Chapter 6

Launching the Venture

 Learning Objectives
 Explain the purposes of goals
 Describe the kinds of goals that entrepreneurial
ventures might pursue
 Describe the characteristics of well-written goals
 Explain how to set goals
 Discuss the importance of strategies to
entrepreneurial ventures
 Describe the coordinative relationship between
goals and strategies
 Explain specific operations management and
technology, marketing, information systems, and
financial and accounting strategies
 Discuss the role of quality in an entrepreneurial
venture
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 Organizational Goals
 Three Main Purposes of Goals
1. Direct all organizational work
toward common and unified
purpose
2. Act as targets for motivating
people
3. Serve as criteria against which
work accomplishments are
measured

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Types of Goals

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 Characteristics of
Well-Written Goals
1. Written in terms of outcomes rather
than actions
2. Measurable and quantifiable
3. Clear as to a time frame
4. Challenging yet attainable
5. Written down
6. Communicated to all organizational
members

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 The Goal-Setting Process
1. Review the organizational vision and mission
2. Evaluate available resources
3. Determine broad, long-term organization-
wide goals
4. Write down the organization-wide goals
5. Determine specific, short-term operational
goals
6. Write down the operational goals
7. Review results

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 Organizational Strategies
 What is a strategy?
– It’s a plan of action for accomplishing
goals
 What are strategies important to
entrepreneurial ventures?
– Strategies provide the “how’s” of goal
achievement

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Technology and Operations
Strategies

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Production Process Strategies
 Process-focused Strategy
– Technology and operations methods are organized
around the processes used to produce a
customized product or service
 Product-focused Strategy
– Technology and operations methods are organized
around the product or service
 Repetitive-focused Strategy
– Standardized component parts are used to
assemble standardized products
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 Capacity, Location, and
Work-Design Strategies
 Capacity Strategies
– Capacity is the maximum possible output of a
organization in a given time period
 Location Strategies
– This decision boils down to: “Where will the
entrepreneurial venture be located?”
 Work-Design Strategies
– Addresses the way the entrepreneurial venture’s
work will be done

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 Six Potential Layout
Strategies
1. Fixed-position Layout
– Product remains stationary and requires workers
and equipment to come to the work area

2. Process-oriented Layout
– For low-volume, high-variety products which the
focus is on the process used create products

3. Office Layout
– Positions workers, equipment, and office spaces
to provide for movement of information

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 Six Potential Layout
Strategies (cont’d)
4. Retail/service Layout
– Arranges people and equipment according to
customers’ needs and behaviors

5. Warehouse Layout
– Designed to find the optimal tradeoff between
product-handling cost and warehouse space

6. Product-oriented Layout
– Organized around a product or group of similar
high-volume, low-variety products

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 Operations-Management
Strategies
 Just-in-time Product System
 Purchasing-Management Procedures
 Inventory-Management systems
 Project-Management Procedures
 Maintenance Management

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The Important Role of Quality
 Quality
– The ability of a product or service to reliably do
what it’s supposed to doe and to satisfy
customers’ expectations
 Total Quality Management (TQM)
– Driven by customer needs and expectations and
focused on continual improvement in the way
employees do their work

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What is TQM?

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 Establishing the Venture’s
Marketing Function
 Marketing
– Assessing and meeting individual’s or group’s
wants and needs by creating, offering, and
exchanging products of value
 Two Biggest Factors in Marketing
– Customers and competitors
 Main Marketing Strategies
– Segmentation, differentiation, and marketing mix
strategies

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 Segmentation Variables
 Geographic
– Region, city or metropolitan area, population density, and
climate
 Demographic
– Age, gender, family size, family life cycle, income, occupation,
education, religion, race, and nationality
 Psychographic
– Social class, lifestyle, attitudes toward various societal
situations, and personality
 Behavioral
– Occasion of product use,user status, usage rate, loyalty status,
readiness to purchase, and attitude toward product

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 Target Market Selection
Approaches
 Single Segment Concentration
 Selective Specialization
 Product Specialization
 Market Specialization
 Full Market Coverage

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 Differentiation Strategies
1. Differentiating the product itself
2. Differentiating on the basis of
services offered
3. Differentiating by personnel
4. Differentiating by image

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 Marketing Mix Strategies
 Product Strategy
– Addressing issues of new product development, packaging,
labeling and other related decisions

 Pricing Strategy
– Markup pricing, target return pricing, perceived-value pricing,
value pricing, going-rate pricing, or sealed bid pricing

 Promotion Strategy
– Advertising, sales promotion, public relations, personal selling,
direct marketing

 Place Strategy
– Type of intermediary and number of intermediaries to use

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 Types of Information System
 Transaction Processing System
 Office Automation system
 Knowledge Work System
 Management Information System
 Decision Support System
 Executive Support system

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Establishing the Venture’s Financial
and Accounting System
 Evaluating Financial Performance
– What type of analysis? How often to analyze?
How much to analyze?
 Financial Forecasting, Planning, and
Budgeting
– What type of forecast? How often to forecast?

 Financial Mix
– Short-term versus long-term funding sources.
Permanent or temporary sources
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 Establishing the Venture’s Financial
and Accounting System
 Other Financial Management
Decisions
– Capital Budgeting
– Stock Dividend Policy
– Cash Flow Management
– Cash and Marketable Securities Mgt
– Accounts Receivable and Inventory Mgt.
– Term Loans or Leases

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