Master of International Tourism and Hospitality Management -
Ish
Topic5-Entrepreneurialplanningandgrowth1.pptx\
Entrepreneurship
Topic 5
Entrepreneurial planning and growth
Module Objectives
discuss the nature of strategic planning
describe the value of strategic planning for an entrepreneurial venture
identify and describe the steps involved in the strategic planning of entrepreneurial firms
identify the stages of the venture life cycle
discuss growth and identify key factors during the growth stage
discuss the complex management of paradox and contradiction in the growth stage.
2
A Major Shift . . .
From financial capital to intellectual capital
Human
Structural
Customer
Strategic Management
Is crucial to building a successful business.
Involves developing a game plan to guide a company as it strives to accomplish its mission, goals, and objectives, and to keep it on its desired course.
Strategic Management and Competitive Advantage
Developing a strategic plan is crucial to creating a sustainable competitive advantage, the aggregation of factors that sets a company apart from its competitors and gives it a unique position in the market that is superior to its competition.
Building a Competitive Advantage
Consider five aspects of a small company:
Products they sell
Service they provide
Pricing they offer
Way they sell
Values to which they are committed
Key: Core Competencies
Unique set of capabilities a company develops in key areas, such as superior quality, customer service, innovation, team-building, flexibility, responsiveness, and others that allow it to vault past competitors.
They are what a company does best.
Best to rely on a natural advantage (often linked to a company’s “smallness”).
Building a Sustainable Competitive Advantage
Superior value for customers
Sustainable competitive advantage
Capabilities
Core competencies
Skills
Lessons learned
Strategic Management Process
Step 1 Develop a vision and translate it into a mission statement
Step 2 Assess strengths and weaknesses
Step 3 Scan environment for opportunities and threats
Step 4 Identify key success factors
Strategic Management Process
Step 5 Analyze competition
Step 6 Create goals & objectives
Step 7 Formulate strategies
Step 8 Translate plans into actions
Step 9 Establish accurate controls
Step 1: Develop a Vision and Create a Mission Statement
Vision – the result of an entrepreneur’s dream of something that does not exist yet and the ability to paint a compelling picture of that dream for everyone to see.
A clearly defined vision:
Provides direction
Determines decisions
Inspires people
Allows for perseverance in the face of adversity
Step 1: Develop a Vision and Create a Mission Statement
Addresses question: “What business are we in?”
The mission is a written expression of how the company will reflect an entrepreneur’s values, beliefs, and vision – more
than just “making money.”
Serves as a “strategic compass.”
Examples: Chick-fil-A, Google
Step 2: Assess Company Strengths and Weaknesses
Strengths
Positive internal factors a company can draw on to accomplish its mission, goals, and objectives.
Weaknesses
Negative internal factors that inhibit a company’s ability to accomplish its mission, goals, and objectives.
Step 3: Scan for Opportunities and Threats
Opportunities
Positive external factors the company can exploit to accomplish its mission, goals, and objectives.
Threats
Negative external factors that inhibit the firm's ability to accomplish its mission, goals, and objectives.
The Power of External Market Forces
Competitive
Economic
Political and Regulatory
Technological
Social and Demographic
Step 4: Identify Key Success Factors
Key success factors (KSFs): factors that determine the relative success of market participants.
The keys to unlocking the secrets of competing successfully in a particular market
segment.
Example: Five Guys Burgers and Fries
Step 5: Analyze Competitors
Small business owners believe they operate in a highly competitive environment and the level of competition is increasing.
Competitor Analysis
Direct competitors
Offer the same products and services
Customers often compare prices, features and deals among these competitors when they shop
Significant competitors
Offer some of the same or similar products or services
Product or service lines overlap but not completely
Indirect competitors
Offer same or similar products in only a small number of areas
Step 5: Analyze Competitors
Analyzing key competitors allows an entrepreneur to:
Avoid surprises from existing competitors’ new strategies and tactics.
Identify potential new competitors and the threats they pose.
Improve reaction time to competitors’ actions.
Anticipate rivals’ next strategic moves.
Step 5: Analyze Competitors
Techniques do not require unethical behavior:
Monitor industry and trade publications.
Talk to customers and suppliers.
Debrief employees, especially sales representatives and purchasing agents.
Attend trade shows and conferences and study competitors’ sales literature.
Watch for competitor’s employment ads.
Conduct patent searches for patents competitors have filed.
Get EPA reports for the factories of competing manufacturers.
Monitor direct competitors via social media
Step 6: Create Company Goals and Objectives
Goals: Broad, long-range attributes to be accomplished.
Objectives: More detailed, specific targets of performance that are:
Specific
Measurable
Assignable
Realistic (yet challenging)
Timely
Step 7: Formulate Strategies
Strategy - a road map of the actions an entrepreneur draws up to achieve a company’s mission, goals, and objectives.
It is the company’s game plan for gaining a competitive advantage.
Step 7: Formulate Strategies
Three basic strategies:
Strategy?
Cost Leadership
Differentiation
Focus
Three Strategic Options
Cost Leadership
Goal: to be the low-cost producer in the industry (or market segment).
Low-cost leaders have advantages:
Reaching buyers who buy on the basis of price
The power to set the industry’s price floor.
Cost Leadership
Cost Leadership works well when:
Buyers are sensitive to price changes.
Competing firms sell the same commodity products.
A company can benefit from economies of scale.
Differentiation
Company seeks to build customer loyalty by positioning its goods or services in a unique or different fashion.
Idea is to be special at something customers value.
Key: Build basis for differentiation on a distinctive competence, something that the small company is uniquely good at doing in comparison to its competitors.
Focus
Company selects one or more customer segments in a market, identifies customers’ special needs, wants, or interests, and then targets them with a product or service designed specifically for them.
Strategy builds on the differences among market segments.
Rather than try to serve the total market, the company focuses on serving a niche (or several niches) within that market.
Step 8: Translate Strategies into Action Plans
Survey of senior executives: Companies achieved only 63% of the results in their strategic plans.
Create projects by defining:
Purpose
Scope
Contribution
Resource requirements
Timing
Step 9: Establish Accurate Controls
Plan establishes the standards against which actual performance is measured.
Entrepreneur must:
Identify and track key performance indicators.
Take corrective action.
Module Conclusion
The strategic planning process:
Begins with the nine steps.
Becomes more efficient each time.
Teaches entrepreneurial discipline for a higher chance of survival.
