Entrepreneurial Strategies Entrepreneurship and Innovation (ENT 601) KUSOM, MBA, 2020

3/20/20
Lecture - 3
Entrepreneurial Strategies
Entrepreneurship and Innovation (ENT 601)

KUSOM, MBA, 2020
Faculty - Shashi Raj Bajracharya
Strategy
• Greek strategia = ‘generalship’
• the art of planning and directing military activity in a war or battle.
• a plan designed to achieve a particular long-term aim.
• The 1952 edition of the Concise Oxford

Dictionary still defined strategy as: “Generalship;
the art of war; management of an army or armies
in a campaign.”
• Alfred D. Chandler, Jr., first applied the term to
the conduct of a business in 1962 in his pioneering
Strategy and Structure (Cambridge, Mass.: M.I.T. Press),
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Defining Strategy: Evolving Definitions

1. “The determination of the basic 3. “The direction and scope of an
long-term goals and objectives of organisation over the long term,
an enterprise, and the adoption which achieves advantage in a
of courses of action and the changing environment through its
allocation of resources necessary configuration of resources and
for carrying out these goals” competences with the aim of
(Chandler, 1962) fulfilling stakeholder expectations”
(Johnson, Scholes &
2. “An integrated and coordinated set Whittington, 2008)
of commitments and actions
designed to exploit core 4. “The way in which the firm deploys
competencies and gain a its resources and capabilities within
competitive advantage” (Hitt, its business environment in order to
Ireland & Hoskisson, 2003) achieve its goals”(Grant, 2009)
Just as entrepreneurship requires entrepreneurial management, that is,
practices and policies within the enterprise, so it requires practices and
policies outside, in the marketplace. It requires entrepreneurial
strategies. They are important; they are distinct; and they are different.
Specifically entrepreneurial strategies:

• Fustest with the Mostest
• Hit Them Where They Ain’t
• Ecological Niches
• Changing Values and Characteristics
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1. Fustest with the Mostest (First Mover Benefit or Achieving Dominance)
• Trying to become the unchallenged
leader in an economic field.
• Considers this strategy to carry the biggest risks
and demanding massive resources, even though
it is highly rewarding when successful.
• Must aim at creating something truly new,
something truly different.
• This requires that he has to make his product or
his process obsolete before a competitor can do it.
• This is too risky and much too difficult to be used for anything than major
innovations, even though it is highly rewarding when successful.
*
2. Hit Them Where They Ain’t (Supply the Missing Ingredient)
• Fulfilling a need that a competitor is not.
• If the new product is already known, it is much easier to find out what customers
buy and how to fit their specific needs.
• The risk is misreading the market trend and saturating the market with oversupply.
• Less riskier strategy to achieve market leadership.
• Creative imitation.
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3. Ecological Niches (Finding and Occupying a Specialized "Ecological
Niche")
• In contrast to the strategies presented earlier, this one does not aim so
much at leadership or dominance of a market, but rather at control.
• It tries to obtain a practical monopoly in a small area.
• The main idea behind this strategy is to offer a product that is essential,
but nevertheless offers no incentive for others to compete.
• Drucker saw three distinct ways for implementing this approach.
• The Toll-Gate Strategy:
• The Specialty Skill Strategy:
• The Specialty Market Strategy:
3. Ecological Niches (Finding and Occupying a Specialized "Ecological
Niche")
i. The Toll-Gate Strategy
• You control an essential piece of something else that is needed, such
that would-be competitors cannot do business without what you
supply.
• This means an entrepreneur tries to find a product
that is essential to some bigger, complex process, but
does not represent a big part of the whole thing.
• The market for this product must be so small
that whoever enters it first preempts it.
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3. Ecological Niches (Finding and Occupying a
Specialized "Ecological Niche")
ii. The Specialty Skill Strategy:
• Somehow similar to the first strategy, one would aim at
occupying a certain field of the market, but not so much
because it is too small for more than one enterprise, but
because it requires very specialized, very unique
knowledge no others are likely to have or to achieve.
• This means, a business occupying a specialty skills
niche must constantly work on improving its own skill,
making sure no runners-up will enter the stage.
3. Ecological Niches (Finding and Occupying a
Specialized "Ecological Niche")
iii. The Specialty Market Strategy
• Built around specialized knowledge of a market.
• The entrepreneur tries to place a more or less
common product on a very special market, meeting
specific customers' needs that are not as common as
the product itself might be in the overall market.
• This strategy has the same limitations as the specialty
skills strategy. The greatest threat is its success,
because when the market one occupies becomes a
mass market, it is however complex and difficult to
understand it might be not special any longer.
*
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4. Changing Values and Characteristics (Changing Economic
Characteristics )
• Does not require the introduction of an innovation. In this approach,
the strategy is the innovation such that you change certain economic
characteristics in what you provide to others.
• There are several ways of applying this strategy, each of them tries to
create new customers for an existing product.
• Creating Customer Utility
• Pricing
• The Customer's Reality
• Delivering Value to the Customer
Characteristics )
i. Creating Customer Utility

• This strategy works by enabling customers to do what serves
their purpose. The main element of this strategy is some
additional service that is offered with the product that meets
specific customers' needs.
• Price is usually almost irrelevant in the strategy of creating
utility. The strategy works by enabling customers to do what
serves their purpose.
• E.g., Home delivery service, Full fledged repair service, Online
utility payments
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4. Changing Values and Characteristics (Changing
Economic Characteristics )
ii. Pricing:
• This strategy tries to price different components of a
product in a way that is accepted by customers.
• It is not so much about cutting the overall price of a
product, but about thinking how the price should be
divided among its components.
• Thus, the price of a component needn't always
resemble the actual manufacturing or other costs
associated with it, but the value it presents to the
customer.
4. Changing Values and Characteristics (Changing
Economic Characteristics )
iii. The Customer's Reality

• This strategy focuses on selling a product in a way it
fits into the customer's world, and not in a way that
resembles the manufacturer's point of view.
• This might concern pricing (as mentioned above),
but sometimes it might just be enough to think of
services or product packages appealing to potential
customers.
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Characteristics )
iv. Delivering Value to the Customer
• Similar to other strategies, one should focus on what delivers value to
the customer rather than what is product to the manufacturer.
• "What the customer pays for each piece of the product has to work
out as X dollars for us. But how the customers pays depends on what
makes sense to him. It depends on what the product does for the
customer. It depends on what fits his reality. It depends on what the
customer sees as value".
• E.g., IT AMC, Insurance
***

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3/20/20

Entrepreneurship and Innovation (ENT 601)

• The 1952 edition of the Concise Oxford

Defining Strategy: Evolving Definitions

Specifically entrepreneurial strategies:

i. Creating Customer Utility

iii. The Customer's Reality

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