Beruflich Dokumente
Kultur Dokumente
Entrepreneurial Strategy:
Generating and Exploiting
New Entries
McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
Learning Objectives
• To understand that the essential act of
entrepreneurship involves new entry
• To be able to think about how an
entrepreneurial strategy can first generate,
and then exploit over time, a new entry
• To understand how resources are involved in
the generation of opportunities
• To be able to assess the attractiveness of a
new entry opportunity
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Learning Objectives
• To acknowledge that entrepreneurship
involves making decisions under conditions of
uncertainty
• To be able to assess the extent of first-mover
advantages and weigh them against first-
mover disadvantages
• To understand that risk is associated with
newness, but there are strategies that the
entrepreneur can use to reduce risk
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New Entry
• Includes:
• New product in an established or new market
• Established product in a new market
• A new organization
• Entrepreneurial strategy
• Set of decisions, actions, and reactions that
generate, and exploit, a new entry over time
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Figure 3.1 - Entrepreneurial Strategy:
The Generation and Exploitation of New Entry Opportunities
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Generation of a New Entry Opportunity
• Resources
• Inputs into the production process
• Source of competitive advantage
• Basic building blocks to a firm’s functioning
• Can be combined in different ways
• Provide capacity to achieve superior performance
when they are:
• Valuable
• Rare
• Inimitable
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Generation of a New Entry Opportunity
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Generation of a New Entry Opportunity
• Technological knowledge
• Provides insight into ways to create new knowledge
• Assessing the attractiveness of a new entry
opportunity depends on:
• The level of information
• Willingness to make a decision without perfect
information
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Generation of a New Entry Opportunity
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Generation of a New Entry Opportunity
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Figure 3.2 - The Decision to Exploit or Not
to Exploit the New Entry Opportunity
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Generation of a New Entry Opportunity
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Figure 3.3- Factors That Influence the Decision
to Enter the Market Now or to Delay Entry
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Entry Strategy for New Entry Exploitation
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Entry Strategy for New Entry Exploitation
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Entry Strategy for New Entry Exploitation
• Creating a frame of reference for potential customers
• Educating customers through demonstration and
documentation
• Lead time and first-mover (dis)advantages
• Lead time
• Grace period in which the first mover operates in the
industry under conditions of limited competition
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Entry Strategy for New Entry Exploitation
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Risk Reduction Strategies for
New Entry Exploitation
• Risk
• Probability, and magnitude, of downside loss
• Derived from uncertainties over:
• Market demand
• Technological development
• Actions of competitors
• Strategies to reduce uncertainties
• Market-scope strategies
• Imitation strategies
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Market Scope Strategies
• Scope: Choice about which customer groups
to serve and how to serve them
• Narrow-scope strategy
• Offers small product range to a small number of
customers to satisfy a particular need
• Focuses on:
• Producing customized products
• Localized business operations
• High level craftsmanship
• High-end of the market
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Market Scope Strategies
• Broad-scope strategy
• Offers range of products across different market
segments
• Helps gain better understanding of the whole
market
• Opens the firm up to many different “fronts” of
competition
• Reduces risks associated with market
uncertainties
• Increases exposure to competition
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Imitation Strategies
• Copying practices of other
• Advantages
• Help develop skills necessary to be successful in
the industry
• Provide organizational legitimacy
• Reduce costs associated with R&D
• Reduce customer uncertainty over the firm
• Make the new entry look legitimate from day one
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Imitation Strategies
• Types of imitation strategies
• Franchising
• Acquiring a “proven formula” for new entry from a
franchisor
• “Me-too” strategy
• Copying exist products and attempting to build an
advantage through minor variations
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Risk Reduction Strategies for
New Entry Exploitation
• Liabilities of newness
• Negative implications arising from an
organization’s newness
• Arise from:
• Costs in learning new tasks
• Conflict arising from overlap or gaps in responsibilities
• Informal structures of communication
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Risk Reduction Strategies for
New Entry Exploitation
• Assets of newness
• Positive implications arising from an organization’s
newness
• Learning advantage
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