Entrepreneurship Chapter 2

What are the 2 principal broad-based strategies that lead to competitive advantages? (And explain).

Cost-based strategy: requires a firm to be the lowest cost producer within the market. The sources of cost advantage are quite varied, ranging from low cost labor to efficiency in operations. Compared to other strategies, competing on cost may be the least sustainable strategy; competitors could respond by lowering their prices. Both small and larger businesses use this strategy. Differentiation-based strategy: differentiation of product or service along some dimension other than cost. A firm that can create and sustain an attractive differential position will be a successful performer in the marketplace. Consumers but be convinced of the differentiation. A wide variety of operation and marketing tactics, ranging from promotion to product design, lead to product or service differentiation.

The general environment contains a number of important trends. Describe each of them.

Economic trends Sociocultural trends Political-legal trends Global trends

Compare the different approaches to deliberate search for new venture ideas.

Entrepreneurs can begin by either evaluating their own abilities and ideas (a production oriented approach) or assessing market needs or opportunities (a marketing oriented approach). Either approach can produce viable new venture ideas, but students should note that venture capitalists typically like ideas that have a known market demand.

Describe start-ups that are based on new technology ideas.

Involve new knowledge or technology breakthroughs. They are higher risk since there is not necessarily a model to follow but there is tremendous potential for them. Need to be unique and better than what is currently offered to generate sufficient sales.

Define and briefly explain sustainable competitive advantage.

It is an established, value-creating industry potion which is likely to endure over time. No competitive advantage lasts forever. A value creating industry position is best when it is likely to endure over time. Important to think of rivals and ways to invest performance outcomes so that the basis of competitive advantage can be renewed over the long run. Building a competitive advantage generally requires commitment of considerable resources, a well-planned effort that will lead to a performance pay-off. In order for a firm to maintain performance over time, it is essential that the business owner be forward thinking.

Why does it become necessary for some entrepreneurs to pivot at some point after start up?

Refocus the start-up if it is becoming clear that there are flaws in the original concept.

What marketing activities suggest that a firm is following a niche market segmentation strategy?

Restricting focus to a single market segment Concentrating on the superiority of the product or service Limiting sales to a single geographical region Emphasizing a single product or service

What is market segmentation?

The division of a market into several smaller groups with similar needs or buying behavior.

What are the 5 core elements that can lead to competitive advantage? (And give an example of each).

-Price/value - Unique service feature - Notable product attributes - Customer service - Accessibility

What are 2 reasons why the single-segmentation approach is probably the wisest strategy for small businesses to use during initial marketing efforts?

A small business may have limited resources, and the single-segmentation approach allows it to specialize and focus on one segment to make better use of its limited resources.

What are the differences between prior work experience, accidental discovery and deliberate search as sources of start-up ideas?

Prior work experience: most prolific source Accidental: serendipity; strike at anytime and can be completely unrelated to an individual's knowledge/work experience Deliberate search: potential for producing ideas for many kinds and escapes the limitations inherent in relying on prior work experiences for inspiration.

What is the multi-segmentation strategy?

Recognizing individual market segments with different preferences and developing a unique marketing mix for each segment.

What is the single-segmentation strategy?

Recognizing that several distinct market segments exist but choosing to concentrate on reaching only one segment, usually the most profitable one.

What 4 conditions can erode a segmented market?

The focus strategy is limited The target segmentation becomes structurally unattractive because of erosion of the structure or because demand simply disappears The target segment's difference from other segments narrow New firms sub segment in the industry

Explain the process of organizational assessment.

The processes of organizational assessment is the assessment of the strengths and weaknesses of a firm. Organizational resources: basic inputs that the firm uses to conduct its business (e.g. employees, equipment, trademarks, brand recognition) both tangible and intangible resources. Organizational capabilities are what a company can deliver when the resources are gathered together and deployed to the firm's advantage.

What are the 5 factors that determine the nature and degree of competition in an industry?

The threat of new competitors The threat of substitutes The bargaining power of buyers The bargaining power of suppliers The rivalry among existing competitors