Entrepreneurial Strategy: Generating and Exploiting New Strategies

Entrepreneurial Strategy:
Generating and Exploiting

New Strategies
New Entry
 Offering a new product to an established or new
market. Offering an established product to a new
market or creating a new organization.
 Offering a new product to an established or new

market.
 Offering an established product to a new market.
 Creating a new organization.
Stage3: Feedback loop of resources
Entry
Knowledge
Strategy
Assessment of
Resource Risk Reduction Firm
New Entry
Bundle Strategy Performance
Opportunity
Other
Resources Organization
Stage 1 : New Entry Generation Stage2 : New Entry Exploitation

Entrepreneurial Strategy
A set of decisions, actions, and reactions that

first generate and then exploit over time a
new entry.
 An entrepreneurial strategy has three Key
Stages
1. Generation of a New Entry Strategy
2. Exploitation of New Entry Strategy
3. A feedback loop from the New strategy
Generation of a new Entry
Opportunity
Resources as a source of Competitive Advantage
Understanding where a sustainable competitive

advantage comes from will provide some
insight into how entrepreneurs can generate
new entries that are likely to provide the basis
for high firm from performance over an
extended period of time
Opportunity
Entrepreneurial Resources: The ability to obtain, and then
recombine, resources into a bundle that is valuable,
rare, and inimitable
 Entrepreneurs combines the resources into such a

different ways as this bundle of resources provides a
firm its capacity to achieve superior performance
 For Example: A high skilled workforce will be useless

if the organization’s culture, teamwork, communication
does not support them
Opportunity
Resources must be:
1. Valuable: enables a firm to pursue opportunities,
neutralize threats, and offer valuable product and
services to the customers
2. Rare: Possessed by few, (potential) competitors
3. Inimitable: Replication of this bundle of resources

would difficult or costly for the potential
competitors
Opportunity
Market Knowledge: Possession of Information,
technology, know-how, and skills that provide
insight into a market and its customers
Technological Knowledge: Possession of

information, technology, know-how and skills
that provide insight into ways to create new
knowledge
Opportunity
Assessing the Attractiveness of a New Entry
Opportunity
 The entrepreneur needs to determine whether
it is in fact valuable, rare, and inimitable by

assessing whether the new product or the new
market are sufficiently attractive to be worth
exploiting and developing
Opportunity
Assessing the Attractiveness of a New Entry
Opportunity
 Information on a New Entry: The prior
market and technological knowledge used to
create the potential new entry can also be of
benefit in assessing the attractiveness of a
particular opportunity
Opportunity
 Window of Opportunity: The period of time
when the environment is favorable for
entrepreneurs to exploit a particular new entry.
 When the window is open the environment is

favorable for entrepreneurs to exploit a new
product.
Opportunity
Comfort with making a decision under Certainty
The trade-off between more information and the

likelihood that the window of opportunity will close
provides a dilemma for entrepreneurs
Here entrepreneurs usually commits two types of errors
Opportunity
1. Error of Commission occurs from the decision to pursue
this new entry opportunity, only to find out later that the
entrepreneur had over estimated his/her ability to create
customer demand and/or to protect the technology from
imitation by competitors. The cost of the entrepreneur
were derived from acting on the perceived opportunity
(Error of commission is creating an error by acting.)

Opportunity
2. Error of Omission occurs from the decision not to
act on the new entry opportunity only to find out
later that the entrepreneur had underestimated his/her
ability to create customer and/or protect the
technology from imitation by competitors. In this
case, the entrepreneur must live with the knowledge
that he let an attractive opportunity slip through his
fingers
(Error of omission is a negative outcome from not
acting.)
Opportunity
Decision to Exploit or Not Exploit the New
Entry
Assessment of the new entry’s attractiveness &

determining whether the entrepreneur believes
she or he can make the proposed new entry
work.
ENTRY STRATEGY FOR NEW
ENTRY EXPLOITATION
“Being first” : Being first means the first mover, “whether
they are the first to introduce a new product and or the
first to create a new market.
Competitive Advantages of ‘being first’
1. First mover develop a cost advantage
2. First mover face less competitive rivalry
3. First movers can secure important channels
4. First movers are better positioned to satisfy customers
5. First mover gain expertise through participation
ENTRY EXPLOITATION
Disadvantages of ‘Being First’
1. Demand Uncertainty: Considerable difficulty in
accurately estimating the potential size of the
market, how fast it will grow, and the key
dimensions along which it will grow
2. Technological Uncertainty: Considerable difficulty
in accurately assessing whether the technology will
perform and alternate technologies will emerge and
leapfrog (game) over current technologies
ENTRY EXPLOITATION
3. Uncertainty of Customers: Customers may
have considerable difficulty in accurately
assessing whether the new product or service
provides value for them.
RISK REDUCTION STRAGEIES FOR NEW ENTRY
EXPLOITATION
Scope is a choice by the entrepreneur about which customers groups
to serve and how to serve them.
1. Narrow Scope Strategy
•Produce customized products with localized business operations and
high level of craftsmanship.
•Focus on special group of customers that can build specialized
expertise and knowledge.
•The high end of the market typically represents a highly profitable
niche that is well suited to those firms that can produce customized
products.
2. Broad Scope Strategy
•Offering a range of products across many different market
segments.
•Open the firm to increased exposure of competition.
•Must develop a broader knowledge base to understand your
Imitation Strategies
It is about copying products that already exist and attempting to
build an advantage through minor variation. Further:
•Copying the practices of other firms.
•It is easier to imitate than go through the long process of
developing new strategies.
•It may help the entrepreneur to practice already successful skills.
•You will be perceived by the customer as well established.
Managing Newness
Its about managing assets and liabilities of new organization.
•New firms face costs in learning new tasks.
•It will take new people time to develop skills and assume
responsibilities.
•New firms sometimes have difficult developing communication
channels.
•New firms do not have the stigma of “old habits” and are more

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Entrepreneurial Strategy:

Generating and Exploiting

 Offering a new product to an established or new

Stage 1 : New Entry Generation Stage2 : New Entry Exploitation

A set of decisions, actions, and reactions that

Understanding where a sustainable competitive

 Entrepreneurs combines the resources into such a

 For Example: A high skilled workforce will be useless

2. Rare: Possessed by few, (potential) competitors

3. Inimitable: Replication of this bundle of resources

Technological Knowledge: Possession of

it is in fact valuable, rare, and inimitable by

 When the window is open the environment is

The trade-off between more information and the

(Error of commission is creating an error by acting.)

Assessment of the new entry’s attractiveness &

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