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