1. Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns
PART 3
STRATEGIES FOR THE
ENTREPRENEURIAL
ORGANIZATION
CHAPTER 12
Developing Strategies for
Growth
2. Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns
Keys to Growth
• Understand why you have been successful
• Build on strengths and core competencies
and shore up weaknesses
• Build a marketing strategy for each product
that reflects the appropriate generic strategy,
the stage the it is at in its life cycle and all in
the context of its place in the portfolio of
products
3. Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns
Successful Entrepreneurial Strategies
• Strategy should emphasise something that
makes your firm as unique as possible and
delivers as much value as possible to the
customer
• The best chance of doing this comes from
differentiation with the aim of dominating
your market and to do this effectively and
quickly
• Then to continue to innovate based upon
your differential advantage
4. Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns
Product - Market Matrix
Market
Existing
New
Product/Service
Existing New
1
Market Penetration
or
Consolidate
Withdraw
2
Market
Development
5. Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns
Porter’s 5 Forces
Competitive rivalry:
Number & size
Industry growth
Extent of differentiation
Capacity increments
Exit barriers
Power of Suppliers:
Concentration
Extent of substitutes
Importance of supplier
Extent of
differentiation
Forward integration
Threat of substitutes:
Changing technology
Changing market
Changing tastes
Switch costs
Extent of differentiation
Barriers to Entry:
Economies of scale
Product differentiation
Capital requirements
Legal agreements
Switch costs
Power of Buyers:
Numbers &
concentration
Extent of differentiation
Switch costs
Margin they earn
Backward integration
6. Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns
Entry and Exit Barriers
Exit barriers
Exit
barriers
High
High
Low
Low
High, stable
returns
Low, stable
returns
High, risky
returns
Low, risky
returns
High risk
High
return
7. Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns
Product - Market Matrix
Market
Existing
New
Product/Service
Existing New
1
Market Penetration
or
Consolidate
Withdraw
3
Product/Service
Development
2
Market
Development
4
Diversification
- Related
- Unrelated
8. Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns
Types of Diversification
RELATED DIVERSIFICATION
• Backward, vertical diversification
• Forward, vertical diversification
• Horizontal diversification
UNRELATED DIVERSIFICATION
9. Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns
Synergy
Benefits from creating linkages
between activities or processes
where none existed before so that the
combined effect is more than the sum
of the parts
1 + 1 = 3
10. Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns
Examples of Logic for an Acquisition
• Defensive, to maintain market position,
perhaps gaining economies of scale
• As part of a strategy to develop new
products when firm does not have internal
capability
• As part of a strategy to develop new markets
• As part of a strategy of diversification –
accepting the risks
11. Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns
Pressure Groups for CSR
• Environmentalists
• Social reformers
• Social activists
• Ethical activist
12. Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns
Business Reasons for CSR
• Enhanced customer loyalty
• Increased future purchases
• Reduced operating costs
• Improved new product development
• Access to new markets
• Productivity gains
13. Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns
The Strategic Planning Process & CSR
VISION
STRATGY
IMPLEMENTATION
STRATEGIC
ANALYSIS
STRATEGY
FORMULATION
Feedbackloops
Awareness of legislation,
expectation of stakeholders
and comparison with
competitors
Formulation of CSR
commitments
Development of concrete
action plan that can be
publicised to stakeholders
to demonstrate commitment
and attainment
14. Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns
Sustaining Competitive Advantage
• Reputation – often encapsulated in the
brand, but communicated through
relationships
• The way the organisation innovates – again
and again
• The organisation’s strategic assets –
particularly the ones that can’t be copied
All of this is part of organisational architecture
Kay 1998
15. Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns
Five mistakes in Implementing
Strategy
1. Misunderstanding industry attractiveness
2. Not having real competitive advantage
3. Pursuing an unsustainable competitive
position
4. Compromising the strategy for growth with
short-term goals
5. Failing to communicate strategy internally
Porter (1991)
