CHAPTER 13 Strategic

Issues in Entrepreneurial
Ventures and Small
Businesses

STRATEGIC MANAGEMENT & BUSINESS POLICY

10TH EDITION
THOMAS L. WHEELEN J. DAVID HUNGER

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99% of all businesses –

–23 million small businesses

–60% -80% new jobs annually

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Employs fewer than 500 people and

sales of less than $20 million annually –

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Small business firm –

–Independently owned & operated

–Not dominant in field
–Not engaged in innovative practices

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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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Entrepreneur –

–Ultimate strategist
–All 3 levels
•Corporate
•Business
•functional

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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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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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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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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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Advisory Boards –

–External business people – voluntary

–Discuss strategic and other issues

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Sarbanes-Oxley

–Compliance costs

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Sources of Innovation –

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

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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 Characteristics –

–Identify opportunities better

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

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Sub-stages of small business

development

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

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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

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