GROUP 7

Lingatong, Evalyn Salim, Amila Menor, Lovely Ramos, Rhyllin

Jamaica Mae

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 Entrepreneurial
Chapter
Strategy and
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Competitive
Dynamics
Need for Entrepreneurial Strategy
Consider…
New technologies, shifting social and demographic
trends, as well as sudden changes in the business
environment can create opportunities for
entrepreneurship.
However, business opportunities can disappear as
quickly as they appear.
What do new ventures and entrepreneurial firms need
to do to achieve and sustain a competitive advantage?
 Recognizing Entrepreneurial Opportunities

What is Entrepreneurial?
• Involves value creation and the assumption of risk.

Entrepreneurial Activity can be done through:

1. Start-up ventures
2. Major Corporations
3. Family-owned Businesses
4. Nonprofit Organizations
5. Established Institutions

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Opportunity Analysis Framework

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Entrepreneurial
OPPORTUNITIES

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 Entrepreneurial Opportunities

Entrepreneurial Opportunities Recognition

• Entrepreneurial opportunities require Opportunity Recognition.

2 phases of activity ( DISCOVERY and EVALUATION )

Discovery becoming aware of a new business concept.

 Result of a deliberate search for new venture opportunities or creative solutions to business
problems.

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Several ways to undertake a structed search for entrepreneurial ideas:
1.Look at what’s bugging you
• What are the frustration you have with current products or processes?
2. Talk to the people who know
• Talk to the supplier, customers and front-line workers in the market.
3. Look to other markets
• Barrowing ideas from other markets.
4. Get inspired by history
• Looking to the past to find good ideas that have slipped out of practice.

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Evaluation Involves analyzing the opportunity to determine whether it is viable or feasible to
develop further.

╸ Feasibility Analysis

4 Qualities for an opportunity to be viable:

1. Attractive
2. Achievable
3. Durable
4. Value-creating

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Entrepreneurial
RESOURCES

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Resources are essential for entrepreneurial success.

• Financial RESOURCES

• Human CAPITAL

• Social CAPITAL

• Government RESOURCES

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 Entrepreneurial Financial Resources

Financial Resources depends on the stage of venture development & venture scale.
• Initial, Startup financing
╸ Personal savings, family, and friends
╸ Crowdfunding
• Early-stage financing
╸ Bank financing, Angel Investors
• Later-stage financing
╸ Commercial banks, Venture Capitalist equity financing.

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Entrepreneurial Human, Social & Government Resources

Human Capital
• Strong, skilled management
Social Capital
• Extensive social contacts & strategic alliances
╸ Technology, manufacturing, or retail alliances
Federal, State, & Local government resources
╸ Government contracting
╸ Loan guarantee programs
╸ Training, counseling, & support services

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Entrepreneurial
LEADERSHIP

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 Entrepreneurial Leadership

Entrepreneurial Leadership needs:

• Courage
• Belief in one’s conviction
• Energy to work hard
Leadership personality traits:
• Higher self-confidence, conscientiousness, openness to new experiences, emotional stability
• Lower agreeableness

Leadership Characteristics:
• Vision
• Dedication and drive
• Commitment to excellence

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 Entrepreneurial Leadership:
Vision, Drive & Dedication

Vision is entrepreneur’s most important asset.

• Requires transformational leadership
• Ability to envision realities that do not yet
exist
• Ability to share this vision with others

Drive & Dedication are necessary.

• Involves internal motivation
• Calls for intellectual commitment
• Requires patience
• Stamina, willingness to work long hours
• Enthusiasm that attracts others.

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 Entrepreneurial Leadership:
Commitment to Excellence

Commitment to excellence is required.

• Commit to knowing the customer

• Provide quality goods and services

• Pay attention to details

• Continuously learn

• Conned the dots

• Hire people smarter than themselves

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Entrepreneurial
STRATEGY

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 Entrepreneurial Strategy

New ventures require an Entrepreneurial Strategy.

• What are the industry conditions?
- What are the barriers to entry? ( Five-forces analysis)
• What is the competitive environment?
- Might there be retaliation by established firms?
• What are the market opportunities?
- How should the firm actually enter a new market?
Firms must choose how to compete.
• Entry Strategies
• Generic Strategies
• Combination Strategies

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 Entry Strategies

New venture Entry Strategies need to:

• Quickly generate cash flow

• Build credibility
• Attract good employees
• Overcome the liability of newness

Choices Include:
• Pioneering new entry
• Imitative new entry
• Adaptive new entry

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 Entry Strategies: Pioneering

Pioneering New Entry:

• Create new ways to solve old problems.

• Met customer’s needs in a unique new way.

• Will it be accepted by customers?

• Will it be disruptive to the status quo of an industry?

• Will the advantage be sustainable against imitators?

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 Entry Strategies: Imitative

Imitative New Entry:

• Imitators have a strong marketing orientation.

• Capitalize on proven market successes.

• Introduce the same basic product or service in another segment of the

market.

• Can we do it better than an existing competitor?

• Will someone then imitate us?

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 Entry Strategies: Adaptive

Adaptive New Entry:

• Capitalizes on current market trends.

• Offers a product or service that is somewhat new and sufficiency different.

• Creates new value for customers.

• Captures market share.

• Does it do a superior job of meeting customer needs?

• Can it be easily imitated?

• How can we continue to keep it fresh and new?

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 Generic Strategies for New Venture

Overall cost leadership – advantage due to:

• Simpler organizational structure & smaller size.
• Quicker decision making to upgrade technology & integrate marketplace feedback controls costs.

Differentiation – can compete by:

• Offering a unique value proposition through innovation & superior use of new technology.
• Deploying resources in a radical new way.

Focus – means ability to:

• Use niche strategies that fit the small business model.

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 Combination Strategies for New Ventures

Pursuing Combination Strategies can combine the best features of low-cost, differentiation,
and focused strategies.

• Holding down expenses by having a simple structure.

• Creating high-value products & services by being flexible & innovative.

• Offering highly specialized products or superior customer service to a niche market.

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Competitive
DYNAMICS

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 Competitive Dynamics

Competitive Dynamics helps explain why competitive strategies evolve and how to
respond.

• Need to identify new competitive action.

• Engage in threat analysis.

• Have the motivation and capability to respond.

• Understand the types of competitive action.

• Evaluate the likelihood of competitive reaction .

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Competitive Dynamics Model

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 Competitive Dynamics: Why Launch Actions?

Why do companies launch new competitive actions?

• To improve market position

• To capitalize on growing demand.

• To expand production capacity.

• To provide an innovative new solution

• To obtain first mover advantages

• To strengthen financial outcomes & capture profits.

• To grow the business.

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 Competitive Dynamics: Incumbents

Competition among Incumbent rivals can involve “hardball” strategies.

• Devastating rivals’ profit sanctuaries.

• Plagiarizing with pride.

• Deceiving the competition.

• Unleashing massive & overwhelming force.

• Raising competitors’ costs.

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 Competitive Dynamics: Threat Analysis

Threat Analysis involves as assessment of:

• Market Commonality.
• Resource Similarity.
How serious is the threat?

Motivation & Capability to respond means asking:

• What type of competitive response is necessary?

• What resources are needed to fend off a competitive attack?

Am I willing & able to launch an action?

Which competitive action should I take?

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 Competitive Dynamics: Actions

Types of competitive actions include:

Strategic Actions
• Entering new markets.
• Creating new products introductions.
• Changing production capacity.
• Pursuing mergers or alliances.
Tactical Actions

• Doing price cutting ( or offering increases)

• Making product or service enhancements.
• Increasing marketing efforts.
• Developing new distribution channels.
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 Competitive Dynamics: Reaction

Likelihood of competitive reaction depends on:

• Market Dependence.
• Competitor’s resources.
• The reputation of the firm that initiates the action – the actor’s reputation.

Choosing not to respond is a choice & includes:

• Forbearance – holding back on an attack.

• Co- operation – both cooperating & competing.
• Working together behind the scenes to achieve industry wide efficiencies.

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THANK
YOU!
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