13-1

Chapter

13

Entrepreneurial Strategy:
Generating and Exploiting New Entries

13-2

What Is A New Entry?

1. Offering A New Product To An Established/New Market 2. Offering An Established Product To A new Market 3. Creating A New Organization
13-3

Resources As Competitive Advantage

ResourcesResources- Firms Building Blocks, Inputs Into Production Process Must Be:
Valuable Rare Inimitable
13-4

Creating Resource Bundle

EntrepreneurEntrepreneur- Has Ability To Obtain & Recombine Resources Market Knowledge- Information, KnowledgeTechnology, Know-How/Skills That KnowProvide Insight To Market/Customers Technological Knowledge- Information, KnowledgeTechnology Know-How/Skills That KnowProvide Insight To Create New Knowledge
13-5

Assessing New Entry Opportunity

Information
Prior Knowledge/Information Search Window Of Opportunity- Time When OpportunityEnvironment Is Favorable

Decision Making Under Uncertainty

Error of Commission Error of Omission

Decision To Exploit/Not Exploit New Entry

13-6

Strategy For New Entry- First Movers Entry Develop Cost Advantage Face Less Competition Secure Important Channels Better Positioned To Satisfy Customers Gain Expertise Through Participation
13-7

First Mover Disadvantages

Emerging Industries Demand Uncertainty- Difficult to UncertaintyEstimate Market Size, Speed Of Growth & Its Key Dimensions Technological Uncertainty- Will UncertaintyTechnology Perform, Alternate Technologies Emerge? Adaptation To New Environmental Conditions Customer Uncertainty- Newness Uncertainty13-8

Overcoming Customer Uncertainty

Informational Advertising Highlight Product Benefits Over Substitutions Create Frame Of Reference For Potential Customer Educate Customer- Set CustomerIndustry Standard, Customer Loyalty
13-9

Lead Time & First Mover

Lead Time- Period In Which 1st TimeMover Operates With Limited Competition Create Barriers To Entry For Competition
Build Customer Loyalty Build Switching Costs Protect Product Uniqueness Secure Access To Sources Of Supply & Distribution
13-10

Risk Reduction Strategies

RiskRisk- Probability Of Downside Loss Derived From Entrepreneurs Uncertainties:
Market Demand Technological Development Actions Of Competitors

13-11

Market Scope Strategy

ScopeScope- Choice Of Which Customers To Serve & How Narrow-ScopeNarrow-Scope- Reduces Competitive Risk
Focus On Customized Products, Local Business, Craftsmanship Build Specialized Expertise/Knowledge High End Market = High Profit Niche

Broad-ScopeBroad-Scope- Offer Wide Range Of Products To Many Market Segments, Causes Increased Exposure To Competition
13-12

Imitation Strategy
Why?Why?- Minimize Risk Types
Franchising Me Too
Minor Variation Of Launch Product Take Existing Product/Service To New Market Deliver Existing Product In New Way
13-13

Liabilities Of Newness
Costs Of Learning New Tasks Overlap/Gaps In Responsibilities Causes Internal Conflict CommunicationCommunication- Formal & Informal
13-14

Assets Of Newness
Clean Slate- No Established SlateProcedures, Systems, Etc. Heightened Ability To Learn New Knowledge- Competitive KnowledgeAdvantage Respond To Change More QuicklyQuickly- Flexibility
13-15