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Chapter 13 - Entrepreneurial Strategy: Generating and Exploiting New Entries

Mar 06, 2015

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Page 1: Chapter 13 - Entrepreneurial Strategy: Generating and Exploiting New Entries

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Page 2: Chapter 13 - Entrepreneurial Strategy: Generating and Exploiting New Entries

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ChapterChapter1313

Entrepreneurial Strategy:Entrepreneurial Strategy:Generating and Exploiting New EntriesGenerating and Exploiting New Entries

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What Is A New Entry?What Is A New Entry?

1.1. Offering A New Product To Offering A New Product To An Established/New MarketAn Established/New Market

2.2. Offering An Established Offering An Established Product To A new MarketProduct To A new Market

3.3. Creating A New OrganizationCreating A New Organization

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Resources AsResources As Competitive AdvantageCompetitive Advantage

Resources- Firm’s Building Resources- Firm’s Building Blocks, Inputs Into Production Blocks, Inputs Into Production ProcessProcess

Must Be:Must Be:ValuableValuableRareRare InimitableInimitable

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Creating Resource BundleCreating Resource Bundle

Entrepreneur- Has Ability To Obtain & Entrepreneur- Has Ability To Obtain & Recombine ResourcesRecombine Resources

Market Knowledge- Information, Market Knowledge- Information, Technology, Know-How/Skills That Technology, Know-How/Skills That Provide Insight To Market/CustomersProvide Insight To Market/Customers

Technological Knowledge- Information, Technological Knowledge- Information, Technology Know-How/Skills That Technology Know-How/Skills That Provide Insight To Create New Provide Insight To Create New KnowledgeKnowledge

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AssessingAssessing New Entry OpportunityNew Entry Opportunity

InformationInformation Prior Knowledge/Information SearchPrior Knowledge/Information Search Window Of Opportunity- Time When Window Of Opportunity- Time When

Environment Is FavorableEnvironment Is Favorable

Decision Making Under Decision Making Under UncertaintyUncertainty Error of CommissionError of Commission Error of OmissionError of Omission

Decision To Exploit/Not Decision To Exploit/Not Exploit New EntryExploit New Entry

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Strategy ForStrategy ForNew Entry- First MoversNew Entry- First Movers

•Develop Cost AdvantageDevelop Cost Advantage

•Face Less CompetitionFace Less Competition

•Secure Important ChannelsSecure Important Channels

•Better Positioned To Satisfy Better Positioned To Satisfy CustomersCustomers

•Gain Expertise Through Gain Expertise Through ParticipationParticipation

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First Mover DisadvantagesFirst Mover Disadvantages

Emerging IndustriesEmerging IndustriesDemand Uncertainty- Difficult to Demand Uncertainty- Difficult to

Estimate Market Size, Speed Of Estimate Market Size, Speed Of Growth & Its Key DimensionsGrowth & Its Key Dimensions

Technological Uncertainty- Will Technological Uncertainty- Will Technology Perform, Alternate Technology Perform, Alternate Technologies Emerge?Technologies Emerge?

Adaptation To New Environmental Adaptation To New Environmental ConditionsConditions

Customer Uncertainty- NewnessCustomer Uncertainty- Newness

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OvercomingOvercomingCustomer UncertaintyCustomer Uncertainty

Informational AdvertisingInformational AdvertisingHighlight Product Benefits Highlight Product Benefits Over SubstitutionsOver Substitutions

Create Frame Of Reference Create Frame Of Reference For Potential CustomerFor Potential Customer

Educate Customer- Set Educate Customer- Set Industry Standard, Customer Industry Standard, Customer LoyaltyLoyalty

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Lead Time & First MoverLead Time & First Mover

Lead Time- Period In Which 1Lead Time- Period In Which 1stst Mover Operates With Limited Mover Operates With Limited CompetitionCompetition

Create Barriers To Entry For Create Barriers To Entry For CompetitionCompetition Build Customer LoyaltyBuild Customer Loyalty Build Switching CostsBuild Switching Costs Protect Product UniquenessProtect Product Uniqueness Secure Access To Sources Of Supply & Secure Access To Sources Of Supply &

DistributionDistribution

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Risk Reduction StrategiesRisk Reduction Strategies

Risk- Probability Of Risk- Probability Of Downside LossDownside Loss

Derived From Entrepreneur’s Derived From Entrepreneur’s Uncertainties:Uncertainties:Market DemandMarket DemandTechnological DevelopmentTechnological DevelopmentActions Of CompetitorsActions Of Competitors

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Market Scope StrategyMarket Scope Strategy

Scope- Choice Of Which Customers To Scope- Choice Of Which Customers To Serve & HowServe & How

Narrow-Scope- Reduces Competitive Narrow-Scope- Reduces Competitive RiskRisk• Focus On Customized Products, Local Business, Focus On Customized Products, Local Business,

CraftsmanshipCraftsmanship• Build Specialized Expertise/KnowledgeBuild Specialized Expertise/Knowledge• High End Market = High Profit Niche’High End Market = High Profit Niche’

Broad-Scope- Offer Wide Range Of Broad-Scope- Offer Wide Range Of Products To Many Market Segments, Products To Many Market Segments, Causes Increased Exposure To Causes Increased Exposure To CompetitionCompetition

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Imitation StrategyImitation Strategy

Why?- Minimize RiskWhy?- Minimize RiskTypesTypes

FranchisingFranchising““Me Too”Me Too”

Minor Variation Of Launch ProductMinor Variation Of Launch Product Take Existing Product/Service To New Take Existing Product/Service To New

MarketMarket Deliver Existing Product In New WayDeliver Existing Product In New Way

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Liabilities Of NewnessLiabilities Of Newness

Costs Of Learning New TasksCosts Of Learning New Tasks

Overlap/Gaps In Overlap/Gaps In Responsibilities Causes Internal Responsibilities Causes Internal ConflictConflict

Communication- Formal & Communication- Formal & InformalInformal

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Assets Of NewnessAssets Of Newness

Clean Slate- No Established Clean Slate- No Established Procedures, Systems, Etc.Procedures, Systems, Etc.

Heightened Ability To Learn Heightened Ability To Learn New Knowledge- Competitive New Knowledge- Competitive AdvantageAdvantage

Respond To Change More Respond To Change More Quickly- FlexibilityQuickly- Flexibility