Gregory G. Dess
G. T. Lumpkin
Marilyn L. Taylor
Categories of Entrepreneurial Ventures
•
Distinctions (with strategic
implications) among entrepreneurial firms
•
Size
•
Age
•
Growth goals
n Entrepreneurial
firms generally favor growth
n Entrepreneur
may sell shares to support growth
Elephants, Mice, and Gazelles
•
Elephants
•
Large
•
Older
•
Cannot change direction quickly
•
Have laid off more people than hired in
past 25 years
•
Can be hard chargers
•
Can mover rapidly because of power in
the marketplace
•
Command respect
•
Can influence marketplace and business
conditions
Elephants, Mice, and Gazelles
•
Mice
•
Small firms that power the U.S. economy
•
Small retailers, manufacturers
•
Small service firms, auto repair shops,
plumbers, restaurants
•
Don’t have much market power
•
Can change direction quickly in response
to changes in business conditions
•
Many do not aspire to grow large
•
Maintain profitability
•
Some, however, aspire to grow
Elephants, Mice, and Gazelles
•
Gazelles
•
Seek rapid growth and above average profitability
•
May be listed in the Inc. 500 or Entrepreneur
Hot 100
•
Grow at least 20 percent a year for five
years, from a base of at least $100,000 in revenues
•
Doubles in size during the four-year
period
•
Value proposition often includes radical
innovation or implementation of new technology
•
Seek growth rather than control
•
Create many jobs in the economy
Opportunity Recognition: Identifying and Developing
Market Opportunities
•
Opportunities come from many sources
•
Start-ups
n Current
or past work experiences
n Hobbies
that grow into businesses or lead to inventions
n Suggestions
by friends or family
n Chance
events
n Change
Opportunity Recognition: Identifying and Developing
Market Opportunities
•
Opportunities come from many sources
•
Established firms
•
Needs of existing customers
•
Suggestions by suppliers
•
Technological developments that lead to
new advances
•
Change
Opportunity Recognition Process
•
Period when you first become aware of a
new business concept
•
May be spontaneous and unexpected
•
May occur as the result of deliberate
search for
•
New venture projects
•
Creative solutions to business problems
•
Evaluating an opportunity (Can it be
developed into a full-fledged new venture?)
•
Talk to potential target customers
•
Discuss it with production or logistics
managers
•
Conduct feasibility analysis
•
Market potential
•
Product concept testing
•
Focus groups
•
Trial runs with end users
Entrepreneurial Resources
•
Major challenge for entrepreneurial firm
is lack of resources
•
Money
•
Human capital
•
Social capital
•
Money (New-Venture Financing)
•
Early-stage financing
•
Personal savings, family, and friends
•
Bank financing, public financing,
venture capital
•
Debt
•
Equity
•
Bootstrapping
•
Money (Going Concern)
•
Later-stage financing
•
Angel investors
•
Venture capital
•
equity financing
•
Commercial banks
•
Human capital
•
Social capital
•
Government resources
•
Small Business Administration
•
Government contracting
•
State and local governments
Entrepreneurial Leadership
•
Launching a new venture requires a
special king of leadership
•
Courage
•
Belief in one’s convictions
•
Energy to work hard
•
Three characteristics
•
Vision
•
Dedication and drive
•
Commitment to excellence
•
Vision may be entrepreneur’s most
important asset
•
Ability to envision realities that do
not yet exist
•
Able to communicate with a wide audience
•
Willing to make unpopular decisions
•
Determined to make sure your message
gets through
•
Create and implement quality systems and
methods that will survive
•
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
•
To achieve excellence, venture founders
and small business owners must
•
Understand the customer
•
Provide quality products and services
•
Manage the business knowledgeably and
expertly
•
Pay attention to details
•
Continuously learn
•
Surround themselves with good people
Entrepreneurial Strategy
•
Best strategy for the enterprise will be determined to some
extent by
•
Unique features of the opportunity,
resources, and entrepreneur(s)
•
Other conditions in the business
environment
•
Can use various tools and techniques to
determine strategic choices
•
Five-forces analysis
•
Value-chain analysis
Entrepreneurial Strategy
•
Best strategy for the enterprise will be determined to some
extent by
•
Unique features of the opportunity,
resources, and entrepreneur(s)
•
Other conditions in the business
environment
•
Can use various tools and techniques to
determine strategic choices
•
Five-forces analysis
•
Value-chain analysis
Entry Strategies
•
Getting a foothold in the market
•
Pioneering new entry
n Creating
new ways to solve old problems
n Meeting
customer’s needs in a unique new way
•
Imitative new entry
n Strong
marketing orientation
n Introduce
same basic product or service in another segment of the market
•
Adaptive new entry
n Offer
product or service that is “somewhat new and different”
n Aware
of marketplace conditions and conceive entry strategies to capitalized on
current trends
Generic Strategies
•
How new ventures can achieve competitive
advantages
•
Overall cost leadership
n Simple
organizational structures
n More
quickly upgrade technology and integrate feedback from the marketplace
n Make
timely decisions that affect cost
•
Differentiation
n Use
new technology
n Deploy
resources in a radical new way
•
Focus
n Niche
strategies fit the small business mold
Combination Strategies
•
A key issue is the scope of a small
firm’s strategic efforts relative to those of its competitors
•
Pursue combination strategies
n Combine
best features of low-cost, differentiation, and focus strategies
n Flexibility
and quick decision-making ability of a small firm not laden with layers of
bureaucracy
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