ENTREPRENEURIAL STRATEGY AND COMPETITIVE DYNAMICS

Entrepreneurship New Value Creation

Start-up ventures Major corporations Family-owned businesses Non-profit organizations Established institutions

Opportunity

Entrepreneur(s) Resources

Sources of Opportunities for Start Ups

Current or past work

experiences

Suggestions of friends and

family

Hobbies that grow into business or

lead to inventions

Chance events

Sources of Opportunities for Start

Ups

Change Suggestions of suppliers

Need of existing customers

Technology

Opportunity Recognition -The process of discovering and evaluating the changes in the business environment:

Technology Socio-Cultural Shift in Consumer Demand

Discovery phase Period when you first become aware of a new

business concept

May be spontaneous and unexpected

May occur as the result of deliberate search for

New venture projects

Creative solutions to business problems

Evaluation phase Evaluating an opportunity (can it be developed into

a full pledged new venture?)

Tal to potential target customers

Discuss it with production or logistics managers

Conduct feasibility analysis

Market potential

Product concept testing

Focus groups

Trial runs with end users

There has to be a market

Attractive

Must be practical and physically possible

Achievable

Long-term

Durable

Profitable

Value Creating

Before launching opportunity as a business Consider the resources available to undertake it Consider the characteristics of the entrepreneur pursuing it

Major challenge for entrepreneurial firm is lack or resources Money

Human capital

Social capital

Financial Resources Early-stage financing

Personal savings, family, and friends

Bank financing, public financing, venture capital

Debt

Equity

CONSTRAINED

- Constrained be low

ambitions or lack of capital,

personnel or information

GLAMOROUS/

SUPERSTARS

- Few high superstars in technology centers

ECONOMIC CORE

- Typified by corner dairy,

house cleaning franchisees

and people in professional

occupation

AMBITIOUS

- Owners are skilled at spotting new opportunities

INN

OV

AT

ION

High

Low

Low High

GROWTH

Financial resources (Going concern) Later-stage financing

Angel investors

Commercial banks

The challenge of financing a business venture significantly increases if you are a 20 year old entrepreneur.

The key to successfully raising capital is to open your mind and expand your choices. Look beyond your parents of personal credit cards

A solid business plan and a good business concept will attract some business angels.

Human Capital

Skilled

management

Smart with

high integrity

Social Capital

Social

Network: prior

jobs, industry

organizations

Local business

groups

Government

Resources

Loan

guarantee

programs

contracts

Launching a new venture requires a special kind of leadership Courage

Belief in ones convictions

Energy to work hard

Three characteristics Vision

Dedication and drive

Commitment to excellence

Vision may be entrepreneurs most important asset Ability to envision realities that do not yet exist

Exercise a kind of transformational leadership

Able to share with others

Dedication and drive are reflected in hard work Patience

Stamina

Willingness to work long hours

Internal motivation

Intellectual commitment to the enterprise

Strong enthusiasm for work and life

To achieve excellence, venture founders and small business owners must Understand the customer

Provide quality products and services

Pay attention to details

Continuously learn

Surround themselves with good people

Charisma along is not enough to grow a venture.

People should fit with the companys culture, goals, and work ethic.

Here are 10 management lessons from a young entrepreneur, Scott Smigler, the founder of Exclusive Concepts Inc.: 1. Its all about perseverance. 2. Understand the value of mentorship and

teamwork 3. Stick to your niche. 4. Stay on top of news that affects your clients. 5. Communication is key. 6. Capitalization is crucial. 7. Communication of unwavering honesty and

integrity. 8. Stay on top of the curve. 9. Take ownership in your clients success/ 10. Never stop marketing.

Best strategy for the enterprise will be determined to some extent by A variable opportunity, resources, and

entrepreneur(s)

Other conditions in the business environment

Can use various tools and techniques to determine strategic choices Five forces analysis

Value chain analysis

Entry into an industry with radical new product or

highly innovative service that changes the way

business is conducted.

Pioneer New

Entry

Entry into an industry with products or services that

capitalize on proven market successes and that

usually has a strong marketing orientation.

Imitative

New Entry

Entry into an industry by offering a product or service

that is somewhat new and sufficiently different to

create value for customers on current market trends

Adaptive

New Entry

How new ventures can achieve competitive advantages Overall cost leadership

Simple organizational structures More quickly upgrade technology and integrate

feedback from the marketplace

Make timely decisions that affect cost

Differentiation Use new technology Deploy resources in a radical new way

Focus Niche strategies fit the small business mold

A key issue is the scope of a small firms strategic efforts relative to those of its competitors Pursue combination strategies

Combine best features of low-cost, differentiation, and focus strategies

Flexibility and quick decision-making ability of a small firm not laden with layers of bureaucracy

New competitive

action

Threat

analysis

Motivation

and capability

to respond

Types of

competitive action

Likelihood of

competitive

reaction

Strategic Actions major commitments of distinctive and specific resources to strategic initiatives Entering new markets New product introductions Changing production capacity Mergers/alliances

Tactical Actions refinements of extensions of strategies usually involving minor resources commitments Price cutting or increases Product/services enhancements Increased marketing efforts New distribution channels

Devastate rivals profit sanctuaries

Plagiarize with pride

Deceive the competition

Unleash massive and overwhelming force

Raise competitors costs

How a competitor is likely to respond will depend on three factors Market dependence

competitors resources

The reputation of the firm that initiates the action (actors reputation)