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MANAGING GROWTH

New ventures pass through transitional stages that present new challenges to their founders. These transitional stages are represented by an organizational life cycle The organizational life cycle requires changes in entrepreneurial behavior, and because many entrepreneurs cannot adapt to new role responsibilities, their ventures can fail or be terminated. In some instances, the venture survives but the entrepreneur is ousted.

The organizational life cycle:-

-----early growth ----maturity ----decline Slow growthrapid growth---moderates growth---saturatedmaturity( for many followed by decline)

The Entrepreneurs Perspective:-Transition stages for entrepreneurial ventures--Start up, expansion, consolidation, revival and decline ( these are explained in terms of three variables; growth, product/market definition and organization)

Start up stagegrowth is inconsistent no expected sales struggle to survive During this initial stage, entrepreneur modify their products, change distribution systems, alter services, and experiment with marketing tactics in an attempt to survive

Expansion stagerapid growth new product potential innovation and development

Start up stage: Single product or restricted line of merchandise and services-----positioned to compete in one market or to serve limited clientele Expansion stage: Multiple products or expanded line of merchandise and services----positioned in new markets and among a wider group of customers or clientele

3 Consolidation stage: As competition intensifies within a growing industry, business are faced with marginally smaller incremental shares of markets. The result is a competitive struggle at a slower rate of growth during what is often called an industry shakeout period.Weaker companies fail, some are sold or merged with others, and many consolidate to remain profitable.

Consolidation may reduce product lines retreat from marginally profitable markets reduce staff stream line distribution system withdraw from high risk markets

4 Revival stage: The revival stage is one of rekindling organizational growth. Growth can be achieved by clever repositioning of product lines and services through purposeful market segmentation Repositioning sets the stage for a strategy of product or service diversification.

In order to achieve rapid growth, innovation is essential, and because the company needs to incubate new ideas,greater responsibility is given to division managers for independent development

5. Decline stage, Growth declines once again if revival strategies are short lived or ineffective Companies in decline often are those that have diversified too widely or created excessively bureaucratic organizations. Successful ventures will not complete the life cycle: by definition, they avoid decline.

Changing entrepreneurial Roles:

Founding the venture


There is deference between leaders and managers

Leaders are involved emotionally in a venture, think strategically to create opportunities and resolve conceptual, long term problems and provide the inspiration necessary for sustained momentum Managers have a transactional orientation, that permits them to maintain psychological distance between their personal lives and business decisions

Success depends on shaping expectations, developing creative ideas in to marketable commodities and adjusting idiosyncratic phenomena Guiding the venture through expansion:--Management responsibilities increase as venture expands An entrepreneur unable to handle all the functional management activitiessay marketing , inventory, purchasing , Finance credit management, HRM and R&D

During expansion, the entrepreneur's role is that of CEO, who plans and guide subordinates toward fulfillment of organization objectives. ( Federal Express-Fed Smith) transitional state of mind Few entrepreneurs thinkhiring (qualified ) staff is expense not as asset ( as a result their ventures poorly staffed)

****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 lead the venture The entrepreneur and others spend their time ignoring strategic growth and development

The entrepreneur is too busy to be aware of what others are doing and employees are no longer aware of what must be done. The entrepreneur ,subordinate managers and employees lose track of where the firm is going and what they are trying to accomplish ( These problems can be reversed through effective human resource planning and management)

The transition from intuitive decision to strategic management

Managing Consolidation --Rapid growth cannot continue indefinitely and at some point industries go through shakeout periods

During rapid growth management is concerned with gaining new resources,finding expansion capital, adding employees and developing new products or services. Managing during consolidation is a fight for survival. Rationalization becomes prominent concern

Turning the venture around: Reversing a companys pattern of poor performance is called turning it around

Objectives and new venture growth


Influence rate Of growth and duration of Effort required to be expand

Strategic objectives: Profitability Significant market position Income to founder or investors Size for economies of scale Product R&D Image Founders personal aspirations

Growth rate

When achieved, satisfy strategic Objectives or influence changes

Strategies for achieving growth Market diversification Product development and diversification Expansion of services Other alternatives

Diversification options for new ventures


Expand into new customer niches with existing products Open new markets with similar products and customers In new geographic areas Expand overseas by exporting Develop new products through R&D for existing Customers Licence or acquire products or expand merchandise line for specific market niches Expand services for clients Import products for domestic markets

Market diversification

Product diversification

Combined diversification New products developed or acquired for new market niches in local or new geographic areas

Implications for entrepreneurial careers----

Entrepreneurs seldom stay with their ventures through the entire organisation life cycle. The small business career emerges from personal aspirations of business owners who prefer the autonomy of ownership rather than a job. The small business owner who has the entrepreneurial spirit remains in small business, starting new ventures, selling ,buying and restarting.

Women entrepreneurs
Women entrepreneurs have been making significant impact in all segments of the economy They have made their mark in business for the following reasons --- they want new challenges and opportunities for 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 and business lives.

Women entrepreneurs have excelled in their enterprise,the fear of success haunt women in general. The new thrust circumstances, economic policy and development, spread of education New awareness

Some of the outstanding qualities; Accept challenge, ambitious, drive, enthusiastic,hardwork, patience, industrious, motivator, skilful, unquenchable optimism, adventurous, conscious, educated determination to excel, keenness to learn and imbibe new ideas, experienced intelligent perseverance ,studious

Psycho social barriers; Poor self image of women, inadequate motivation, discriminating treatment, faulty socialization, role conflict, cultural values, lack of courage and self confidence, inadequate encouragement, lack of social acceptance , afraid of failures and criticism, susceptible to negative attitudes, nonpersistent attitude, low dignity of labour,lacking in leadership qualities