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SOM497 – Business Policy & Strategy

CHAPTER 13CHAPTER 13: Strategic Issues in:

Entrepreneurial Ventures and Small Businesses

STRATEGIC MANAGEMENT & BUSINESS POLICY 10TH EDITIONTHOMAS L. WHEELEN & J. DAVID HUNGER

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Small Businesses versus Entrepreneurial Ventures

Definition of small business

Importance of small businesses: 99% of all businesses in US Over 25 million small businesses in US 60% -80% new jobs annually Produce 13 to 14 times more patents per employee than large patenting

firms Employers of 41% of high tech workers (such as scientists, engineers, and

computer workers) 66% of new employer establishments survive at least 2 years, and

44% survive at least 4 years

Definition of Entrepreneurial Venture

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Strategic Planning (in small business)

Strategic planning related to better performance BUT small business lack strategic planning because: Not enough time Unfamiliar with strategic planning Lack of skills Lack of trust and openness

Small firms with too much formalization in processes may reduce performance…why?

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Issues in Environmental Scanning & Strategy Formulation (in small business)

Less sophisticated in small than large firms Can’t afford to hire specialist

CEO of small firm tends to be owner and primary stakeholder

Small firms may end up with stability strategy

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Factors affecting new venture success

Structure of industry Success is greater for entrepreneurial ventures entering

rapidly changing industries OR early growth industries OR industries with different/heterogeneous products THAN stable industries and industries w/homogenous products

Business strategy of new venture Keys to success are to

Differentiate product from competitors Focus product on customer needs in a segment of the market

Behavioral characteristics of entrepreneur

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Issues in Small & Entrepreneurial Firms

Strategy Implementation issues Organizing & staffing growing firm

Transferring ownership of firm

Issues in Evaluation & Control Line between debt and equity blurred

Lifestyle part of financial statements

Standard financial formulas don’t apply

Personal preference determines financial policies

Banks combine personal and business wealth

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SOM497 – Business Policy & Strategy

CHAPTER 14CHAPTER 14: Strategic Issues in:

Not-for-Profit Organizations

STRATEGIC MANAGEMENT & BUSINESS POLICY 10TH EDITIONTHOMAS L. WHEELEN & J. DAVID HUNGER

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Non-For-Profits (NFP)

NFP – Private nonprofit corporations

Public governmental units/agencies

Importance of NFP Employ 1 in every 20 jobs in nations throughout world Employ 25% of U.S. workforce in U.S.

(study from 1986) Own approx. 15% of U.S. private wealth

(study from 1986)

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Why Not-for-Profit?

Public or collective goods Certain goods and services that profit-making

firms cannot or will not provide

Importance of revenue source Depends on:

dues assessments donations funding

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Not for Profit Strategies

Strategic piggybacking

Social entrepreneurship

Mergers

Strategic alliances

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SOM497 – Business Policy & Strategy

CHAPTER 3CHAPTER 3: Ethics & Social Responsibility

STRATEGIC MANAGEMENT & BUSINESS POLICY 10TH EDITIONTHOMAS L. WHEELEN & J. DAVID HUNGER

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Social Responsibilities

Social Responsibility

Milton Friedman use firm resources and engage in activities designed

to increase its profits

Carroll’s 4 Responsibilities

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Stakeholders

Corporate Stakeholders –Affect or are affected by the achievement of the corporation’s objectives

Stakeholder Analysis Primary stakeholder

Secondary stakeholder

Stakeholder Input

Business Ethics & Behavior

Types of corporate unethical practices

Reasons for unethical behavior

Guidelines for Ethical Conduct → “Code of Ethics”

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Next classes

No class on May 1st (Thurs) & May 6th (Tues) (use this time to work your exam )

Final exam is due on: May 8th (Thurs)