Part V – Growth and Development of Entrepreneurial Ventures Chapter 15 – Strategic Planning for Emerging Ventures Chapter 16 – Managing Entrepreneurial Growth Chapter 17 – Global Opportunities for Entrepreneurs Copyright (c) 2004 by South-Western, a division of Thomson Learning. All rights reserved.

Chapter 15 – Strategic Planning for Emerging Ventures

The Nature of Planning in Emerging Firms Although most entrepreneurs do some form of planning for their ventures, it often tends to be informal and unsystematic.

Strategic Planning Strategic Planning is the formulation of long-range plans for the effective management of environmental opportunities and threats in light of a venture’s strengths and weaknesses.

Strategic Management Model Environmental Scanning Strategy Formulation Strategy Implementation Evaluation and Control External Mission Reason for existence Programs Activities needed to accomplish a plan Performance Process to monitor performance and take corrective action Social Environment General Forces Task Environment Industry Analysis Objectives What results to accomplish by when Budgets Cost of the programs Internal Structure Chain of Command Strategies Plan to achieve the mission & objectives Procedures Sequence of steps needed to do the job Culture Beliefs, expectations, values Resources Assets, skills, competencies, knowledge Policies Broad guidelines for decision making Feedback/Learning

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

The Lack of Strategic Planning Time scarcity Lack of knowledge Lack of expertise/skills Lack of trust and openness Perception of high cost

The Value of Strategic Planning A number of other studies have focused on the impact of planning on small firms. These studies support the contention that strategic planning is of value to a venture. Most of the studies imply, if they do not directly state, that planning influences a venture’s survival.

Reported 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

Strategic Planning Levels Structured strategic plans (SSP) Structured operational plans (SOP) Intuitive plans (IP) Unstructured plans (UP)

Fatal Visions in Strategic Planning Flaw 1: Misunderstanding industry attractiveness Flaw 2: No real competitive advantage Flaw 3: Pursuing an unattainable competitive position Flaw 4: compromising strategy for growth Flaw 5: Failure to explicitly communicate the venture’s strategy to employees

Entrepreneurial and Strategic Actions

The Integration of Entrepreneurial and Strategic Actions Innovation Networks Internationalization Organizational learning Top Mgt teams and governance Growth Wealth Creation

Strategic Positioning: The Entrepreneurial Edge Strategic positionings are often not obvious, and finding them requires creativity and insight. Entrepreneurs often discover unique positions that have been available but simply overlooked by established competitors.

Implementing a Strategic Plan

Opportunity Management Approach

Milestone Planning Approach

An Entrepreneurial Strategy Matrix Model

The Entrepreneurial Strategy Matrix: Independent Variables High I-r I-R High Innovation low risk High Innovation High Risk (creating a unique and different product/service) Innovation i-r i-R low innovation low risk low innovation High Risk Low Low High Risk (probability of major financial loss)