rowth Strategies &

B
hallenges for Growth
  If the business succeeds,
 the entrepreneur reaps the reward
of profits;
 if it fails,
 one takes the loss.
The World of the Entrepreneur
 A new business is born every 11
seconds in the United States
 Study of influential Americans – the
defining issue of the 21st Century:
Entrepreneurship!
 One of 12 Americans is actively involved
in trying to start a new business.

 Entrepreneurial Activity Across the
Globe
P e rc e nta ge of Adult P opula tion W ork ing to S ta rt a Ne w Bus ine s s

U nited States 8.5%

C anada 6.8%

Israel 5.4%

Italy 3.4%

Great Britain 3.3%

Germ any 2.2%

D enm ark 2.0%

C
n
u
o
try

F rance 1.8%

Japan 1.6%

F inland 1.4%

0.0% 2.0% 4.0% 6.0% 8.0% 10.0%

Perce nt
Ultimate Growth Strategies
 A practical guide to engineer high growth into your
business
Avoid the major Flaws

Principle 1. Finding the right place, right time

Principle 2. Developing a clear vision
Principle 3. Innovation as the driver
Principle 4. Finding the compelling need to buy
Principle 5. Targeting the right customer
Principle 6. Achieving a clear competitive advantage
Principle 7. Building in sustainability
Principle 8. Developing channels to market
Principle 9. Creating robust margins
Principle 10. Engineering scalability
Principle 11. Assembling a capable management team
Principle 12. Working the numbers
Principle 13. Managing risk
Principle 14. Pulling it all together in a plan
 -Professor McKaskill
Objectives
1. To introduce the importance of strategic planning for
an entrepreneurial venture
2. To discuss some of the reasons entrepreneurs do not
carry out strategic planning
3. To relate some of the benefits of strategic planning
4. To discuss the five stages of a typical venture life
cycle: development, start-up, growth, stabilization,
and innovation or decline
5. To explore the elements involved with an
entrepreneurial firm
Objectives (cont’d)
6. To examine the transition that occurs in the
movement from an entrepreneurial style to a
managerial approach
7. To identify the key factors that play a major role
during the growth stage
8. To discuss the complex management of paradox and
contradiction
9. To introduce the steps useful for breaking through the
growth wall
10.To identify the unique managerial concerns with
growth businesses

7
The Nature of Planning in Emerging Firms

 Most entrepreneurs’ planning for their

ventures is informal and unsystematic.
 The need for formal, systematic planning
arises when:
 The firm is expanding with constantly
increasing personnel size and market
operations
 A high degree of uncertainty exists
 There is strong competition
 There is a lack of adequate experience,
either technological or business
8
Strategic Planning
 Strategic Planning
 The formulation of long-range plans for
the effective management of
environmental opportunities and
threats in light of a venture’s strengths
and weaknesses.
 Includes:
 Defining the venture’s mission
 Specifying achievable objectives
 Developing strategies
 Setting policy guidelines

9
Strategic Planning (cont’d)
 Basic Steps in Strategic Planning:
1.Examine the internal and external
environments of the venture (strengths,
weaknesses, opportunities, threats).
2.Formulate the venture’s long-range and
short-range strategies (mission,
objectives, strategies, policies).
3.Implement the strategic plan (programs,
budgets, procedures).
4.Evaluate the performance of the strategy.
5.Take follow-up action through continuous
feedback.
10
Figure
13.1 The Strategic Management Process

Source : Michael A . Hitt, R . Duane Ireland, and Robert E . Hoskisson ,

Strategic Management: Competitiveness & Globalization, 11
Key Dimensions Influencing a Firm’s
Strategic Planning Activities
 Demand on strategic managers’ time
 Decision-making speed
 Problems of internal politics
 Environmental uncertainty
 The entrepreneur’s vision
 Step 1: Commitment to an open planning
process.
 Step 2: Accountability to a corporate
conscience.
 Step 3: Establishment of a pattern of
subordinate
participation in the development 12
The Lack of Strategic Planning
 Reasons for the Lack of Strategic
Planning
1.Time scarcity
2.Lack of knowledge
3.Lack of expertise/skills
4.Lack of trust and openness
5.Perception of high cost

13
The Value of Strategic Planning
 Findings of Strategic Planning Studies
 Strategic planning is of value to a venture and
that planning influences a venture’s survival.
 Benefits of Long-Range Planning
 Cost savings
 More efficient resource allocation
 Improved competitive position
 More timely information
 More accurate forecasts
 Reduced feelings of uncertainty
 Faster decision making
 Fewer cash-flow problems

14
Strategic Planning Levels (cont’d)
 Strategic Planning Categories (Rue and Ibrahim)
 Category I: No written plan
 Category II: Moderately sophisticated planning
 Category III: Sophisticated planning
 Results: More than 88% of firms with Category II or
III planning performed at or above the industry
average compared with only 40% of firms with
Category I planning.
 All research indicates:
 Firms that engage in strategic planning are more
effective than those that do not.
 The planning process, rather than merely the
plans, is a key to successful performance.

15
Fatal Visions in Strategic Planning
 Fatal
mistakes that entrepreneurs fall in
while to implementing a strategy:
 Fatal Vision #1: Misunderstanding industry
attractiveness
 Fatal Vision #2: No real competitive
advantage
 Fatal Vision #3: Pursuing an unattainable
competitive
position
 Fatal Vision #4: Compromising strategy for
growth
 Fatal Vision #5: Failure to explicitly
communicate the venture’s strategy to 16
Figure
13.2 The Integration of Entrepreneurial and Strategic Actions

Source : R . Duane Ireland, Michael A . Hitt, S . Michael Camp , and Donald L .

Sexton, “Integrating Entrepreneurship and Strategic Management Actions to Create
17
Firm Wealth,” Academy of Management Executive 15(1) (February 2001): 51.
Strategic Positioning:
The Entrepreneurial Edge
 Strategic Positions
 Are often not obvious, and finding
them requires creativity and insight.
 Are unique positions that have been
available but simply overlooked by
established competitors.
 Can help entrepreneurial ventures
prosper by occupying a position that
a competitor once held but has
ceded through years of imitation and
straddling.
18
Figure
13.3 The Entrepreneurial Strategy Matrix: Independent Variables

Source : Matthew C . Sonfield and Robert N . Lussier, “ The

Entrepreneurial Strategic Matrix: A Model for New and Ongoing
Ventures.” Reprinted with permission from Business Horizons, May/June
1997, by the trustees at Indiana University, Kelley School of 19
Business.
 Figure
13.4 The Entrepreneurial Strategy Matrix: Appropriate Strategies

M a tth e w C . S o n fie ld a n d R o b e rt N . Lu ssie r, “ T h e E n tre p re n e u ria l

Source :
Strategic Matrix: A Model for New and Ongoing Ventures.” Reprinted with 20
permission from Business Horizons, May/June 1997, by the trustees at Indiana
Venture Development Stages
 Life-Cycle Stages of an Enterprise
(Chandler)
1.Initial expansion and accumulation of
resources
2.Rationalization of the use of resources
3.Expansion into new markets to assure
the continued use of resources
4.Development of new structures to ensure
continuing mobilization of resources

21
Figure
13.5 A Venture’s Typical Life Cycle

22
The Entrepreneurial Company in the
Twenty-First Century

 Major Challenges:
 Building dynamic capabilities that are
differentiated from those of emerging
competitors
 Internal—utilization of the creativity
and knowledge from employees
 External—the search for external
competencies to complement the
firm’s existing capabilities.

23
Figure
13.6 The Entrepreneurial Mindset

24
 Table
13.2 The Managerial versus the Entrepreneurial Mind-Set

Decision-making The past is theMind-Set

Managerial best predictor of the future. Entrepreneurial Mind-Set
A new idea or an insight from a unique
assumptions Most business decisions can be quantified. experience is likely to provide the best
estimate of emerging trends.

Values
Beliefs
Approach to problems The best
Law of large
Problems decisions
numbers:
represent are
an Chaos
those based
and uncertainty
unfortunate on of
turn New of
Law insights
Problemssmall numbers:
and real-world
represent an A single
experiences
incident
opportunity or
are
to detect
quantitative
can be that
events resolved
analyses.
by systematically
threaten analyzing
financial projections. more highly
several
emerging isolated
valued
changesincidents
thanpossibly
and results
quicklynew
based
becomeon
business
Rigorous
the right data.
Problems analyses are highlywith
must be resolved valued for
substantiated historical
pivotal fordata.
making decisions regarding future
opportunities.
making critical decisions.
analyses. trends.

S o u rce : M ike W rig h t, R o b e rt E . H o skisso n ,

a n d Lo w e ll W . B u se n itz, “ Firm R e b irth :
B u yo u ts a s Fa cilita to rs o f S tra te g ic G ro w th
25
a n d E n tre p re n e u rsh ip ,” Academy of Management
Building the Adaptive Firm
 An Adaptive Firm
 One that Increases opportunity for its
employees, initiates change, and instills a
desire to be innovative.
 How to remain adaptive and innovative:
 Share the entrepreneur’s vision
 Increase the perception of opportunity
 Institutionalize change as the venture’s goal
 Instill the desire to be innovative:
 A reward system
 An environment that allows for failure
 Flexible operations
 The development of venture teams

26
The Transition from an Entrepreneurial Style
to a Managerial Approach
 How to do?
A highly centralized decision-making
system
 An overdependence on one or two key
individuals,
 An inadequate repertoire of
managerial skills and training
 A paternalistic atmosphere

27
Balancing the Focus—Entrepreneurial versus
Manager (Stevenson and Gumpert)
 The Entrepreneur’s  The Administrative
Point of View Point of View
 Where is the  What resources do I
opportunity? control?
 How do I capitalize on  What structure
it? determines our
 What resources do I organization’s
need? relationship to its
 How do I gain control market?
over them?  How can I minimize
 What structure is the impact of
best? others on my ability
to perform?
 What opportunity is
appropriate?
28
Understanding the Growth Stage
 Key Factors During the Growth Stage
 Control
 Does the control system imply trust?
 Does the resource allocation system imply trust?
 Is it easier to ask permission than to ask
forgiveness?
 Responsibility
 Creating a sense of responsibility that establishes
flexibility, innovation, and a supportive
environment.
 Tolerance of failure
 Moral failure
 Personal failure
 Uncontrollable failure
 Change
29
Understanding the Growth Stage (cont’d)

 Managing Paradox and Contradiction

 Bureaucratizationversus decentralization
 Environment versus strategy

 Strategic emphases: Quality versus cost

versus innovation

30
Confronting the Growth Wall
 Successful growth-oriented firms have exhibited
consistent themes:
 The entrepreneur is able to envision and anticipate the
firm as a larger entity.
 The team needed for tomorrow is hired and developed
today.
 The original core vision of the firm is constantly and
zealously reinforced.
 “Big-company” processes are introduced gradually as
supplements to, rather than replacements for, existing
approaches.
 Hierarchy is minimized.
 Employees hold a financial stake in the firm.

31
Unique Managerial Concerns of Growing Ventures

Distinctio One - Person -

n Band
of Small Syndrome
Size

Continuous Time
Growing Venture
Learning Management

Community
Pressures

32
The International Environment:
Global Opportunities
 Global Entrepreneurs
 Rely on global networks for resources,
design, and distribution.
 Are adept at recognizing opportunities
that require agility, certainty, and
ingenuity with a global perspective.
 Must be global thinkers in order to
design and adopt strategies for
different countries.

33
Figure
13.7 Share of the World Population Engaged in Entrepreneurship

Source : Niels Bosma, Kent Jones, Erkko

Autio, and Jonathan Levie, Global
Entrepreneurship Monitor (Babson College,
Babson Park, MA, and London Business School, 34
London, 2007).
 Table
13.4 Strategic, Visionary, and Managerial Leadership
Visionary Leaders Managerial Leaders
are proactive, shape ideas, change the way people think about what is are reactive; adopt passive attitudes toward goals; goals arise out of

desirable, possible, and necessary necessities, not desires and dreams; goals based on past
work to develop choices, fresh approaches to long standing problems; view work as an enabling process involving some combination of ideas

work from high-risk positions and people interacting to establish strategies

are concerned with ideas; relate to people in intuitive and empathetic ways relate to people according to their roles in the decision-making process

feel separate from their environment; work in, but do not belong to, see themselves as conservators and regulators of existing order; sense of
organizations; sense of who they are does not depend on work who they are depends on their role in organization
influence attitudes and opinions of others within the organization influence actions and decisions of those with whom they work

concerned with insuring future of organization, especially through  involved in situations and contexts characteristic of day-to-day activities
development and management of people
more embedded in complexity, ambiguity, and information overload; concerned with, and more comfortable in, functional areas of
engage in multifunctional, integrative tasks responsibilities
know less than their functional area experts expert in their functional area

 more likely to make decisions based on values  less likely to make value-based decisions
more willing to invest in innovation, human capital, and creating and engage in, and support, short-term, least-cost behavior to enhance
maintaining an effective culture to ensure long-term viability financial performance figures
focus on tacit knowledge and develop strategies as communal forms of focus on managing the exchange and combination of explicit knowledge

tacit knowledge that promote enactment of a vision and ensuring compliance to standard operating procedures
utilize nonlinear thinking utilize linear thinking

believe in strategic choice, that is, their choices make a difference in their believe in determinism, that is, the choices they make are determined by


organizations and environment their internal and external environments

u rce : W . G le n n R o w e , “ C re a tin g W e a lth in O rg a n iza tio n s: T h e R o le o f S tra te g i35

c
a d e rsh ip ,” Academy of Management Executive 15(1) (2001): 82.
THE CHALLENGES OF GROWTH
 Under Rapid Growth . . .
 Entrepreneurs face:
 Challenges
 Pressure

 Physical wear and tear

 Emotional wear and tear
 A possible business harvest


Growth stages
Greiner (1972)
CHALLENGES AS AN ENTREPRENEUR W/IN
AN ORGANIZATION
 Resistance to change by the
organization
 Resentment of the individual
 Red tape that makes it difficult to
operate quickly
 Discouragement of creative ideas
 Little tolerance for risk
 Lack of incentives for innovations
 Over-emphasis on accountability

7 daily challenges for every entrepreneur

1. No rules protecting employers

2. Global competition

3. Changes around the globe

4. Balance between projects and

personnel
5. Delayed payments

6. Return to the investor

7. How society perceives you

 INTRODUCTION.


The Kenya Youth Business Trust
(KYBT) is an initiative of Youth
Business International (YBI) and is
modeled after the Prince’s Trust
whose three main objectives are:



Ø Working with disadvantaged youth between
the age of 18 to 30 years.


Ø Providing start up capital for those with

viable business propositions but are
unable to find finance else where.


Ø Providing successful applicants with

volunteer business mentor and full
access to the organization’s local and
national business support network.

THE CHALLENGES FACING YOUTH
ENTREPRENEURS IN NAIROBI- A group of 22 youth
entrepreneurs interviewed.
Ø Start-up/Working capital
Ø Youth Attitude
Ø Extended Family and community
responsibilities
Ø Placing the cart before the donkey
Ø Cultural expectations and conventions
Ø Education system
Ø Role Models
Ø Government policies


Ø
What Doesn’t Work.
a) Adopting programmes without customization.
b)
c) Ignoring the local culture.
d)
e) Working independent of other youth organizations.
f)
g) Making decisions for the youth without including
them.
h)
i) Not having specific government policies on Youth.

 Conclusion.
Ø KYBT sees itself as part player in the noble
goal of ensuring a good, sustainable
future for the youth and appreciates the
work done by other partner bodies.


Ø KYBT also notes the work already done by

the Kenyan government, notably the
Kenya National Youth Policy passed by
cabinet on 15th January, 2004 which sets
guidelines and proposals from which
strategies can be developed to facilitate
participation of the youth in national
developed.

Ø The responsibility of ensuring a good
and sustainable future however does
not only lie with the government but
also with the private sector, the
development partners, NGO’s, CBO’s
and more so the youth.


Ø It is also hoped that this empowerment

of the youth economically and the
creation of a sustainable and
increasing entrepreneur group and
spirit will be a continuous exercise.



UGANDA WOMEN
ENTREPRENUERS
ASSOCIATION LIMITED
 “Empowering Women Business Owners to Create Wealth”


 EXPERIENCES AND CHALLENGES

FACING WOMEN ENTERPRENUERS

OBJECTIVES OF UWEAL
1.Enable women access:


 Business information

 Markets

 Land

 Finance
 Training
UWEAL ACTIVITES

 Girl
Entrepreneurship
program
 Annual achievers
awards
 Business
counselling
 Resource center
 Facilitate
participation in
local and
international fairs
 Product
development
trainings
 Overview of women
entrepreneurs
 Agriculture
employs
more women
(70-80%)

 Only 34% have

ownership in
this sector
Overview of women entrepreneurs
 The lower status of women in
comparison to men is due to gender
imbalances that arise from unequal
opportunities, access to and control
over productive resources and
benefits. Statistics proceeds show that
although women in Uganda constitute
70% to 80% of the agricultural labor
force, only 7% own land and only 30%
have access to and control over
resources.
Overview of women entrepreneurs
 In spite of the imbalances, women in Uganda are
slowly but surely expanding their role from the
kitchen into the economic and political domains.
This is not to forget the traditional and crucial role
women have always played in the household, child
care and agriculture.
 Women are the vast majority on which the country
depends for food and its economic growth,
producing 80 percent of the non-traditional and 60
percent of the Farm exports that earn foreign
exchange.
 Overview of women
entrepreneurs
 Women are now doing business
in most sectors of the
economy from the informal
sector, micro, small, medium
and a few in large businesses
previously a domain of men.
 Women are doing business in
tailoring, beverages, service
and handcrafts, food
processing, tourism, real
estates, education, contract
cleaning ,furniture making,
import and export, among
others.
 A survey conducted by USAID of
micro, small and medium scale
enterprise that covered 5,143
active business enterprises
indicated that the majority
(45.5%) of SMEs are owned
and operated by women
entrepreneurs compared to
Challenges faced by Women
entrepreneurs
 Access to credit


 Requirements


 Costs of credit


 Group lending and

small size


 Challenges faced by Women

entrepreneurs
 Access to markets

 Smaller size of most women
businesses


 Small volumes/quantity of products or

services produced


 Poor quality products


 Tendency to produce for the local
market only

 Lack of access to Information on
potential market, customers and
suppliers

 Ability to respond to market
information due to financial,
material, human resource and
production constraints
 Participation in tradeshows is beyond
budgets


 Challenges faced by Women
entrepreneurs
 Access to information

 Access to and control of the media
and other sources of information is
limited, particularly in rural areas.


 Lack of information that portrays

women positively. Information on
women is often culturally
stereotyped, portraying women as
objects rather than individuals.


 Limited use of information

technology to access information
due to high telecommunication
costs, computer literacy etc. There
is a real danger of creating a new
type of poverty or challenge for
women business owners who can
not afford information technology,
or are in areas where the facilities
for technology support do not yet
exist.
 Challenges faced by Women
entrepreneurs
Poor institutional support for promoting women


entrepreneurs


 Institutions supporting business

development and SMEs often lack the
capacity, specialised skills and resources
to analyze and assess women
entrepreneurs needs.
 Few institutions have monitoring and
outreach mechanisms, particularly for
women in rural areas. For example, the
Uganda Women Entrepreneurs Association
Limited (UWEAL) has mobilized business
women in Kampala, Jinja, Bugiri, Mbale,
Soroti, Lira, Luwero, and Kabale,
registering membership of over 1000
Challenges faced by Women
entrepreneurs
Access to appropriate technology


 Women need new technologies in order

to meet the quality requirements of
the globalized market. Very often they
are unable to get access to such
technology because of its cost and
inability to locate the best deals most
suitable for their companies.
 Challenges faced by Women
entrepreneurs
Access to training


 Although the increase in

women business
owners has risen
dramatically in the last
ten years women’s
access to training that
will assist in developing
business skills is
limited or difficult due
to their multiple roles,
cost of training, and
language, appropriate
time to participate and
ability to understand
and appreciate
concepts
 There are few structured
institutions to address
the specific training
needs of women in
business skill
development.
 How to enhance the role women
entrepreneurs for business development in
the region
 Promoting more women in the trade negotiations

 Mainstream trade in development and further
mainstreaming gender in trade through enhancing
understanding of basic issues of gender and
gender issues in trade policy.

 Build government capacity including the ministry of
trade, the private sector and women organizations
to deal and understand trade related issues

 Encouraging and facilitating training for women,
expose them to modern technologies, modern
methods of business management and enhance
their entrepreneurial capabilities.

 Lobbying and advocating for women’s increased access
to resources particularly credit, training,adquate
technology e.g. (guarantee funds under ADB)

 Facilitating the exchange of ideas and information with
the business community both inside and outside
How to enhance the role women entrepreneurs for
business development in the region
 Providing the necessary input into government policy for the benefit of women
entrepreneurs and their enterprises.

 Collecting and disseminating business information to women both in urban and
rural locations

 Liaising with government and other agencies in order to create an enabling
environment for the promotion of women enterprises,
 Publicizing the central role of women in the national economy and of "success
stories" of women entrepreneurs through use of a

 Wide range of media strategies, to assist in changing public attitudes towards
women's involvement in economic decision-making and encourage women to
become entrepreneurs.

 Mentoring of women entrepreneurs, young girls and less advantaged women to
take up business as a first carrier option.
