7/30/2019 Corporate New Venture Units

1/3

Corporate new venture units:

instigate new ideas: starting new ideas, cadre: group of people trained for specified job.

New venture unit develop by initiating new ideas and change those ideas into

commercialization by passing several stages under the management in charge of venture.

Few corporations provided the opportunity to Employees buy back these ventures by options

plan. i.e. Starbucks Coffee in USA, Tesco UK

There are two types of venture teams

1. The Spontaneous Team:

Pinchot identified four stages of spontaneous team development.

1. Solo phase:

a. Individual foster the creative ideas to establish the feasible innovation to

develop during the spare time in weekends and from daily working hours.

2. Network phase:

a. It is process of gaining allies and sponsors for the support of their project.

3. Boot leg phase:

a. Formal team begins to take shape.

b. Team members start doing work and helping to develop procedures, gathering

market information, lining up production resources and finally formulation of

business plan/proposal.

c. That proposal taken to corporate management for formal recognition of

project.

4. The formal team phase:

a. Team members are given opportunity to manage the project

b. budgets are allocated

c. Resources are lined up for commercial development process.

2.Formal venture units:

A polished proposal with supported data will enhance the like hood of approval and budget

support for product innovation.

After formal recognition, entrepreneurial team established leads toward the

development of prototypes,

7/30/2019 Corporate New Venture Units

2/3

initials market research,

testing

Cost and profit analysis

Teams are allowed to operate autonomously within budgets

if the new idea failed first stage budget considered as necessary investment to encourage

activity

The second round of support involved development budget which includes limited production

and introduction of product in selected market.

Results are gathered from sales ,team enhances its proposal again corporate decisions mage

regarding accept or reject the project.

Following approaches used in lunching of project

1. Innovation transfer:

Making new product operational

Operational control could be extended to research and development, production, marketing,

logistic and most other operational functions.

Merck and company American firm

Robert Pengelly introduced Merck's innovation transfer model in 1988

it could be treated as alternative of traditional R & D.

2. New division status:

This process involve in formation of new organisation within the parent company

Horizontal extension that allows diversification without disrupting other operations

Example: AT & T 's Transtech in 1983 to manage the stock transfer.

The subsidiary would have independent operations, budgets, research and compensation

system

3. Spin- offs:

Corporate subsidiaries

Team members often enjoy stock options and ownership position in spin offs

Mother company retains strong equity position

7/30/2019 Corporate New Venture Units

3/3