CHAPTER 6

MANAGING GROWTH AND

TRANSITION
 Introduction
• The growth of a business firm is similar to that of a human being who
passes through the stages of infancy, childhood, adulthood, and old
age. An enterprise may be considered growing when there is a
permanent increase in its sales turnover, assets, and volume of
output. Business growth is a natural and on-going process. Many
business firms started small and have become big through continuous
growth. However, growth may be restricted by constraints of market
demand, finance, technology, management skills, etc
• Preparing For the Launch of the Venture
• The process of launching a new venture can be divided into three key
stages as:
• Discovery;
• Evaluation; and
• Implementation.
 Introduction…..
• These can be further sub-divided into seven steps as shown
below:
• DISCOVERY
• Step 1. Discovering your entrepreneurial potential to know
more about your personal resources and attributes through
some self-evaluation.
– what will you bring to the venture?
– What are your strengths and challenges?
• Step 2. Identifying a problem and potential solution
a new venture has to solve a problem and meet a genuine
need.
 Introduction…..
EVALUATION
• Evaluate if the idea in the first stage is worthy
• Step 3. Evaluating the idea as a business opportunity find out
information about the market need.
– Is the solution to this problem really wanted by enough
customers?
– Investigate the feasibility of the proposed solution
(technically, economically, socially, and legally).
• Step 4. Investigating and gathering the resources
– How will the product/service get to market?
– How will it make money?
– What resources are required?
 Introduction….
EXPLOITATION (making it more useful) -
IMPLEMENTATION
• Step 5. Forming the enterprise to create value set up a
business entity and protect any intellectual property.
• Get ready to launch the venture in a way that
minimizes risk and maximizes returns
• Step 6. Implementing the entrepreneurial strategy
activate the marketing, operating, and financial plans.
• Step 7. Planning the future – look ahead and visualize
where you want to go
 Rapid Growth and Management Controls

• Usually, rapid growth is seen as a positive sign

of success.

• When the new venture begins to reach a

rapid growth phase, the entrepreneur needs
to be sensitive to some of the resultant
management problems.
 Problems of rapid growth include
• It can cover up weak management, poor planning, or waste
resources.
• It dilutes effective leadership
• It causes the venture to stray from its goals and objectives
• It leads to communication barriers between departments and
individuals.
• Training and employee development are given little attention
• It can lead to stress and burnout.
• Delegation is avoided and control is maintained by only the
founders, creating bottlenecks in management decision
making.
• Quality control is not maintained.