Small Business Strategies: Imitation with a Twist Chapter 7 © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Learning Objectives LO1 Describe the decisions needed to establish a foundation for strategic planning. LO2 Identify the forms of imitative and innovative businesses. LO3 Articulate the benefits that win over customers. LO4 Assess how have industry changes affect strategy. LO5 Explain the major strategies of business—differentiation, cost, and focus. LO6 Determine how to sustain competitive advantage through attracting customers and discouraging competition. © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Strategy in the Small Business the ideas and actions that explain how a firm will make its profit © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

The Small Business Strategy Process Figure 7.1 © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Owner Rewards Magic number The post-tax income the entrepreneur personally seeks from the business. © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Industry Industry The general name for the line of product or service being sold, or the firms in that line of business Key is selecting an industry that offers good potential for making a profit Also needs to offer attractive opportunities to work with a minimum of risk and competition © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Attractiveness of Selected Industries and Lines of Business Figure 7.2 © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Imitation and Innovation Incremental innovation An overall strategic approach in which a firm patterns itself on other firms, with the exception of one or two key areas. © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Industry Dynamics and Analysis Introduction stage The life cycle stage in which the product or service is being invented and initially developed. Growth stage An industry life cycle stage in which customer purchases increase at a dramatic rate. © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Industry Dynamics and Analysis Retrenchment An organizational life cycle stage in which established firms must find new approaches to improve the business and its chances for survival. © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

The Industry Life Cycle Figure 7.3 © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Strategy Selection Supra-strategies classic benefit combinations which are designed to work where there are many small businesses in an industry, along with a few larger firms © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Typical Strategies for Small Business Start-Ups Table 7.2 © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Post Start-Up Tactics Competitive advantage The particular way a firm implements customer benefits that keeps the firm ahead of other firms in the industry. © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Porter’s Five-Forces Model of Industry Competition Figure 7.4 © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.