Strategic Entrepreneurship

CHAPTER 13
STRATEGIC ACTIONS: STRATEGY IMPLEMENTATION
Strategic Entrepreneurship
Strategic Management
Competitiveness and Globalization: Seventh edition Concepts and Cases
Michael A. Hitt R. Duane Ireland Robert E. Hoskisson
PowerPoint Presentation by Charlie Cook The University of West Alabama 2007 Thomson/South-Western. All rights reserved.
KNOWLEDGE OBJECTIVES Studying this chapter should provide you with the strategic management knowledge needed to:
1. Define strategic entrepreneurship and corporate entrepreneurship.

2. Define entrepreneurship and entrepreneurial opportunities and explain their importance.
3. Define invention, innovation, and imitation and describe the relationship among them.
4. Describe entrepreneurs and the entrepreneurial mindset. 5. Explain international entrepreneurship and its importance.
2007 Thomson/South-Western. All rights reserved. 132
The World of the Entrepreneur

In the U.S., entrepreneurs start between 3 million and 4.5 million businesses a year! Study of influential Americans the defining issue of the 21st Century: Entrepreneurship. Approximately 10.5% of Americans are actively involved in trying to start a new business.
2007 Thomson/South-Western. All rights reserved.
133
Total Entrepreneurial Activity (TEA) Index
20.0 18.0 16.0 14.0 12.0 10.0 8.0 6.0 4.0 2.0 0.0
Entrepreneurial Activity Across the Globe
Persons per 100 Adults, 18-64 Years Old Engaged in Entrepreneurial Activity
Country
Japan Russia Belgium France Hong Kong Croatia Sweden Taiwan Poland Spain Netherlands Finland Slovenia Germany United Italy Singapore South Denmark Hungary Switzerland Israel Australia Norway Canada Ireland United Iceland China Mexico Brazil New Argentina Korea Chile India Thailand
TEA Index
Global TEA Average
134
What is an Entrepreneur?
One who creates a new business in the face of risk and uncertainty for the purpose of achieving profit and growth by identifying opportunities and assembling the necessary resources to capitalize on them.
135
Characteristics of Entrepreneurs
Desire for responsibility Preference for moderate risk Confidence in their ability to succeed Desire for immediate feedback High level of energy Future orientation Skilled at organizing Value achievement over money
136
Entrepreneurship
One characteristic of entrepreneurs stands out: Diversity! Anyone regardless of age, race, gender, color, national origin, or any other characteristic can become an entrepreneur (although not everyone should).
137
Taking entrepreneurial actions using a strategic perspective. Engaging in simultaneous opportunity seeking and competitive advantage seeking behaviors. Designing and implementing entrepreneurial strategies to create wealth.
Strategic entrepreneurship actions can be taken by:

Individuals Corporations
Strategic Entrepreneurship and Innovation

Entrepreneurship is concerned with:
The discovery of profitable opportunities The exploitation of profitable opportunities
Firms that encourage entrepreneurship are:

Risk takers. Committed to innovation. Proactive in creating opportunities rather than waiting to respond to opportunities created by others.
139
Entrepreneurial Opportunities
Entrepreneurial Opportunities
Conditions in which new products or services can satisfy a need in the market.
Entrepreneurs or entrepreneurial managers must be able to:

Identify opportunities not perceived by others. Take actions to exploit the opportunities.
Establish a competitive advantage.
1310
Benefits of Small Business Ownership

The opportunity to: Create your own destiny Make a difference Reach your full potential Reap impressive profits Contribute to society and to be recognized for your efforts Do what you enjoy and to have fun at it
1311
Owner Age at Business Formation

18.0% 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0%
16 . 8 %
16 . 7 % 15 . 9 % 15 . 2 %
9.8%
9.3%
8.5%
3.9% 2.2% 1. 7 %
Under 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 25 Age
65+
1312
Feeding the Entrepreneurial Fire
Entrepreneurs as heroes Entrepreneurial education Demographic and economic factors Shift to a service economy Technological advancements Independent lifestyles E-Commerce and the World Wide Web
1313
Feeding the Entrepreneurial Fire
Entrepreneurs as heroes Entrepreneurial education Demographic and economic factors Shift to a service economy Technological advancements Independent lifestyles E-Commerce and the World Wide Web
International opportunities
1314
The Cultural Diversity of Entrepreneurship

Young entrepreneurs Women entrepreneurs Minority-owned enterprises Immigrant entrepreneurs Part-time entrepreneurs
1315
The Cultural Diversity of Entrepreneurship

Home-based businesses Family businesses Copreneurs Corporate castoffs Corporate dropouts
1316
A Profile of Small Business by Industry

Construction 12% Retail 20% Wholesale 8% Manufacturing 6% Finance 8%
Other 6%
Service 40%
1317
Small Businesses...
Make up 99% of all the businesses in the U.S. Employ 51% of the nation's private sector workforce. Create more jobs than big businesses. Are leaders in offering training and advancement opportunities to workers.
1318
Innovation Process
Invention
The act of creating or developing a new product or process Brings something new into being. Technical criteria are used to determine the success of an invention.
1319
Innovation Process (contd)

Invention The process of creating a commercial product from an invention. Brings something new into use. Commercial criteria are used to determine the success of an innovation.
Innovation
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Innovation Process (contd)

Invention The adoption of an innovation by similar firms Usually leads to product or process standardization. Products based on imitation often are offered at lower prices but with fewer features.
Innovation
Imitation
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The Importance of Innovation

Innovation
Is a key outcome firms seek through entrepreneurship. Is often the source of competitive success.
Corporate Entrepreneurship
Innovations produced in large established firms.
1322
International Entrepreneurship
Entrepreneurship can:
Fuel economic growth Create employment Generate prosperity for citizens
There is a strong positive relationship between the rate of entrepreneurial activity and economic development in a nation.
1323
International Entrepreneurship (contd)

There must be a balance (in the culture) between
Individual initiative and The spirit of cooperation and group ownership of innovation.
Successful entrepreneurial firms:

Provide appropriate autonomy. Offer incentives for individual initiative. Promote cooperation and group ownership of an innovation.
1324
Incremental and Radical Innovation

Incremental Innovation Is the usual case for innovation in organizations. Provides small increments in current product lines. Improves existing knowledge and processes. Can create value. Radical Innovation Is rare because of difficulty and risk. Provides significant technological breakthroughs. Creates new knowledge and processes. Can create value.
1325
Venturing: Strategic Behaviors

Autonomous Strategic Behavior
Based on a firms knowledge and resources that are the sources of the firms innovation. A firms technological capabilities and competencies are its basis for new products and processes.
Induced Strategic Behavior

A top-down process whereby the firms current strategy and structure foster product innovations.
The strategy in place is filtered through a matching structural hierarchy.

Implementing New Product Development and Internal Ventures

To be innovative and develop internal ventures requires:
An entrepreneurial mindset Risk propensity An emphasis on execution
Individuals with an entrepreneurial mindset

Engage the energies of everyone in their domain both inside and outside the organization.
1327
Acquisitions to Buy Innovation

Acquisitions
Can rapidly extend the product line. Can quickly increase the firms revenues.
Key risks of acquisitions

The firm may substitute the ability to buy innovations for an ability to produce innovations internally. The firm may lose intensity in R&D efforts. The firm may lose its ability to produce patents.
1328
Capital for Entrepreneurial Ventures

Venture Capital Firms
Seek high returns on their investment. Value the competence of the entrepreneur or the human capital in the firm. Place weight on the expected scope of competitive rivalry the firm is likely to experience. Evaluate the degree of instability in the market addressed.
1329
Creating Value through Strategic Entrepreneurship

Be effective in identifying opportunities. Be flexible and willing to take risks. Have sufficient resources and capabilities to exploit identified opportunities.
Sustain a competitive advantage while identifying and exploiting opportunities.

Develop an entrepreneurial mind-set among managers and employees. Seek to enter and compete in international markets.
Small Businesses...
(continued)
Produce 51% of the nation's private GDP. Account for 47% of business sales. Create 4X more innovations per R & D dollar spent than medium-sized firms and 24X as many as large companies.
1331
Small Business Survival Rate

100% 100% 81% 65% 54% 46% 40% 36% 32% 29% 27%
% of Small Firms Surviving
90% 80% 70% 60% 50% 40% 30% 20% 10% 0% New
25%
10
# of Years in Business
1332
Ten Deadly Mistakes of Entrepreneurship

1. 2. 3. 4. 5. Management mistakes Lack of experience Poor financial control Weak marketing efforts Failure to develop a strategic plan
1333
Ten Deadly Mistakes of Entrepreneurship

(continued)
6. 7. 8. 9. 10.
Uncontrolled growth Poor location Improper inventory control Incorrect pricing Inability to make the entrepreneurial transition
1334
Putting Failure Into Perspective

Entrepreneurs are not paralyzed by the prospect of failure. Failure a natural part of the creative process. Successful entrepreneurs learn to fail intelligently.
1335
Avoiding the Pitfalls of Small Business Failure

Know your business in depth Develop a solid business plan Manage financial resources Understand financial statements Learn to manage people effectively Keep in tune with yourself
1336

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CHAPTER 13

STRATEGIC ACTIONS: STRATEGY IMPLEMENTATION

1. Define strategic entrepreneurship and corporate entrepreneurship.

The World of the Entrepreneur

2007 Thomson/South-Western. All rights reserved.

Total Entrepreneurial Activity (TEA) Index

2007 Thomson/South-Western. All rights reserved.

Entrepreneurial Activity Across the Globe

Global TEA Average

2007 Thomson/South-Western. All rights reserved.

2007 Thomson/South-Western. All rights reserved.

2007 Thomson/South-Western. All rights reserved.