Chapter Eight: Entrepreneurial Strategy and Competitive Dynamics 1. Explain how the combination of opportunities, resources, and entrepreneurs helps determine the character and strategic direction of an entrepreneurial firm. 2. What is the difference between discovery and evaluation in the process of opportunity recognition? Give an example of each. The discovery phase refers to the process of becoming aware of a new business concept. The discovery of new opportunities is often spontaneous and unexpected. For example, the CEO of Starbucks was in Milan, Italy, when he suddenly realized that the coffee-and-conversation café model that was common in Europe would work in the U.S. as well. Opportunity evaluation, which occurs after the opportunity has been identified, involves analyzing an opportunity to determine whether it is viable and strong enough to be developed into a full-fledged new venture. Ideas developed by newproduct groups or in brainstorming sessions are tested by various methods, including talking to potential target customers and discussing operational requirements with production or logistics managers. 3. Describe the three characteristics of entrepreneurial leadership: vision, dedication and drive, and commitment to excellence. Vision: An entrepreneur’s greatest asset. Entrepreneurs envision realities that do not yet exist. But w/out a vision, v ision, most entrepreneurs would never even get their venture off the ground. With vision, entrepreneurs are able to exercise a kind of transformational leadership that creates something new and, in some w ay, changes the world. Dedication and Drive: Dedication and drive are reflected in hard work. Drive involves internal motivation; dedication calls for an intellectual commitment that keeps an entrepreneur going even in the face of bad news or poor luck. Commitment to excellence: Excellence requires entrepreneurs to commit to knowing the customer, providing quality goods and an d services, paying attention to details, and continuously learning. 4. Briefly describe the three types of entrepreneurial entry strategies: pioneering, imitative, and adaptive. Pioneering: If the product or service is unique enough, a pioneering new entrant may actually have little direct competition; may change ch ange the way business is conducted. Example: the first personal computer and the first Internet browser. b y entrepreneurs who see Imitative: An imitative new entry strategy is used by products or business concepts that have been successful in one market niche or
physical locale and introduce that same basic product or service in another segment of the market Adaptive: An adaptive new entry approach does not involve “reinventing the wheel,” nor is it merely imitative either. It involves taking an existing idea and adapting it to a particular situation. 5. Explain why entrepreneurial firms are often in a strong position to use combination strategies. Entrepreneurial firms are often in a strong position to offer a combination strategy because they have the flexibility to approach situations uniquely. By combining the best features of low-cost, differentiation, and focus strategies, new ventures can often achieve something truly distinctive. 6. What does the term competitive dynamics mean?
Intense rivalry among similar competitors; has the potential to alter a company’s strategy. New entrants may be forced to change their strategies or develop new ones to survive competitive challenges by incumbent rivals. 7. Explain the difference between strategic actions and tactical actions and provide examples of each. Strategic Actions: represents major commitments of distinctive and specific resources. Examples include launching a breakthrough innovation, building a new production facility, or merging with another company. Such actions require significant planning and resources and, once initiated, are difficult to reverse. Tactical Actions: refinements or extensions of strategies usually involving minor resource commitments. Examples of tactical actions include cutting prices, improving gaps in service, or strengthening marketing efforts. Such actions typically draw on general resources and can be implemented quickly.
