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STRATEGIC MANAGEMENT & BUSINESS POLICY10TH EDITION

THOMAS L. WHEELEN J. DAVID HUNGER

CHAPTER 13 Strategic Issues in Entrepreneurial

Ventures and Small Businesses

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Entrepreneurial Ventures & Small Businesses

99% of all businesses –

–23 million small businesses–60% -80% new jobs annually

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Entrepreneurial Ventures & Small Businesses

Employs fewer than 500 people and sales of less than $20 million annually –

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Entrepreneurial Ventures & Small Businesses

Small business firm –

–Independently owned & operated–Not dominant in field–Not engaged in innovative practices

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Entrepreneurial Ventures & Small Businesses

Entrepreneurial venture –

–Primary goals profitability and growth–Characterized by innovative strategic practices

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Entrepreneurial Ventures & Small Businesses

Differences –

–Not in types of goods and services–Fundamental views on growth and innovation

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Entrepreneurial Ventures & Small Businesses

Entrepreneur –

–Ultimate strategist–All 3 levels

•Corporate•Business•functional

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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

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Entrepreneurial Ventures & Small Businesses

Degree of formality –

–Process far more informal in small companies than in large corporations

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Informal questions to begin strategic management process

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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

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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

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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

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Entrepreneurial Ventures & Small Businesses

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Entrepreneurial Ventures & Small Businesses

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Entrepreneurial Ventures & Small Businesses

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Entrepreneurial Ventures & Small Businesses

Advisory Boards –

–External business people – voluntary –Discuss strategic and other issues

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Entrepreneurial Ventures & Small Businesses

Sarbanes-Oxley

–Compliance costs

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Entrepreneurial Ventures & Small Businesses

Sources of Innovation –

–The unexpected–The incongruity–Innovation based on process need–Changes in industry or market structure

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Entrepreneurial Ventures & Small Businesses

Sources of Innovation –

–Demographics–Changes in perception, mood, meaning–New knowledge

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Entrepreneurial Ventures & Small Businesses

Factors affecting new venture success –

–Structure of industry–Business strategy of new venture–Behavioral characteristics of entrepreneur

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Entrepreneurial Ventures & Small Businesses

Entrepreneurial Characteristics –

–Identify opportunities better–Sense of urgency—action oriented–Detailed knowledge-physical stamina–Access to outside help

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Entrepreneurial Ventures & Small Businesses

Sub-stages of small business development

–Existence–Survival–Success–Take-off–Resource maturity

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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