Entrepreneurship does not take place in isolation, it depends on several factors. The growth of entrepreneurship results from some economic factors input & certain environmental conditions. In fact, for the development & growth of Entrepreneurship, a number of micro and macro factors must be considered, such as financial and economic factors-limited liability and greater mobility of capital, low taxes and tax incentives, good chance to make high profit, good banking with easily available credit, free trade with limited tariffs, lower labor cost, political factors like a stable and chaos free political system, political biases, legal factors- uniform commercial law and regulations, strong legal support for private property, infrastructural factors like strong educational and training facilities, good transportation system, strong telecommunication and distribution networks, state factors including support from large corporations, research and development, public-private partnership, innovation, socio-cultural factors like encouragement and support from family & society, social status, social integration, social security, & last but not the least personal factors like optimistic, hard workers, accept responsibility, desire to achieve, risk-oriented, opportunity seekers. (Khan, 2005) Moreover, if an entrepreneur plans to grow his business he must understand the growth strategy he will adapt depending on the nature of his business.
In order to understand strategic planning, we need to know about strategy. The strategy is grounded in the array of competitive moves and business approaches that the management/entrepreneur depends on to produce a successful performance. The strategy is management’s game plan for strengthening the organization’s position, pleasing customers, and achieving performance targets.
Without a strategy, managers have no thought-out course to follow, no roadmap to manage by & no action program to produce the intended result. The strategy is management’s plan and actions for organizing resources and skills taking into consideration the threats & opportunities in the environment to achieve the mission, vision, and objectives of the business to establish a sustainable competitive position. (Chell, Haworth & Brearley 1991)
The strategy involves a series of related decisions & actions with respect to the organization’s goals, takes into account internal strengths & weaknesses and external opportunities threats.
Good strategy and good strategy execution are the most trustworthy signs of good management.
A company’s strategy consists of the following concerns how to satisfy customers, that is, either to broaden or narrow down the product line & deciding on the amount of customer service provided, how to grow the business, that is, whether to concentrate on a single business strategy, diversify into related or unrelated industries or expand globally, how to respond to changing industry and market conditions, how best to capitalize on new opportunities, how to manage each functional piece of the business & how to achieve strategic and financial objectives. (Cunningham, J R & Lischeron, J 1991)
And before making a strategy, especially a growth strategy, an entrepreneur must ask himself the three fundamental strategic questions as to where we are currently, where do we want to be in the future & how will we get there?
Strategic Planning & Management
Dwight D. Eisenhower once quoted, “Plans are nothing; planning is everything!”
Strategic planning is a “disciplined effort to produce fundamental decisions and actions that shape and guide what an organization is, what it does, and why it does it.”
Strategic Planning helps an entrepreneur to increase effectiveness & efficiency, improve understanding and better learning & better decision making, enhance organizational capabilities, improve communications and public relations & increase political support.
Strategic Management focuses on how an entrepreneur implements & formulates and evaluates strategies that are aimed at developing a sustainable competitive advantage which is the reason behind some firms enjoying greater levels of performance than their competitors.
Strategic management is therefore concerned with the overall Product Life Cycle. Four aspects that set strategic management apart: its interdisciplinary nature, external focus, internal focus & future directions.
The importance of strategic management lies in the fact that it gives every employee gets an opportunity to play a role in making the firm successful. (Frederick, Kuratko & Hodgetts, 2010)
Strategic management brings about a huge difference in the performance of an organization. Research in this area has suggested that successful companies use strategic management concepts & techniques. And their success evolves from the clarity of their vision of what they want which is achieved by a strategic plan.
Strategic management provides the entrepreneur with a systematic approach to deal with the uncertainties of the dynamic competitive & global environment, as irrespective the magnitude of change; it must be recognized and analyzed, & dealt with. Strategic management helps the entrepreneurs to analyze the changes in the situation (identifying the sources of change in environment).
With strategic management imbibed into the business, the entrepreneur can coordinate and focus better to achieve the organization’s goals. Moreover, strategic management allows for the development of a plan, communication, coordination, & cooperation among diverse aspects & functions of the business. (Lessem, 1983)
Strategic Competitiveness can be achieved when a firm successfully formulates and implements a value-creating strategy. A sustained competitive advantage occurs when a firm develops a strategy that competitors are not simultaneously implementing & provides benefits which current and potential competitors are unable to duplicate.
A strategic management process comprises of the following steps starting by establishing a mission, vision and objectives of the business, conducting an internal analysis to understand the strengths & weaknesses of our business, performing an environmental analysis to get a better understanding of the external environment in which the business operates, followed by strategy formulation, strategy implementation & an ongoing strategic control and performance evaluation.
Product development is the name given to a growth strategy where a business aims to introduce new products into existing markets. This strategy may require the development of new competencies and requires the business to develop modified products which can appeal to existing markets.
Product development strategy aims at achieving growth by introducing new products to existing markets. The new products could not essentially be new products but could be improved versions of an existing product or substitutes serving the same need catering to the same market as at present.
Product development strategy is usually carried out through quality improvement such as better, stronger, bigger, vastly improved product, bringing improvements in features such as expanding product’s convenience, changing size of products, versatility, safety, change in its weight, materials and accessories etc, style improvement increasing the product’s aesthetic appeal such as new scooter or motorcycle models, new packaging etc.
This strategy is often adopted to attract satisfied customers to lengthen the life cycle of current products or to take advantage of a favorite reputation or brand name. McDonald's is one of the best examples of companies strategizing on product development.
When considering the growth of a company, one should consider the business model of the organization and how it lends itself to growth. Three areas that an entrepreneur should concentrate on are the revenue model, the operational model, and the cash flow model.
Since diversification is the riskiest of all the strategies available for growth, it would be advisable for the entrepreneur to focus on Product development strategy through new products in existing markets.
Moreover, since it is a new business it is difficult for the entrepreneur to drive down costs & selling the product at a low price would not be advisable.
The best way how the entrepreneur can grow the business is looking for new geographical markets, new product dimensions or packaging, new distribution channels or different pricing policies to attract different customers or create new market segments.