Strategic Analysis (Environmental Scan and swot)

A frequent complaint about strategic plans is that they are merely “to-do” lists of what to accomplish over the next few years. Or, others complain that strategic planning never seems to come in handy when the organization is faced with having to make a difficult, major decision. Or, others complain that strategic planning really doesn’t help the organization face the future. These complaints arise because organizations fail to conduct a thorough strategic analysis as part of their strategic planning process. Instead, planners decide to plan only from what they know now. This makes the planning process much less strategic and a lot more guesswork. Strategic analysis is the heart of the strategic planning process and should not be ignored.

Environmental Scan – taking a wide look around

SWOT Analysis – Strengths, Weaknesses, Opportunities and Threats

Strategizing – setting overall organizational goals and how they will be reached

Monitoring, Evaluating and Deviating from the Plan

Too often, strategic plans end up collecting dust on a shelf. Monitoring and evaluating the planning activities and status of implementation of the plan is as important as identifying strategic issues and goals. One advantage of monitoring and evaluation is to ensure that the organization is following the direction established during strategic planning. That advantage is obvious. However, another major advantage is that the management can learn a great deal about the organization and how to manage it by continuing to monitor and evaluate the planning activities and the status of the implementation of the plan. Note that plans are guidelines. They’re not rules. It’s OK to deviate from a plan. But planners should understand the reason for the deviations and update the plan to reflect the new direction.

Тема 24. Предпринимательство.

Text A. The evangelist of entrepreneurship

Carl Schramm is on a mission to teach the world to be entrepreneurial.

“Forget the space aliens and race cars – here’s a game that gives kids skills they can use for the rest of their lives”. So says the blurb for Hot Shot Business, an online game (www.hotshotbusines.com) played each year by millions of “budding entrepreneurs” who get the chance to open their own pet spa, skateboard factory, landscape-gardening business or comic shop in Opportunity City. Players start marketing campaigns: change products, services and prices; and respond to demanding customers and big news events. And, “as self-funded entrepreneur, you’ll keep all the profits. But if anything goes wrong, well, you’re on your own”.

The game was a product of a partnership between the “edutainment” arm of the Walt Disney Company and the charitable Ewing Marion Kauffman Foundation, headed since 2002 by Carl Schramm, now arguably America’s leading evangelist of entrepreneurship. Hot Shot Business is one many initiatives launched by Mr Schramm to educate Americans – and, increasingly, foreigners too – about how to be entrepreneurial. Disney and Kauffman have also developed a popular Opportunity City exhibit in Disney World in Florida. Kauffman has given grants to promote entrepreneurship in American universities; and not just in business schools but across the entire campus. “Entrepreneurship mostly don’t come from business schools”, says Mr Schramm, who worries that with their new course on corporate social responsibility and the like, B-schools increasingly produce graduates uncomfortable with the cut-and-thrust of real capitalism.

Kauffman also funds research into entrepreneurship and its role in the economy, which Mr Schramm says of is greatly underestimated. He argues that a rise in entrepreneurship over the past 25 years has rescued America’s economy from the stagflationary nightmare of “bureaucratic capitalism”. “What we are engaged in is nothing less than a U-turn in economic history”, he claims. “And the name we give to this U-turn is the invention of entrepreneurial capitalism.” Replacing the old “industrial triangle” of government, big business and the unions is a “new kind of entrepreneurial box”, in which start-ups increasingly take on the work of innovation from big business and the unions have been replaced by universities, he says.

A key moment came in 1980 when America adopted the Bayh-Dole act, giving universities a serious financial stake in the intellectual property generated by their research. Yet Mr Schramm worries that universities are becoming too bureaucratic in their approach to intellectual property, creating a new bottleneck in the transfer of technology to start-ups. Several big firms have told Mr Schramm recently that they are considering switching research to universities in some developing countries, because there will be no question over who owns the rights to a breakthrough in those countries.

The university bottleneck is number two in Mr Schramm’s top three top worries. Number three is that favourite bugbear of American businessmen, an anti-corporate attitude that spawns burdensome government legislation, such as parts of the Sarbanes0Oxley act. But the top worry for Mr Schramm (and many others), is the low quality of much of America’s educational system – since most important ingredient of entrepreneurial capitalism is human capital. Happily, the other main focus of the Kauffman foundation is education: it is funding new approaches to teaching maths and science that Mr Schramm hopes will be initiated nationwide.

Mr Schramm was educated by Jesuits, before becoming an academic economist and then an entrepreneur; then he founded two successful health-care firms. His main intellectual influences are Michael Novak, a conservative Catholic theologian; Thomas Sowell, an economist at the conservative Hoover Institution; and Joseph Schumpeter, although Mr Schramm does not share the late economist’s gloomy fear that the “creative destruction» of capitalism will eventually be supplanted by the deal hand of socialism. His bogeymen are John Maynard Keynes, John Kenneth Galbraith and the current darling of development policy, Jeffrey Sachs. However, Mr Schramm is no caricature right0winger; he has recruited Bob Litan, a former economic adviser to Jimmy Carter and Bill Clinton, to run Kauffman’s research into entrepreneurship, and is often consulted by Gordon Brown, Britain’s Labour prime minister-in-waiting.

Laying foundations

No mere cheerleader for entrepreneurs, Mr Schramm has also had to make some tough managerial decisions at home. When he arrived at the Kauffman Foundation – which gives over $70m a year and, with assets of $1.8 billion, is among the 30 largest foundations in America – it was bloated and inefficient, and, says Mr Schramm, had lost sight of the goals of its founder, who died in 1993. Mr Schramm has reduced the foundation’s staff from over 200 to 88, and focused it on pioneering policies in entrepreneurship and education.

Such radical change caused uproar in Kansas City, Missouri, where the foundation is based. The state attorney-general conducted an inquiry into allegations against Mr Schramm, but found nothing. In septembe2003, Kauffman’s board of trustees rejected a proposal to fire Mr Schramm by just four votes to three. The three then quit acrimoniously. That may prove a crucial victory not just for Kauffman and the promotion of entrepreneurship. Mr Schramm has become an increasingly influential voice on the issue of how to improve America’s foundations, many of which are inefficient, unaccountable and out of touch with their founding vision. Perhaps that could be the subject for a new on-line game – although judging by Mr Schramm’s experiences, it might be much too nasty to be played by children.

Text B. Do you have what it takes (to be an entrepreneur)?

Opening and managing a small business has been the dream of many Americans. This dream is now shared by more people than ever before.

The burgeoning interest in entrepreneurship is aptly reflected in bookstores across the country. In the 1950’s, people bought books about the organizing man. In the 196’s, they concentrated on “small is beautiful” books. In the 1970’s books on technology abounded. Today, books about starting and operating small businesses have proliferated.

Even those people who are not interested in owning businesses have become aware of the importance of entrepreneurship. While small businesses were always on the main streets of American life, the small business cause was on the back street of influence. In the 1980’s, people have come to realize that small businesses create jobs and that they, not the giant companies, are the backbone of the free enterprise system. This was clearly demonstrated by dramatic research conducted by David Birch of NIT. At the same time Birch was proving the impact of small business on the economy, the job market was changing. This was brought about by a general downturn in the economy, record numbers of women seeking employment, and some disillusionment with the corporate life where positions at the top are always limited.

The Entrepreneur

While there has been extensive research on this subject from different scholars what we have discovered is not the answer but only the variables to the question and some ideas of what impacts on entrepreneurs’ success.

The question “Are entrepreneurs born or made?” still goes unanswered. This is because trying to determine the propensity to entrepreneurial success is a little like trying to determine if someone who has never been in the water will be a good swimmer. The real test occurs in the performance itself.

However, research has allowed us to identify some of the variables that seem to appear frequently in those people who are successful entrepreneurs. These tend to fall into six areas: 1) life experiences (family history and business background), 2) personality, 3) motivations that drive the person, 4) life cycle (age, health, and general family situation), 5) role assumption capability (willingness to take on entirely new responsibilities), and6) business readiness (in terms of financial and managerial knowledge).

Life experiences

This is the variable most frequently mentioned. A person coming from a small business family or familiar with other small firm owners appears to have advantage of entering a venture with a more realistic attitude.

Varied business experience is a considerable advantage to a business owner. Since he or she must in fact become the chief cook and bottle washer, a generalist rather than a specialist he can better understand a broad range of responsibilities – in finance, in personnel, in marketing, and in production.

While not all entrepreneurs have had a paper route, sold lemonade, or operated other childhood businesses, it is important for an owner to have experienced making money from personal efforts.

Personality.

This is the area around which there is the most mystery and the one that both gives entrepreneurship its mystique and fuels the “born versus made” arguments. Some people fell strongly that entrepreneurs are born with these certain personality traits, while others believe it is life circumstances or market opportunities that make them.

David McClelland, the noted Harvard psychologist, was the first to look into the differences between entrepreneurs and executives and discovered that what distinguished them most was entrepreneurs’ “high” need to achieve, as compared with executives’ need for status or affiliation with a certain job or task. The personality characteristics McClelland found in entrepreneurs tended to cluster in five areas: 1) high level of self-confidence and personal energy, 2) ability to set clear and challenging goals, 3) an understanding of risk taking, 4) a strong internal locus of control, and 5) problem solving ability.

Entrepreneurs tend to have a high level of both self-confidence and personal energy. They appear to have the ability to work actively for long hours with less than normal sleep and to be able to tolerate and live with moderate-to-high levels of ambiguity concerning job and career security.

Motivation

Successful entrepreneurs tend to be driven by three motivations.

They like being the boss, and are willing to treat their business as their number one priority. They have the ability to be totally immersed in, and committed to, the business.

They value creativity and derive satisfaction from innovative work, rather than from perfecting routine tasks.

They have the ability to attract, motivate, and build a team whose skills and management know-how are needed for the venture. They also tend to believe in the traditional values of the American free enterprise system (e.g., profits, capital gains, private ownership).

Life Cycle, Role Assumption and Business Readiness

The last three areas that impact on entrepreneurial success are more difficult to describe, but are equally important factors. They relate to the life cycle of the individual; his or her willingness, readiness, and ability to assume a new role; and the business readiness of the individual and the local economy to deal with a new venture.

Life cycle considerations include the other career options open to the individual and the person’s general health and family situation. Stamina and the ability to deal with stress are essential when opening a business. Just as important is the total support of the person’s family and friends. if a person has health or family problems, it is difficult to give a new business the total attention it needs.

Role considerations require a person to visualize himself or herself without some of the things previously known. There will be no boss, no fixed salary, no set hours, and no business history or past business pattern on which to rely. A successful entrepreneur is both excited and challenged by assuming a completely new role.

Considerations in evaluating one’s own, and the local economy’s, readiness for a new enterprise include one’s personal and local financial situations. Many business failures can be traced to undercapitalization, or lack of management skills, because the owner could not muster the necessary resources.

Another key issue is a prospective owner’s willingness to adapt to the enterprise. For example, one should ask oneself such questions as, “Would I really be willing to take out the trash? Can I deal with the possibility of failure? Am I prepared to stay open during a blizzard to complete an order or serve the public?”

After a potential entrepreneur evaluates himself or herself in terms of these six key areas and decides to move ahead with a business plan, it is time to think about making that business a success. They should

● see the marketplace in a unique way, spotting opportunities where others don’t;

● have the ability both to find and to utilize the resources they will need to succeed;

● have the skills and the talent to turn opportunity into a business success.

If one keeps those three things in mind while planning the business, the chances for success will increase measurably.

One last thought. To a true entrepreneur, the fun and excitement is in the planning and building of the business. Once the company is running smoothly, certain restlessness sets in. So, what does the entrepreneur do then? Why, he or she starts a new business – of course!