LECTURE 8

Managing Entrepreneurial Growth

Entrepreneurship Technology (BPTW 4012) Growth

Organizational changes during growth

Entrepreneur must give up some decision making authority Corporate culture changes from small to larger business Such changes are often difficult for the entrepreneur and other founding members to adapt to

Making the transition as an entrepreneur whos business has grown

Communicate all matters to key employees Be a good listener Be willing to delegate responsibility Provide feedback regularly and consistently Provide continuous training of key employees Emphasize results to key managers with incentives built in to encourage them to train and delegate within their roles Establish a we spirit not a me spirit in memos and meetings

New skills for the entrepreneur

Record keeping and financial control Inventory control Human resources Marketing skills Strategic planning skills Time management skills Negotiation skills

Growth Strategies

Existing

Penetration

Product Development

Market
New

Market Development

Diversification

Existing

New

Product

Strategies
Penetration-

Growth By Selling More Of Existing Product To Existing Customers Market Development

New

Geographic Market New Demographic Market New Product Use

Product

Development- Sell New Products To Existing Customers Diversification- Sell New Product To New Market

Pressures On Firm Growth

1. 2. 3. 4.

Existing Financial Resources Human Resources Management Of Employees Entrepreneurs Time

Overcoming Financial Resources Pressure

Manage Cash Flow- Budget vs. Actual Manage Inventory Manage Fixed Assets Manage Costs/Profits- Compare Actual vs. Standard Percentages Taxes Record Keeping

Generic Strategies
Cost Leadership

In conjunction with differentiation Economies or diseconomies of scale Capacity utilization achieved Linkages w/ suppliers & distributors

Generic Strategies
Low Cost Producer Advantage

Many price-sensitive buyers Few ways of achieving differentiation Buyers not sensitive to brand differences

Large # of buyers w/bargaining power

Generic Strategies
Differentiation
Greater product flexibility
Greater compatibility Lower costs Improved service Greater convenience More features

Generic Strategies
Focus
Industry segment of sufficient size Good growth potential Not crucial to success of major competitors

Three strategies for managing fast growth

Scaling Duplication Granulation

Scaling doing more of what you are good at

Focus on concrete product, technology, or customer segment Invest aggressively

Expand product development around core technologies, expand product lines, increase marketing using existing channels to reach new groups

Specialize and standardize Hire the right mix Adapt the structures Learn from customers

Duplication: Repeat the business model in new regions

Balance standardization and adaptation Hire flexible, independent managers Duplicate key parts of the infrastructure Duplication entrepreneurial knowledge Be aware of the limitations

Granulation: Growing select business cells

Focus on specific areas of business Balance the old and the new Balance formal and informal Evaluate and monitor Learn from customers, partners, and competition

Bear Opportunities
Leverage your relationships Advertise value propositions Control costs Pursue traditional marketers

Total Quality Management (TQM)

Definition :

Internally from the firms view and it measured in terms of compliance with determined product specifications or standards with minimum defects

Corporate Entrepreneurship

As a process to create new ventures within a business corporate Characteristics of a Corporate entrepreneur

Proactive Innovative Propensity to make moderate and calculated risk Inspiration to do more than current capacity Team work Creative problem solving Listening the feedback Need for achievement

Innovation
Spotting and exploiting opportunities quickly Definition

Is the process of implementing new ideas of turning creative concepts into realities

2 phase of Innovation:
Creating an idea Make sure it results in something new

Sources of Innovation

Technology

The types and pattern of activity, equipment and material, knowledge and experience used to perform task Annoying habit of expecting-demanding
All business need to know what their competitors are doing

Customers

Competitors

Creativity

Types of competitor

There 3 types of competitor

Direct competitors

Compete against on a day-to day basis Those that similar, but not identical products/services

Close competitors

Indirect competitors

More varied

What we can learn from competitors?

Products and services Product line Promotional activities Distribution

Creativity

Is the ability to generate novel and useful ideas and solutions to everyday problems and challenges Being creative is seeing thing as everybody else but thinking of something different

Why is creativity a major source of innovation?

innovation is usually regarded as the successful exploitation of news ideas, creativity clearly has a major role to play during the early stage of innovation and new products/ service development

Thank you
Champions believe in themselves even if no one else does. In order to succeed, we must first believe that we can. They can because they think they can.