Professional Documents
Culture Documents
Chapter 13
Entrepreneurial Strategy: Generating & Exploiting New Entries
Opening Profile: Justin Parer
NEW ENTRY
Offering a new product to an established or new market.
Offering an established product to a new market.
Cr
eating a new organization.
Entrepreneurial Strategy
A set of decisions, actions, and reactions that first generate and then exploit over
time a new entry.
Three key stages;
1.
The generation of a new entry opportunity.
2.
The exploitation of a new entry opportu
nity.
3.
A feedback loop from the culmination of the new entry and exploitation
back to stage 1.
how, and skills that provide insight into ways to create new knowledge.
Often, technology has been invented for a specific purpose.
Sometimes that specific purpose leads to a broader base of use. (Tang, freeze
dried coffee, Velcro & Teflon created fro NASA space flights)
ASSESSING THE ATTRACTIVENESS OF A NEW ENTRY OPPORTUNITY
Information on a New Entry
Prior knowledge used to create a new venture can also benefit in assessing the
attractiveness of a particular opportunity.
Knowledge can be increased by searching for information that will shed light on
the attractiveness of th
e new entry.
The search process is in itself a dilemma. The time it takes to properly search for
information may allow for the opportunity to pass or someone else takes
advantage of the venture.
Window of Opportunity
The period of time when the environmen
t is favorable for entrepreneurs to exploit
a particular new entry.
When the window is open the environment is favorable for entrepreneurs to
exploit a new product.
Comfort with Making a Decision under Uncertainty
The trade
off of needing more information
and the window of opportunity closing
creates a dilemma.
.
Must determine the key factors for success.
Advantage is the entrepreneur being first means you have considerable freedom in
how you achieve success.
Disadvantage would be that the demand is uncertain. Difficult to determine how
fast the market will gr
ow, and the key dimensions that make it grow.
Technology may be uncertain because its performance is not proven.
Customers may have difficulty assessing the products value to them.
Lead time is the grace period from the first entrepreneur entering the ind
ustry
under conditions of limited
competition.
1.
Build customer loyalty.
2.
Building switching costs is a mechanism which customer loyalty is
enhanced through rewards programs. (Ex. Flyer miles, points toward cash,
user discounts, etc.)
3.
You must product your pr
oduct uniqueness through patents, copyrights,
trademarks, etc.
4.
Develop exclusive relationships with key sources of supply will limit
access to future competitors.
Managing Newness
New firms face costs in learning new tasks.
It will take new people time to develop skills and assume responsib
ilities.
New firms sometimes have difficult developing communication channels.
New firms do not have the stigma of old habits and are more flexible to attempt
new ways of conducting business.
HOMEWORK
Research the failure rates of;
1)
All new businesses. (
Provide source)
2)
All new franchises. (Provide source)
3)
What inferences can you make from these numbers?