Sunday, March 9, 2014

Venture Life Cycle


Venture Life Cycle


As shown in fig, the traditional life-cycle stages of an enterprise. These stages include new venture development, startup activities, growth, stabilization, and innovation and decline.



New-venture development


This is first stage, consists of activities associated with the initial formulation of the venture. This initial phase is the foundation of the entrepreneurial process and requires creativity and assessment. In addition to accumulation and expansion of resources, this is a creativity, assessment and networking stage for initial entrepreneurial strategy formulation. The enterprise’s general philosophy, mission, scope and direction are determined during this stage.


Start up activities


This is second stage, encompasses the foundation work needed for creating a formal business plan, searching for capital, carrying out marketing activities and developing an effective entrepreneurial team. These activities typically demand on aggressive entrepreneurial strategy with maximum efforts devoted to launching the venture.


Growth


This stage often requires major changes in entrepreneurial strategy. Competition and other market forces call for the formulation of strategies. This growth stage presents newer and more dominant problems than those the entrepreneur faced during the startup stage. This growth stage is a transition from entrepreneurial one person leadership to managerial team oriented leadership.


Business stabilization


This stage is a result of both market conditions and entrepreneurs efforts. During this stage a number of developments commonly occur, including increased competition, consumer indifference to the entrepreneurs good(s) or service (s), and saturation of the market with a host of “me too” look alike. Sales begin to stabilize and the entrepreneur must begin thinking about where the enterprise will go ever the next three to five years.


Innovation or Decline


The last stage, firms that fail-to innovate will die. Financially successful enterprises often will try to acquire other innovative firms, thereby ensuring their own growth. Also, many firms will work on new product/service development in order to complement current offerings. All of venture’s life cycle stages are important strategic points and each requires a different set of strategies.