CHAPTER 7: MANAGING GROWTH AND TRANSITION

New ventures pass through transitional stages that present new challenges to their founders. Since
these growth-oriented firms are being increasingly relied upon to generate jobs and economic
development in the global economy, their founders and managers need to know about successfully
managing the combination of increased complexity and rapid growth.

Timmons model of entrepreneurship

Jeffry Timmons (2006) developed the Timmons model of entrepreneurship through his doctoral

thesis. The entrepreneurship process, as defined by Timmon, helps in ascertaining whether new
business models are viable and emphasising the rigor within opportunity assessment.

The Timmons model of entrepreneurial process has three key elements; opportunity, team, and
resources, which must fit together and should be properly aligned in conjunction with each other in
order to make the business plan successful.

The process starts with the opportunity and not the money, business plan, networks, or anything else.
The identification of opportunity is key as per Timmons Model, the opportunity holds the key to drive
the business to be a long-term success.

The team is vital as well in the process and is thus responsible to remove the uncertainty and ambiguity
with the use of creativity for the opportunity.

Effective teams are required to be developed to effectively execute the identified opportunity.
Ineffective teams could result in failure of the developed business opportunity (Timmons Model, 2018).

The resource It is must to define the resources required in the business. The presence of extensive
resources decreases the risks associated with start-up of new business by the entrepreneur.

New Venture Expansion Strategies

Growth means that new employees will be hired who will be looking to the top management of the
company for leadership.

Growth means that market share will expand, calling for new strategies for dealing with larger
competitors. Growth also means that additional capital will be required, creating new responsibilities to
shareholders, investors, and institutional lenders. Thus, growth brings with it a variety of changes in the
company's structure, needs, and objectives.

7.3.2 Methods of Growth

Many companies have plans to grow their business and increase sales and profits. However, there are
certain methods companies must use for implementing a growth strategy. The method a company uses
to expand its business is largely contingent upon its financial situation, the competition and even
government regulation. Some common growth strategies in business include market penetration,
market expansion, product expansion and diversification.
THE ANSOFF MODEL

These ways are clearly presented in the Ansoff model, a strategic tool used during the development of a
growth strategy. It is a good basis for considering the strategic development of your company.

The Ansoff growth matrix is comprised of two axes

The Products:

Which products do you currently offer, and which new products would you like to offer in the future?

The market:

Which markets do you currently serve, and which markets would you like to serve in the future?

THE FOUR GROWTH STRATEGIES

Four types of growth strategies are proposed on this basis. The four main growth strategies are as
follows:

MARKET PENETRATION

The aim of this strategy is to increase sales of existing products or services on existing markets, and thus
to increase your market share. To do this, you can attract customers away from your competitors
and/or make sure that your own customers buy your existing products or services more often. This can
be accomplished by a price decrease, an increase in promotion and distribution support, the acquisition
of a rival in the same market or modest product refinements.

MARKET DEVELOPMENT

This means increasing sales of existing products or services on previously unexplored markets. Market
expansion involves an analysis of the way in which a company's existing offer can be sold on new
markets, or how to grow the existing market. This can be accomplished by different customer segments;
industrial buyers for a good that was previously sold only to the households; New areas or regions about
of the country; Foreign markets

PRODUCT DEVELOPMENT

The objective is to launch new products or services on existing markets. Product development may be
used to extend the offer proposed to current customers with the aim of increasing their turnover. These
products may be obtained by: Investment in research and development of additional products;
Acquisition of rights to produce someone else's product; Buying in the product and "branding" it; Joint
development with ownership of another company who need access to the firm's distribution channels
or brands.

DIVERSIFICATION

This means launching new products or services on previously unexplored markets. Diversification is the
riskiest strategy. It involves the marketing, by the company, of completely new products and services on
a completely unknown market.
Expansion Issue

It is a combination of potentially frustrating issues as they try to grow their business in a smooth and
productive manner.
1.Growing Too Fast
2. RECORDKEEPING AND OTHER INFRASTRUCTURE NEEDS
3. EXPANSION CAPITAL
4. PERSONNEL ISSUES
5. CUSTOMER SERVICE
6. DISAGREEMENTS AMONG OWNERSHIP
7. FAMILY ISSUES

CHOOSING NOT TO GROW

"Many entrepreneurs would rather limit growth than give up those satisfactions." Other successful
small business owners, meanwhile, simply prefer to avoid the headaches that inevitably occur with
increases in staff size, etc. And many small business owners choose to maintain their operations at a
certain level because it enables them to devote time to family and other interests that would otherwise
be allocated to expansion efforts.

There are three approaches to Corporate Responsibility:

1. Corporate social responsibility (CSR)-is a philosophy in which the company’s expected actions include
not only producing a reliable product, charging a fair price with fair profit margins, and paying a fair
wage to employees, but also caring for the environment and acting on other social concerns.

It is composed of four obligations: The legal responsibility -to adhere to rules and regulations. The
ethical responsibility -This is the theory’s keystone obligation, and it depends on a coherent corporate
culture that views the business itself as a citizen in society, with the kind of obligations that citizenship
normally entails. It is to do whatever is right without the requirements of the law. The economic
responsibility to make money - this obligation is the business version of the human survival instinct (you
need to make money to buy food). The philanthropic responsibility- is to contribute to society’s projects
even when they’re independent of the particular business. view that businesses, like everyone in the
world, have some obligation to support the general welfare in ways determined by the needs of the
surrounding community. It's a view that businesses, like everyone in the world, have some obligation to
support the general welfare in ways determined by the needs of the surrounding community.

2.The triple bottom line- the corporate leaders formulate bottom-line results not only in economic
terms but also in terms of company effects in the social realm, and with respect to the environment.

There are two keys to this idea. First, the three columns of responsibility must be kept separate, with
results reported independently for each. Second, in all three of these areas, the company should obtain
sustainable results. Triple bottom lines:

1.Economic sustainability- it's concerned about cost, growth, revenue. It values long-term financial
solidity over more volatile, short-term profits, no matter how high. Sustainability as a virtue means
valuing business plans that may not lead to quick riches but that also avoid disastrous losses.
2.Social sustainability values balance in people’s lives and the way we live. It includes fair trade,
community stakeholders and employee wellbeing.

3.Environmental sustainability -focus on waste management, land use and carbon footprint. It begins
from the fact that we are linked to natural resources (fuel...) which are limited. Thus, conservation of
resources is very important.

These three notions of sustainability guide businesses toward actions fitted to the conception of the
corporation as a participating citizen in the community. 3. Stakeholder theory is the mirror image of
corporate social responsibility. The stakeholder theory affirms that those whose lives are touched by a
corporation hold a right and obligation to participate in directing it.

Example If the enterprise produces chemicals for industrial use and is located in a small town; The
theory demands that all those who may be affected know what’s being dumped, what the risks are to
people and the environment, and what the costs are of taking the steps necessary to dispose of the
chemical runoff more permanently and safely.

There are 12 main Business Ethics Principles that incorporates the characteristics and values that most
people associate with ethical behavior. Ethical principles are guides for decision making in business.
Those are namely - Honesty, Integrity, Loyalty, Fairness, Promise-Keeping & Trustworthiness, Concern
for Others, Respect for Others, Leadership, Accountability, Reputation and Morale, Commitment to
Excellence, Law Abiding