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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