Entrepreneurship Management MANAGING EARLY GROWTH Prof Bharat Nadkarni Managing early growth Growth cycle of a New Venture Start-up Early growth Rapid growth Maturity Negative Entropy Resist/ Delay Decline Managing early growth

Expand the venture through Expansion horizontal/ vertical Diversification- related / unrelated Joint venture

Acquisitions Mergers Leveraged buyouts Franchising Business process reengineering Global ancillarisation Peter.F.Druckers tips for growth-oriented enterprises

The need for market focus Financial foresight Building a management team Where can I contribute? The need for outside advice Managing organizations during Growth and Decline A Model of Organizational Growth as developed by Larry Greiner in early 1970s. Phases of PLC 1. Growth through creativity : Crisis of Leadership 2. Growth through Direction : Crisis of Autonomy 3. Growth through Delegation : Crisis of Control

4. Growth through Co-ordination : Crisis of Red Tape 5. Growth through Collaboration : Crisis of Stagnation 6. Growth through Globalisation : Crisis ? Business Communication Survival Rate for Globalised Corporates Age in Years Percentage Perish Percentage surviving

5 62 38 10 79 21 15

86 14 20 90 10 25 93

7 50 98 2 75 99 1

100 99.50 0.50 Organizational Decline The changing environment Is managing Decline the reverse of managing growth? Potential problems when organizations decline: Explaining cutbacks in the middle management Dysfunctional Consequences of organizational decline

Dysfunctional consequences of organizational decline Centralization : DM passed upwards, less participation, control is emphasised No long term planning Innovation curtailed Scapegoating : Blamegame Resistance to new alternatives Turnover Low morale, Conflicts Loss of slack ; uncommitted resources are used to cover operating expenses Fragmented pluralism ; special interest groups organize and become more vocal

Loss of credibility, Nonprioritized cuts. Managers caught in the middle Reducing organizational size / delayering for avoiding takeovers What is the Solution? Meet the challenge upfront Increase communication Increase participation for redefining strategy and goals

Look innovative ways to deal with the problem. Elements in Turnaround Management Khandwallas ten elements of a successful turnaround strategy.

Change in top management Initial credibility building actions. Neutralizing external pressures. Initial control Identifying quick payoff activities. Quick cost reductions Revenue generation. Asset Liquidation for generating cash Mobilization of the organization Better internal co-ordination. SICKNESS IN VENTURE

RBI definition: principal or interest has remained overdue for two consecutive quarters in a financial year and there is an erosion in the net worth due to the accumulated cash losses to the extent of 50% or more Impact unemployment, nonpayment of dues, blockage of finance, non-utilization of assets Causes of sickness Personal

Lack of integrated knowledge/ training Incompatible personalities Health Shift in attitude Succession Management

Form of ownership Wrong choice of product/location Team building Planning Management information systems Inability to manage growth HR issues

Faulty recruitment Wage structure Industrial Relations Low productivity Operational issues Technology obsolescence Quality up gradation Production Management

Plant location & layout Quality Capacity utilization Inventory Maintenance Environment Waste management Financial

Capital structure Capacity to bring capital Poor resources management Costing/pricing policy Over-dependence on concessions & subsidies

Diversion of capital Over-trading Unfavorable gearing Lack of tax planning Marketing Over-dependence on a single customer Marketing myopia Sales &distribution set-up Market feedback/ research Marketing strategies Government

Changing policies Scale of economy Controls Fiscal policies Role as facilitator Act of God Accidents and injuries Catastrophes and disasters

BIFR Board for Industrial and Financial Reconstruction Prevention is better than cure The Success Trap All great companies have some kind of success formula. It could emanate from a unique set of

strategic frames, resources, processes,relationships or values. But when the formula hardens,companies lose a vital ingredient for continued Is your company at risk? Symptoms of Active Inertia Strategic frames become binders We are a growth company We know our competitors well We are number one Resources harden into millstones Our brand means the product

We have it all Our technology is a fortress Processes lapse into routines We have a bible for critical processes We hire and promote people like us We make our decisions by consensus Relationships become shackles We know our place in the value chain We do the important tasks in-house Values ossify dogmas We are a family, not a company We have a campus, not a headquarter Our competitors are our enemies

THANK YOU!! Entrepreneurship Management Business Process Reengineering (BPR) Definition by M Hammer. BPR is defined as the critical analysis or fundamental rethinking and radical redesign of existing business processes to achieve breakthrough or dramatic improvements in performance measures such as cost, quality, service and speed. BPR has often been confused with the quality movement. Quality specialists tend to focus on incremental change and gradual improvement of processes, while proponents of

reengineering seek radical redesign and drastic improvement of processes. Entrepreneurship Management It is based on four key words: 1. Fundamental Why do we do what we do? And Why do we do it the way we do? Why the old rules and assumptions exist? 2. Radical Disregard all existing structures and procedures, and inventing completely new ways of accomplishing work. 3. Dramatic Not about making marginal improvements.

4. Processes a. Dysfunctional b. Importance c. Feasibility

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