Entrepreneurship refers to the process of launching and running a new business venture by individuals who have the eagerness and capacity to develop, organise and manage the venture. There has been a recent rise in the number of talented entrepreneurs who are good at perceiving new opportunities for business in the globalised market, and attaining growth. Management degree courses across universities are now focusing on educating future professionals in this direction. In this paper, a reflection would be put up related to Module 1 ‘Understand Growth’ that discusses the different theories and approaches that can inform an entrepreneur and help manage growth. The reflection would include different growth strategies and growth models to discuss whether there is an ideal-type growth strategy or model. The dilemma of growing economies in limited space would also be highlighted. The role of individual companies in this context would also make a part of the reflection.
In my opinion, all individuals have an entrepreneur within them, implying that everyone sees opportunities around them. The entrepreneur in us is more concerned about discrimination between diverse opportunities than the person is with failing to utilise the opportunities and attaining growth. Growth in entrepreneurship is a risky and challenging process that makes it difficult for the startup businesses to survive in this demanding market. I have learnt that growth is to be assessed in the context of customers, employees, profit, liquidity and revenue, apart from other dimensions. Hurdles and barriers are common regardless of the type of growth. In this regard, I would like to mention that an entrepreneur who has a good understanding of the risks and takes them in a known manner has more chances of attaining growth.
According to Drucker (2014) at the heart of entrepreneurship lies the zeal to achieve growth and maximise profit through identification of major opportunities and assembling of necessary resources for capitalising them. I propose that entrepreneurship is the process of organising, conceptualising and launching innovative businesses wherein the business is nurtured into a high growth venture in an unstable and complex environment. Since there is an innovative approach in entrepreneurship, unlike common business, the former one has more potential for achieving growth in a shorter span of time. Entrepreneur ventures cannot be restricted to existing market as they have the capability to create their own suitable market (Kuratko, 2016). In contrast, small businesses operate in an already existing industry which is not unique, making growth difficult to be achieved.
At this juncture, it would be advisable to highlight the different growth models and approaches as highlighted in the literature. According to Achtenhagen et al. (2017), two distinct growth modes are commonly in practice at present. These are organic growth and growth by acquisition. Organic growth, or internal growth, is the one that is attained when the venture expands on its own operations instead of relying on the mergers. Growth through acquisition refers to the process when one company takes the acquisition of another. It can be taking over of control or merger. As highlighted by firms exhibit different growth patterns, and these are not random. In contrast, the patterns of firm growth are conceptually comprehensible, empirically distinct and related to demographic affiliation in a systematic manner (Shibia et al., 2017).
As highlighted by Clarke et al., (2014) the entrepreneurial growth depends on the context in which the growth is about to take place. The entrepreneur’s cognitive processes are responsible for shaping the growth. Such cognitive processes have been indicated to configure the resources required for achieving growth. Wiklund (1998) had pointed out that multiple variables enhance and restrict the growth of small firms and drive their performance over a considerable period of time. The finding of the researcher is that small business managers, along with the choices they make, act as the driving vehicle for the development of firms. It is likely that the managers of the companies take encouraging actions to allow the company grow and expand. The authors also state that small firms performing well and witnessing growth have an entrepreneurial strategic orientation. The two strategic dimensions are proactiveness and innovation. Aiming for growing market niches holds more importance for growth instead of taking market shares from the different competitors. According to Nason and Wiklund (2015), VRIN resources are responsible for permitting firms to assess diverse opportunities and allow companies to allocate resources in a proper manner for creating growth.
Lockett et al. (2011) explained the Edith Penrose’s theory of firm growth. The theory postulates that the firm’s present growth rate is always influenced by the adjustment costs of productive opportunity and changes brought about in the previous growth. The authors further highlight that previous organic growth acts a barrier to present organic growth. Moreover, previous acquisition growth makes a positive impact on the present organic growth. It is to be concluded that acquisition growth, as well as organic growth, make up two distinct strategic options that the firm faces. Future growth is also influenced in the same manner. Davidson et al., (2009) debates on whether companies should grow profitable or should grow from profits. According to them, firm growth is perceived as a good thing across the globe, as portrayed as the measure of success. The author’s reason that growth is not to be thought as a trace of sound development. It can be hypothesised that companies that grow without considering securing profitability are less effective in the longer run as compared to those that first focus on securing high profitability at low growth. Abrams (2017) brought into limelight some examples of growth strategies adopted by some reputed companies of the world. When Unilever introduced Sunsilk shampoo in US, the strategy adopted was market development. The company did not bring any modification in the product and expansion to US increased market potential. On the other hand, when Coca-Cola launched Diet Coke, the strategy was product development as a new product was brought into the market. An apt example of product diversification strategy is that of GAP when it introduced Forth and Towne brand for women over 35. The market potential increased since no brand of GAP had targeted women of this age group.
The risks and benefits associated with form growth are valuable topics for discussion. The dilemma of growing economies in limited spaces has bene felt across industries. All firms, big or small, have to undergo periods of growth and these periods are turbulent since they carry diverse risks. In practice, entrepreneur ventures would face challenges impeding growth. Though growth is risky, stagnation further increases the risk of failure. Under such situations, companies need to invest in innovation as a response to the potential risk. This way mitigation of risks is possible with the help of suitable planning (Stoery, 2016). In this respect, I would like to provide key insights into how companies must act appropriately for fostering growth. Building up an organisational culture and strong network of stakeholders is essential. The company would start growing, the founders are to establish a connection with customers, investors and competitors. A large network permits firms to expand and come across partners in new demographic region or market. This in turn aids in expansion of customer base.
From the above analysis, I would like to draw the inference that there is no typical growth approach or model since different types of firms have different growth patterns. Recognition of growth is certainly a multidimensional process which can occur in different ways. Strategic planning lies at the core of growth for all companies and in order to successes, they must take effective strategic decisions. From my perception, entrepreneur ventures must execute short term and long term plans for giving a vision to the company that allows integrity and focus towards company objective. Lastly, I have understood that company structure is of pivotal value in company growth. At the time when the company is small, information channels are more centralised. With growth, diverse communication channels are required. Therefore, establishment of a network of strong communication channels is elementary for company growth. The closing thought is that growth cannot be experienced without analysing the future possibilities and waiting for the correct opportunity. I as a potential entrepreneur need to be flexible enough so that I can work with any emerging issues while not losing the major emphasis on long-term goals.
References
Abrams, R. M. (2017). Entrepreneurship: A Real-World Approach. Planning Shop.
Achtenhagen, L., Brunninge, O., & Melin, L. (2017). Patterns of dynamic growth in medium-sized companies: Beyond the dichotomy of organic versus acquired growth.
Long Range Planning, 50(4), 457–471.
Clarke, J., Holt, R., & Blundel, R. (2014). Re-imagining the growth process:(co)-evolving metaphorical representations of entrepreneurial growth. Entrepreneurship & Regional Development, 26(3-4), 234-256.
Davidsson, P., Steffens, P., & Fitzsimmons, J. 2009. Growing profitable or growing from profits: Putting the horse in front of the cart? Journal of Business Venturing,
24(4), 388–406.
Drucker, P. (2014). Innovation and entrepreneurship. Routledge.
Kuratko, D. F. (2016). Entrepreneurship: Theory, process, and practice. Cengage Learning.
Lockett, A., Wiklund, J., Davidsson, P. & Girma, S. (2011). Organic and acquisitive growth: re-examining, testing and extending Penrose’s growth theory. Journal of
Management Studies, 48(1), 48-74.
Nason, R. S., & Wiklund, J. (2015). An Assessment of Resource-Based Theorizing on Firm Growth and Suggestions for the Future. Journal of Management, XX(X), 1–29.
Shibia, A.G., Shibia, A.G., Barako, D.G. & Barako, D.G., (2017). Determinants of micro and small enterprises growth in Kenya. Journal of Small Business and Enterprise Development, 24(1),105-118.
Storey, D. J. (Ed.). (2016). Entrepreneurship and new firm. Routledge.
Wiklund, J. (1998), Small Firm Growth and Performance: Entrepreneurship and Beyond. JIBS Dissertation Series 3. Jönköping: JIBS, pp. 255-259.
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