Chapter 14

Growing the
Enterprise
Group 4
Azizah
Fransisca
Noor
Rany Dwi Amanda

Most studies confirm.....

Half of Start up
survive no more than 4 years

Identify the factors which contribute to the

success and growth of new ventures

Differentiate the factors which the

entrepreneurs can influence from those
which are more contextual

Implementing proven strategies for new

venture succes and growth

Factors Influencing
Success
Technology
Ventures
36% survived after 4 years
22% after 5 years

Supply Chain
Management
Market
Scope
Firm
Age
Size of Founding
Team
Financial
Resource
Founders marketing
experience
Founders industry
experience
Exsistance of Patent
Right

Factors Influencing
Success
Despite high rate of survival
Very few firms grow significantly
Typically less than 4% (the so called Gazelles)

The Most Significant Controllable Factors

Size of target market

Industrial experience of
founders
Strength of social networks
Business management skills

Factors Influencing
Success

Positive Effect on Venture

Success
Age
Educational level
Number of founders
Starting Capital

Companies competing on price rather than

differentiation are much less likely to survive

Factors Influencing
Success
Complementary Capabilities
Have technical or intelectual property
BUT not able to reach potential customers
Could identify market opportunities
BUT not be able to provide product or service

Funding
Different stage of
development each have
different financial
requirements :
Initial
financing
for launch

Secondround
financing
for initial
developm
ent and
growth

Thirdround
financing
for
consolidat
ion adn
growth

Maturity
or exit

Funding
Venture Capitalist ???
Can play two distinct role
Picking winners or
scouting
Coaching Role

Growth and Performance of New

Venture
Contribution small firms
make to economic
employment or regional
development
Study difference
between highest
growing and the lowest
growing

Growth and Performance of New

Venture
Higest growing company showed
Higher priftability
Increased number of
employee
Significat higest market share
locally, nationally, and
internationally

Growth and Performance of New

Venture
Several traits were found
The high growers had youngers CEO than
low growers
Higher portion of new product
Perceived themselve better than competitor
Prioritized growth, market share, reinvesting
rather than profitability

Growth and Performance of New

Venture
Innovative activities of SMEs have similiar
characteristics

Product innovation than process

innovation
Focused on product of niche markets
than mass
Final products rather than
components
Involve external linkage
Growth in output and employement
than profits

Growth and Performance of New

Venture
- Innovation three times
more important to growth
than founder attributes or
any other factors
- Innovation is associated
with performance

- The size and location has

an effect on performance

The venture needs to consider two

environmental factors:

Excludability
Complementary Assets

Growth and Performance of New

Venture
Four Strategy Options

Attackers Advantage
Ideas Factory
Reputation-based
Greenfield

Growth and Performance of New

Venture
Many ways a new venture can grow and
create additional value

Organic growth through additional

sales and diversification
Acquisition or merger with another
company
Sale of the business to another
company
An initial public offering (IPO) on a
stock market

Growth and Performance of New

Venture
Individual Skills

Social and interpersonal

communication
Negotiating and balancing skills
Influencing and visioning skills