Ch10 entrepreneurial strategies

Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns

CHAPTER 10

Entrepreneurial Strategies

PART 3

STRATEGIES FOR THE

ENTREPRENEURIAL

ORGANIZATION


Influences on Organisational Architecture

Architecture Strategy

Leadership

Environment

Culture

Structure

and size


The Strategic Planning Process

VISION

STRATGY

IMPLEMENTATION

STRATEGIC

ANALYSIS

STRATEGY

FORMULATION

Fe

ed

ba

ck

loo

ps

Enduring

Continuous, multi-level activity,

informed by real-time, realistic

information

Continuous, multi-level

activity with selection

made by management

Incremental & adaptive

decision-making to maintain

maximum flexibility


Sustaining Competitive Advantage

• Reputation – often encapsulated in the brand, but communicated through relationships

• The way the organisation innovates – again and again

• The organisation’s strategic assets –particularly the ones that can’t be copied

All of this is part of organisational architecture

Kay 1998


Questions to be answered by SWOT

• What are the dimensions of value customers care

about – operational excellence, product

leadership or customer intimacy?

• For each dimension, what proportion of

customers focus on it as their primary decision

criteria?

• Which competitors provide the best value in each

dimension?

• How does the firm compare to these competitors?

• Why does the firm fall short of the value leaders?

Treacy & Wiersema (1995)


Tools of SWOT Analysis

Internal appraisal:

• Benchmarking

• Life cycle analysis

• Portfolio analysis

• Value Chains

External appraisal:

• Market research

• Economies of scale

• SLEPT analysis

• Porter’s Five Forces


Strategy Misfit – Three Key Questions

1. What new types of customer benefits

should we seek to provide in 5, 10 or 15

years?

2. What new competencies will we need to

build or acquire to offer these benefits?

3. How will we need to reconfigure our

customer interface over the next few years?

Hamel & Prahalad



Internal appraisal:

• Benchmarking



• Value Chains

External appraisal:

• Market research


• SLEPT analysis



SLEPT Analysis

Social

Legal

Economic

Political

Technological


Scenario Planning

• Constructs views of a possible future

that might affect the firm identified from

SLEPT

• These allow you to ask the 3 key

questions from ‘strategy misfit’

• Strategic options can then be matched

to scenarios


Futures Thinking

• Holistic perspective

• Avoids a rigid approach to strategic

planning

• Develops a vision about a desired future

state

• Plans backwards from that state

• Scenario planning is similar



Internal appraisal:

• Benchmarking



• Value Chains

External appraisal:

• Market research


• SLEPT analysis



Generic Marketing Strategies

COMMODITY

SUPPLIER

OUTSTANDING

SUCCESS

MARKET

TRADER

NICHE

PLAYER

Broad market

Focused market

Low price

Low differentiation High differentiation

High price


Economies of scale

Average

cost per

unit

Output volume

Technological

innovation

Big firm

minimum

cost

output


Economies of small scale

Small firm

minimum

cost

output

Average

cost per

unit

Output volume

Technological

innovation

Big firm

minimum

cost

output


Growth Trajectory of a Market Trader

Average

cost per

unit

Output volume

Big firm

minimum

cost

output

And how do you

compete at these

levels of output?

Small firm

minimum

cost

output


Michael Dell

We learned to identify our core strengths….The idea of building a business solely on cost or price was not a

sustainable advantage …What was important was sustaining loyalty among

customers.

http://www.dell.co.uk/




Internal appraisal:

• Benchmarking



• Value Chains

External appraisal:

• Market research


• SLEPT analysis



The Value Chain

PRIMARY ACTIVITIES

Inbound

logisticsService

Outbound

logisticsOperations

Marketing

& sales

Firm infrastructure

Human resource management

Technology development

Procurement

SUPPORT ACTIVITIES


Successful Entrepreneurial Strategies

• Strategy should emphasise something that makes your firm as unique as possible and delivers as much value as possible to the customer

• The best chance of doing this comes from differentiation with the aim of dominating your market and to do this effectively and quickly

• Then to continue to innovate based upon your differential advantage


Michael Dell

When you’ve got single digit market share – and you’re

competing with the big boys –you either differentiate or die




Customer Loyalty Ladder

Prospect

Customer

Regular

Customer

Supporter

AdvocateIN

CR

EA

SIN

G

LO

YA

LT

Y


Dimensions of Differentiation

Emotions

Aesthetics

Functional Core


Strategic Development

• Likely to be both deliberate and emergent

• Strategic intent provides a strong common vision which directs behaviour

• Continuous strategising takes place

• Development of multiple strategic options

• Decisions based on opportunistic circumstances at the time

• Decentralisation is the response to turbulence


CRISIS

CONSOLIDATION

GROWTH

The strategy formulation cycle

Emergent

strategy

formulation

Deliberate

strategy

formulation


CRISIS

CONSOLIDATION

GROWTH

The strategy formulation cycle

Emergent

strategy

formulation

Deliberate

strategy

formulation


Finally….

• Strategy should be clear and focused

• Supported by

- a culture that aims high

- a structure that is flexible & responsive

• A good strategy is important but effective

strategy execution is vital (and often ignored)

Ch10 entrepreneurial strategies

Education