Strategic Planning in the Small Business

Unit 3

HO 3-3

(continued)

The variables

of relative competitive

strength and

product and industry

attractiveness must

be

considered

even at this

initial stage. in this early

phase, relative competitive

strength and

firm

competencies

may be difficult to

ascertain. The basis

for internal analysis is

limited because on­

going

business operations

are new and difficult

to observe.

the owner

Instead,

or manager's

experience, background,

philosophy,

knowledge, and skills

forms the basis of

these assessments.

The business

should be started

in an area that the owner

knows and understands.

This in no way

assures that

either the product

and industry characteristics

or relative competitive

position will

be attractive. Therefore,

the business owner

must be open to

signals that may indicate

that the

product/market

or competitive

position appears

riLky or is

unattractive.

rapidly

becoming

Generally, the business

can change directions

at this initial stage

more easily and

more quickly

than during subsequent

stages. The

owner must be willing

to read the signals,

appraise them

accurately,

and respond objectively.

The entrepreneur

must fight the urge

to become enamored

with

a pet product and thus,

refuse to perceive

and react to important,

critical feedback.

If either

product and industry

attractiveness

or relative competitive

strength are low,

the firm

should consider

a niche posture and

search for and develop

new areas of concentration.

It is

quite common

for businesses to

change products or

services during the

start-up stage. Of

course, in choosing

new niches and areas

of concentration, selection

should be limited

to areas

that

are in demand and

where true entrepreneurial

ski!l and knowledge

exists. If such a

venture

can not be identified,

one should realistically

consider leaving

the business arena.

Stabilization

Stage

Once the business

becomes established

and survival seems

probable, a critical

decision stage is

reached.

Here, the owner

or manager must decide

whether or not to

aggressively pursue

further

business growth.

Although one

often assumes that

growth is a natural

and underlying

assumption held by

all businesspersons,

such a view is inaccurate.

Often, the owner

or manager

is content

with the present level

of business activity

and, even though growth

opportunities

are

possible, decides

to remain at that current

level of activity.

The business has

entered the

stabilization

stage.

There is nothing

wrong with such

a decision. Often, it

reflects a personal choice

of lifestyles.

If growth is not desired,

the firm may continue

on with the

established product/market

posture

that has provided past

successes. This decision

does not mean

that the firm's managers

are

lulled

into passive complacency.

To covcentrate

on the existing posture

and still be

responsive

to changing customer

needs and competitive

demands and threats

requires an open

and aware

management.

Environmental analysis,

internal analysis,

and creatively planned

responses are

as important here

as ever. Such concentration

on the single

product/market posture

can continue

as long as
the firm's relative competitive
position and product
and industry attractiveness
remain

positive.

Growth Stage

Although
Cooper distinguishes
between early
growth and later growth,
his model has
been

modified and
simplified here to suggest
a single, more
encompassing growth
stage. As in the

stabilization stage,
a business in the
growth stage has weathered
the storms of
early business life

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