Ch. 8

Entrepreneurship

the creation of new value by an existing organization or new venture that involves the assumption of risk

forbearance

a firm's choice of not reacting to a rival's new competitive action

Explain how the combination of opportunities, resources, and entrepreneurs helps determine the character and strategic direction of an entrepreneurial firm.

An entrepreneurial venture creates value when three factors are present. There must be an entrepreneurial opportunity, the resources to pursue the opportunity, and an entrepreneur or entrepreneurial team willing and able to undertake the opportunity. The entrepreneurial strategy used will depend on these three factors. The opportunity recognition process also involves organizing the key people and resources needed to proceed.

Explain why entrepreneurial firms are often in a strong position to use combination strategies.

Combining the best features of low-cost, differentiation and focus strategies can often lead organizations to achieve something distinctive. Forms can pursue a combination strategy because they have the flexibility to approach situations uniquely. Big firms often are burdened by layers of bureaucracy that hinder cost minimization. Big firms also have trouble offering truly differentiated products. Entrepreneurial firms can often create high-value products and services through their differentiating efforts.

What does the term competitive dynamics mean?

Intense rivalry among similar competitors

What is the difference between discovery and evaluation in the process of opportunity recognition? Give an example of each.

Opportunity recognition involves discovery and evaluation, leading to viable new venture opportunities. Discovery involves the process of becoming aware of a new business concept. This can result from a deliberate search for new venture opportunities or creative solutions to business problems. Viable opportunities often emerge after concerted effort, and can be similar to the creative process and eventually lead to a practical solution or business innovation. John Hantz has identified an opportunity to develop unused tracts of land within Detroit into urban farming ventures. Opportunity evaluation occurs after an opportunity has been identified, involving analysis of opportunities to determine viability and strength to be developed into a full-fledged new venture. Ideas are tested by various methods, and feasibility analysis is used to further evaluate the opportunity. John Hantz' urban farming project has most definitely utilized the expertise of several team members to evaluate project feasibility.

Briefly describe the three types of entrepreneurial entry strategies: pioneering, imitative, and adaptive.

Pioneering: introduction of a radically new product or innovative service that is unique enough that a new entrant will have little to no competition. Imitative new entry: entrepreneurs that seek successful products or business concepts in one niche market and introduce the same basic product or service to serve another market segment. Adaptive new entry: somewhere between pure innovation and simple imitation. The offering of a product that is somewhat new and significantly different enough to create new value for customers and capture market share.

Explain the difference between strategic actions and tactical actions and provide examples of each.

Strategic actions: major commitments of distinctive and specific resources. Example - building a new production facility Tactical action: refinements or extensions of strategies. Example - strengthening marketing efforts. Tactical actions are smaller steps taken to either follow or redirect more encompassing strategic actions.

Describe the three characteristics of entrepreneurial leadership: vision, dedication and drive, and commitment to excellence.

Vision - ability to envision realities that do not yet exist. Vision enables a form of transformational leadership that creates something new and brings some form of change to the world. Dedication and drive: simply put, hard work and persistence. Internal motivation, intellectual commitment, patience, stamina, willingness to put in long hours of work to purse a venture. Commitment to excellence: commitment to knowing the customer, provide quality goods and services, pay attention to details, and continuously learn. Successful entrepreneurs are sensitive to how these qualities work together.

threat analysis

a firm's awareness of its closest competitors and the kinds of competitive actions they might be planning

adaptive new entry

a firm's entry into an industry by offering a product or service that is somewhat new and sufficiently different to create value for customers by capitalizing on current market trends

pioneering new entry

a firm's entry into an industry with a radical new product or highly innovative service that changes the way business is conducted

imitative new entry

a firm's entry into an industry with products or services that capitalize on proven market successes and that usually has a strong marketing orientation

co-opetition

a firm's strategy of both cooperating and competing with rival firms

entrepreneurial strategy

a strategy that enables a skilled and dedicated entrepreneur, with a viable opportunity and access to sufficient resources, to successfully launch a new venture

new competitive action

acts that might provoke competitors to react, such as new market entry, price cutting, imitating successful products, and expanding production capacity

venture capitalists

companies organized to place their investors' funds in lucrative business opportunities

market dependence

degree of concentration of a firm's business in a particular industry

Crowdfunding

funding a venture by pooling small investments from a large number of investors, often raised on the internet

Competitive Dynamics

intense rivalry, involving actions and responses, among similar competitors vying for the same customers in a marketplace

entrepreneurial leadership

leadership appropriate for new ventures that requires courage, belief in ones convictions, and the energy to work hard even in difficult circumstances; and embody vision, dedication and drive, and commit to excellence

strategic actions

major commitments of distinctive and specific resources to strategic initiatives

angel investors

private individuals who provide equity investments for seed capital during the early stages of a new venture

Tactical Actions

refinements or extensions of strategies usually involving minor resource commitments

market commonality

the extent to which competitors are vying for the same customers in the same markets

resource similarity

the extent to which rivals draw from the same types of strategic resources

opportunity recognition

the process of discovering and evaluating changes in the business environment, such as a new technology, sociocultural trends, or shifts in consumer demand, that can be exploited