CHAPTER 13 Strategic Issues in Entrepreneurial Ventures and

CHAPTER 13 Strategic Issues in Entrepreneurial Ventures and Small Businesses STRATEGIC MANAGEMENT & BUSINESS POLICY 10 TH EDITION THOMAS L. WHEELEN J. DAVID HUNGER 1

Entrepreneurial Ventures & Small Businesses 99% of all businesses – – 23 million small businesses – 60% -80% new jobs annually 2

Entrepreneurial Ventures & Small Businesses Employs fewer than 500 people and sales of less than $20 million annually – 3

Entrepreneurial Ventures & Small Businesses Small business firm – –Independently owned & operated –Not dominant in field –Not engaged in innovative practices 4

Entrepreneurial Ventures & Small Businesses Entrepreneurial venture – –Primary goals profitability and growth –Characterized by innovative strategic practices 5

Entrepreneurial Ventures & Small Businesses Differences – –Not in types of goods and services –Fundamental views on growth and innovation 6

Entrepreneurial Ventures & Small Businesses Entrepreneur – –Ultimate strategist –All 3 levels • Corporate • Business • functional 7

Entrepreneurial Ventures & Small Businesses Lack of strategic planning in small business – –Not enough time –Unfamiliar with strategic planning –Lack of skills –Lack of trust and openness 8

Entrepreneurial Ventures & Small Businesses Degree of formality – –Process far more informal in small companies than in large corporations 9

Informal questions to begin strategic management process 10

Entrepreneurial Ventures & Small Businesses Strategic decision-making process for entrepreneurial ventures – –Develop basis business idea • Product/service with target market/customers –Scan external environment • Locate factors of opportunity/threat 11

Entrepreneurial Ventures & Small Businesses Strategic decision-making process for entrepreneurial ventures – –Scan internal factors • Relevant to the new business –Analyze strategic factors • Current situation using SWOT 12

Entrepreneurial Ventures & Small Businesses Strategic decision-making process for entrepreneurial ventures – –Decide go or no go • Opportunity to go –Generate business plan • Transform idea into reality 13

Entrepreneurial Ventures & Small Businesses 14

Entrepreneurial Ventures & Small Businesses 15

Entrepreneurial Ventures & Small Businesses 16

Entrepreneurial Ventures & Small Businesses Advisory Boards – –External business people – voluntary –Discuss strategic and other issues 17

Entrepreneurial Ventures & Small Businesses Sarbanes-Oxley –Compliance costs 18

Entrepreneurial Ventures & Small Businesses Sources of Innovation – –The unexpected –The incongruity –Innovation based on process need –Changes in industry or market structure 19

Entrepreneurial Ventures & Small Businesses Sources of Innovation – –Demographics –Changes in perception, mood, meaning –New knowledge 20

Entrepreneurial Ventures & Small Businesses Factors affecting new venture success – –Structure of industry –Business strategy of new venture –Behavioral characteristics of entrepreneur 21

Entrepreneurial Ventures & Small Businesses Entrepreneurial Characteristics – –Identify opportunities better –Sense of urgency—action oriented –Detailed knowledge-physical stamina –Access to outside help 22

Entrepreneurial Ventures & Small Businesses Sub-stages of small business development –Existence –Survival –Success –Take-off –Resource maturity 23

Entrepreneurial Ventures & Small Businesses Evaluation and Control – –Line between debt and equity blurred –Lifestyle part of financial statements –Standard financial formulas don’t apply –Personal preference –Banks combine personal and business wealth 24