Businesses and Entrepreneurial Ventures

Part A In terms of strategic management, how does a new venture’s situation differ from that of an ongoing small company?

Part B How should a small company engage in environmental scanning? To what aspects of the environment should management pay most attention?

Part C What considerations should small-business entrepreneurs keep in mind when they are deciding whether a company should follow a growth or a stability strategy?

Part D How does being family-owned (as compared to being publicly owned) affect a firm’s strategic management?

Part E If the owner/manager of a small company asked you for some advice concerning the introduction of strategic planning, what would you tell her?

ANSWER

Businesses and Entrepreneurial Ventures

Part A

Strategic management refers to planning, formulation, assessment, analysis, and monitoring of all necessities that an organization requires to meet the organizational objectives and goals (Dess, 2013). In a new business venture, strategic management entails the formulation of goals and initiatives by the stakeholders of the organization. The stakeholders evaluate the organization’s vision, objectives, and goals as well as the plans. Strategic management in new ventures emphasizes the establishment of competitive advantage, environmental scanning to understand the market, and strategy formulation to create an objective-oriented approach for the new venture. The new venture defines the goals and objectives in terms of financial milestones and strategies. The new venture has to define the goals and objectives in such a way that they will create differentiation in the market by meeting the unmet demands in the market. Strategic management for new ventures also includes the evaluation of the required resources to fulfill the requirements of the market.

In contrast, strategic management for an ongoing business entails a continuous process and assessment that appraises the business in which the organization is involved. The company reassesses its goals, objectives, and strategy to determine the success and performance of the organization as well as formulate new strategies and approaches (Wheelen and Hunger, 2011). For an ongoing business, strategic management is a continuous approach used to assess the industries, competitors as well as changes in the business environment to implement change in their strategies. Strategic management enables the organization to account for the current situation, analyze the efficiency of the implemented strategies, and recommend changes to meet its objectives and goals.

Part B

Environmental scanning has been considered as the first stage in the process of linking an organization’s strategy with the environment. Environmental scanning enables companies to learn about threats and opportunities that may influence their performance (Zhang, Majid, and Foo, 2011). Small companies should engage in environmental scanning through acquiring information related to the consumer market, market trends, competitors, technological aspects, legal aspects, economic aspects, and cultural aspects. This will enable the small company to understand its external environment in which it operates thus setting goals, strategies, and objectives that meet the consumer and market demands better. Small companies should analyze all the factors that may influence the future of the business through careful monitoring of the threats and opportunities in the market. Therefore, the organization will have to scan the external and internal environment to understand the internal and external forces that are responsible for the shift in their operations to improve their performance and secure a better position in the market.

A small company should mainly focus on technological and economic aspects in a business environment. These two aspects of the business environment have a great influence on future operations within an organization. The technological aspects entail the adoption of new technologies and innovative business processes that influence the effectiveness and efficiency of a business. Economic aspects impact the consumer market since they influence the spending power of consumers in varying circumstances. The two aspects enable an organization to take advantage of the trends, changes in events, opportunities, and minimize threats since they fully understand the dynamics and complexity of the market and the industry at large.

Part C

A company strategy is an essential ingredient in determining the future of the company. While determining whether to follow stability or growth strategy, there are several things that a business needs to put into consideration. Stability strategy entails retaining the present strategy and continuing to focus on the current markets and products thus maintaining the existing level of effort (Wheelen and Hunger, 2011). Growth strategy entails entry into new lines of activity and increased diversification. Therefore, while determining whether to focus on expansion strategy or stability strategy, a company should consider the availability of resources, their current and past financial performance, the current market share owned by the company, their position in the market, the turnover of the company, profitability in the current operations, and the condition of sales of its products.

The past sales and profitability of the company are important while assessing whether a business should expand or remain the current position since they indicate the increase or decrease in productivity. Evaluating the present market enables the business to assess whether it is working to its full capacity. Examining the availability of the current resources for the business operations will indicate whether new expansions will impact the goals, objectives, and business profits. Therefore, a business needs to consider these factors while deciding on whether a company needs a stability strategy or expansion strategy.

Part D

The goals and objectives of a family-owned business are different from those of publicly owned businesses which mainly focus on maximizing the value of a business. Ideally, the values and goals of a business greatly impact its strategic management. Family-owned businesses focus on meeting family goals, objectives, and values. This is because the business is managed by family members whose strategic decisions focus on productivity and profitability. Lack of experience and skills influence the company’s strategic management. This is because family businesses tend to appoint their family members into responsibilities and roles that they lack skills resulting in a stressful working environment. As the business grows the shift may focus from development to personal interests and gains which result in conflict. Publicly owned businesses focus on growth and development which leads to their strategic management focusing on constantly reinventing and adapting to remain ahead of its competitors as well as operational effectiveness. The ownership characteristics and interests significantly impact strategy selection due to the strength of being family operated.

Part E

Strategic planning is the process of establishing a direction of the small business through assessing the current business environment. The strategic planning offers a place to record the action plans, long term goals as well as decision on the allocation of resources to pursue and implement the business strategy (Akinyele and Fasogbon, 2010). Additionally, strategic planning helps in defining the vision, mission, and goals of the company. Introducing strategic planning in small business sets measurable goals and offers a sense of direction for the business.

Strategic planning is a useful tool for guiding day to day activities as well as examining progress as well as changing approaches while moving forward (Akinyele and Fasogbon, 2010). Ideally, strategic planning focuses on the company’s efforts while ensuring that everyone in the business is working towards a common objective. Strategic planning entails realizing weaknesses, strengths, threats, and opportunities of the company. Therefore, the firm will build on the opportunities and strengths of the firm and minimize weaknesses and threats in the business. Introducing strategic planning for small businesses is essential since it enables the business in reaching a better position in the market through an effective course of action and plan that guides the company.

References

Akinyele, S. T., & Fasogbon, O. I. (2010). Impact of strategic planning on organizational performance and survival. Research Journal of Business Management, 4(1), 73-82.

Dess, G. (2013). Strategic management: Text and cases. McGraw-Hill Education.

Wheelen, T. L., & Hunger, J. D. (2011). Concepts in strategic management and business policy. Pearson Education India.

Zhang, X., Majid, S., & Foo, S. (2011). The Contribution of Environmental Scanning to Organization Performance. Singapore Journal of Library & Information Management, 40.