Entrepreneurship MGT602

Theme 08: Strategic Management in Entrepreneurship and E-Commerce

Videos 87-104

1
 Strategic Management
Strategy is an action plan that synchronizes the tangible and intangible resources and for achieving a set target for
superior performance.
Strategic Management is a branch of management. It is essential for managing organizational tangible and intangible resources
to achieve its long term and short term goals and objective for sustainable competitive advantage in industry.
3 Main phases of Strategic Management
Strategic Management & Entrepreneurship Over lappings
1. Strategy formulation
2. Strategy implementation Creation & growth, Diversification, Performance of firms, Industry
3. Strategy evaluation and control
dynamics, Competitive advantage, Product ecosystems,

Main Areas of Strategic Management Mergers/acquisitions/alliances Innovation, Competitive advantage for

1. Business vision and mission
2. Internal and external environmental scanning new ventures, Strategic management process, Vision and mission of
3. Strategies formulation
new ventures, Short/long term goals and objectives, SWOT Analysis,
4. Analyzing the multiple strategies
5. Sustainable competitive advantage for sustainable growth Key success factors for being competitive, Analyzing competition,
6. Implementation and operational execution of strategies
7. Strategies review, measures and control Select appropriate strategies, Establish accurate controls

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Theme 08 Video 87 Strategic management in entrepreneurship
 Strategic Planning Process

External
environmental
scanning
(opportunity
seeking)

Vision and
Objective Measure and
mission Strategies
Development Implementation evaluation
statement evaluation (execution plan)
(Business action (business
(Business (execution plan)
plan) performance)
Description)

Internal
environmental
scanning
(resources in hand
and
personal
investment)

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01 Video 88 Strategic Management Process
Theme 08
 Vision & Mission
What is your business?
A mission statement outlines the company’s business, objectives and its approach to reach those objectives.
What do we want to become?
Generally, vision statement defines the anticipated future orientation of the business venture.
Characteristics of good vision & mission statement Benefits of Vision and Mission Statements
1. Philosophy 1. Brings unanimity of purpose and direction among strategic partners
2. Aligned vision and mission statement (owner and employees)
3. Customer orientation 2. Provide standards and procedures for execution plan
4. Market 3. Bring focus in allocation of resources
5. Technology 4. Establish a culture and tone of your venture
6. Competitive Advantage 5. Serve as a direction and quality standard
7. Concern for society 6. Set rule to deter those strategic partners who cannot from
8. Concern for employees participate for further growth
9. Future orientation 7.Facilitate in translating the long-term and short-term goals and
objectives into a work structure
8. Motivates for future growth

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Theme 08
01 Video 89 Clear Vision and mission of business venture
 The Internal Assessments
Strengths are the positive internal factors that a business venture can
use to achieve its vision, mission, goals and objectives. Internal Audit (self-assessment check list example)

Weaknesses are the negative internal factors that inhibit the business o Am I clear about my destination ?
venture’s capability to achieve its vision, mission, goals and objectives. o Are my skills sufficient for kick start or growth?
It adversely affect the sustainable competitive advantage of a venture. o What are my limitations ?
o In which area I am lacking that could adversely/positively
affect my venture establishment or growth?
o Is my network worthy for establishment/growth?
o What level of commitment I can bring in my venture ?
Internal Audit (Venture assessment check list example)
o 1. Is venture’s objectives and goals measurable ?
o 2. Is venture’s objectives and goals well communicated to strategic partners?
o 3. Is product/service design competitive?
Tools for internal audit (strength and weakness) o 4. Is selected target market is well thought and planned ?
o 5. Is my pricing strategy competitive?
ü Cost/Benefit Analysis o 6. Are my unique selling proposition well communicated to target market?
ü Financial Ratios o 7. Is customer orientation well crafted?
ü Production and operation assessment o 8. Is the venture’s structure appropriate?
o 9. Are jobs and requirements clear to all strategic partners?
o 10. Is strategic partners morale high?
o 11. Are employee’s absenteeism and/or turnover low?
o 12. Are reward and control mechanisms effective?
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Theme 08 Video 90 Assessment of strength and weakness of yourself and venture
 The External Assessments
Opportunities are potential options available in the external environment that a venture/entrepreneur can exploit
to achieve its vision, mission, goals and objectives
Threats are negative forces available in the external environment that inhibit the business venture’s capability to achieve its
vision, mission, goals and objectives. Broad categories of external forces
§ Economic forces
§ Social, cultural and demographic forces
§ Natural environment forces
§ Political and governmental forces
§ Legal forces
§ Technological forces
§ Competitive forces
§ Sources of External Information

Tools for External Environment Audit

§ Marketing intelligence
§ Scenario planning
§ PEST Analysis (political, economic, social and technological
analysis)
§ Porter’s five forces model (Competition in the industry, New
entrants,
Power of suppliers, Power of customers, Substitute products)

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Theme 08 Video 91.Scan environment for potential opportunities and threats
 Business Goals and Objectives

Goals are the broad long-range attributes that a business seeks to

accomplish; Goals tend to be general and sometimes even abstract.
Areas of objectives
Objectives are more specific, precise and quantifiable plan of § Product design
performance addressing areas such as profitability, productivity, § Innovation
growth and other key aspects of a business. § Market development/diversification/penetration
§ Productivity
§ Cost efficiency
Goals & Objectives are SMART (Both longterm and short term) § Profitability
üSpecific § Financial resources
üMeasurable § Growth
üAggressive but Attainable § Physical infrastructure development
üResults-Oriented § Team/venture restructuring
§ Venture/employees performance
üTimeframe
§ Customer service
§ Social responsibility

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Theme 08 Video 92 Create short term and long term goals and objectives
 The selection of appropriate strategy
Cost leadership strategy: A strategy in which an entrepreneur strives to be low-cost producer relative to its competitors in the
industry. It involves mass production, quality compromise, or technological break through.

Cost leadership strategy is applied, when

ü If selling similar product/services
ü If customers are not brand conscious
ü If customers are price conscious and ready to compromise on quality
ü If the industry is price focuses
Differentiation strategy in which the entrepreneur seeks to build customer base by
positioning its product or service in a unique or different fashion and where the customers also value its differentiation.

Differentiation strategy is applied when,

ü If customers are brand conscious
ü If customers value and demand for differentiation
ü If customers are not price conscious
ü If customers are not ready to compromise on quality
ü Integrated marketing campaign
Focus strategy where an entrepreneur selects one or more narrow (niche) market segment to serve. He/she identifies the
market segment’s special need, wants, interest and approaches them with customized product or service.
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Theme
Theme0108 Video 93 Select appropriate strategies
 Competitive Advantage
Competitive advantage is defined as unique advantage over the competitors an entrepreneur gained by offering
consumers greater value either in terms of cost or differentiation of product or services.
Ø Superior good and/or service quality Resources
Ø Superior cost/production efficiency
Ø Superior innovation and up-gradation
Ø Superior customers engagement Cost advantage
Global Competitive Advantage Competitive Or
Value
1. Local market adaptation Advantage Differentiation
Creation
2. Economies of scale advantage
3. Common global culture
4. Tapping optimal location for activities & resources
5. Knowledge management and sharing Core
6. Technology transfer Competencies
7. Cost efficiency
8. Technological efficiency Characteristics of competitive advantage
Competitive Positions Ø Valuable
Ø Market Leader Ø Rare
Ø Market Challenger Ø Inimitable
Ø Market Follower Ø Non-substitutable
Ø Market Nicher Ø Sustainable 9
Theme 08 Video 93 Building competitive advantage for new venture Entrepreneurship MGT602
 Michael Porter’s Five Forces Model

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Theme 08 Video 95 Analyze competition
 Criteria for Evaluating Strategies
Consistency: Astrategy should not present inconsistent goals and policies.
Consonance: refers to the need for strategists to examine sets of trends adaptive response to the external environment.
Feasibility: Physical, human, and financial resources of the enterprise
Advantage: maintenance of a competitive advantage
Strategy Evaluation Checklist
ü Competitors reaction to strategies
ü Competitors’ strategies change
ü Competitors’ strengths and weaknesses change
ü Competitors strategic changes and success
ü Competitors satisfaction with their present market positions and profitability
Financial Review
ü Return on investment (ROI)
ü Return on equity (ROE)
ü Profit margin
ü Market share
ü Debt to equity ration
ü Earnings per share
ü Sales growth
ü Asset growth
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Theme 08 Video 96 Strategy review, evaluation and control
 Blue Ocean Strategy

How to create uncontested market space and make the competition irrelevant?
What is Red Ocean Strategy?
Align the whole system of a strategic firm's activities with its choice of differentiation or low cost.

ü Compete in existing market space

ü Beat the competition
ü Exploit existing demand
ü Make the value-cost trade-off

What is Blue Ocean Strategy?

Align the whole system of a firm's activities in pursuit of differentiation and low cost. VALUE INNOVATION

ü Create uncontested market space

ü Make the competition irrelevant
ü Create and capture new demand
ü Break the value-cost trade-off

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Theme 08 Video 97 Innovation logic: the blue ocean strategy (Part 1)
 Value Innovation: The cornerstone of Blue Ocean Strategy
Value-cost trade-off (Conventional Believe)

Differentiation and Low cost simultaneously (Blue Ocean Strategy)

The rising Imperative of Creating Blue Oceans
Ø Supply exceeds demand
Ø Globalization
Ø Increasing price wars
Ø Shrinking profit margins
Ø Brands are becoming more similar select based on price

BOS Logic: The Core Principles

1. Reconstruct Market Boundaries… overcome believes.
2. Reach beyond existing Demand… go for uncontested space.
3. Get the strategic sequence right… value innovation first.

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Theme 08 Video 98 Innovation logic: the blue ocean strategy (Part 2)
 Blue Ocean Strategy Logic Explained.....
BOS Logic 1: Reconstruct market boundaries
Boundaries of Competition Head-to-Head Competition Creating New Market Space

Industry Focuses on rivals within its industry Looks across alternative industries

Focuses on competitive position within strategic

Strategic Group Looks across strategic groups within its industry
group

Buyer Group Focuses on better serving the buyer group Redefines the buyer group of the industry

Scope of Product and Service Focuses on maximizing the value of product and Looks across to complementary product and service
Offerings service offerings within the bounds of its industry offerings that go beyond the bounds of its industry

Functional-emotional Focuses on improving price-performance with the Rethinks the functional-emotional orientation of its
Orientation of an Industry functional or emotional orientation of this industry industry

Time/Trends Focuses on adapting to external trends as they occur Participation in shaping external trends over time

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Theme 08 Video 99 Innovation logic: the blue ocean strategy (Part 3)
 Blue Ocean Strategy Logic Explained.....
BOS Logic 2: Reach Beyond Existing Demand
1. Focus on existing customers.
2. Drive for finer segmentation to accommodate buyer differences.

BOS Logic 2: Get the Strategic Sequence Right

Entrepreneurship MGT602
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Theme 08 Video 99 Innovation logic: the blue ocean strategy (Part 3)
 Group Discussions and Interviews

Group Discussion 1: The interview with an entrepreneur 1: How to lead the competition or making competition irrelevant?

Group Discussion 2: E-commerce and the entrepreneur

Group Discussion 3: Myths of E-commerce and challenges

Group Discussion 4: Tech entrepreneurship and academia linkage

Group Discussion 5:The interview with an entrepreneur 2: What are the challenges of online businesses?

Entrepreneurship MGT602
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Theme 08 Video 100,101,102,103,104