chapter 3 Generating and Exploiting New Entries created

chapter 3 Generating and Exploiting New Entries created by , T. Alaa Al Amoudi

Learning Objectives To understand that the essential act of entrepreneurship involves new • entry To be able to think about how an entrepreneurial strategy can first • generate, and then exploit over time, a new entry. To understand how resources are involved in the generation of • opportunities. To be able to assess the attractiveness of a new entry opportunity. • To acknowledge that entrepreneurship involves making decisions under conditions of uncertainty. •

What is New Entry I. NEW ENTRY A New entry refers to: 1. Offering a new product to an established market or new market. 2. Offering an established product to a new market. 3. Creating a new organization. B. Newness can be both positive and negative. Newness can help differentiate a firm from its competitors. However, newness creates a number of challenges for entrepreneurs , in a way that maximizes the benefits of newness and minimizes its costs.

Entrepreneurial strategy represents the set of decisions, actions, and reactions that. 1 first generate, and then exploit over time. The elements of an entrepreneurial strategy are: The generation of a new entry opportunity, . . 1 The exploitation of a new entry opportunity. . 2 A feedback loop. . 3

GENERATION OF A NEW ENTRY OPPORTUNITY How can a Resources be a Source of Competitive Advantage ? u Resources are the basic building blocks to a firm’s performance ü HOW? These resources are the inputs into the production process. . 1 These can be combined in different ways to achieve better. 2 performance. These resources need to be considered as a bundle rather than just ü the resources that make up the bundle. In order for a bundle of resources to be the basis of a firm’s better ü performance, the resources must be valuable, rare, and inimitable (impossible to copy).

Con’t A bundle of resources is: ü Valuable when it enables the firm to pursue opportunities, . 1 and to offer products and services that are valued by customers. Rare when it is possessed by few, if any, competitors. . 2 Inimitable when replication of this combination of resources. 3 would be difficulty or costly for competitor (impossible to copy) The resource bundle is created from the entrepreneur’s u market knowledge, technological knowledge, and other resources.

Advantages for new entry EXPLOITATION Being first can create advantages that can enhance performance by: 1. First movers can select and develop strong relationships with the most important suppliers and distribution channels 2. First movers are better positioned to satisfy customers: They have the chance to: Select the most attractive segments of a market. ü 3. First movers gain expertise through participation BY: Learn from the first generation of user products experince. • Monitor changes in the market that might be difficult to detect for firms not • in the market. .

H. W Choose 2 major inventions that have led to successful products. Who were the inventors? Why do you believe they were the first to invent this products? •