Stratetgies for Entrepreneurial VentureC

7/31/2019 Stratetgies for Entrepreneurial VentureC

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Strategies for entrepreneurial ventures

One of the essential acts of entrepreneurship

is new entry which refers to offering a new

product to an established or new market;

offering established product to a new market

or creating a new organization.

The entrepreneur needs to develop strategies

to succeed with new business venture. Thestrategy includes the following elements:


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Generation of a new entry opportunity

The exploration of a new entry opportunity,

and

A feedback


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Generation of new entry opportunity

Resources as a source of competitiveadvantage: Understanding where asustainable competitive advantage comes

from will provide some insight into howentrepreneurs can generate new entries thatare likely to provide the basis for high firmperformance over an extended period to time.

Resources are the basic building blocks to afirms functioning and performance


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In order for a bundle of resources to be thebasis of a firms superior performance overcompetitors for an extended period of time,

the resources must be valuable, rare andinimitable.

Valuable when it enables the firm to pursueopportunities, neutralizes threats and offerproduct and services that are valued bycustomers.


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Those knowledge might include:

Market knowledge: Which is possession of

information, technology, know-how and skills that

provide insight into a market and its customers.

Technological knowledge: Is possession of

information, technology, know-how and skills that

provide insight into ways to create newknowledge. This leads to the technology which

becomes a basis for new entry.


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Assessing the attractiveness of a new

entry opportunity

Having created a new resource combination, theentrepreneur needs to determine whether it is infact valuable, rare and inimitable by assessingwhether new product and/or the new market are

sufficiently attractive to be worth exploiting anddeveloping. This is affected by:

Prior knowledge and information search: Theprior market and technological knowledge used

to create the potential new entry can also be ofbenefit in assessing the attractiveness of aparticular opportunity.


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Window of opportunity: The dynamic nature

of the viability of a particular new entry can

be described in terms of window of

opportunity. When the window is open, the

environment is favorable for entrepreneurs to

exploit the opportunity.


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Entry strategy for new entry

exploitation

The common catch phrase used by

entrepreneurs when asked about their source

of competitive advantage is Our competitive

advantage comes from being first. We are the

first movers. whether they are the first to

introduce a new product and/or the first to

create a new market, these claims have somemerit. The following are the first mover

advantages:


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First mover develop cost advantage

They face less competitive rivalry

First movers can secure important channels They are better positioned to satisfy

customers

First movers gain expertise throughparticipation


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However, there are few first moverdisadvantages:

Determination of key success factors and

developing them. (key success factors are therequirements that any firm must meet in order tosuccessfully compete in a particular industry)

Demand uncertainty: considerable difficulty in

accurately estimating the potential size of themarket, how fast it will grow and the keydimensions along which it will grow.


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Technological uncertainty: considerabledifficulty in accurately assessing whether thetechnology will perform and whether

alternate technologies will emerge andleapfrog over current technologies.

Customer uncertainty: Customers may haveconsiderable difficulty in accurately assessingwhether the new product or service providesvalue for them.


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Risk reduction strategies for new entry

exploration

A new entry involves considerable risk for the

entrepreneur and his/her firm. Firm can

choose from following strategies to reduce

such risk.

Market scope strategy: Scope is a choice by

the entrepreneur about which customer

groups to serve and how to serve them.


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Narrow scope strategy: A narrow scope

strategy offers a small product range to a

small number of customer groups in order to

satisfy a particular need. The narrow scopecan reduce the risk that firm will face

competition with larger, more established

firms in number of ways.


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A narrow scope strategy focuses the firm on

producing customized products, localized

business operations and high levels of

craftsmanship. Such outcomes provide thebasis for differentiating the firm from larger

competitors who are more oriented towards

mass production and the advantages that arederived from that volume.


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By focusing on a specific group of customers,

the entrepreneur can build up specializedexpertise and knowledge that provide an

advantage over companies that are competing

more broadly.

The high end of the market typically represents

highly profitable niche that is well suited to

those firms that can produce customized

products, localized business operations and

high levels of craftsmanship.


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Broad scope strategy: A broad scope strategy

can be thought of as taking a portfolio

approach to dealing with uncertainties about

the attractiveness of different marketsegments. By offering a range of products

accross many different market segments, the

entrepreneur can gain an understanding ofthe whole market by determining which

products are the most profitable.


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Unsuccessful products (and market segments)

can then be dropped and resources

concentrated on those product markets that

show the greatest promise. In essence, theentrepreneur can cope with market

uncertainty by using a broad scope strategy t

learn about the market through a process oftrial and error.


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Imitation strategy: This is a strategy for

minimizing risk of downside loss associated

with new entry. Imitation involves copying the

practices of other firms, whether those otherfirms are in the industry being entered or from

related industries. This represents a substitute

for individual learning.


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A firm implements this strategy by redefining

the business-either adding to the scope of

activity or substantially increasing the efforts

of the current business. Even without achange in mission, market share substantially,

often accompanied by plant expansion.


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Expansion can be achieved through followingstrategies

Concentration: In this strategy, the firm

directs its resources to the profitable growthof a single product, in a single market andwith a single technology. The reasons for thisstrategy are:

Low risk

Based on known competencies


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Market penetration strategy: this strategy

involves seeking increased market share forpresent products or services in present

markets through greater marketing efforts.

Market development: It consists of marketingpresent products, often with only cosmetic

modifications, to customers in related market

areas by adding different channels ofdistribution or by changing the content of

advertising or the promotional media.


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Product development involves substantialmodification of existing products or creationof new but related items that can be marketed

to current customers through establishedchannels.

This strategy is often adopted either toprolong the life cycle of current product or totake advantage of favorable reputation andbrand name.


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Innovation:The underlying philosophy of grand

strategy of innovation is creating a new

product life cycle.

This approach differs from the product

development strategy of extending an existing

products life cycle

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Stratetgies for Entrepreneurial VentureC