Entrepreneurial process involves certain activities aimed at appropriate management of organization and solving problems. It is a matter of a great importance to identify the stage of business development of the company in order to develop appropriate business strategy for it. Identification of the development stage of the company is needed to denote the needs and requirements of the company in a specific market conditions.
Hisrich, Peters and Shepherd (2010) identified that business venture goes through the following stages: concept design and testing, development (abort), growth, maturity, and re-growth (decline).
Each stage is attributed to a certain feature. For example, the concept design stage (also called seed stage), may also be combine with start-up stage. On this stage there is a need to envisage business idea and design a concept of a venture. The development of the stage implies that product development, marketing strategy, financial resources, and distribution channels are planned (Jain, 2011).
Thus, American corporate and private investors pay significant attention to Brazil seed companies, such as PeixeUrbano and Grupo Xango. Lately, some investors emphasize unfavorable environment for seed-stage investors (Primack, 2011).
Development stage refers to materialization of the concept. This period is also called start-up process. It is the time to complete legal formalities (registration and incorporation). This is the last preparatory period before a business starts working (Jain, 2011).
Growth stage suggests developing or abortion of the initial idea. The stage includes estimation of the market share and potential. Detailed analysis of the market conjuncture, competitors and estimation of the industry scenarios is appropriate on this stage. Growth stage may include aggressive advertising and brand promotion to increase customers’ awareness of the product. This is a period of an active growth of the company which also influences the level of revenue. This stage may require significant financial inflows (Hisrich, Peters and Shepherd, 2010). Among companies which are in a growth period are: Twitter, Bit. ly, Formspring and Instagram. The period of growth depends on several factors including industry special features, competition and market conjuncture (Primack, 2011).
Maturity stage is characterized with a strong position of the company in the market. The company benefits from established base of loyal customers, cash flows are stabilized; the managerial policies and systems are adjusted. Expansion and diversification of business are strongly recommended on this stage. This is the time when old ideas yield, but new ideas should be invented to provide future potential for competitive advantage. New ventures supplant maturing companies using new concepts and offering new products (Ernst and Young AG, 2009). Maturity of the company is often tied to a product maturity. Interestingly, the economies of scale are lost with company maturity. Maintaining business and excelling competitors becomes a costly process, thus, profits start to decrease and there are no finance resources for innovations. The following ventures were the examples of the companies at the point of maturity: Anderson and Zeithaml (1984), Hill and Jones (1998), Wasson (1974), and Fox (1973).
Maturity stage is gradually transferring to a decline stage. Implementing a concept of diversification may be crucial for the company struggling for its presence in the market. This is a good strategy for large corporations which need to refresh their customers’ base (Shukla, 2011).
During a decline stage the company faces hardships, such as, market pressure, customers’ changing priorities, financial decline and losses. At this stage a strong restoring measures are needed (Jain, 2011). When Apple introduced new iPhone in 2001, which allowed listening music as additional function, it replaced manufacturers of portable players.
Ernst and Young AG. (2009). Development of Business Models. Business Modelling. Retrieved from http://www2. eycom. ch/publications/items/tas/2009_bm_development_ch/2009_EY_BM_Development_CH. pdf
Hisrich, R. D., M. P. Peters, and D. Shepherd. 2010. Entrepreneurship. 8th
ed. New York: Irwin McGraw-Hill.
Jain, P. (2011, June 06). Stages of Business Development. Retrieved from http://www. ehow. com/info_8548731_stages-business-development. html
Primack, D. (2011, July 08). Chris Sacca: Bad Environment for Seed-Stage investors. Retrieved from http://finance. fortune. cnn. com/2011/07/08/chris-sacca-bad-environment-for-seed-stage-investors/
Shukla, I. C. (2011, October 04). Business Development Stages. Retrieved from
http://www. buzzle. com/articles/stages-of-business-development. html