Entrepreneurship ch.7
entry wedge
an opportunity that makes it possible for a new business to gain a foothold in a market
incremental innovation
an overall strategic approach in which a firm patterns itself on other firms, with the exception of one or two key areas
Industry Dynamics
changes in competitors, sales and profits in an industry over time
benefits
characteristics of a product or service that the target customer would consider worthwhile
strategic actions
competitive responses requiring a major commitment of resources
tactical actions
competitive responses with low resource requirements
growth stage
customer purchases increase at a dramatic rate
gross profit
funds left over after deducting the cost of goods sold
scope
geographic range
4 step process
goals, customer benefits, industry dynamics and analysis, strategy selection
strategy
ideas and actions that explain how a firm will make its profit -- leads to greater chances for survival and higher profits
imitation plus one degree of similiarity
incremental innovation
industry analysis
life cycle, trends Tool: industry analysis
goals
owner rewards, product/service (industry, imitation, innovation), markets (scale and scope)
intro stage
p/s is being invented and initially developed
market scale
size
decline stage
A life cycle stage in which sales and profits of the firm begin a falling trend.
parallel competition
An imitative business that competes locally with others in the same industry.
retrenchment
An organizational life cycle stage in which established firms must find new approaches to improve the business and its chances for survival.
shake-out
a type of life cycle stage following a boom in which there is a rapid decrease in the number of firms in an industry
imitation itself
Patterning a business on existing firms and processes • Not copying like franchising, because you are unlikely to have all the info about the model businesses/processes • Parallel competition
net profit
The amount of money left after operating expenses are deducted from the business
magic number
The post-tax income the entrepreneur personally seeks from the business
mass market
a customer group that involves large portions of the population
Cost Strategy
a generic strategy aimed at mass markets in which a firm offers a combination of cost benefits that appeals to the customer
focus strategy
a generic strategy that targets a portion of the market, called a segment or niche
perceptual mapping
a graphic display which positions products, services, brands, or companies according to their scores of important strategic dimensions
industry analysis
a research process that provides the entrepreneur with key information about the industry, such as its current situation and trends
differentiation strategy
a type of generic strategy aimed at clarifying how one product is unlike another in a mass market
profit before taxes
the amount of profit earned by a business before calculating the amount of income tax owed
Imitation minus one degree of similarity is
the business equivalent of cloning (franchising)
maturity stage
the third and longest stage in the product life cycle, during which sales peak and profit margins narrow
generic strategies
three widely applicable classic strategies for businesses of all types- differentiation, cost, and focus
customer and benefits
value benefits and cost benefits Tool: Perceptual mapping
