Generating and Chapter 3

exploiting new entries

Business Plan
Groups introduced

Today’s tasks
• Create a group chat
• Decide if you will use Canva or the Excel Template for your Gantt
Chart (clickUp)
• List out this semester’s tasks and upload on Moodle
Create your Gantt Chart
▪ Use Canva
Canva.com (website) and search Gantt Chart template.

• Or use template provided.

https://docs.google.com/spreadsheets/d/1HcrWxBPt5bnJipeqqG5tWZ
BWVz0qIa0L/edit?usp=sharing&ouid=112919875687123387616&rtpof
=true&sd=true
Outline of final Project (1-4 wks)

• Part I – 150 words

1. Cover Page
2. Table of Contents
3. Company overview
4. Mission statement - the purpose of the business
5. Vision statement – what the business desires to achieve in the long run
NEW ENTRY

Offering offering a new product to an established or new market,

Offering offering an established product to a new market, or

creating a new organization (regardless of whether the

Creating product or the market is new to competitors or customers).
 The set of decisions, actions, and reactions that first
generate and then exploit over time a new entry

An entrepreneurial strategy has three key stages:

Entrepreneurial (1) the generation of a new entry opportunity,

strategy
(2) the exploitation of a new entry opportunity, and

(3) a feedback loop from the culmination of a new

entry generation and exploitation back to stage 1
 Resources as a Source of Competitive Advantage -When a
firm engages in a new entry, it is hoped that this new entry
will provide the firm with a sustainable competitive
advantage
resources The inputs into the production process
GENERATION
OF A NEW
ENTRY Creating a Resource Bundle That Is Valuable, Rare, and
Inimitable
OPPORTUNITY
entrepreneurial resource -The ability to obtain, and then
recombine, resources into a bundle that is valuable, rare, and
inimitable
 market knowledge -Possession of information, technology,
know-how, and skills that provide insight into a market and
its customers

technological knowledge - Possession of information,

GENERATION technology, know-how, and skills that provide insight into
OF A NEW ways to create new knowledge

ENTRY Assessing the Attractiveness of a New Entry Opportunity

OPPORTUNITY
CONT’D
the entrepreneur needs to determine whether it is in fact
valuable, rare, and inimitable by assessing whether the new
product and/or the new market are sufficiently attractive to
be worth exploiting and developing
 • Prior Knowledge and Information Search
The prior market and technological knowledge
used to create the potential new entry can also
be of benefit in assessing the attractiveness of a
Information on a particular opportunity.
New Entry • window of opportunity
The period of time when the environment is
favorable for entrepreneurs to exploit a
particular new entry
Comfort with Making
a Decision under
Uncertainty

• error of commission -Negative outcome from acting

• error of omission -Negative outcome from not acting

Decision to Exploit or
Not to Exploit the
New Entry

• assessment of a new
entry’s attractiveness
• Determining whether the
entrepreneur believes she or
he can make the proposed
new entry work
 Entrepreneurs sources of competitive advantage
comes from being first:
• First movers develop a cost advantage. Being
first to offer and sell a particular product to a
specific market means that the first mover can
begin movement down the “experience curve.”
ENTRY STRATEGY • First movers face less competitive rivalry.
FOR NEW ENTRY Although first movers might initially have only
EXPLOITATION a few customers, if they have correctly
assessed the opportunity, the market will grow
rapidly.
• First movers can secure important channels.
First movers have the opportunity to select
and develop strong relationships with the most
important suppliers and distribution channels.
 • First movers are better positioned to satisfy customers.
First movers have the chance to
(1) select and secure the most attractive segments of a
market and
(2) Position themselves at the center of the market, providing
an increased ability to recognize, and adapt to, changes in the
market. In some cases, they may even
ENTRY STRATEGY (3) establish their product as the industry standard.

FOR NEW ENTRY

• First movers gain expertise through participation. First
EXPLOITATION movers have the opportunity to
CONT’D (1) learn from the first generation of products and
improve, for example, product design, manufacturing,
and marketing;
(2) monitor changes in the market that might be difficult
or impossible to detect for those firms not participating
in the market; and
(3) build up their networks, which can provide early
information about attractive opportunities.
 • Assessment depends on
• the stability of the
environment surrounding
the entry,
• the ability of the
entrepreneur to educate
customers, and
• (3) the ability of the
entrepreneur to erect barriers
to entry and imitation to
extend the firm’s lead time.
Factors that influence the
decision to enter the market now
or delay entry
 The performance of a firm depends on the fit
between its bundle of resources and the external
environment. If there is a good fit between its
resources and the external environment, then
the firm will be rewarded with superior
performance; and vice versa.
Environmental
Instability and First- • key success factors The requirements that any
Mover firm must meet to successfully compete in a
particular industry.
(Dis)Advantages
• emerging industries - Industries that have
been newly formed and are growing
• 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
 • technological uncertainty -Considerable
difficulty in accurately assessing whether the
technology will perform and whether alternate
Environmental technologies will emerge and leapfrog over
Instability and First- current technologies
Mover
(Dis)Advantages • Adaptation -Changes in market demand and
cont’d technology do not necessarily mean that first
movers cannot prosper. They do mean that the
entrepreneur must adapt to the new
environmental conditions.
 • uncertainty for customers Customers may
have considerable difficulty in accurately
assessing whether the new product or service
provides value for them.
Lead Time and First-Mover (Dis)Advantages
Customers’ lead time The grace period in which the first
mover operates in the industry under conditions
Uncertainty and of limited competition
First-Mover ✓ Building customer loyalties
(Dis)Advantages ✓ Building switching costs
✓ Protecting product uniqueness
✓ Securing access to important sources of supply
and distribution
 A new entry involves considerable risk for the
entrepreneur and his or her firm
RISK REDUCTION • risk The probability, and magnitude, of
STRATEGIES FOR downside loss.
NEW ENTRY
EXPLOITATION Market Scope Strategies:
• scope A choice about which customer groups
to serve and how to serve them
 Narrow-Scope Strategy
• offers a small product range to a small number
of customer groups to satisfy a particular need
• focuses the firm on producing customized
products, localized business operations, and
RISK REDUCTION high levels of product quality.
STRATEGIES FOR • By focusing on a specific group of customers,
NEW ENTRY the entrepreneur can build up specialized
expertise and knowledge that provide an
EXPLOITATION advantage over companies that are competing
CONT’D more broadly.
• The high end of the market typically represents
a highly profitable niche that is well suited to
those firms that can produce customized
products, localized business operations, and
high levels of product quality.
https://www.youtube.com/watch?v=HiBRviA3lnI
RISK REDUCTION
STRATEGIES FOR
NEW ENTRY • Broad-Scope Strategy -can be thought of as
EXPLOITATION taking a “portfolio” approach to dealing with
CONT’D uncertainties about the attractiveness of
different market segments. (Walmart & Ikea)

Imitation strategies -Copying the practices of

other firms.
• Types of Imitation Strategies:- Franchising,
• “me-too” strategy -copying products that
already exist and attempting to build an
advantage through minor variations
 • Managing Newness -New entry can occur through the
creation of a new organization. The creation of a new
organization offers some challenges not faced by
entrepreneurs who manage established firms.
• liabilities of newness Negative implication arising from an
organization’s newness.
✓ New organizations face costs in learning new tasks
RISK REDUCTION
✓ As people are assigned to the roles of the new
STRATEGIES FOR organization, there will be some overlap or gaps in
responsibilities.
NEW ENTRY
✓ Communication within the organization occurs through
EXPLOITATION both formal and informal channels.
CONT’D Managing a new firm requires special attention to educating
and training employees so that their knowledge and skills will
develop quickly to meet the needs of their tasks, to Facilitate
conflicts over roles, and to foster social activities that will in
turn quickly foster informal relationships and a functional
corporate culture.
• assets of newness -Positive implications arising from an
organization’s newness