13. Strategies for Growth and Managing the Implications of Growth

7/30/2019 13. Strategies for Growth and Managing the Implications of Growth

1/28


2/28

A Successful new entry provides the opportunity for

Entrepreneur to grow his business.

Opportunities for new entry are generated by the

knowledge of entrepreneur and from organizational

knowledge.


3/28

Product developmentStrategies

Market development

Strategies

Diversification Strategies

Penetration Strategies

Product

Market

Existing

New

Existing New


4/28

A Strategy to grow by encouraging existing

customers to buy more of the firms current

product.

Focus on the firms existing product in its existingmarket.


5/28

Strategy to grow by selling the firms existing products to

new group of customers.

Group of customers can be categorized in term of

Geographic's or demographics or new product use.


6/28

New Geographical Market

Selling the existing product in new location.

New Demographic Market

Based upon income, education, age, sex, where they

live.

New Product Use

An entrepreneurial firm find out that people use its

product in a way that was not expected


7/28

A strategy to grow by developing and selling new

products to people who are already purchasing the firms

existing product.

Experience with a particular group is a source of

knowledge.


8/28

A strategy to grow by selling a new product to a new

market.

There are three types of diversification

1. Backward Integration2. Forward Integration

3. Horizontal Integration


9/28

Backward Integration

Raw material

Producer

Raw material

Wholesaler

Manufacturer

Finished goods

wholesaler

Customer

Forward Integration

Horizontal

Raw material

Producer

Raw material

Wholesaler

Manufacturer

Finished goods

wholesaler

Customer


10/28

Public companies had achieved much larger growth than

those who did not go public, studies revealed.

Modest levels of growth by small businesses can have adramatic impact on the economy.

Use of technology hit the jack pot or fails.


11/28

As the firm grow ,it changes.

These changes introduces a number of managerial

challenges.

1. Pressure on existing financial resources2. Pressure on Human Resource

3. Pressure on Management of Employee

4. Pressure on Entrepreneurs Time


12/28

FINANCIAL CONTROLAppropriate controls to ensure that

entrepreneur met projections and goals.

Managing cash flow Managing inventory1. LIFO

2. FIFO

Managing fixed assets

Managing costs and profits1. Taxes

2. Record keeping


13/28

MANAGINGCASHFLOW

Up-to-dateassessment of cashposition.

Prepare

monthly

cash flow

statements

Comparing

budgeted

Or Performa

with

Actual

results

This

indicates

Cash flow

problems

Controlling

thecash needs


14/28

MANAGINGINVENTORY

InventoryTo much inventory

Drain on cash flow Manufacturing Transportation Storage

1. Customer demand are not meet2. Lost in sales

To littleinventory


15/28

LIFO ORFIFO

Conversion to LIFO is beneficial when

Rising labor, materials, and other production costsare anticipated.

Business and inventory are growing. Business has computer-assisted inventory control

method capability.

Profitable business.

If the start up is losing money, there is no no point inconversion methods.


16/28

MANAGINGFIXEDASSETS

Involves long-term commitment and largeinvestments for new venture.

Equipment require servicing and insurance.

Affects utility costs.Equipment will be depreciated over time.

Leasing could consider as alternative.

Terms of lease

Type of asset to be leased

Usage demand on the asset.


17/28

MANAGINGCOSTSANDPROFITS

Finding the cause of problemseffecting profits

Eliminating the problems to increaseprofits

Computing net income for interim periodsDuring the year

Establishing the standards andComparing results


18/28

Taxes

Withhold federal and state taxes for his / heremployees.

If payments are late higher interest and penalties areto be paid.

Record keeping

Maintain and keeping the databases for

Customer knowledge and interest Sales new and existing


19/28

OVERCOMING PRESSURES ON THE EXISTINGHUMAN RESOURCES

The entrepreneur/manager involves in interviewing,hiring, and evaluating employees because with a newventure one does not has the luxury of a humanresource department.

Use of professional employer organizations (PEOs).

Proportion of employees: permanent / part time

Mistakes in hiring and selecting. Maintenance of the corporate culture.


20/28

OVERCOMING PRESSURES ON THEMANAGEMENT OF EMPLOYEES

Participative Style Of Management

The entrepreneur/manager involves other indecision making process


21/28

Activities to successfully grow a Business

Establish a team spirit

Communicate with employees

Provide feedback

Delegate some responsibility to others

Provide continuous training for employees


22/28

OVERCOMING PRESSURES ONENTREPRENEURS TIME

Time management

The process of improving an individualsproductivity through more efficient use of time.


23/28

Benefits Of Time Management

Increased productivity

Increased jo satisfaction

Improved interpersonal relationshipsReduced time anxiety & tension

Better health


24/28

BASIC PRINCPLES OF TIME MANAGEMENT

Principle Of Desire

A recognition of the need to change personalattitudes & habits regarding the allocation of

time.

Principle Of Effectiveness

A focus on the most important issues, even whenunder pressure.


25/28

Principle Of Analysis

Understanding how time is currently beingallocated, and where it is being inefficientlyinvested.

Principle Of Teamwork

Acknowledgment that only a smallamount of timeis actually under ones control & that most of

ones time is taken up by others.


26/28

Principle Of Prioritized Planning

Categorization of tasks by their degree ofimportance & then the allocation of time to tasksbased on this categorization.

Principle Of Reanalysis

Periodic review of ones time management process.


27/28

IMPLICATIONS OF FIRM GROWTH FOR THEENTREPRENEUR

Firm growth introduces a number of managerialchallenges for the entrepreneur: familiar and

unfamiliar.

Pursuit of growth will improve firm performance;but all entrepreneurs dont follow the philosophy.


28/28

CATEGORIZATION OF ENTREPRENEURS &THEIR FIRMS GROWTH

Four Types Of Entreprenuers & Firm Growth

Unused potential Actual growth

Little Potential Constrained

No Yes

High

Low

Entrepreneurs growth aspiration

Entrepreneursability toinstituteprofessional

managementpractices

13. Strategies for Growth and Managing the Implications of Growth

Documents

Transcript of 13. Strategies for Growth and Managing the Implications of Growth