Topic 8: Managing Early Growth

Of The New Venture

Sources:
Adapted from Hisrich, Peters Shephard, Entrepreneurship; McGraw-Hill International
Edition 2013

OPENING PROFILE:
BRIAN AND JENNIFER MAXWELL
Brian Maxwell, a marathon
runner and coach at University
of California, teamed up with
Jennifer in a quest for an
energy bar that would taste
good, be healthy and
nutritious, and could provide
optimum performance.
They were determined to
create a work environment
that would not have all the
things they hated in their
previous jobs.

Topic Outline
Growth Strategies
Implications of Growth for the Firm
Overcoming Pressures on Human Resources,
Employee Management & Entrepreneurs Time

Figure 13.1 - Growth Strategies Based upon

Knowledge of Product and/or Market

Growth Strategies
Penetration strategy
Encouraging existing customers to buy more of
the firms current products
Relies on taking market share from competitors
and/or expanding the size of the existing market

Market development strategy

Selling the firms existing products to new groups
of customers
New geographical market - Selling in new
locations

Growth Strategies
New demographic market - Selling to a different
demographic group
New product use - Selling an existing product,
which may have a new use, to new groups of
buyers

Product development strategies

Developing and selling new products to people
already purchasing the firms existing products
Capitalizes on existing distribution systems and
on the corporate reputation of the firm

Growth Strategies
Diversification strategies
Selling a new product to a new market
Backward integration: A step back (up) in the
value-added chain toward the raw materials
Forward integration: A step forward (down) in
the value-added chain toward the customers
Horizontal integration: Involves a different,
but complementary, value-added chain

Implications of Growth for the Firm

Pressures on human resources

Pressures on the management of employees
Pressures on entrepreneurs time
Pressures on existing financial resources

Overcoming Pressures on
Existing Human Resource
Using professional employer organizations
(PEOs) for various HR activities
Giving employees regular feedback
Identifying problems along with a proposed
solution

Overcoming Pressures on the Management

of Employees
Participative style of management:
Manager involves others in decision making
To institute participative style of management:

Establish a team spirit

Communicate with employees
Provide feedback
Delegate responsibility
Provide continuous training to employees

Overcoming Pressures on
Entrepreneurs Time
Time management
Process of improving an individuals productivity
through more efficient use of time

Advantages of efficient time management

Increased productivity
Increased job satisfaction
Increased interpersonal relationships
Reduced time anxiety and tension
Better health