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Prentice Hall, Inc. © 2006 13-1
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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Prentice Hall, Inc. © 2006 13-2
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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Differences –
–Not in types of goods and services–Fundamental views on growth and innovation
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Prentice Hall, Inc. © 2006 13-7
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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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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Prentice Hall, Inc. © 2006 13-12
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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Prentice Hall, Inc. © 2006 13-13
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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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