ENTREPRENEURSHIP

Lecture No: 11

Resource Person:

Malik Jawad SaboorAssistant Professor

Department of Management SciencesCOMSATS Institute of Information Technology

Islamabad.

Previous Lecture Review

• Entrepreneurs in Action

• VIDEO ON STEVE JOBS – APPLE INC.

Objectives• Strategic Management

• Competitive Advantage

• Core Competency

• Strategic Management Process

• Vision & Mission Statement

• SWOT Analysis

A Major Shift . . .. . . From financial capital to intellectual

capital.–Human– Structural–Customer

Strategic Management• Is crucial to building a successful business. • Involves developing a game plan to guide a

company as it strives to accomplish its mission, goals , and objectives, and to keep it on its desired course.

Strategic Management and Competitive Advantage

• Developing a strategic plan is crucial to creating a sustainable competitive advantage, the aggregation of factors that sets a company apart from its competitors and gives it a unique position in the market that is superior to its competition.

• Example: Blockbuster Video

Key: Core Competencies

• Unique set of capabilities a company develops in key areas, such as superior quality, customer service, innovation, team-building, flexibility, responsiveness, and others that allow it to vault past competitors. – They are what a company does best. – Best to rely on a natural advantage (often linked to a

company’s “smallness”). • Example: Netflix

Key: Core Competencies

Power of Core Competence• Is the Competence hard to copy?

• Is the Competence Durable?

• Is the Competence really Competitively Superior?

• Can the Competence be trumped by Rivals?

Building a Sustainable Competitive Advantage

Superior value for customers

Sustainable competitive advantage

Capabilities

Core competencies

Skills

Lessons learned

Strategic Management Process

Step 1. Develop a vision and translate it into a mission statement.Step 2. Assess strengths and weaknesses.Step 3. Scan environment for opportunities and threats.Step 4. Identify key success factors.

Strategic Management Process

Step 5. Analyze competition. Step 6. Create goals and objectives. Step 7. Formulate strategies. Step 8. Translate plans into actions. Step 9. Establish accurate controls.

(continued)

Step 1: Develop a Vision and Create a Mission Statement

• Vision – the result of an entrepreneur’s dream of something that does not exist yet and the ability to paint a compelling picture of that dream for everyone to see.

• A clearly defined vision:– Provides direction– Determines decisions– Motivates people

Step 1: Develop a Vision and Create a Mission Statement

• Addresses question: “What business are we in?”

• The mission is a written expression of how the company will reflect an entrepreneur’s values, beliefs, and vision – more than just “making money.”

• Serves as a “strategic compass.”

Step 1: Develop a Vision and Create a Mission Statement

• Survey of employees: 89 percent of employees say their companies have a mission statementbut…

• Only 23 percent of workers believe their company’s mission statement has become a way of doing business!

Step 2: Assess Company Strengths and Weaknesses

• Strengths– Positive internal factors a company can

draw on to accomplish its mission, goals, and objectives.

• Weaknesses– Negative internal factors that inhibit a

company’s ability to accomplish its mission, goals, and objectives.

Step 2: Assess Company Strengths and Weaknesses

What to look for in Identifying Company’s Strengths• Core competencies in ______.

• A strong financial condition; ample financial resources to grow the business.

• Strong brand name image/company reputation.

• Economy of scale and/or learning and experience curve advantages over rivals.

Step 2: Assess Company Strengths and Weaknesses

What to look for in Identifying Company’s Strengths• Proprietary technology/superior technological skills/important patents.

• Cost advantages over rivals.

• Product innovation capabilities.

• Proven capabilities in improving production processes.

• Good supply chain management capabilities.

• Good customer service capabilities.

Step 2: Assess Company Strengths and Weaknesses

What to look for in Identifying Company’s Strengths• Better product quality relative to rivals.

• Wide geographic coverage and distribution capability.

• Alliances/joint ventures with other firms that provide access to valuable Technology, competencies, and/or

attractive geographic markets.

Step 2: Assess Company Strengths and Weaknesses

What to look for in Identifying Company’s Weaknesses• No clear strategic direction.

• No well-developed or proven core competencies.

• A weak balance sheet; burdened with too much debt.

• Higher overall unit costs relative to key competitors.

• A product/service with features and attributes that are inferior to those of rivals.

Step 3: Scan for Opportunities and Threats

What to look for in Identifying Company’s Weakness• Behind on product quality, R&D, and/or technological

know-how.

• Lack of management depth.

• Short on financial resources to grow the business and pursue promising initiatives.

Step 3: Scan for Opportunities and Threats

• Opportunities– Positive external factors the company can exploit

to accomplish its mission, goals, and objectives.• Threats– Negative external factors that inhibit the firm's

ability to accomplish its mission, goals, and objectives.

Step 3: Scan for Opportunities and Threats

What to look for in Identifying Company’s Opportunities• Utilizing existing company skills or technological know-

how to enter new product lines or new businesses.

• Falling trade barriers in attractive foreign markets.

• Acquiring rival firms or companies with attractive technological expertise or capabilities.

Step 3: Scan for Opportunities and Threats

What to look for in Identifying Company’s Opportunities• Serving additional customer groups or market

segments.

• Expanding into new geographic markets.

• Expanding the company’s product line to meet a broader range of customer needs.

Step 3: Scan for Opportunities and Threats

What to look for in Identifying Company’s Threats• Increasing intensity of competition among industry

• Slowdowns in market growth.

• Likely entry of potent new competitors.

• Growing bargaining power of customers or suppliers.

• A shift in buyer needs and tastes away from the industry’s product.

Step 3: Scan for Opportunities and Threats

What to look for in Identifying Company’s Threats

• Adverse demographic changes that threaten to curtail demand for the industry’s product.

• Vulnerability to unfavorable industry driving forces.

• Restrictive trade policies on the part of foreign governments.

• Costly new regulatory requirements.

Lecture Review

• Strategic Management

• Competitive Advantage

• Core Competency

• Strategic Management Process

• Vision & Mission Statement

• SWOT AnalysisReference: Essentials of Entrepreneurship & Small Business Management,

Zimmer, Scarborough &Wilson, 5th Edition