Strategic entrepreneurship Topic 8
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Transcript of Strategic entrepreneurship Topic 8
STRATEGIC ENTREPRENEURSHIP
TOPIC 8DR ANIS AMIRA AB RAHMAN
TAHIRAH BINTI ABDULLAH
FACULTY OF ENTREPRENEURSHIP AND BUSINESSUNIVERSITI MALAYSIA KELANTAN
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STRATEGIC FOR VENTURE GROWTH
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Concept of Business Venture
To organize or to assemble on goinginterdependent actions into sensible sequencesthat generate sensible outcomes (Gartner, 1985).
Important for new ventures to be competent intransforming inputs into outputs that itsstakeholders need and want (Zimmerman, 2002).
The characteristics of the entrepreneur, thestructure of the industry entered and the strategyof the venture involved were play important rolein venture performance (Sandber and Hofer,1987).
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Concept of Business Venture
Criteria for a business venture (Gartner, 1985):
1. Its founders must acquire expertise in products, process,market and/or technology;
2. Results are expected beyond the year in which theinvestment is made;
3. It is considered a new market entrant by its competitors;and
4. It is regarded as a new source of supply by its potentialcustomers.
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A Framework for Describingthe Creation of A New Venture
Dimensions Descriptions
Individual(s) The person(s) involved in starting a new organization
Organization The kind of firm that is started
Environment The situation surrounding and influencing the new organization
New venture process
The actions undertaken by theindividual(s) to start the venture
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A Framework for Describingthe Creation of A New Venture
Dimensions
Individual(s) Value in describing entrepreneurs; (i) Need for achievement, (ii) Risk taker, (iii) Previous work experience, (iv) Education, (v) Job satisfaction*entrepreneur characteristics are extremely important for venture success (Baum et al., 2001)
OrganizationType of firms such as retail, manufacturing, service and wholesale.
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A Framework for Describingthe Creation of A New Venture
Dimensions
Environment(i) sees the environment as an outside set of conditions to which the organization must adapt(ii) sees the environment as a "reality“ that organizations create via the selectivity of their own perceptions
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A Framework for Describingthe Creation of A New Venture
Dimensions
New venture process(i) The entrepreneur locates a business opportunity(ii) The entrepreneur accumulates resources(iii) The entrepreneur markets products and services(iv) The entrepreneur produces the product(v) The entrepreneur builds an organization
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Potential Barriers for The Venture Growth
Institutional barriers
including the legislative framework.
the degree of corruption and bribery a firm encounters.
The external market position of a firm
the sector in which the firm operates.
The degree of competition, whether a firm is facing strategic behavior by competitors.
extent of network alliances to support growth.
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Potential Barriers for The Venture Growth
Financial barriers
Including availability
cost of capital and finance
Internal organizational barriers
including managerial capacity and capability
objectives of firm
principal-agent difficulties
skills
Social barriers
to do with the support, or lack of it, from local actors and agencies.
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Does every venture need growth?
Not all entrepreneurs seek growth, and growth is nota necessary or even desirable objective for all SMEs.
Firstly, the SME owners may have objectives otherthan profit maximisation.
Secondly, if profit maximising, they may have alreadyreached the minimum efficient scale of businessactivity (small retail shops, repair shops and so on).
Therefore a lack of growth on its own does notnecessarily indicate the presence of significantbarriers to growth (Bartlett and Bukvic, 2001).
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STRATEGIES FOR VENTURE GROWTH
Venture growth
Traits
General competencies
Specific competencies
Motivation
Competitive strategies
Environment
Size
Source: Baum et al. 2001Dr Anis Amira Ab Rahman 14
STRATEGIES FOR VENTURE GROWTH
Traits
Tenacity
Proactivity
Passion for work
General Competencies
Organizational Skill
Opportunity Skill
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STRATEGIES FOR VENTURE GROWTH
Specific Competencies
Technical skill
Industry skill
Motivation
Vision
Growth Goals
Self-Efficacy
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STRATEGIES FOR VENTURE GROWTH
Competitive strategies
Focus
Low-cost
Differentiation-Innovation
Differentiation-Quality/service
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STRATEGIES FOR VENTURE GROWTH
Environment
Dynamism
Munificence
Concentration
Size
Size
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Threat of new entrants
Threat of substitute product or service
Bargaining power of customer
Bargaining power of suppliers
Intensity of competitive rivalry
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Porter’s Five Forces Model Strategy
Barriers to EntryAbsolute cost advantages Proprietary learning curve Access to inputs Government policy Economies of scale Capital requirements Brand identity Switching costs Access to distribution Expected retaliation Proprietary products
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Threat of new entrants
Switching costs
Buyer inclination tosubstitute
Price-performancetrade-off of substitutes
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Threat of substitute product or service
Bargaining leverage
Buyer volume
Buyer information
Brand identity
Price sensitivity
Threat of backward integration
Product differentiation
Buyer concentration vs. industry
Substitutes available
Buyers' incentives
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Bargaining power of customer
Supplier concentration
Importance of volume to supplier
Differentiation of inputs
Impact of inputs on cost or differentiation
Switching costs of firms in the industry
Presence of substitute inputs
Threat of forward integration
Cost relative to total purchases in industry
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Bargaining power of suppliers
Exit barriers
Industry concentration
Fixed costs/Value added
Industry growth
Intermittent overcapacity
Product differences
Switching costs
Brand identity
Diversity of rivals
Corporate stakes
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Intensity of competitive rivalry
Legitimacy Strategies
Using legitimacy strategies to achieve venturegrowth.
legitimacy as "a generalized perception orassumption that the actions of an entity are desirable,proper, or appropriate within some sociallyconstructed system of norms, values, beliefs, anddefinitions“
(DiMaggio & Powell, 1991)
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Legitimacy Strategies
Legitimacy is a relationship between the practices and utterances of the organization and those that are contained within, approved of, and enforced by the social system in which the organization exists.
(Zimmerman and Zeitz, 2002)
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REFERENCES Zimmerman, M. A., & Zeitz, G. J. (2002). Beyond survival:
Achieving new venture growth by building legitimacy. Academy ofManagement Review, 27(3), 414-431.
DiMaggio, P. J., & Powell, W. W. 1991. Introduction. In W. W.Powell & P. J. DiMaggio (Eds.), The new institutionalism inorganizational analysis: 1-40. Chicago: University of Chicago Press.
Baum, J. R., Locke, E. A., & Smith, K. G. (2001). A multidimensionalmodel of venture growth. Academy of management journal,44(2), 292-303.
Baum, J. R., & Locke, E. A. (2004). The relationship ofentrepreneurial traits, skill, and motivation to subsequent venturegrowth. Journal of applied psychology, 89(4), 587.
Bartlett, W., & Bukvic, V. (2001). Barriers to SME growth inSlovenia. MOST: Economic Policy in Transitional Economies, 11(2),177-195.
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REFERENCES Gartner, W. B. (1985). A conceptual framework for describing the
phenomenon of new venture creation. Academy of ManagementReview, 10(4), 696-706.
SandbergW. R. and Hofer, C. W. (1987). Improving new ventureperformance: The role of strategy, industry structure, and theentrepreneur. Journal of Business Venturing, 2(1), 5-28.
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