1. Entrepreneurial Strategy and Competitive Dynamics
Chapter 8
Role of opportunity recognition
Nature of the opportunity
Resources
Characteristics of entrepreneur
Entry strategies
New (specific to start-ups)
Generic
Competitive dynamics

2. Recognizing Entrepreneurial Opportunities
Entrepreneurship
the creation of new value by an existing organization or new venture that involves the assumption of risk.
New value can be created in:
Start-up ventures
Major corporations
Family-owned businesses
Non-profit organizations
Established institutions
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3. Terms Franchises Family Businesses Home-Based Businesses
Small Businesses
Entrepreneurial Businesses

4. Opportunity Analysis Framework
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5. Entrepreneurial Opportunities
Opportunity recognition
the process of discovering and evaluating changes in the business environment, such as a
new technology
socio-cultural trends
shifts in consumer demand
that can be exploited
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6. Entrepreneurial Opportunities
Discovery phase
the process of becoming aware of a new business concept.
May be spontaneous and unexpected
May occur as the result of deliberate search for new venture projects or creative solutions to business problems
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7. Entrepreneurial Opportunities
Start-Ups
Established firms
Current or past work experiences
Hobbies that grow into businesses or lead to inventions
Suggestions by friends/family
Chance events
Trade shows
Newspapers
College classes
Change
Needs of existing customers
Suggestions by suppliers
Technological developments that lead to new advances
Change
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8. Opportunity Recognition Process
Opportunity evaluation phase
involves analyzing an opportunity to determine whether it is viable and strong enough to be developed into a full-fledged new venture.
Talk to potential target customers
Discuss it with production or logistics managers
Conduct feasibility analysis
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9. Characteristics of Good Opportunities
Attractive. - market demand for the new product or service.
Achievable. - must be practical and physically possible.
Durable. -must be attractive long enough for the development and deployment to be successful; that is, the window of opportunity must be open long enough for it to be worthwhile.
Value creating. - must be potentially profitable;
- the benefits must surpass the cost of development by a significant margin.
Attractive
Achievable
Durable
Value creating
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10. QUESTION
The majority of entrepreneurial start-ups are financed with  A. Bank financing B. Public financing C. Venture capital financing D. Personal savings and the contributions of family and friends
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11. Financial Resources
The types of financial resources that may be needed depend on two factors: the stage of venture development and the scale of the venture.
To obtain funding for rapid growth, firms often seek venture capital.
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12. Entrepreneurial Resources
Human capital
Social capital
Government resources
Small Business Administration
Government contracting
State and local governments
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13. Entrepreneurial Leadership
Launching a new venture requires a special kind of leadership
Courage
Belief in one’s convictions
Energy to work hard
Three characteristics
Vision
Dedication and drive
Commitment to excellence
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14. Entrepreneurial Leadership
Vision may be entrepreneur’s most important asset
Ability to envision realities that do not yet exist
Exercise a kind of transformational leadership
Able to share with others
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15. Entrepreneurial Leadership
Dedication and drive are reflected in hard work
Patience
Stamina
Willingness to work long hours
Internal motivation
Intellectual commitment to the enterprise
Strong enthusiasm for work and life
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16. Entrepreneurial Leadership
To achieve excellence, venture founders and small business owners must
Understand the customer
Provide quality products and services
Pay attention to details
Continuously learn
Surround themselves with good people
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17. Example: 10 Management Lessons
It’s all about perseverance
Understand the value of mentorship and teamwork
Stick to your niche
Stay on top of news that affects your clients
Communication is key
Capitalization is crucial
Communicate unwavering honesty and integrity
Stay on top of the curve
Take ownership in your clients’ success
Never stop marketing
Source: Pierce, Sarah. “10 Management Lessons From a Young Entrepreneur,” December 17, 2003.
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18. Opportunity Analysis Framework
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19. Section #2 Entrepreneurial Strategies
Unique to new businesses
Generic strategies

20. Entrepreneurial Strategy
Best strategy for the enterprise will be determined to some extent by:
Opportunity
Resources
Skilled and dedicated entrepreneurial team
Other conditions in the business environment
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21. Entry Strategies Pioneering new entry
radical new product / highly innovative service
changes the way business is conducted
Imitative new entry
Products/services that capitalize on proven market successes
usually has a strong marketing orientation
Adaptive new entry
Product/service that is somewhat new and sufficiently different to create value for customers by capitalizing on current market trends
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22. Examples of Adaptive New Entrants
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23. Generic Strategies Overall cost leadership
Simple organizational structures
More quickly upgrade technology and integrate feedback from the marketplace
Make timely decisions that affect cost
Differentiation
Use new technology
Deploy resources in a radical new way
Focus
Niche strategies fit the small business mold
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24. Combination Strategies
Entrepreneurial firms are often in a strong position to offer a combination strategy
Combine best features of low-cost, differentiation, and focus strategies
Flexibility and quick decision-making ability of a small firm not laden with layers of bureaucracy
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25. Section #3 Competitive Dynamics
New businesses = New competition 
Competitive dynamics

26. Competitive Dynamics Competitive dynamics
Intense rivalry, involving actions and responses, among similar competitors vying for the same customers in a marketplace.
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27. Model of Competitive Dynamics
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28. Threat Analysis Threat analysis
A firm’s awareness of its closest competitors and the kinds of competitive actions they might be planning.
Market commonality
The extent to which competitors are vying for the same customers in the same markets.
Resource similarity
The extent to which rivals draw from the same types of strategic resources.
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29. Motivation & Capability to Respond
Seriousness of attack
Intent of response
Blunt the attack
Opportunity to enhance competitive position
Firm Age & Size
Innovative capabilities
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30. Why Do Companies Launch New Competitive Actions?
Improve market position
Capitalize on growing demand
Expand production capacity
Provide an innovative new solution
Obtain first mover advantages
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31. Five “Hardball” Strategies
Devastate rivals’ profit sanctuaries
Plagiarize with pride
Deceive the competition
Unleash massive and overwhelming force
Raise competitors’ costs
Exhibit 8.8
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32. Types of Competitive Actions
Strategic Actions
Major commitments of distinctive and specific resources
Tactical Actions
Refinements or extensions of strategies
Guerilla offensives
Defensive actions
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33. Types of Competitive Actions Exhibit 8.9
Examples
Strategic Actions
Entering new markets
New product introductions
Changing production capacity
Mergers/Alliances
Make geographical expansions
Expand into neglected markets
Target rivals’ markets
Target new demographics
Imitate rivals’ products
Address gaps in quality
Leverage new technologies
Leverage brand name with related products
Protect innovation with patents
Create overcapacity
Tie up raw materials sources
Tie up preferred suppliers and distributors
Stimulate demand by limiting capacity
Acquire/partner with competitors to reduce competition
Tie up key suppliers through alliances
Obtain new technology/intellectual property
Facilitate new market entry
Tactical Actions
Price cutting (or increases)
Product/service enhancements
Increased marketing efforts
New distribution channels
Maintain low price dominance
Offer discounts and rebates
Offer incentive (e.g., frequent flyer miles)
Enhance offering to move upscale
Address gaps in service
Expand warranties
Make incremental product improvements
Use guerilla marketing
Conduct selective attacks
Change product packaging
Use new marketing channels
Access suppliers directly
Access customer s directly
Develop multiple points of contact with customers
Expand Internet presence
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34. Types of Competitive Actions
Strategic Actions
Entering new markets
New product introductions
Changing production capacity
Mergers/Alliances
Tactical Actions
Price cutting (or increases)
Product/service enhancements
Increased marketing efforts
New distribution channels
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35. Types of Competitive Actions – Strategic Actions
Examples
Entering new markets
New product introductions
Changing production capacity
Mergers/Alliances
Make geographical expansions
Expand into neglected markets
Target rivals’ markets; Target new demographics
Imitate rivals’ products; Address gaps in quality
Leverage new technologies
Leverage brand name with related products
Protect innovation with patents
Create overcapacity
Tie up raw materials sources
Tie up preferred suppliers and distributors
Stimulate demand by limiting capacity
Acquire/partner with competitors to reduce competition
Tie up key suppliers through alliances
Obtain new technology/intellectual property
Facilitate new market entry
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36. Types of Competitive Actions – Tactical Actions
Examples
Price cutting (or increases)
Product/service enhancements
Increased marketing efforts
New distribution channels
Maintain low price dominance
Offer discounts and rebates
Address gaps in service
Make incremental product improvements
Change product packaging
Use new marketing channels
Access suppliers/customers directly
Expand Internet presence
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37. Likelihood of Competitive Reaction
How a competitor is likely to respond will depend on three factors
Market dependence
Competitor’s resources
The reputation of the firm that initiates the action (actor’s reputation)
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38. Choosing Not to React Forbearance
a firm’s choice of not reacting to a rival’s new competitive action
Could be best option
Co-opetition
A firm’s strategy of both cooperating and competing with rival firms.
Avoid collusion
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