Scott and Bruce (1987) divide the small business life into 5 stages,that is:
Stage 1.Inception 2.Survival 3.Growth. 4.Extension 5.Maturity.
Between the transition point of each stage,there'r a severe growth crisis.
In Grener(1972) words,there'r also 5 stages in business lifecycle as well,
but he also explained the crisis in each stage which Bruce and Scott don't
mention in their theory.
1.Creativity 2. Direction 3.Delegation 4.Co-ordination 5.Collaboration.
The crisises are 1.Leadership 2.Autonomy 3.Control 4. Red-tape. 5.?
Bruce's Specific models developed in relation to small businesses in response to problems associated with generic life cycle models such as Greiner’s main problems associated with Greiner’s model:
1)Assume that a company must grow and pass through all the stages of development or die in the attempt
2)Models fail to capture the important early stages of a company’s origin and growth.
If we look at Greiner’s model, whilst the concept of crises extremely relevant to small businesses, only the first two stages of his model have any relevance to most small businesses. In stage 3 of his model, company assumed to have different plants and headquarters, with numerous ‘top executives’. More typical of medium sized companies that growing into large organisations that small organisations.
In early stages, business is still simple.
Organisation simple. Owner-manager does everything and performs all tasks. Systems and formal planning non-existent. Owner is the business. Major goal is survival.
Growth (S&B) / Success (C&L): Basic marketing, financial and production systems in place. Planning quite functional. Managers brought in to manage some activities. Business and owner begin to move apart.
In later stages,
Organisation becomes decentralised. Both operational and strategic planning increasingly conducted.
Systems becoming refined and extensive. Effective delegation becomes crucial. Owner and business become relatively separate. Owner occupies more specific leadership role, less hands on.
Grener's model describes growth as occurring through five distinguishable phases of development. Basic tenet of model is that growth is not a smooth or inevitable process - organisations have to face substantial turbulence and upheaval of management practices during the growth process.
Growth occurs through relatively stable and incremental phases or stages of growth, termed ‘evolutions’. Towards the end of each phase period of turbulence resulting in a crisis, termed ‘revolutions’.
The critical task for management is to find a new set of organisational practices that will become the basis for managing the next period of evolutionary growth.
Each major solution to a particular crisis eventually becomes the root of the turbulence and subsequent crisis in the next stage. For example, at the end of phase 1, organisation faces a crisis of leadership, where entrepreneur is forced to bring in strong managers to pull organisation together and provide direction. However, this strong direction by manager causes a crisis of autonomy, where lower-level employees demand greater freedom and autonomy.
