Bygrave & Zacharakis, Entrepreneurship, New York: Wiley. © Chapter 4 Understanding your Business Model and Developing your Strategy

Bygrave & Zacharakis, Entrepreneurship, New York: Wiley. © Basic strategy categories are:  Differentiation  Low cost  Niche

Bygrave & Zacharakis, Entrepreneurship, New York: Wiley. © Business model Revenue model Revenue categories Cost model Cost of Goods Sold Operating Costs

Bygrave & Zacharakis, Entrepreneurship, New York: Wiley. © Amazon.com’s Revenue Model Total revenues

Bygrave & Zacharakis, Entrepreneurship, New York: Wiley. © Amazon. com’s cost model Total costs and expenses

Bygrave & Zacharakis, Entrepreneurship, New York: Wiley. © Several key aspects about capturing a first mover’s advantage  You have to be first (or very early) into the market  You need to capture a large percentage of the market quickly  You need to create switching costs so the customer will stick with you  Very expensive, hard to win  First Movers rarely win

Bygrave & Zacharakis, Entrepreneurship, New York: Wiley. © Attributes of winning strategies Better Faster Cheaper

Bygrave & Zacharakis, Entrepreneurship, New York: Wiley. © The people are what Matters Values StructureSelection

Bygrave & Zacharakis, Entrepreneurship, New York: Wiley. © Entry Strategy Benchmark Devise Initial Market Test Create a Platform

Bygrave & Zacharakis, Entrepreneurship, New York: Wiley. © Growth Strategy Franchising Expanding your product mix Geographic expansion

Bygrave & Zacharakis, Entrepreneurship, New York: Wiley. © Benefits of franchising Adds new revenues Speeds growth

Bygrave & Zacharakis, Entrepreneurship, New York: Wiley. © Factors defining success of geographic expansion CustomersVendorsDistribution

Bygrave & Zacharakis, Entrepreneurship, New York: Wiley. © The Entrepreneurial Firm International Expansion Process

Bygrave & Zacharakis, Entrepreneurship, New York: Wiley. © Means to expand globally ProsCons Technology Transfer- Reduces entry costs- Risk of losing the technology Technology Licensing- Generates revenue - Conserves resources - A lost opportunity to extend your own brand Outsourcing- Cost-saving Exporting- Cheap - Easy - Additional costs in after-sales support and transportation - Moral hazard Foreign Direct Investment (FDI)- Physical presence - Control of assets - Expensive Franchising- Licenses an operational system- Risk of damaging the brand name Venture financing- Both an enabling and an enacting mechanism - Often leads to mergers and acquisitions with foreign companies Mergers and acquisitions (M&A)- Established infrastructure - Allow a company to grow and expand quickly - Very expensive