(10 b)Managing Growth1

7/30/2019 (10 b)Managing Growth1

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MANAGING GROWTH


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New ventures pass through transitional stagesthat present new challenges to their founders.

These transitional stages are represented by anorganizational life cycle

The organizational life cycle requires changes inentrepreneurial behavior, and because manyentrepreneurs cannot adapt to new roleresponsibilities, their ventures can fail or be

terminated. In some instances, the venture survives but the

entrepreneur is ousted.


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The organizational life cycle:-

-----early growth

----maturity----decline

Slow growthrapid growth---moderates

growth---saturatedmaturity( for manyfollowed by decline)


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The Entrepreneurs Perspective:--

Transition stages for entrepreneurialventures---

Start up, expansion, consolidation, revival

and decline

( these are explained in terms of threevariables; growth, product/market

definition and organization)


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Start up stage:

Single product or restricted line ofmerchandise and services-----positioned tocompete in one market or to serve limited

clientele Expansion stage:

Multiple products or expanded line of

merchandise and services----positioned innew markets and among a wider group ofcustomers or clientele


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3 Consolidation stage:

As competition intensifies within a growingindustry, business are faced withmarginally smaller incremental shares ofmarkets. The result is a competitivestruggle at a slower rate of growth duringwhat is often called an industry shakeoutperiod.Weaker companies fail, some are

sold or merged with others, and manyconsolidate to remain profitable.


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Consolidation may

reduce product linesretreat from marginally profitable

markets

reduce staffstream line distribution system

withdraw from high risk markets


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4 Revival stage:

The revival stage is one of rekindlingorganizational growth.

Growth can be achieved by cleverrepositioning of product lines and servicesthrough purposeful market segmentation

Repositioning sets the stage for a strategyof product or service diversification.


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In order to achieve rapid growth,innovation is essential, and because thecompany needs to incubate new

ideas,greater responsibility is given todivision managers for independentdevelopment


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5. Decline stage,

Growth declines once again if revivalstrategies are short lived or ineffective

Companies in decline often are those thathave diversified too widely or created

excessively bureaucratic organizations.

Successful ventures will not complete thelife cycle: by definition, they avoid decline.


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Changing entrepreneurial Roles:

Founding the venture

There is deference between leaders andmanagers


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Leaders are involved emotionally in a

venture, think strategically to createopportunities and resolve conceptual, longterm problems and provide the inspiration

necessary for sustained momentum Managers have a transactional orientation,

that permits them to maintain

psychological distance between theirpersonal lives and business decisions


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Success depends on shaping expectations,developing creative ideas in to marketablecommodities and adjusting idiosyncraticphenomena

Guiding the venture through expansion:---

Management responsibilities increase asventure expands

An entrepreneur unable to handle all thefunctional management activitiessay

marketing , inventory, purchasing , Financecredit management, HRM and R&D


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During expansion, the entrepreneur's role

is that of CEO, who plans and guidesubordinates toward fulfillment oforganization objectives.

( Federal Express-Fed Smith) transitionalstate of mind

Few entrepreneurs thinkhiring

(qualified ) staff is expense not as asset( as a result their ventures poorly staffed)


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****Growing pains that result from a poorly

staffed organization: The entrepreneur is overwhelmed with

work; there are not enough hours in the

day to manage activities, plan and leadthe venture

The entrepreneur and others spend theirtime ignoring strategic growth anddevelopment


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The entrepreneur is too busy to be aware ofwhat others are doing and employees are nolonger aware of what must be done.

The entrepreneur ,subordinate managers andemployees lose track of where the firm is goingand what they are trying to accomplish

( These problems can be reversed througheffective human resource planning andmanagement)


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The transition from intuitive decision tostrategic management

Managing Consolidation

--Rapid growth cannot continue indefinitely

and at some point industries go throughshakeout periods


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During rapid growth management is

concerned with gaining newresources,finding expansion capital,adding employees and developing new

products or services. Managing during consolidation is a fight

for survival. Rationalization becomes

prominent concern


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Turning the venture around: Reversing acompanys pattern of poor performance iscalled turning it around


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Objectives and new venture growth

Strategic objectives:Profitability

Significant market position

Income to founder orinvestorsSize for economies of scale

Product R&DImage

Founders personal

aspirations

Influence rateOf growth and duration

ofEffort requiredto be expand

When achieved,satisfy strategicObjectives or

influence changes

Strategies for achieving growthMarket diversification

Product development anddiversification

Expansion of servicesOther alternatives

Growth rate


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Diversification options for new ventures

Market diversification

Product diversification

Combined diversification

Expand into new customer niches with existing productsOpen new markets with similar products and customers

In new geographic areasExpand overseas by exporting

Develop new products through R&D for existingCustomers

Licence or acquire products or expand merchandiseline for

specific market nichesExpand services for clients

Import products for domestic markets

New products developed or acquired for newmarket niches in local or new geographic areas


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Implications for entrepreneurial careers----

Entrepreneurs seldom stay with their venturesthrough the entire organisation life cycle.

The small business career emerges from personal

aspirations of business owners who prefer theautonomy of ownership rather than a job.

The small business owner who has theentrepreneurial spirit remains in small business,starting new ventures, selling ,buying andrestarting.


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Women entrepreneurs

Women entrepreneurs have been makingsignificant impact in all segments of theeconomy

They have made their mark in business for the

following reasons--- they want new challenges and opportunitiesfor self fulfillment

-----they want to prove their mettle in innovative

and competitive jobs--- they want the change to control the balance

between their family responsibilities andbusiness lives.


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Women entrepreneurs have excelled in

their enterprise,the fear of success hauntwomen in general.

The new thrust circumstances, economic

policy and development, spread ofeducation

New awareness


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Some of the outstanding qualities;

Accept challenge, ambitious, drive,enthusiastic,hardwork, patience,industrious, motivator, skilful,

unquenchable optimism, adventurous,conscious, educated determination toexcel, keenness to learn and imbibe newideas, experienced intelligentperseverance ,studious


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Psycho social barriers;

Poor self image of women, inadequatemotivation, discriminating treatment,faulty socialization, role conflict, culturalvalues, lack of courage and self

confidence, inadequate encouragement,lack of social acceptance , afraid offailures and criticism, susceptible tonegative attitudes, nonpersistent attitude,

low dignity of labour,lacking in leadershipqualities

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(10 b)Managing Growth1