Entrepreneurship Innovation and Global Operations

Entrepreneurship Innovation and Global

Operations Business Policy

0

Please note that these slides are not intended as a substitute

to reading the recommended text for this course.

Various stages of entrepreneurial growth

Characteristics of the entrepreneur / entrepreneurial relationship

How entrepreneurs create strategy

Innovation as a source of competitive strategy

Innovation process

Variables involved in conducting business globally

Strategic alternatives in new geographical markets

Chapters 8 & 9: Johnson, Scholes & Whittington

Objectives

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Entrepreneurship

– Strategic thinking and risk-taking behavior that results in the creation of new opportunities for individuals and/or organizations.

Entrepreneurs

– Risk-taking individuals who take actions to pursue opportunities and situations others may fail to recognize or may view as problems or threats.

What is entrepreneurship?

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Stages of Entrepreneurial Growth

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Stages of Entrepreneurial Growth

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Be able to take risks and live with uncertainty

Be able to see how new innovations satisfy a market

Be either creative or able to utilize those who are

Be willing to crate an environment of continuous learning

Sense of urgency

Recognize self shortcomings

Characteristics of the Entrepreneur

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A SBU that is new to the company and carries a much higher risk of failure than other departments.

Due to the level of uncertainty, it is often managed separately

Corporate ventures undertaken to move the company in new directions

Entrepreneurial Relationships - Corporate Venture?

6

Effective way to create new revenue streams

Entrepreneurial activities stimulate product/process innovation

CV is a source of organizational growth

Entrepreneurial activities spur the company to take risks and pioneer, making it more competitive

Entrepreneurial Relationships - Benefits of CV

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Entrepreneurial Relationships - Ecosystems

8

Screen out losers quickly.

Minimize the resources devoted to researching ideas.

Don’t wait for all the answers, and be ready to change course.

How Entrepreneurs Craft Strategies

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Innovation is the “specific function of

entrepreneurship” (Drucker)

It is “the means by which the entrepreneur either creates new wealth-producing resources or endows existing resources with enhanced potential for creating wealth” (Drucker)

It is a source of competitive success, especially in turbulent and highly competitive environments

What is Innovation?

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Introduction of a new product or a qualitative change in an existing product

Process innovation new to an industry

Development of new sources of supply for raw materials or other inputs

Definition of innovation

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Product innovations

– product used by consumers

• Microwaves, computers, mobile phones, etc

– Products use by firms

• Shipping containers, computers, robots, etc

Process innovations

– Used by consumers

• Fast food, air travel

– Used by firms

• Assembly lines, software

Product and process innovations

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The innovation process

13

The reasons for going abroad are the desire to increase profits and sales and to protect them from competition.

Guaranteed supply of raw materials

Acquire technology and management know-how

Geographic diversification

Satisfy management’s desire for expansion

Why Companies Go Global

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Development of Global Operations

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Type of Entry Characteristics (+; -)

Exporting Incremental start; High cost, low control

Licensing Low cost, low risk; Little control, lower returns

(royalty payments)

Strategic alliances Shared costs, resources, and risks; Cultural

differences, integration problems

Acquisition Quick access to new market, new product,

existing distribution and employees; High cost,

complex negotiations, regulatory restrictions,

integration problems

New wholly owned

subsidiary

Maximum control, potentially the most

profitable; Complex, costly in time and money,

high risk

Choice of International Entry Mode

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Entry Modes of International Expansion

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Pros & Cons of different entry modes

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Globalization is a process of closer integration and exchange between different countries and peoples worldwide.

Made possible by:

– Falling trade and investment barriers

– Advanced telecommunications

– Reduced transportation costs

What Is Globalization?

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Global money and Capital Markets

– Hedging / access to global financial marketplace

Emergence of a symbol based economy

– Knowledge / information

Deregulation of Markets

– International trade

Global Trade

– Technology / infrastructure have aided the growth in foreign trade

Demographic Changes

– Education / age profile

Environmentalism

– Global warming / CSR / Sustainability

The Global Environment - Trends

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Gain access to a larger market

– Capitalize on market potential, such as China, India, and emerging economies

Gain access to low-cost input factors

– Labour, natural resources, technology, logistics

Managing corporate risk

Leverage core competencies

Develop new competencies

– Location economies

– Unique location advantages

Global Strategies

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Management / Human Variables

– Cost of coordination across diverse geographical business units

– Institutional and cultural barriers

– Understanding strategic intent of competitors

– The overall complexity of competition and the business environment

– Shortage of internationally equipped leadership

Limits to International Expansion

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Political risks include:

• Instability in national governments

• War, both civil and international

• Potential nationalization of a firm’s resources

Economic risks are interdependent with political risks and include:

• Differences and fluctuations in the value of different currencies

• Differences in prevailing wage rates

• Inflation /deflation

• Tax consideration

Risk in the International Environment

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Physical:

• Difficulties in enforcing property rights

• Unemployment

• Availability of natural resources

• Climate conditions – hurricane ally

Other Variables

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