Strategies for entrepreneurial ventures

One of the essential acts of entrepreneurship is new entry which refers to offering a new product to an established or new market; offering established product to a new market or creating a new organization. The entrepreneur needs to develop strategies to succeed with new business venture. The strategy includes the following elements:

 Generation of a new entry opportunity The exploration of a new entry opportunity, and A feedback

Generation of 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 performance over an extended period to time. Resources are the basic building blocks to a firms functioning and performance

 In order for a bundle of resources to be the basis of a firms superior performance over competitors for an extended period of time, the resources must be valuable, rare and inimitable. Valuable when it enables the firm to pursue opportunities, neutralizes threats and offer product and services that are valued by customers.

 Rare when it is possessed by few, if any, (potential) competitors. Inimitable when replication of this combination of resources would be difficult and/or costly for (potential) competitors. Knowledge is the basis of this entrepreneurial resource, which in itself is valuable. This type of knowledge is built up over time through experience and it resides in the mind of the entrepreneur and in the collective mind of management and employees.

 Those knowledge might include:

Market knowledge: Which is possession of information, technology, know-how and skills that provide insight into a market and its customers. Technological knowledge: Is possession of information, technology, know-how and skills that provide insight into ways to create new knowledge. This leads to the technology which becomes a basis for new entry.

Assessing the attractiveness of a new entry opportunity

Having created a new resource combination, the entrepreneur needs to determine whether it is in fact valuable, rare and inimitable by assessing whether new product and/or the new market are sufficiently attractive to be worth exploiting and developing. This is affected by: 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 particular opportunity.

 Window of opportunity: The dynamic nature of the viability of a particular new entry can be described in terms of window of opportunity. When the window is open, the environment is favorable for entrepreneurs to exploit the opportunity.

Entry strategy for new entry exploitation

The common catch phrase used by entrepreneurs when asked about their source of competitive advantage is Our competitive advantage comes from being first. We are the first movers. whether they are the first to introduce a new product and/or the first to create a new market, these claims have some merit. The following are the first mover advantages:

First mover develop cost advantage They face less competitive rivalry First movers can secure important channels They are better positioned to satisfy customers First movers gain expertise through participation

 However, there are few first mover disadvantages:

Determination of key success factors and developing them. (key success factors are the requirements that any firm must meet in order to successfully compete in a particular industry) 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 technologies will emerge and leapfrog over current technologies. Customer uncertainty: Customers may have considerable difficulty in accurately assessing whether the new product or service provides value for them.

Risk reduction strategies for new entry exploration

A new entry involves considerable risk for the entrepreneur and his/her firm. Firm can choose from following strategies to reduce such risk. Market scope strategy: Scope is a choice by the entrepreneur about which customer groups to serve and how to serve them.

 Narrow scope strategy: A narrow scope strategy offers a small product range to a small number of customer groups in order to satisfy a particular need. The narrow scope can reduce the risk that firm will face competition with larger, more established firms in number of ways.

 A narrow scope strategy focuses the firm on producing customized products, localized business operations and high levels of craftsmanship. Such outcomes provide the basis for differentiating the firm from larger competitors who are more oriented towards mass production and the advantages that are derived from that volume.

 By focusing on a specific group of customers, the entrepreneur can build up specialized expertise and knowledge that provide an advantage over companies that are competing more broadly. The high end of the market typically represents highly profitable niche that is well suited to those firms that can produce customized products, localized business operations and high levels of craftsmanship.

 Broad scope strategy: A broad scope strategy can be thought of as taking a portfolio approach to dealing with uncertainties about the attractiveness of different market segments. By offering a range of products accross many different market segments, the entrepreneur can gain an understanding of the whole market by determining which products are the most profitable.

 Unsuccessful products (and market segments) can then be dropped and resources concentrated on those product markets that show the greatest promise. In essence, the entrepreneur can cope with market uncertainty by using a broad scope strategy t learn about the market through a process of trial and error.

 Imitation strategy: This is a strategy for minimizing risk of downside loss associated with new entry. Imitation involves copying the practices of other firms, whether those other firms are in the industry being entered or from related industries. This represents a substitute for individual learning.

 Franchising is an example of a new entry that focuses on imitation to reduce the risk of downside loss for the franchisee. A franchisee acquires the use of a proven formula for new entry from a franchisor. Me too strategy: Copying products that already exist and attempting to build an advantage through minor variations.

Growth strategies
An growth/expansion strategy is a strategy that a firm pursues when:
It serves the public in additional product or service or adds markets or functions to its definition. It focuses its strategic decision on major increases in the pace of activity within its present business definition.

 A firm implements this strategy by redefining the business-either adding to the scope of activity or substantially increasing the efforts of the current business. Even without a change in mission, market share substantially, often accompanied by plant expansion.

 Expansion can be achieved through following strategies Concentration: In this strategy, the firm directs its resources to the profitable growth of a single product, in a single market and with a single technology. The reasons for this strategy are:
Low risk Based on known competencies

 Market penetration strategy: this strategy involves seeking increased market share for present products or services in present markets through greater marketing efforts. Market development: It consists of marketing present products, often with only cosmetic modifications, to customers in related market areas by adding different channels of distribution or by changing the content of advertising or the promotional media.

 Product development involves substantial modification of existing products or creation of new but related items that can be marketed to current customers through established channels. This strategy is often adopted either to prolong the life cycle of current product or to take advantage of favorable reputation and brand name.

Innovation:The underlying philosophy of grand strategy of innovation is creating a new product life cycle. This approach differs from the product development strategy of extending an existing products life cycle