Lecture 2 - Strategic Entrepreneurship

Question 1

What are the 5 strategy environments?

Answer 1

Classical
Adaptive
Visionary
Shaping
Renewal

Question 2

What are the steps of strategy renewal?

Answer 2

1) Operational turnaround (cost cutting, reallocation of internal resources etc)
2) Picking a new strategic approach for innovation and growth

Question 3

What is the definition of Entrepreneurship?

Answer 3

The process by which individuals/ firm identify and pursue entrepreneurial opportunities without being immediately constrained by their current resources

Question 4

What is the definition of Corporate Entrepreneurship?

Answer 4

The use or application of entrepreneurship within an established firm

Question 5

What is the definition of strategic entrepreneurship?

Answer 5

Involves taking entrepreneurial actions using a strategic perspective

Question 6

What are the 4 forms of strategic entrepreneurship? (Covin and Miles 1999)

Answer 6

1) Sustained regeneration
2) Organisational rejuvenation
3) Strategic renewal
4) Domain redefinition

Question 7

What is the 4 questions to ask when trying to derive a new value curve?

Answer 7

4 questions to ask:

Reduce: which factors should be reduced below the industry standard?

Raise: which factors should be raised well above the industry standard?

Eliminate: which factors that the industry takes for granted should be eliminated?

Create: which factors should be created that the industry has never offered?

Question 8

What are Ireland, Hitt and Sirmon’s (2003) steps for successful strategic entrepreneurship and thus competitive advantage? (IMPORTANT)

Answer 8

1) Entrpreneurial Mindset
Recgnising opportunities, alertness, goals
Entrepreneurial Orientation
Risktaking, innovativeness, proactiveness
Leadership

2) Managing Resources Strategically
Financial, human, and social capital

3)Apply Creativity and develop innovation

Question 9

How does conventional logic differ to value innovation (Kim and Mauborgne 1997)?

Answer 9

Along the 5 basic dimensions of strategy:

1) Industry assumptions
2) Strategic focus
3) Customers
4) Assets and capabilities
5) Product and service offerings

Question 10

How does conventional logic differ to value innovation in terms of industry assumptions?

Answer 10

value innovators dont take industry conditiond as set in stone, and instead look for blockbuster ideas no matter how the rest of the industry is fairing

Question 11

How does conventional logic differ to value innovation in terms of strategic focus?

Answer 11

Conventional logic leads companies to compete at the margin for incremental share

Value innovation starts with an ambition to dominatethe market by offering a huge leap in value

Value innovators do not focus on competing, conventional logic does

Question 12

How does conventional logic differ to value innovation in terms of customers?

Answer 12

value innovation builds on the commonalities in the features that customers value, as opposed to differences

Question 13

How does conventional logic differ to value innovation in terms of assets and capabilities?

Answer 13

Value innovators often ask ‘what if we start anew?’ as opposed to working with what they have

Yet value innovators still leverage existing assets, they just arent constrained by them

Question 14

How does conventional logic differ to value innovation in terms of product and service offerings?

Answer 14

Conventional competition takes place within clearly established boundaries defined by the products/ services that the industry traditionally offers

Value innovators often cross those boundaries, thinking in terms of the total solution buyers seek

value innovators are also not defined by the industrys definition of what should or should not be done

Question 15

What questions should be asked when creating a new value curve?

Answer 15

• Which of the factors that our industry takes for granted should be eliminated?
• Which factors should be reduced well below the industrys standard?
• Which factors should be raised well above the industrys standard?
• Which factors should be created that the industry has never offered?

Question 16

What is a value curve?

Answer 16

a graphic depiction of a companies relative performance across its industrys key success factors

Question 17

When would a value innovator fall into the trap of conventional strategic logic?

Answer 17

When the competition tries to imitate a new value curve

Question 18

When should managers resist innovation, and instead embark on geographical expansion amd operational impovements?

Answer 18

When a companies value curve is fundamentally different from that of the rest of the industry, and the difference is valued by most customers

Question 19

Which firms are best at repeating value innovation?

Answer 19

Those that took advantage of all three platforms which value innovation can take place: product, service, and delivery

Question 20

What are pioneers?

Answer 20

the businesses that offer unprecedented value and are the most powerful sources of profitable growth

Settlers are the businesses with the value curves that confom to the basic shape of the industry

Question 21

What are migratiors?

Answer 21

Their potential lies somewhere in between pioneer and settler

such businesses extend the industry curve by offering customers more for less, but they dont alter its basic shape

Question 22

How would a company find the right strategic style? (Reeves et al. 2012)

Answer 22

Assess the industry

Consider three critical factors: predictability and malleability (can we shape it?), and harshness (can we survive it?)

Put these two variables together and four broad strategic styles emerge: classical, adaptive, shaping and visionary

Question 23

What does predictability mean?

Answer 23

how far into the future and how accurately you can forecast demsnd, corporate performance, competitive dynamics, and market expectations

Question 24

What does malleability mean?

Answer 24

to what extent can you or your competitors influence those factors

Question 25

What is a classical strategic style?

Answer 25

when you oeprate in an industry whose environment is predictable but hard for your company to change Can work well as a stand alone function as it requires special analytic and quantitative skills Works well in predictable environments (oil)

Question 26

What is an adaptive strategic style?

Answer 26

Involves constantly refining goals and shift, acquire or divest resources smoothly and promptly The goal is not to optimise efficiency, but engineer flexibility Specialist fashion retailing is a good example

Question 27

Explain how specialty fashion retailing is a good example of an adaptive strategy?

Answer 27

tastes change quickly, brands become hot overnight, no amount of data or planning will grant execs the luxury of knowing in advance what to make, so best bet is to produce, roll out, and test

Question 28

Describe how Zara adopts an adaptive style?

Answer 28

Maintains strong relationships with external suppliers to design, manufacture, andshio a garment in a fraction of industry average time, allowing for experimentation their style requires relationships among its planners, designers, manufacturers and distributors

Question 29

What is a shaping strategic style?

Answer 29

Embraces short or continual planning cycles Flexibility is paramount and little reliance placed on prediction mechanisms, instead strategy is often implemented as a portfolio of experiments shapers focus beyond company boundaries, often by rallying a formidable ecosystem of customers, suppliers by defining attractive new markets etc

Question 30

What is a visionary strategic style?

Answer 30

Considers the environment not as given but as something that can be molded to advantage has more in common with a classical than an adaptive approach establishes a clear goal, so strategists can take deliberate steps to reach it without having to keep many options open

Question 31

What traps do companies sometimes fall into?

Answer 31

They tend to overestimate predictability and malleability They dont feel competent in building adaptive capabilities needed to address unpredictability Implementing adapative capabilities can be highly countercultural, yet classical strategies create a culture that prizes efficiency and eliminates variation by prioritising economies of scale and scope

Question 32

How could a company get a better sense of the extent to which an environment can be changed?

Answer 32

Measure industry youthfullness, concentration, growth rate, innovation rate, and rate of technlogical change

Question 33

When would a company have to manage more than one strategic style at a time?

Answer 33

if units within a company would benefit from operating in a strategic style other than the one best suited to the industry as a whole

Question 34

Provide an example of a company that might adopt a classical strategy

Answer 34

Large, established companies in stable industries like oil, examples include Coca Cola

Question 35

Explain the characteristics of companies that adopt an adaptive strategy

Answer 35

Companies in this environment need to be agile, experiment rapidly, and adapt to changing conditions

Question 36

What are the first steps that companies should consider if they are going through strategic renewal?

Answer 36

It is important to undergo an operational turnaround, focusing on cutting costs, reallocating internal resources, and improving efficiency This is often followed by an approach that supports both innovation and growth

Question 37

Define strategic entrepreneurship and highlight its importance in todays business landscape

Answer 37

Strategic entrepreneurship involves simultaneously opportunity seeking and advantage seeking behaviours and results in superior firm performance It is vital because it combines innovation with strategic thinking, enabling firms to identify and exploit opportunities for growth and success long term

Question 38

Explain corporate entrepreneurship and how it can be beneficial to established firms

Answer 38

Corporate entrepreneurship refers to the application of entrepreneurial principles within an established organisation This is done to foster innovation, encourage risk taking, and drive new business ventures within the existing corporate structure, ultimately enhancing competitiveness

Question 39

Explain the concept of value innovation and its relation to domain redefinition

Answer 39

Value innovation involves creating new value for customers by simultaneously lowering costs and increasing benefits, often by eliminating andf replacing existing attributes This often leads to domain redefinition, as the company creates a new market space or segment

Question 40

How does the concept of strategic entrepreneurship relate to the development of competitive advantage?

Answer 40

Strategic entrepreneurship is central to developing competitive advantage by fostering innovation, proactiveness, and effective resource management By combining strategic vision with entrepreneurial actions, firms can create unique products/ services, or business models that give them an edge

Question 41

Explain a classical business environment

Answer 41

Highly predictable industries with strong brands, high regulation, and limited technology change Winning here means being big anf efficient

Question 42

Explain an adaptive business environment

Answer 42

Characterised by unpredictability and technological disruption Winning here mesns being flexible and experimentation oriented

Question 43

Explain a visionary business environment

Answer 43

Predictable industries with a focus on innovation Leaders of such companies are visionaries who are not locked into current solutions and traditional ways of thinking

Question 44

Explain a shaping business environment

Answer 44

Despite unpredictability, innovators here create an ecosystem of many companies that collectively reshape the industry Winning here is all about influencing, orchestrating and coevolving

Question 45

Explain a renewal environment

Answer 45

Characterised by harsh conditions, when a company needs transformation The strategy should aim not to create competitive advantage but to ensure survival by restructuring to free up and redistribute resources Only when survival is achieved should an attempt to deploy another strategy be considered

Question 46

What do fortune 500 remaining companies have in common?

Answer 46

They are ambidextrous, remain market focused and driven from the outside as opposed to being introverted