Building successful companies involves identifying the cycle of organizational growth and assessing the need for change (Flamholtz & Randle, 2007, p. 48). Organizational strategies spearheading growth focus on all stages from new venture, professionalization, consolidating and strategic planning. These also focus on the structure of the organization to highlight the leadership strategies, performance management and corporate culture. Business growth depends on the type of business, the resources available and business strategies. In contemporary business, firms strategize on how to move from one level to another. Small businesses today take advantage of the digital platform to excel in the midst of a highly competitive environment (Estrin, Korosteleva, & Mickiewicz, 2013). Market trends influence the growth of businesses. Business growth has advantages and disadvantages influenced by the strategies in place. Organizations have entry, midlevel and exit strategies which contribute to success. Entrepreneurship is a continuous search for opportunities. The process has risks and benefits. Organizations need to embrace the change and employees have a challenge to move along. Therefore, the role of leadership is critical and there are pros and cons of different strategies within different levels.
The structure of growth influences the adoption of strategy. Companies experience growth in different stages. In start-up levels, firms’ main concern features market entry strategies like differentiation, which increase sales. As the business grows, strategic decisions like niche planning emerge to define the company. This linkage of resources with specialization influences the professional approaches in the operations. As the business gets to an advanced stage, managing growth becomes even more difficult because of the transition period. Therefore, it is important to start well and survive beyond the start-up and entrepreneurial stages. Organizational structures are different and sometimes organizations experiment with different plans (Anchtenhagen, Melin, & Naldi, 2013). Progress in business involves change and strives to enhance value within the growing business. Business capabilities such as leadership and employee commitment are critical in the creation of business value. These are different factors influencing business transitions. Business planning needs a goal, which describes the management approaches, their strengths and weaknesses. Successful businesses like Coca Cola keep changing through innovation in order to gain a competitive edge. The framework for successful organizations depends on the operational strategy and its resources. Unsuccessful business cycles include Walmart’s experience which had a decline in economic performance in 2016 (Hang the Bankers, 2016). Growth translates to increased revenue and business improvements.
The role of governance is critical for optimization of strategies for business growth. Niche strategies in small businesses helps firm into medium sized ventures (Roberts, 1999, p, 16). Operating in a market driven system call for effective and efficient plans. Narrowing down the target is minimizing the business focus to personalized services. The importance of this approach is to optimize the customer value. In order to find a niche, companies explore different types of growth strategies including differentiation and segmentation. These focus on the customer needs and the firm’s business plan. The niche market is important in maintaining the customer loyalty. It is an ideal strategy for market entry because it is a focus on the owner’s needs and market demand. This enables the business to overcome market entry barriers such as resource limitation and brand recognition. The competitive advantage gives the firm a reputation; however, the niche market has limitation.
Growth challenges are critical at certain times. During the emergence of professional enterprises, the transition of business management practices from family based firms to professionally management businesses started with changes in strategies (Hofer & Charan, 1984). The small business management approach has changed to competitive strategies. This transition is due to the nature of global entrepreneurial transition or business cycle. Managing the relationship between these transition periods is critical. Conflicts arise in entrepreneurship for different reasons hence the need for negotiation strategies (Collewaert, 2013). When this happens, the business relationships and their level of investment come into play. Rules govern the stakeholder interactions for successful integration and business operations. Investment contracts determine the contracts and the entrepreneurial links. Investor’s want high net value and will collaborate with promising firms that show a potential for growth. These may be individuals or organizations with some level of involvement. The investor and the venture agree to sign an agreement in order to achieve a specific outcome. In investor venture interactions, trust is important for business success. Successful implementation transforms the business model and is useful in the initial stages of the business and challenges arise in case of reduced cash flow or unexpected decisions.
Entrepreneurial exit plans are important in business when failure arises. These set the pace for business closure, public offering and write offs (DeTiennem D, McKelvie, & Chandler, 2015, p, 259). Acquisitions and mergers need this plan in order to steward an ideal route of exit through a systematic process. The global market is full of scadals showcasing the collapse of multinational companies due to bankruptcy, mismanagement, liquidation or other closures. Some companies exit the process successful while others stand out as failures. Distresses and voluntary closure take different routes based on formal and informal exit plans. Financial rewards motivate entrereneurship and when this fails, it leads to financial gaps. The closure of a business is also a strategy that gives a company a chance to reposition itself for the future. This was evident in the case of Walmart the largest retailer which adopted a merger strategy in order to invent itself (Hang the Bankers, 2016). The characteristics of a firm determine its exit strategies. Some brands like the small businessess opt for income subsititution. The financial status, and the type of governance also influence the plans. Companies make critical growth decisions based on the financial strategy, external market trend, decision making and innovative opportunities available.
Research on the entrepreneurial process highlights the transition process of family based firms in shaping policies on business entry and exits (Lumme, Mason, & Suomi, 2013). From the findings it is evident that business management has cycles. Among these is the critical stage of succession which covers the management of resources, leadership and risk management strategies. Managing change in the transition period is important. Entreprenuerial processess affect both the individuals and organizations at large (Nordqvist, Wennberg, Bau, & Hellerstedt, 2013). Therefore, the governance factor is important in growth processes. Employee wellbeing is important because organizations need a team for successful growth. Motivating the employees is one way of stimulating growth through stakeholders. The number of employees, level of motivation and adoption of innovation are critical.
In conclusion, firms have business cycles, which influence their trends. Growth level factors like strategic maps and individual motivational factors determine the growth structure of a firm. Companies champion ideas and resources into a success plan but when this fails, an exit strategy becomes inevitable. This plan is as critical as an entry plan because it ensures that the firm’s initiative is not in vain. Companies, which have a fall back plan, stand a high chance of bouncing back as successful stories despite its shortcomings. Although an exit plan is a positive move, it does not guarantee a successful bounce back. Therefore, businesses need proven strategic plans. A customized plan prevents overlapping strategies in order to help the firm gain a competitive plan. The plan needs to cater for contingency plans to deal with stakeholders challenges.
References:
Anchtenhagen, L., Melin, L., & Naldi, L. (2013). Dynamics of business models-strategizing, critical capabilities and activities for sustained value creation. Long Range Planning, 46(6), 427-442.
Collewaert, V. (2013). Angel investors and enterepreneursintentions to exit their ventures: A conflict perspective. Entrepreneurship theory and practice, 36(4), 753-779.
DeTiennem D, R., McKelvie, A., & Chandler, G. N. (2015). Makingsense of entrepreneurial exit strategies: A typology and test. Journal of Business Venturing, 255-272. Retrieved from https://www.effectuation.org/wp-content/uploads/2017/06/Making-sense-of-entrepreneurial-exit-strategies-A-typology-and-test-1.pdf
Estrin, S., Korosteleva, S., & Mickiewicz, T. (2013). Which institutions encourage entrepreneurial growth aspirations? Journal of Business Venturing, 28(4), 564-580.
Flamholtz, E. G., & Randle, Y. (2007). Growing pains: Transitioning from an entrepreneurship to a professionally managed firm. San Francisco: Jossey-Basss. Retrieved December 1, 2017, from https://www.groundswelldiagnostics.com/pdfs/growing_pains_book_excerpt_courtesy_jossey-bass.pdf
Hang the Bankers. (2016, January 17). Walmart set to close 269 stores as economic collapse begins. Retrieved December 1, 2017, from https://www.hangthebankers.com/walmart-close-269-stores-economic-collapse/
Hofer, C. W., & Charan, R. (1984). The transition to professional management: Mission Impossible? American Journal of Small Business, 9(11), 1-11.
Lumme, A., Mason, C., & Suomi, M. (2013). Informal Venture Capital: INvestors, Investors, investments and policy issues in Finland. Springer Science & Business Media.
Nordqvist, M., Wennberg, K., Bau, M., & Hellerstedt, K. (2013). An entrepreneurial process perspective on succession in family firms. Small Business Economics, 1087-1122. Retrieved December 1, 2017, from https://www.researchgate.net/publication/256086846_An_entrepreneurial_process_perspective_on_succession_in_family_firms
Roberts, M. J. (1999). Managing transitions in the growing entreprise. In W. A. Sahlman, & H. H. Stevenson, The Entrepreneurial Venture (pp. 377-391). Boston, MA: Harvard Business School. Retrieved December 1, 2017, from https://www.diva-portal.org/smash/get/diva2:533371/FULLTEXT01.pdf
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