Categories of Entrepreneurial Ventures

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Categories of Entrepreneurial Ventures

• Distinctions (with strategic implications) among
  entrepreneurial firms
• Size
• Age
• Growth goals
• Entrepreneurial firms generally favor growth
• Entrepreneur may sell shares to support growth

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Elephants, Mice, and Gazelles
Elephants

• Elephants
• Large
• Older
• Cannot change direction quickly
• Have laid off more people than hired in the past
  25 years
• Can be hard chargers
• Can move rapidly because of power in the
  marketplace
• Commands respect
• Can influence marketplace and business conditions

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Elephants, Mice, and Gazelles
Mice

• Mice
• Small firms that power the U.S. economy
• Small retailers, manufacturers
• Small service firms, auto repair shops, plumbers,
  restaurants
• Dont have much market power
• Can change direction quickly in response to
  changes in business conditions
• Many do not aspire to grow large
• Maintain profitability
• Some, however, aspire to grow

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Elephants, Mice, and Gazelles
Gazelles

• Gazelles
• Seek rapid growth and above average profitability
• May be listed in the Inc. 500 or Entrepreneur Hot
  100
• Grow at least 20 a year for 5 years, from a base
  of at least 100,000 in revenues
• Doubles in size during the 4-year period
• Value proposition often includes radical
  innovation or implementation of new technology
• Seek growth rather than control
• Create many jobs in the economy

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Types of Entrepreneurial Ventures
Type Characteristics

• Definition A family business is a privately held
  firm in which family members have some degree of
  effective control over the strategic direction of
  the firm and intend for the business to remain
  within the family.
• Scope Comprise 80 to 90 of all business
  enterprises in North America, 30 t0 35 of the
  Fortune 500 companies and majority of enterprises
  internationally. Fifty percent of the U.S. GDP
  (over 3.3 trillion) is generated by family-owned
  businesses.

Family businesses
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Types of Entrepreneurial Ventures
Type Characteristics

• Definition A franchise exists when a firm that
  already has a successful product or service
  (franchisor) contracts with another business to
  be a dealer (franchisee) by using the
  franchisors name, trademark and business system
  in exchange for a fee
• Scope Accounted for 1 trillion in annual retail
  sales in the United States in 2000. There are
  about 320,000 franchise businesses, employing
  more than 8 million people in 75 different
  industries.

Franchises

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Types of Entrepreneurial Ventures
Type Characteristics

• Definition a home-based business, also referred
  to as SOHO (Small Office/Home Office), consists
  of a company with 20 or fewer employees,
  including self-employed, free agents, e-lancers,
  telecommuters, or other independent professionals
  working from a home-based setting.
• Scope Approximately 20 million businesses are
  home-based. The U.S. Commerce Department
  estimates that more than half of all small
  businesses are home-based.

Home-based businesses
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Entrepreneurial Leadership

• Launching a new venture requires a special kind
  of leadership
• Courage
• Belief in ones convictions
• Energy to work hard
• Three characteristics
• Vision
• Dedication and drive
• Commitment to excellence

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Entrepreneurial Leadership

• Vision may be entrepreneurs most important asset
• Ability to envision realities that do not yet
  exist
• Able to communicate with a wide audience
• Willing to make unpopular decisions
• Determined to make sure your message gets through
• Create and implement quality systems and methods
  that will survive

Vision
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Entrepreneurial Leadership

• Dedication and drive are reflected in hard work
• Patience
• Stamina
• Willingness to work long hours
• Internal motivation
• Intellectual commitment to the enterprise
• Strong enthusiasm for work and life

Vision
Dedication and Drive
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Entrepreneurial Leadership

• To achieve excellence, venture founders and small
  business owners must
• Understand the customer
• Provide quality products and services
• Manage the business knowledgeably and expertly
• Pay attention to details
• Continuously learn
• Surround themselves with good people

Vision
Dedication and Drive
Commitment to Excellence
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Entrepreneurial Strategy

• Best strategy for the enterprise will be
  determined to some extent by
• Unique features of the opportunity, resources,
  and entrepreneur(s)
• Other conditions in the business environment
• Can use various tools and techniques to determine
  strategic choices
• Five Forces analysis
• Value chain analysis

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Entry Strategies

• Getting a foothold in the market
• Pioneering new entry
• Creating new ways to solve old problems
• Meeting customers needs in a unique new way
• Imitative new entry
• Strong marketing orientation
• Introduce same basic product or service in
  another segment of the market
• Adaptive new entry
• Offer product or service that is somewhat new
  and different
• Aware of marketplace conditions and conceive
  entry strategies to capitalized on current trends

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Generic Strategies

• How new ventures can achieve competitive
  advantages
• Overall cost leadership
• Simple organizational structures
• More quickly upgrade technology and integrate
  feedback from the marketplace
• Make timely decisions that affect cost
• Differentiation
• Use new technology
• Deploy resources in a radical new way
• Focus
• Niche strategies fit the small business mold

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Combination Strategies

• A key issue is the scope of a small firms
  strategic efforts relative to those of its
  competitors
• Pursue combination strategies
• Combine best features of low-cost,
  differentiation, and focus strategies
• Flexibility and quick decision-making ability of
  a small firm not laden with layers of bureaucracy