Ch12 developing strategies for growth(1)

Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns

PART 3

STRATEGIES FOR THE

ENTREPRENEURIAL

ORGANIZATION

CHAPTER 12

Developing Strategies for

Growth


Keys to Growth

• Understand why you have been successful

• Build on strengths and core competencies

and shore up weaknesses

• Build a marketing strategy for each product

that reflects the appropriate generic strategy,

the stage the it is at in its life cycle and all in

the context of its place in the portfolio of

products


Successful Entrepreneurial Strategies

• Strategy should emphasise something that makes your firm as unique as possible and delivers as much value as possible to the customer

• The best chance of doing this comes from differentiation with the aim of dominating your market and to do this effectively and quickly

• Then to continue to innovate based upon your differential advantage


Product - Market Matrix

Market

Existing

New

Product/Service

Existing New

1

Market Penetration

or

Consolidate

Withdraw

2

Market

Development


Porter’s 5 Forces

Competitive rivalry:

Number & size

Industry growth

Extent of differentiation

Capacity increments

Exit barriers

Power of Suppliers:

Concentration

Extent of substitutes

Importance of supplier

Extent of

differentiation

Forward integration

Threat of substitutes:

Changing technology

Changing market

Changing tastes

Switch costs


Barriers to Entry:

Economies of scale

Product differentiation

Capital requirements

Legal agreements

Switch costs

Power of Buyers:

Numbers &

concentration


Switch costs

Margin they earn

Backward integration


Entry and Exit Barriers

Exit barriers

Exit

barriers

High

High

Low

Low

High, stable

returns

Low, stable

returns

High, risky

returns

Low, risky

returns

High risk

High

return


Product - Market Matrix

Market

Existing

New

Product/Service

Existing New

1

Market Penetration

or

Consolidate

Withdraw

3

Product/Service

Development

2

Market

Development

4

Diversification

- Related

- Unrelated


Types of Diversification

RELATED DIVERSIFICATION

• Backward, vertical diversification

• Forward, vertical diversification

• Horizontal diversification

UNRELATED DIVERSIFICATION


Synergy

Benefits from creating linkages between activities or processes

where none existed before so that the combined effect is more than the sum

of the parts

1 + 1 = 3


Examples of Logic for an Acquisition

• Defensive, to maintain market position,

perhaps gaining economies of scale

• As part of a strategy to develop new

products when firm does not have internal

capability

• As part of a strategy to develop new markets

• As part of a strategy of diversification –

accepting the risks


Pressure Groups for CSR

• Environmentalists

• Social reformers

• Social activists

• Ethical activist


Business Reasons for CSR

• Enhanced customer loyalty

• Increased future purchases

• Reduced operating costs

• Improved new product development

• Access to new markets

• Productivity gains


The Strategic Planning Process & CSR

VISION

STRATGY

IMPLEMENTATION

STRATEGIC

ANALYSIS

STRATEGY

FORMULATION

Fe

ed

ba

ck

loo

ps

Awareness of legislation,

expectation of stakeholders

and comparison with

competitors

Formulation of CSR

commitments

Development of concrete

action plan that can be

publicised to stakeholders

to demonstrate commitment

and attainment


Sustaining Competitive Advantage

• Reputation – often encapsulated in the brand, but communicated through relationships

• The way the organisation innovates – again and again

• The organisation’s strategic assets –particularly the ones that can’t be copied

All of this is part of organisational architecture

Kay 1998


Five mistakes in Implementing

Strategy

1. Misunderstanding industry attractiveness

2. Not having real competitive advantage

3. Pursuing an unsustainable competitive

position

4. Compromising the strategy for growth with

short-term goals

5. Failing to communicate strategy internally

Porter (1991)

Ch12 developing strategies for growth(1)

Education

Transcript of Ch12 developing strategies for growth(1)