Session 2
STRATEGIES FOR GROWTH
The entrepreneurial process
Key Contingencies
Opportunity
Identification
Entrepreneur
Attraction and
Management
Resources
Leadership and
direction
Organisation
Wickham, P. (2006: 224)
Organisation
•
•
•
•
May take many forms
Often characterised by strong, charismatic leadership
Less formal, therefore flexible and responsive
Networks of contacts rather than formal structures
they work informally, in a competitive way and
succeed by adding value.
Wickham, P. (2006: 223-228)
Resources
• Money, people, effort, resources and skills.
• Physical resources, whatever machinery, buildings,
equipment the organisation has
• Intangible assets, such as the name/brand of the
company, intellectual property, goodwill
• As organisations grow, the entrepreneur might find it
difficult to maintain control
Wickham, P. (2006: 223-228)
Opportunity
• A gap left in the market by those who currently serve
it.
• This represents an opportunity to server the market
with something different and/or better than the
present suppliers.
• Need to add value through innovation and
profitability.
Wickham, P. (2006: 223-228)
Opportunity
• A gap left in the market by those who currently serve
it.
• This represents an opportunity to server the market
with something different and/or better than the
present suppliers.
• Need to add value through innovation and
profitability.
Wickham, P. (2006: 223-228)
The learning organisation
Opportunity
Focus
Fit
Entrepreneur
Resources
Configuration
Organisation
Wickham, P. (2006: 227)
Innovation
• If the opportunity is the chance to do
something differently, the innovation is the
way of doing something different or better.
• Innovation is the key to exploiting an
opportunity.
Wickham, P. (2006: 236)
The function of the Entrepreneur
• The role of the entrepreneur is largely an economic one.
• They recognise and fill gaps in the marketplace and use this
opportunity to make profit.
• Government recognise the role of the SME and the
entrepreneur as a mechanism to stimulate growth and
change in an economy and are increasingly finding ways to
help and support them.
Wickham, P. (2006: 5-12)
The function of the entrepreneur
• Provide market efficiency – again in economic terms the
entrepreneur stimulates efficiency and optimization of
resources by creating competition. This may be through
market pressure (price), innovation or both.
• Accept risk – not everyone is comfortable with taking risks in
business and entrepreneurs take risk with a view to the
anticipated rewards. While in economic terms risks may
simply be financial, there are the personal risks for the
entrepreneur – self esteem, professional standing. The
entrepreneur may not be the investor.
Wickham, P. (2006: 5-12)
The function of the entrepreneur
• Maximize investor returns – investors look for entrepreneurs
who have a record of creating profitable ventures. The
financial risk lies primarily with the investor, who may be will
to balance the financial gains with other stakeholder
interests, or who may not.
• Process market information – Entrepreneurs are constantly
looking for opportunities to exploit and gaps in the
marketplace – where for products or services. In this respect
they act as a catalyst and agitate the market.
Wickham, P. (2006: 5-12)
Risk of Failure
• An individuals propensity for risk will determine the type of
entrepreneur they are.
• Risk to the entrepreneur may be viewed in many different
ways: personal wealth, reputation, self esteem.
• The role of the entrepreneur is to manage risk, as far as it is
possible to do so, given that:
– You can not truly predict the actions of the market or competitors
– You may need to choose between a set of competing options and will
act on you anticipated ‘view of the world’ and on the anticipated
actions of others.
– The payoffs anticipated my not happen as predicted, contingencies
need to be in place.
Wickham, P. (2006: 247)
Uncertainty
Ambiguity
Certainty
Risk
Certainty to Ignorance
Ignorance
Certainty, Risk and Uncertainty
• Certainty – a firm knowledge that something will happen.
• Risk – there is a probability that events or actions will occur.
Even if the probability of a positive outcome are good, risk is
still present. Risk may be gambling on a positive outcome.
• Uncertainty – when the level of certainly is not know, actions
and decisions can be made to maximize potential or minimize
loss. Business decisions are made in conditions of uncertainty,
with the aim of minimizing risk.
Wickham, P. (2006: 248)
Ambiguity, ignorance
• Ambiguity – this lies between risk and uncertainty. There is no
probability that a situation might happen, but there is no
compete uncertainty either. The entrepreneur may have a
instinct or expectation based on market knowledge.
• Ignorance – the opposite of certainty. No understanding of
the issues or probabilities. A high risk strategy.
Wickham, P. (2006: 248)