ASSIGNMENT
SUBJECT: SMALL BUSINESS MANAGEMENT
PROGRAM: PGDPE SUBMITTED: DEEPENDRA SINGH ID NO.: PM|J11|009 EMAIL ID:Deependra0009singh@[Link]
ORGANISATIONAL LIFE CYCLE
The small business management calls for a wide variety of talents far beyond those of the persons performing or in charge of any single business function in a large undertaking. This is because of the fact that, a small business is dependent on promoters skills. New ventures pass through transitional stages that present challenges to their founders. These transitional stages are represented by an organizational life cycle. This life cycle requires changes in entrepreneurial behavior, and because many entrepreneurs cannot adopt a new roles responsibilities, their ventures can fail or be terminated. The organization life cycle comprises 5 stages: 1. Startup 2. Expansion 3. Consolidation 4. Revival 5. Decline START-UP STAGE: During this stage, growth is inconsistent, sales seldom meet a founders expectations, and they can occur haphazardly. In extreme circumstances- markets will be chaotic spurts and disappointing sputters. This chaos can absorb entrepreneurs in their daily struggle to survive. in the worst-case scenario, markets may be dormant, leaving the entrepreneur bewildered. If the growth doesnt provide a pattern of sales targeted to narrow market niches, confusion persists. During the initial stage, entrepreneurs modify their products, change distribution systems, alter services, and experiment with marketing tactics in an attempt to survive, they are fighting fires every day.
EXPANSION STAGE: During this stage, rapid growth results in a pattern of success that is useful for evaluating market position and new product potential. The venture is transformed from a single-line enterprise operating in limited market to a multilane company penetrating new markets. Product and service lines are broadened through innovation and development, and the organization expands through functional authority. Decision making may be centralized during early growth, but departmentalization ensures, dispersion of authority. CONSOLIDATION STAGE: As competition intensifies within a growing industry, businesses are faced with marginally smaller incremental shares of markets. Consolidation occurs differently for every organization. Manufacturers may trim operations, reduce product lines or retreat from marginally profitable markets. A consolidated company can successfully maintain this downsized posture for a prolonged period of time; growth is not essential. The consolidated company, however, must rationalize having a smaller market segment with commensurate profits. REVIVAL STAGE:
The Revival stage is optional and can occur during a Mature or Decline stage for a firm who recognizes and initiates drastic changes to alter their current trajectory. This is typically a phase of diversification and expansion of product-market scope. Firms pursue rapid growth through innovation, acquisition, and diversification and this involves a good deal of risk taking. New top-level leadership is often required to initiate or effectively implement this stage and it is also a period of necessarily increased investment. It also encourages a focus on innovation rather than imitation of the strategies of competitors as in the Maturity stage.
Risk is mitigated and informed by an analytical, reflective and participative approach to decision making. It is common for task forces and project teams to be formed to analyze major capital expenditures, innovations or acquisitions. Groups of experts come together to analyze problems and to generate and evaluate different solution alternatives in a systematic and scientific way.
DECLINE STAGE:
The Decline stage is market by declining sales and profitability. It is often preceded by market stagnation and firms begin to decline with them. Profitability drops because of the external challenges and because of the lack of innovation. Firms in the decline stage react to adversity in their markets by becoming stagnant. Decision making is characterized by extreme conservatism. There is little innovation, an abhorrence of risk taking, and a reluctance even to imitate competitors' innovations, let alone lead the way.