CHAPTER 13 Strategic

Issues in Entrepreneurial
Ventures and Small
Businesses
STRATEGIC MANAGEMENT & BUSINESS POLICY
11TH EDITION
THOMAS L. WHEELEN

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J. DAVID HUNGER

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Entrepreneurial Ventures & Small Businesses

99% of all businesses

23 million small businesses
60% -80% new jobs annually

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Entrepreneurial Ventures & Small Businesses

Employs fewer than 500 people and

sales of less than $20 million annually

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Entrepreneurial Ventures & Small Businesses

Small business firm

Independently owned & operated
Not dominant in field
Not engaged in innovative practices

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Entrepreneurial Ventures & Small Businesses

Entrepreneurial venture
Primary goals profitability and growth
Characterized by innovative strategic
practices

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Entrepreneurial Ventures & Small Businesses

Differences
Not in types of goods and services
Fundamental views on growth and
innovation

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Entrepreneurial Ventures & Small Businesses

Entrepreneur
Ultimate strategist
All 3 levels
Corporate
Business
functional

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Entrepreneurial Ventures & Small Businesses

Lack of strategic planning in small

business
Not enough time
Unfamiliar with strategic planning
Lack of skills
Lack of trust and openness

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Entrepreneurial Ventures & Small Businesses

Degree of formality
Process far more informal in small
companies than in large corporations

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Informal questions to begin strategic management process

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Strategic decision-making process for

entrepreneurial ventures
Develop basis business idea
Product/service with target market/customers

Scan external environment

Locate factors of opportunity/threat

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Entrepreneurial Ventures & Small Businesses

Strategic decision-making process for

entrepreneurial ventures
Scan internal factors
Relevant to the new business

Analyze strategic factors

Current situation using SWOT

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Entrepreneurial Ventures & Small Businesses

Strategic decision-making process for

entrepreneurial ventures
Decide go or no go
Opportunity to go

Generate business plan

Transform idea into reality

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Entrepreneurial Ventures & Small Businesses

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Entrepreneurial Ventures & Small Businesses

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Entrepreneurial Ventures & Small Businesses

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Entrepreneurial Ventures & Small Businesses

Advisory Boards
External business people voluntary
Discuss strategic and other issues

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Entrepreneurial Ventures & Small Businesses

Sarbanes-Oxley
Compliance costs

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Entrepreneurial Ventures & Small Businesses

Sources of Innovation
The unexpected
The incongruity
Innovation based on process need
Changes in industry or market structure

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Entrepreneurial Ventures & Small Businesses

Sources of Innovation
Demographics
Changes in perception, mood, meaning
New knowledge

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Entrepreneurial Ventures & Small Businesses

Factors affecting new venture success

Structure of industry
Business strategy of new venture
Behavioral characteristics of entrepreneur

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Entrepreneurial Ventures & Small Businesses

Entrepreneurial Characteristics
Identify opportunities better
Sense of urgencyaction oriented
Detailed knowledge-physical stamina
Access to outside help

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Sub-stages of small business

development
Existence
Survival
Success
Take-off
Resource maturity

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Entrepreneurial Ventures & Small Businesses

Evaluation and Control

Line between debt and equity blurred
Lifestyle part of financial statements
Standard financial formulas dont apply
Personal preference
Banks combine personal and business
wealth

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