This document discusses strategies for small businesses, including imitating existing successful business models with minor innovations. It describes conducting industry and competitor analyses to understand markets. Businesses should select a strategy of differentiation, low cost, or focus on a niche. Finally, the document outlines frameworks for analyzing competitive advantage, including value chain analysis, Porter's five forces, and VRIO analysis to leverage resources for sustained advantage.

1. ORGL 2900
ENTREPRENEURSHIPENTREPRENEURSHIP

2. Chapter 7
Small BusinessSmall Business StrategiesStrategies::
Imitation with an InnovativeImitation with an Innovative
twisttwist

3. This Week’s KEYThis Week’s KEY
ResourcesResources

5. Resources

6. Developing YourDeveloping Your
StrategyStrategy

7. • Defines how your business operates:
– How you develop new offerings
– How you “Go To” market
– How to identify ideal prospects
– How to manage existing accounts
– How to engage partners, vendors, investors, the
media, suppliers
– How to recruit, retain and develop talented people
– How to manage your finances
– How to manage inventory
Your Strategy

8. • Chances are you are pursuing a business model
that ALREADY EXISTS
• Copy others’ successes, avoid their failures
• Developing a strategy requires four key
decisions you make about your business:
– Pre-strategy
– Benefits
– Strategy
– Competitive Analysis
Your Strategy

9. Step 1Step 1: Your: Your
Pre-strategyPre-strategy

10. • Choose your product / service
• Identify the industries you will pursue
• Find all relevant industry trade associations
• SIC versus NAICS Codes?
Pre-Strategy

11. Industries

12. My Industries

13. • A “market” is a population of customers
for your product / service:
– Understand the scale and scope
• Scale: Mass versus Niche
• Scope: Local to global
Selecting Your Markets

14. To Imitate, OrTo Imitate, Or
Innovate???Innovate???

15. 66%66% choose to IMITATE
WHY?WHY?
Innovate Approach

17. • Incremental innovationIncremental innovation: Imitation plus
one or two ways in which you do things
completely different
• Pure InnovationPure Innovation: Results in a new
product or service:
– Occurs VERY rarely
– Enables you to make your business fit your
values, beliefs, strengths, ideas, preferences
Imitate Approach

19. • BY imitating, customers already
understand/know about your offerings.
• Most use imitation plus/minus one degree
of similarity (akin to cloning, manifests in
franchising.)
• Parallel competition: Copying with minor
adjustments.
• Innovate approach enables you to make
your business fit your values, beliefs,
strengths, ideas, preferences.
Innovate Approach

20. INNOVATE Path

21. INNOVATE Path

22. INNOVATE Path

23. ConductingConducting
Industry AnalysisIndustry Analysis

24. • Obtain industry codes
• Size the industry
• Profitability (www.bizstats.com)
• How profits are made
• Competitors
• Analysis: consolidate data into summary
report format
• Source your references
Industry Analysis

25. ResourcesResources

26. Assn. Directories

27. Resources

28. Resources

29. Resources

30. Resources

31. Resources

32. Resources

33. Step 2Step 2: Benefits: Benefits

34. • What benefitsbenefits do you plan on offering
your customers?
• ValueValue benefits: Quality, style, service,
technology, personalization.
• CostCost benefits: lower cost, volume (scale)
savings, learning (greater efficiency)
scope (ex. Multifunction printer.)
• OrganizationalOrganizational: you automate
processes or mastered the production of
a product or service, so you can offer it
more cheaply than anybody else.
Benefits

35. S.W.O.T Analysis
Strengths
Threats
Oppor-
tunities
Weaknesses

36. SWOT Analysis

37. • Information provided can be useful
• Price sensitivity, product/service features
and benefits, feelings about the product,
the company, competitors
• People say one thing in a closed room,
act differently when purchase is involved
• Find a representative sample that fits
ideal customer profile or existing clients if
possible
Brainstorming

38. Step 3Step 3: Strategy: Strategy
SelectionSelection

39. • There Are THREE Primary Strategies
– DifferentiationDifferentiation: Show how you offer a
combination of VALUE benefits unlike anyone
else to pursue MASS markets
– CostCost: Tell how do you offer a combination of
COST benefits
– FocusFocus: Limit your efforts to a small portion
of the overall market, called a segment or
niche
Strategy Selection

40. Step 4Step 4: Competitive: Competitive
AdvantageAdvantage

41. • Implement customer benefits
• Know EXACTLY what your competitors
are doing
• Customer service – it’s lip service or it’s a
true advantage
– Your clients will tell you what you’re doing
wrong & right
– Listen to customers…EXCEPT WHEN YOU
DON’T!
• Needs to be sustained over time
• Know your markets inside & out
Competitive Advantage

42. • Infuse the benefits your customers are looking
for into every area of your business.
• Michael Porter popularized VCA, looking at the
processes and activities a small business
conducts to design, produce, market, deliver
and support its products and services with anwith an
emphasis on four key areasemphasis on four key areas:
– Infrastructure: Location, physical assets
– HR
– Technology
– Procurement
Value Chain Analysis

43. • Existing Competitors
• Potential Entrants
• Substitutes
• Suppliers
• Buyers/Customers
Porter’s Five Competitors

44. • Leverages Jay Barney’sJay Barney’s model for competitive
advantage:
–Value
–Rareness
–Imitability
–Organization
• Used to test whether a resource will give your
firm competitive advantage
• How are you leveraging all your resources
VRIO Analysis

45. VRIO Analysis

46. • Match your company’s strategy to the
lifecycle of the industry:
– Introduction
– Early Adopters
– Growth
– Maturity
– Decline
– Laggards
Lifecycle Analysis