Chapter 8.pptx of shaping opportunity for business

Summary of the course material for students who don't have the textbook of the subject.

1. CHAPTER 8 Entrepreneurial Strategy and Competitive Dynamics Copyright Anatoli Styf /Shutterstock

2. 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?

3. Recognizing Entrepreneurial Opportunities Entrepreneurship involves value creation and the assumption of risk. New value can be created in many contexts. Startup ventures Major corporations Family-owned businesses Nonprofit organizations Established institutions Ideas and opportunities can come from many sources. Change or chance can uncover unmet customer needs.

4. Entrepreneurial Opportunity Analysis Exhibit 8.1 Opportunity Analysis Framework Source: Based on Timmons, J.A., & Spinelli, S. 2004. New Venture Creation (6th edition). New York: McGraw Hill/Irwin; and Bygrave, W.D. 1997. The Entrepreneurial Process. In W.D. Bygrave (Ed.), The Portable MBA in Entrepreneurship (2nd edition). New York: Wiley.

5. Entrepreneurial Opportunity Recognition Entrepreneurial opportunities require opportunity recognition. Two phases of activity: Discovery Becoming aware of a new business concept Evaluation Analyzing the opportunity to determine whether it is viable or feasible to develop further

6. Entrepreneurial Opportunities: Discovery Discovery phase – Becoming aware of the new business concept. Ask: Where are the new venture opportunities? What might be a creative solution to a business problem? Can be spontaneous and unexpected Can also result from a deliberate search Are there frustrations with current products or processes? Do stakeholders have unmet needs? What do other markets or industries do? Can we revive old ideas?

7. Entrepreneurial Opportunities: Evaluation Evaluation phase – Analyzing the viability of an opportunity Talk to potential target customers. Identify operational requirements. Conduct a feasibility analysis. What is the market potential? Is the idea strong enough to create value, and therefore, profits ? Viable opportunities have the following qualities: They are attractive. They are achievable. They are durable. They are value-creating.

8. Entrepreneurial Resources Resources are essential for entrepreneurial success. Financial resources Human capital Social capital Government resources

9. Entrepreneurial Financial Resources Financial resources depend 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 capitalists equity financing

10. Entrepreneurial Human, Social & Governmental 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

11. Entrepreneurial Leadership Entrepreneurial leadership needs: Courage Belief in one’s convictions 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

12. Entrepreneurial Leadership: Vision, Drive & Dedication Vision is an 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

13. 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. Connect the dots. Hire people smarter than themselves.

14. Competitive Dynamics New entry threatens existing competitors. 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.

15. Competitive Dynamics Model Exhibit 8.4 Model of Competitive Dynamics Source: Adapted from Chen, M.J. 1996. Competitor Analysis and Interfirm Rivalry: Toward a Theoretical Integration. Academy of Management Review , 21(1): 100-134; Ketchen, D.J., Snow, C.C., & Hoover, V.L. 2004. Research on Competitive Dynamics: Recent Accomplishments and Future Challenges . Journal of Management , 30(6): 779-804; and Smith, K.G., Ferrier, W.J., & Grimm, C.M. 2001. King of the Hill: Dethroning the Industry Leader . Academy of Management Executive , 15(2): 59-70. Jump to Appendix 1 for long description.

16. 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

17. 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

18. Competitive Dynamics: Threat Analysis Threat analysis involves an 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?

19. Competitive Dynamics: Actions Types of competitive actions include: Strategic actions Entering new markets Creating new product introductions Changing production capacity Pursuing mergers or alliances Tactical actions Doing price cutting (or offering increases) Making product/service enhancements Increasing marketing efforts Developing new distribution channels