9E

Robert D. Hisrich
Mathew J. Manimala
Michael P. Peters
Dean A. Shepherd

2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in
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ENTREPRENEURSHIP

13

STRATEGIES FOR GROWTH

AND MANAGING THE IMPLICATION
OF GROWTH

LEARNING OBJECTIVES
To know where to look for (or how to
create) possible growth opportunities
To understand the human resource
management challenges and to be
prepared to effectively manage those
challenges

13-3

Contd

LEARNING OBJECTIVES
To understand the pressures of time
and how to engage time
management techniques
To recognize that people differ and to
understand how these differences
impact their intentions and abilities
to grow a business

13-4

GROWTH STRATEGIES BASED

UPON KNOWLEDGE OF
PRODUCT AND/OR MARKET
FIGURE 13.1

13-5

GROWTH STRATEGIES
Penetration strategy
Encouraging existing customers to buy
more of the firms current products (e.g.
Horlicks)
Relies on taking market share from
competitors and/or expanding the size
of the existing market

Market development strategy

Selling the firms existing products to
new groups of customers (e.g. Fair &
Lovely for Men)

13-6

Contd

GROWTH STRATEGIES
New demographic market - Selling to a
different demographic group
New product use - Selling an existing
product, which may have a new use, to
new groups of buyers (e.g.
Pharmaceuticals)

Product development strategies

Developing and selling new products to
people already purchasing the firms
existing products
Capitalizes on existing distribution

13-7

Contd

GROWTH STRATEGIES
Diversification strategies
Selling a new product to a new market
Backward integration: A step back
(up) in the value-added chain toward the
raw materials (e.g. Reliance
Petrochemicals from Vimal textiles)
Forward integration: A step forward
(down) in the value-added chain toward
the customers (e.g. Reliance petrol
bunks)
Horizontal integration: Involves a

13-8

EXAMPLE OF A VALUE-ADDED
CHAIN AND TYPES OF RELATED
DIVERSIFICATION
FIGURE 13.2

13-9

IMPLICATIONS OF GROWTH
FOR THE FIRM
Pressures on
Pressures on
employees
Pressures on
Pressures on
resources

human resources
the management of
entrepreneurs time
existing financial

13-10

OVERCOMING PRESSURES ON
EXISTING HUMAN RESOURCE
Using professional employer
organizations (PEOs) for various HR
activities
Giving employees regular feedback
Identifying problems along with a
proposed solution

13-11

OVERCOMING PRESSURES ON
THE MANAGEMENT OF
EMPLOYEES
Participative style of
management: Manager involves
others in decision making
To institute participative style of
management:

Establish a team spirit

Communicate with employees
Provide feedback
Delegate responsibility
Provide continuous training to

13-12

OVERCOMING PRESSURES ON
ENTREPRENEURS TIME
Time management
Process of improving an individuals
productivity through more efficient use
of time

Advantages of efficient time

management

Increased productivity
Increased job satisfaction
Increased interpersonal relationships
Reduced time anxiety and tension

13-13

OVERCOMING PRESSURES ON

Contd

ENTREPRENEURS TIME
Basic principles of time management
Principle of desire
Recognition of the need to change personal
attitudes and habits regarding the allocation
of time

Principle of effectiveness
Focus on the most important issues

Principle of analysis
Understanding how time is currently being
allocated, and where it is being inefficiently
invested
13-14

OVERCOMING PRESSURES ON

Contd

ENTREPRENEURS TIME
Principle of teamwork:
Acknowledgment that:
Only a small amount of time is actually
under ones control
Most of ones time is taken up by others

Principle of prioritized planning

Categorization of tasks by their degree of
importance
Allocation of time to tasks based on this
categorization (Coveys jar with rocks)

Principle of reanalysis: Periodic

13-15

FINANCIAL CONTROL
Managing cash flow
Have an up-to-date assessment of the
cash position
Maintain a daily cash sheet (e.g. Parta
system)
Compare budgeted or expected cash
flows with actual cash flows

13-16

Contd

FINANCIAL CONTROL
Managing inventory
Physically count inventory periodically
Link the needs of a retailer with the
wholesaler and producer
Select an appropriate mode of
transportation

13-17

Contd

FINANCIAL CONTROL
Managing fixed assets
Involves long-term commitments and
large investments
Leasing can be an alternative to buying
depending on:
Terms of the lease
Type of asset
Usage demand

Lease payments can be used as a tax

deduction (e.g. Xerox machines)
13-18

Contd

FINANCIAL CONTROL
Managing costs and profits
Compute net income for interim periods
during the year
Assess each item to determine cost
reduction
Consider raising prices to ensure
positive profits
Compare current actual costs with prior
incurred costs
13-19

Contd

FINANCIAL CONTROL
Taxes
An entrepreneur is required to:
Withhold federal and state taxes for
employees
Pay a number of taxes (state and federal
unemployment taxes and business taxes)
Allocate taxes as part of any budget
File end-of-year returns of the business
Consider use of a tax accountant

13-20

Contd

FINANCIAL CONTROL
Record keeping
System for storing and using customer
information
Helps build organizational knowledge to
reduce dependency on any one
individual
Increases capacity to hold and process
information

13-21

FOUR TYPES OF
ENTREPRENEURS AND FIRM
GROWTH
FIGURE 13.4

13-22