Competing For Advantage
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Transcript of Competing For Advantage
Competing For Advantage
Part IV – Monitoring and Creating
Entrepreneurial Opportunities
Chapter 12 – Strategic Entrepreneurship
The Strategic Management Process
International Strategy
Key Terms
Strategic Entrepreneurship – occurs as firms seek opportunities in the external environment that they can exploit through innovations
Corporate Entrepreneurship – use or application of entrepreneurship within an established firm
Strategic Entrepreneurship and Innovation
Key Terms
Entrepreneurship – process by which individuals or groups identify and pursue entrepreneurial opportunities without the immediate constraint of the resources they currently control
Entrepreneurial Opportunities – conditions in which new products or services can satisfy a need in the market, due to competitive imperfections and unevenly distributed information in the market
Entrepreneurial Firm Characteristics
Risk takers Committed to innovation Proactive
National Interest in Entrepreneurship
It promotes economic growth
It increases productivity
It creates jobs
It drives the economies of the nations in which it exists
Types of Innovative Activity
Key Terms
Invention – act of creating or developing a new product or process
Innovation – process of creating a commercial product from an invention
Imitation – adoption of an innovation by similar firms
Invention v. Innovation
Invention brings something new into being—technical criteria determine its success
Innovation brings something new into use—commercial criteria determine its success
Results of Imitation
Product or process standardization
Products made with fewer features
Products offered at lower prices
Entrepreneurs
Key Terms
Entrepreneurs – individuals throughout the organization, acting independently or as part of an organization, who create a new venture or develop an innovation and take risks by introducing it into the marketplace
Entrepreneurial Mind-Set – viewpoint which values uncertainty in the marketplace and seeks to continuously identify opportunities with the potential to lead to important innovations
Entrepreneurs – Characteristics
Optimism
High motivation
Willingness to take responsibility
Courage
Passion for value
Entrepreneurial mind-set
Challenge of Creating an Entrepreneurial Culture
Identifying people with intellectual talent and entrepreneurial mind-set
Managing the intellectual talent and knowledge to realize its potential
Developing and expanding the knowledge base to foster entrepreneurship with tools such as:
Information systems
Training programs
Cross-functional teams
International Entrepreneurship
Key Terms
International Entrepreneurship – process in which firms creatively discover and exploit opportunities that are outside their domestic markets in order to develop a competitive advantage
International Entrepreneurship – Risks
Unstable foreign currencies
Inefficient markets
Insufficient infrastructures to support businesses
Limitations on market size and growth
International Entrepreneurship - Dimensions
Rates of entrepreneurship across countries Impact of national culture
Entrepreneurship declines as collectivism increases
Exceptionally high levels of individualism can be dysfunctional for entrepreneurship
Balance between individual initiative and cooperative spirit versus group ownership of innovation is required
Level of investment outside of the home country made by new ventures
Top executives with international experience
Methods of Innovation
Internal innovation Cooperative ventures Acquisitions
Internal Innovation
Key Terms
Internal Corporate Venturing – set of activities firms use to develop internal inventions and innovations
Incremental Innovation – process of internal innovation achieved by building on existing knowledge bases and providing small improvements in well-defined current product lines
Induced Strategic Behavior – top-down process whereby the firm’s current strategy and structure foster product innovations that are closely associated with that strategy and structure
Internal Innovation
Key Terms
Radical Innovation – process of internal innovation achieved by generating significant technological breakthroughs and creating new knowledge
Autonomous Strategic Behavior – bottom-up process in which product champions pursue new ideas, often through a political process, to develop and coordinate the commercialization of a new good or service
Product Champion – individual with an entrepreneurial vision of a new good or service who seeks to create support in the organization for its commercialization
Internal Innovation – Types
Incremental innovation – induced strategic behavior
Radical innovation – autonomous strategic behavior
Factors that Influence Innovation in Established Firms
Factors that Influence Innovation in Established Firms
Encourage people to discuss new ideas and take risks
Tolerate failure and encourage learning from mistakes
Establish reward systems that encourage innovation
Establish process and structures to effectively integrate the innovative process across functions
Cross-Functional Product Development Teams – Barriers to Success
Independent frames of reference of members with distinct specializations
Organizational politics that create competition for resources and interunit conflict
Dimensions of Functional Units
Time orientation
Interpersonal orientation
Goal orientation
Formality of structure
Facilitating Integration and Implementation
Shared values
Effective leadership
High-quality communication systems
Creating Value from Internal Innovation Processes
Innovation through Cooperative Strategies
Firms may need to cooperate and integrate knowledge and resources to successfully commercialize inventions Entrepreneurial new venture firms may need
investment capital and distribution capabilities More established companies may need new
technological knowledge possessed by newer entrepreneurial firms
To innovate via cooperative relationships, firms must share their knowledge and skills
Innovation through Acquisitions
Acquisitions
Rapidly extend the product line
Increase the firm’s revenues
A key risk of acquisitions is that a firm may substitute the ability to buy innovations for an ability to produce innovations internally
Firm may lose intensity in R&D efforts
Firm may lose ability to produce patents
Creating Value Through Strategic Entrepreneurship
Entrepreneurial ventures
Produce more radical innovations
Possess strategic flexibility and willingness to take risks
Do more opportunity seeking
Creating Value through Strategic Entrepreneurship
Larger, well-established firms
Produce more incremental innovations
Possess more resources and capabilities to exploit identified opportunities
Do more advantage seeking
Ethical Questions
Do managers have an ethical obligation to any of their stakeholders to ensure that their firms remain innovative? If so, to which stakeholders and why?
Ethical Questions
What types of ethical issues do firms encounter when they use internal corporate-venturing processes to produce and manage innovation?
Ethical Questions
Partners may legitimately seek to gain knowledge from each other. When does it become unethical for a firm to gain additional and competitively relevant knowledge from its partner? Is this point different when a firm partners with a domestic firm as opposed to a foreign firm? Why or why not?
Ethical Questions
Discuss the ethical implications associated with quickly bringing a new product to market.
Ethical Questions
Small firms often have innovative products. When is it appropriate for a large firm to buy a small firm for its product innovations and new product ideas?