1. Entrepreneurship Management MANAGING EARLY GROWTH Prof Bharat Nadkarni

2. Managing early growth Growth cycle of a New Venture Start-up Early growth Rapid growth Maturity Negative Entropy – Resist/ Delay Decline

3. Managing early growth Expand the venture through Expansion – horizontal/ vertical Diversification- related / unrelated Joint venture Acquisitions Mergers Leveraged buyouts Franchising Business process reengineering Global ancillarisation

4. Managing early growth Decision to grow or not to grow (Lifestyle firms) Consider and evaluate growth market Management skills and strategies Hitting the growth wall Product/ Market stagnation (Lack of innovativeness) operations reach out of control cash runs out key employees leave Entrepreneur hopes to add new products and anticipates new contracts

5. Managing early growth Reality is – venture heading towards dissaster The only way to survive it is to “ Manage growth upfront with effective management skills and controls “ A clear assessment of the situation can go a long way to ensure survival. A.Strategic planning skills B. Controls

6. Managing early growth A.Strategic planning skills Business mission Situation analysis - internal & external environment analysis Goal formulation Formulation of programs and initiatives to meet the goals Strategic plan implementation Feedback and control B. Controls Financial control Inventory Human resource Marketing skills Time management

7. Managing early growth Time management Principle of Desire and effectiveness Principle of prioritised planning Principle of teamwork Co-operative and competitive Negotiations Information planning and control Customer service / satisfaction tracking Employee satisfaction / engagement Leadership effectiveness

8. Managing early growth Customer service/satisfaction Record and assess complaints and comments from customers Plan regular meeting with staff members to determine why the complaints are occurring and what solutions can be enacted Focus groups can be used to monitor and track customer satisfaction. Customer surveys enable the entrepreneur to standardize measured responses regarding service/satisfaction

9. Managing early growth Customer Relations The entrepreneur should have a certain acceptable expectation regarding service that, if not met, should involve some consideration of change. Entrepreneurs must be people who care about their customers and are willing to do whatever it takes to ensure favourable customer relations.

10. Peter.F.Drucker’s tips for growth-oriented enterprises The need for market focus Financial foresight Building a management team Where can I contribute? The need for outside advice

11. Managing organizations during Growth and Decline A Model of Organizational Growth – as developed by Larry Greiner in early 1970s. Phases of PLC 1.Growth through creativity : Crisis of Leadership 2.Growth through Direction : Crisis of Autonomy 3.Growth through Delegation : Crisis of Control 4.Growth through Co-ordination : Crisis of Red Tape 5.Growth through Collaboration : Crisis of Stagnation 6.Growth through Globalisation : Crisis ?

12. Business Communication Survival Rate for Globalised Corporates Age in Years Percentage PerishPercentage surviving 56238 107921 158614 209010 25937 50982 75991 10099.500.50

13. Organizational Decline The changing environment Is managing Decline the reverse of managing growth? Potential problems when organizations decline: Explaining cutbacks in the middle management Dysfunctional Consequences of organizational decline

14. Dysfunctional consequences of organizational decline Centralization : DM passed upwards, less participation, control is emphasised No long term planning Innovation curtailed Scapegoating : Blamegame Resistance to new alternatives Turnover Low morale, Conflicts Loss of slack ; uncommitted resources are used to cover operating expenses Fragmented pluralism ; special interest groups organize and become more vocal Loss of credibility, Nonprioritized cuts.

15. Managers caught in the middle Reducing organizational size / delayering for avoiding takeovers What is the Solution? Meet the challenge upfront Increase communication Increase participation for redefining strategy and goals Look innovative ways to deal with the problem.

16. “ An effective organization culture is needed to meet the challenges of business growth” An owner should: Communicate / share Ownership and Autonomy Delegate responsibility Team Building Train / Develop key employees

17. Elements in Turnaround Management Change in top management Initial credibility building actions. Neutralizing external pressures. Initial control Identifying quick payoff activities. Quick cost reductions Revenue generation. Asset Liquidation for generating cash Mobilization of the organization Better internal co-ordination. Khandwalla’s ten elements of a successful turnaround strategy.

18. SICKNESS IN VENTURE

19. RBI definition: principal or interest has remained overdue for two consecutive quarters in a financial year and there is an erosion in the net worth due to the accumulated cash losses to the extent of 50% or more

20. Impact – unemployment, non- payment of dues, blockage of finance, non-utilization of assets

21. Causes of sickness- Personal –Lack of integrated knowledge/ training –Incompatible personalities –Health –Shift in attitude –Succession Management –Form of ownership –Wrong choice of product/location –Team building –Planning –Management information systems –Inability to manage growth

22. HR issues –Faulty recruitment –Wage structure –Industrial Relations –Low productivity Operational issues –Technology obsolescence –Quality up gradation

23. –Production Management Plant location & layout Quality Capacity utilization Inventory Maintenance Environment Waste management

24. Financial –Capital structure –Capacity to bring capital –Poor resources management –Costing/pricing policy –Over-dependence on concessions & subsidies –Diversion of capital –Over-trading –Unfavorable gearing –Lack of tax planning

25. Marketing –Over-dependence on a single customer –Marketing myopia –Sales &distribution set-up –Market feedback/ research –Marketing strategies

26. Government –Changing policies –Scale of economy –Controls – Fiscal policies –Role as facilitator Act of God –Accidents and injuries –Catastrophes and disasters

27. B I F R Board for Industrial and Financial Reconstruction

28. Prevention is better than cure

29. All great companies have some kind of success formula. It could emanate from a unique set of strategic frames, resources, processes,relationships or values. But when the formula hardens,companies lose a vital ingredient for continued success The Success Trap

30. Is your company at risk? Symptoms of Active Inertia Strategic frames become binders “We are a growth company” “We know our competitors well” “We are number one” Resources harden into millstones “Our brand means the product” “We have it all” “Our technology is a fortress”

31. Processes lapse into routines “We have a ‘bible’ for critical processes” “We hire and promote people like us” “We make our decisions by consensus” Relationships become shackles “We know our place in the value chain” “We do the important tasks in-house” Values ossify dogmas “We are a family, not a company” “We have a campus, not a headquarter” “Our competitors are our enemies”

32. THANK YOU!!

33. Entrepreneurship Management Business Process Reengineering (BPR) Definition by M Hammer. BPR is defined as the critical analysis or fundamental rethinking and radical redesign of existing business processes to achieve breakthrough or dramatic improvements in performance measures such as cost, quality, service and speed. BPR has often been confused with the quality movement. Quality specialists tend to focus on incremental change and gradual improvement of processes, while proponents of reengineering seek radical redesign and drastic improvement of processes.

34. Entrepreneurship Management It is based on four key words: 1.Fundamental Why do we do what we do? And Why do we do it the way we do? Why the old rules and assumptions exist? 2.Radical Disregard all existing structures and procedures, and inventing completely new ways of accomplishing work. 3.Dramatic Not about making marginal improvements. 4.Processes a. Dysfunctionalb. Importancec. Feasibility

35. Entrepreneurship Management 1.Core Processes 2.Generic Processes