Strategy Entre
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Transcript of Strategy Entre
8/7/2019 Strategy Entre
http://slidepdf.com/reader/full/strategy-entre 1/22
1
Strategy in
EntrepreneurialCompanies
8/7/2019 Strategy Entre
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2
The Function of Strategy
To Provide a general, broad sense of
direction. To Create a sense of purpose and
builds commitment.
Translates the Corporate Vision intoplans and action steps
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An Entrepreneurial Company
Exists by developing value from
identified opportunities. Grows by continually seeking new
opportunities.
Which means it must allocate andreallocate resources from existing to
new opportunities.
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4
Strategy in Entrepreneurial
Companies
Strategy is Value-based ; focusing on
creating value through innovation andopportunity.
Strategy must be Emergent as we
can¶t always predict wh
en or wh
ereinnovations will occur. Thus strategy
cannot be very specific. It evolves, in
part, from what we do.
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5
Characteristics of Effective
Strategy
It is based on the concepts of:
Don¶t compete, differentiate. Development and exploitation of Core
Competencies:
You have to know what you are good at and
what you are not so good at. You have to know where you need to be
good and develop these areas - an aspect
that is getting more and more important.
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Additional Characteristics of
Effective Strategy
Continuous investment in
innovation. Generalized search for opportunity
at all levels of the organization.
Pivot on Technology/Capabilities
into adjacent markets.
Be Value Oriented.
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Value Oriented Strategy
A basic tenet of
entrepreneurship -- do notcompete, innovate.
Practice Value Pricing --
deliver value to your customer.
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Value PricingValue Pricing
High Margins
R & D New Products
RequireGiveCustomer
Value
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MORE ON VALUE
ORIENTED STRATEGY
But charge enough to keep some
value for yourself - newcompanies usually charge too
little.
Pick your price niches.
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More Characteristics of an
Effective Strategy
Keep a look out for new and
promising areas for innovation. It can put a safety
net under your present
strategy. Aim at the sweet spots of the
product life-cycle curve.
8/7/2019 Strategy Entre
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Basic Product Life CycleBasic Product Life Cycle
Risky
Great
Bad
Good
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Additional Characteristics of
an Effective Strategy
Adopt a ³options model´ for
project expenditures. You thenpay to learn more and thus make
better decisions.
Keep a reserve for the hiddenunknowns.
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Strategic management Strategy formulation (Planning and
analysis)
Strategy implementation (Execution andevaluation)
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Strategy formulationEntry wedges (Methods to get into a business)
Major wedges
New product or service Parallel competition
Franchising
Minor wedges
Customer sponsorship: customer contract
Parent company sponsorship: Joint venture,Licensing
Government purchasing
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Resource based strategyEvery entrepreneur shall possess
resources and capabilities that are rare,hard to copy and non substitutable.
3 strategies related to resources
Rent seeking strategies
Growth strategies
Quality strategies
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Different types of rent Ricardian rent: rent due to acquiring, owning
and controlling a scarce and valuable
resources. Monopoly rent
Entrepreneurial rent: risk taking behavior
Quasi rent: employing firm specific asset in amanner that other firms cannot copy.
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Protecting Rent Isolating mechanism or first mover
advantage
Property rights: Patents, Trademarksand copyrights
Technological leadership
Acquiring valuable and scarce resourcesahead of others
Imposing switching costs
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Growth strategiesThe optimal growth rate for the new
venture involves a balance between thefull exploitation of existing resourcesand development of new ones
Focus effect growth strategy: Related
diversification
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Synergy effect strategy (combination of technology and marketing)
Contestable synergy: Acquiring andemploying resource which create valuebut can be imitated by others
Idiosyncratic synergy: Synergy that canproduce long lasting rents.
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Aspects related to successful
TQM Market research
Organization commitment