go over the next 3-5 years.
Managerial Concerns: Continuous Learning
Staying abreast of industry changes in another way for entrepreneurs to maintain a competitive edge.
Entrepreneurial vs Managerial (M/A)
The administrative point of view. a. What resources do I control? b. What structure determines our organization's relationship to its market? c. What opportunity is appropriate?
Managerial Concerns: Community Pressures
The community exerts pressure on the entrepreneur in regards to participation, leadership, and donations.
innovation
The creation of something new and different.
Strategic Planning
The formulation of long range plans for the effective management of environmental opportunities and threats in light of a venture's strengths and weakness.
Risk
The probability of major financial loss
Entrepreneur to Managerial
This is a key transition where the entrepreneur shifts into a managerial style.
New Venture Development: Growth
This stage is a transition from the entrepreneurial one-person leadership to managerial team-oriented leadership.
Managerial Concerns: The distinctiveness of size
smallness gives emerging businesses certain disadvantages, such as a limited market and a smaller staff to do the work.
Growth Stage
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Managing Paradox and Contradiction
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The Entrepreneurial Company in the 21st Century
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The value of Strategic Planning
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Growth Stage (Key Factors)
1. Control 2. Responsibility 3. Tolerance of failure 4. Change
Fatal visions in Strategic Planning
1. Misunderstanding industry attractiveness 2. No real competitive advantage 3. Pursuing an unattainable competitive postion 4. Compromising strategy for growth 5. Failure to communicate the venture's strategy to employees
Formal Planning is based upon
1. The degree of uncertainty 2. The strength of competition 3. The experience of the entrepreneur
Four basic reasons for the lack of planning
1. Time scarcity 2. Lack of knowledge 3. Lack of expertise 4. Lack of trust and openness 5. Perception of high cost
Entrepreneurial and strategic actions
1. strategic = exploit competitive advantages 2. Entrepreneurial = search for competitive position
Entrepreneurs can build an adaptive firm by:
A. Sharing the entrepreneur's vision B. Increase the perception of opportunity C. Institutionalizing the perception of opportunity D. Institutionalizing change as the venture's goal E. Instilling the desire to be innovative
Unique Managerial Concerns of Growing Ventures
A. The distinctiveness of size B. The one-person-band syndrome C. Time Management D. Community Pressures E. Continuous Learning
New Venture Development
Consists of activities associated with the initial formulation of the venture
New Venture Development: start-up activities
Encompasses the foundation work needed for crating a formal business plan.
Managerial Concerns: Time Management
Entrepreneurs should learn to use time as a resource and not allow time to use them.
New Venture Development: Business Innovation or Decline
Firms that fail to innovate die.
Environment vs. Strategy
High environment turbulence and competitive conditions favor company cultures that support risk taking autonomy, and employee participation in decision making.
Entrepreneurial vs Managerial (E)
a. Where is the opportunity? b. How do I capitalize on it? c. What resources do I need? d. How do I gain control over them?
Who to create an Innovative atmosphere?
a. Where is the opportunity? b. how do I capitalize on it? c. What resources do I need? d. How do I gain control over them? e. What structure is best?
Bureaucratization vs. Decentralization
increased hiring stimulates bureaucracy
Managerial Concerns: The one-person-band syndrome
when an entrepreneur refuses to delegate responsibility to employees