Strategic Issues in

Entrepreneurial Ventures and

Small Business
Introduction
 In India, a unit with investment in plant and machinery
up to Rs 10 million is regarded as a SSI undertaking.
 Although the meanings of the terms “small business”
and “entrepreneurship” overlap considerably, the
concepts are different.
 The small-business firm is independently owned and
operated, not dominant in its field, and does not engage
in innovative practices.
 The entrepreneurial venture, in contrast, is any business
whose primary goals are profitability and growth and
that can be characterized by innovative strategic
practices.
The entrepreneur is a
Strategist
 A person who organizes and manages a
business undertaking and who assumes risk
for the sake of a profit, the entrepreneur is
the ultimate strategist.
 He or she makes all the strategic as well as
operational decisions.
 All three levels of strategy – corporate,
business, and functional – are the concerns of
this founder and owner / manager of a
company.
 Reasons for the lack of
strategic planning practices in
small-business firms are
 Not enough time
 Unfamiliar with strategic planning
 Lack of skills
 Lack of trust and openness
Strategic Decision making
process for entrepreneurial
ventures
1. Develop the basic business idea
2. Scan and assess the external environment
3. Scan and assess the internal envt.
4. Analyze the strategic factors
5. Decide go or not to go
6. Generate a business plan
7. Implement the business plan
8. Evaluate the implemented business plan
Sources for Innovation
1. The unexpected success or failure or an event can
be a unique opportunity.
2. The Incongruity: it is the difference between reality
and what everyone assumes it to be
3. Innovation based on Process need:
4. Changes in industry or market structure
5. Demographics
6. Changes in perception, mood, and meaning of the
society
7. New knowledge in science (coco-cola was born when
doing some medical Research)
Factors affecting the new
venture success
 Industry structure
 Entrepreneurial characteristics
 The ability to identify potential venture
opportunities
 A sense of urgency
 A detailed knowledge of the key areas to
success in the industry
 Access to outside help to supplement their
skills, knowledge, and abilities.
Five stages of Entrepreneurial
development
 Existence (to get customers)
 Survival(got customers, additional
capital is needed)
 Success (Sufficient cash flow, and
growth)
 Take-off (incorporated company)
 Resource Maturity (from small to large
company)
Strategic Issues in Not-for-
Profit Organizations
Introduction
 Not-for-profit organization include private nonprofit
corporations (such as hospitals, institutes, private
colleges, and organized charities) as well as Public
governmental units or agencies (such as welfare
departments, prisons, and state universities).
 Why Non-for-profit? Society desires certain goods and
services that profit-making firms cannot or will not
provide. Eg: roads, police protection, museums, and
schools.
 Non-for-profit organizations are the one which is
formed with the ultimate objective is to provide service
to a society (not profit as a primary objective).
Sources of revenue for non-
for-profit organizations
1. Government
2. Sponsors
3. Clients (service recipients)
Usefulness of strategic
management concepts and
techniques
 Some strategic management concepts can be
equally applied to business and not-for-profit
organizations, whereas others cannot.
 SWOT analysis, mission statements,
stakeholders analysis, and corporate
governance are, however, just as relevant to
a not-for-profit as they are to a profit-making
organization.
Impact of constraints on
strategic management
1. Service is often intangible and hard to measure,
2. Client influence may be weak
3. Strong employee commitments to professions
may weak the loyalty to the orgn. employing
them.
4. Resource contributors may intrude on the
orgn’s internal management
5. Problems on the use of rewards and
punishments may result from constraints 1,3,4.
Popular not-for-profit
strategies
1. Strategic Piggybacking: it refers to the
development of a new activity for the not-for-
profit orgn. that would generate the funds
needed to make up the difference between
revenues and expenses. (railways generate
profits through many ways other than operating
trains – canteens, rental revenues etc).
2. Mergers:
3. Strategic alliances: involve developing
cooperative ties with other organizations.
Strategic Issues in Managing
Technology and Innovation
Introduction
 Gillette’s Mission statement says “we will invest in
and master the key technologies vital to category
success”.
 Hallmark, “we believe that creativity and quality-in
our concept, products and services are essential to
our success.”
 Intel, “To succeed we must maintain our innovative
environment. We strive to embrace change,
challenge the status quo, listen to all ideas and
viewpoints, encourage and reward informed risk
taking, and learn from our success and mistakes”.
Process in Innovation
 Environmental scanning
 External scanning for technology developments
 Market research
 Internal scanning of resources for innovation R&D
 Strategy Formulation
 Product versus Process R&D
 Technology sourcing
 Strategy implementation
 Developing an innovative entrepreneurial culture
 Evaluation and control
Organizing for Innovation:
Corporate Entrepreneurship
Strategic Importance
Very Uncertain Not
Operational Important Important
Relatedness
Unrelated Special Independent Complete
Business Units Business units Spin-off
(sell off)
Partly New Product New venture Contracting
Related Business Division
Department
Strongly Direct Micro New Nurturing and
Related Integration venture contracting
Department
(SBU)