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  • 1. CHAPTER 13 Strategic Entrepreneurship

2. K NOWLEDGEO BJECTIVES

  • Define strategic entrepreneurship and corporate entrepreneurship.
  • Define entrepreneurship and entrepreneurial opportunities and explain their importance.
  • Define invention, innovation, and imitation and describe the relationship among them.
  • Describe entrepreneurs and the entrepreneurial mind-set.
  • Explain international entrepreneurship and its importance.

Studying this chapter should provide you with the strategic management knowledge needed to: 3. K NOWLEDGEO BJECTIVES(contd)

  • Describe how firms internally develop innovations.
  • Explain how firms use cooperative strategies to innovate.
  • Describe how firms use acquisitions as a means of innovation.
  • Explain how strategic entrepreneurship helps firms create value.

Studying this chapter should provide you with the strategic management knowledge needed to: 4. Strategic Entrepreneurship

  • Strategic Entrepreneurship
    • Taking entrepreneurial actions using a strategic perspective.
    • Engaging in simultaneous opportunity seeking and competitive advantage seeking behaviors.
    • Designing and implementing entrepreneurial strategies to create wealth.
  • Strategic entrepreneurship actions can be taken by:
    • Individuals
    • Corporations

5. Strategic Entrepreneurship and Innovation

  • Entrepreneurship is concerned with:
    • The discovery of profitable opportunities
    • The exploitation of profitable opportunities
  • Firms that encourage entrepreneurship are:
    • Risk takers.
    • Committed to innovation.
    • Proactive in creating opportunities rather than waiting to respond to opportunities created by others.

6. Entrepreneurial Opportunities

  • Entrepreneurial Opportunities
    • Conditions in which new products or services can satisfy a need in the market.
  • Entrepreneurs or entrepreneurial managers must be able to:
    • Identify opportunities not perceived by others.
    • Take actions to exploit the opportunities.
    • Establish a competitive advantage.

7. Innovation Process

  • The act of creating or developing a new product or process
  • Brings something new into being.
  • Technical criteria are used to determine the success of an invention.

Invention 8. Innovation Process (contd)

  • The process of creating a commercial product from an invention.
  • Brings something new into use.
  • Commercial criteria are used to determine the success of an innovation.

Invention Innovation 9. Innovation Process (contd)

  • The adoption of an innovation by similar firms
  • Usually leads to product or process standardization.
  • Products based on imitation often are offered at lower prices but with fewer features.

Invention Innovation Imitation 10. The Importance of Innovation

  • Innovation
    • Is a key outcome firms seek through entrepreneurship.
    • Is often the source of competitive success.
  • Corporate Entrepreneurship
    • Innovations produced in large established firms.

11. Entrepreneurs

  • Entrepreneurs
    • Individuals acting independently or as part of an organization who create a new venture or develop an innovation, take risks entering innovations into the marketplace.
    • Can be any manager or employee in an organization.
  • Entrepreneurial capabilities include:
    • Intellectual capital
    • Entrepreneurial mind-set
    • Transfer of entrepreneurial competence to others
    • Effective human capital

12. International Entrepreneurship

  • Entrepreneurship can:
    • Fuel economic growth
    • Create employment
    • Generate prosperity forcitizens
  • There is a strong positive relationship between the rate of entrepreneurial activity and economic development in a nation.

13. International Entrepreneurship (contd)

  • There mustbe a balance(in the culture) between
    • Individual initiative and
    • The spirit of cooperation and group ownership of innovation.
  • Successful entrepreneurial firms:
    • Provide appropriate autonomy.
    • Offer incentives for individual initiative.
    • Promote cooperation and group ownership of an innovation.

14. Incremental and Radical Innovation

  • Incremental Innovation
    • Is the usual case for innovation in organizations.
    • Provides small increments in current product lines.
    • Improves existing knowledge and processes.
    • Can create value.
  • Radical Innovation
    • Is rare because of difficulty and risk.
    • Provides significant technological breakthroughs.
    • Creates new knowledge and processes.
    • Can create value.

15. FIGURE 13.1 Model of Internal Corporate Venturing Source:Adapted from R. A. Burgelman, 1983, A model of the interactions of strategic behavior, corporate context, and the concept of strategy,Academy of Management Review,8: 65. 16. Internal Corporate Venturing

  • The set of activities used to create inventions and innovations through internal means.
    • R&D spending is linked to success in internal corporate venturing.
  • Product Champion
    • An organizational member with an entrepreneurial vision of a new good or service who seeks to create support for the visions commercialization.

17. Internal Corporate Venturing (contd)

  • A bottom-up process in which product champions:
    • Pursue new ideas, often through a political process.
    • Develop and coordinate the commercialization of a new good or service until it achieves success in the marketplace.
  • Forms of internal corporate venturing:
    • Autonomous strategic behavior
    • Induced strategic behavior

18. Venturing: Strategic Behaviors

  • Autonomous Strategic Behavior
    • Based on a firms knowledge and resources that are the sources of the firms innovation.
    • A firms technological capabilities and competencies are its basis for new products and processes.
  • Induced Strategic Behavior
    • A top-down process whereby the firms current strategy and structure foster product innovations.
    • The strategy in place is filtered through a matching structural hierarchy.

19. Implementing New Product Development and Internal Ventures

  • To be innovative and develop internal ventures requires:
    • An entrepreneurial mindset
    • Risk propensity
    • An emphasis on execution
  • Individuals with an entrepreneurial mindset
    • Engage the energies of everyone in their domain both inside and outside the organization.

20. CrossFunctional Product Development Teams

  • Facilitate integration of activities associated with different organizational functions.
    • Design, manufacturing, marketing, etc.
  • New product development processes can be completed more quickly.
    • Products can be more easily commercialized when cross-functional teams work effectively.

Cross-functional Product DevelopmentTeam 21. CrossFunctional Product Development Teams

  • Product development stages are grouped into parallel or overlapping processes, allowing the firm to tailor its product development efforts
    • Unique core competencies
    • Needs of the market

Cross-functional Product DevelopmentTeam 22. Barriers to Cross-Functional Teams Effectiveness

  • Different orientations and perceptions
    • Individuals from separate functions have different orientations on issues.
      • Create differing approaches to product development activities.
  • Organizational Politics
    • Cause aggressive competition for resources among different organizational functions.
      • Organizations must achieve cross-functional integration with minimal political conflict.

23. Facilitating Integration and Innovation

  • Shared Values
    • Are framed around the firms strategic intent and mission.
    • Become the glue that promotes integration between functional units.
  • Effective Leadership
    • Sets goals and allocates resources
      • Goals include integrated development and commercialization of new goods and services
  • Effective Communication

24. FIGURE 13.2 Creating Value through Internal Innovation Processes 25. Cooperative Strategies for Entrepreneurship and Innovation

  • Cooperation and integration of knowledge and resources is required to successfully commercialize inventions.
    • Entrepreneurial firms need investment capital and distribution capabilities.
    • Established companies need the technological knowledge possessed by entrepreneurial firms.
  • Firms innovate through the sharing their knowledge and skills in a cooperative relationship.

26. Acquisitions to Buy Innovation

  • Acquisitions
    • Can rapidly extend the product line.
    • Can quickly increase the firms revenues.
  • Key risks of acquisitions
    • The firm may substitute the ability to buy innovations for an ability to produce innovations internally.
    • The firm may lose intensity in R&D efforts.
    • The firm may lose its ability to produce patents.

27. Capital for Entrepreneurial Ventures

  • Venture Capital Firms
    • Seek high returns on their investment.
    • Value the competence of the entrepreneur or the human capital in the firm.
    • Place weight on the expected scope of competitive rivalry the firm is likely to experience.
    • Evaluate the degree of instability in the market addressed.

28. Capital for Entrepreneurial Ventures

  • Initial Public Offerings (IPOs)
    • Are new stock priced to reflect the firms high potential.
    • Often yield much larger equity investments than can be obtained from venture capitalists.
    • Investment bankers frequently play major roles in the development and offering of IPOs.
    • Firms that have previously received venture capital backing usually receive greater returns from IPOs.

29. Creating Value through Strategic Entrepreneurship

  • Be effective in identifying opportunities.
  • Be flexible and willing to take risks.
  • Have sufficient resources and capabilities to exploit identified opportunities.
  • Sustain a competitive advantage while identifying and exploiting opportunities.
  • Develop an entrepreneurial mind-set among managers and employees.
  • Seek to enter and compete in international markets.