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Ch12 Discussion Light

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Strategy Management
Robert E. Hoskisson; Michael A. Hitt; R. Duane Ireland

Published in: Business, Education
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Ch12 Discussion Light

  1. 1. Strategic Entrepreneurship Robert E. Hoskisson Michael A. Hitt R. Duane Ireland Chapter 12
  2. 2. Chapter 2 Strategic Leadership Chapter 4 The Internal Organization Chapter 6 Competitive Rivalry and Competitive Dynamics Chapter 9 International Strategy Chapter 1 Introduction to Strategic Management Chapter 3 The External Environment Chapter 5 Business-Level Strategy Chapter 8 Acquisition and Restructuring Strategies Chapter 11 Corporate Governance Strategic Intent Strategic Mission Chapter 7 Corporate-Level Strategy Chapter 10 Cooperative Strategy Chapter 12 Strategic Entrepreneurship Strategic Analysis Strategic Thinking Creating Competitive Advantage Monitoring And Creating Entrepreneurial Opportunities The Strategic Management Process
  3. 3. Discussion Questions <ul><li>What is strategic entrepreneurship and why is it important? </li></ul><ul><li>What are the two major types of innovation? </li></ul><ul><li>What are the two central processes associated with internal corporate venturing? </li></ul>Click Here Click Here Click Here Click Here More discussion questions
  4. 4. Discussion Questions (cont.) <ul><li>Will horizontal organization in general and cross-functional teams in particular facilitate appropriation of value from innovation? </li></ul><ul><li>Are strategic alliances a viable way to get innovations? What are the tradeoffs with strategic entrepreneurship through alliances? </li></ul>Click Here Click Here Click Here More discussion questions
  5. 5. Discussion Questions (cont.) <ul><li>How do acquisitions affect innovative inputs (R&D) and outputs (patents)? How does a firm prevent innovation problems associated with the acquisition process? </li></ul><ul><li>How can venture capital be used as an external approach to strategic entrepreneurship? </li></ul>Click Here Click Here
  6. 6. Discussion Question 1 <ul><li>What is strategic entrepreneurship and why is it important? </li></ul>
  7. 7. Strategic Entrepreneurship <ul><li>Strategic entrepreneurship: taking entrepreneurial actions using a strategic perspective </li></ul><ul><ul><li>engaging in simultaneous opportunity seeking and competitive advantage seeking behaviors </li></ul></ul><ul><ul><li>designing and implementing entrepreneurial strategies to create wealth </li></ul></ul><ul><li>These actions can be taken by individuals or by corporations </li></ul>
  8. 8. Entrepreneurial Opportunities <ul><li>Entrepreneurial opportunities are conditions in which new products or services can satisfy a need in the market </li></ul><ul><li>Entrepreneurs or entrepreneurial managers must be able to: </li></ul><ul><ul><li>identify opportunities not perceived by others </li></ul></ul><ul><ul><li>take actions to exploit the opportunities </li></ul></ul><ul><ul><li>establish a competitive advantage </li></ul></ul>
  9. 9. Innovation <ul><li>Three types of innovative activity </li></ul><ul><ul><li>invention brings something new into being </li></ul></ul><ul><ul><li>innovation brings something new into use </li></ul></ul><ul><ul><li>imitation is the adoption of an innovation by similar firms </li></ul></ul><ul><li>Innovation is a key outcome firms seek through entrepreneurship and is often the source of competitive success </li></ul><ul><li>Innovations produced in large established firms are often referred to as corporate entrepreneurship </li></ul>
  10. 10. Entrepreneurs <ul><li>Entrepreneurs are: </li></ul><ul><ul><li>individuals acting independently or as part of an organization </li></ul></ul><ul><ul><li>who create a new venture or develop an innovation and take risks entering them into the marketplace </li></ul></ul><ul><li>Entrepreneurs </li></ul><ul><ul><li>can be independent individuals </li></ul></ul><ul><ul><li>can surface in an organization at any level </li></ul></ul>
  11. 11. International Entrepreneurship <ul><li>Entrepreneurship can </li></ul><ul><ul><li>fuel economic growth </li></ul></ul><ul><ul><li>create employment </li></ul></ul><ul><ul><li>generate prosperity for citizens </li></ul></ul><ul><li>There is a strong positive relationship between the rate of entrepreneurial activity and economic development in a nation </li></ul>
  12. 12. International Entrepreneurship <ul><li>There must be a balance (in the culture) between </li></ul><ul><ul><li>individual initiative and </li></ul></ul><ul><ul><li>the spirit of cooperation and group ownership of innovation </li></ul></ul><ul><li>Successful entrepreneurial firms </li></ul><ul><ul><li>provide appropriate autonomy </li></ul></ul><ul><ul><li>incentives for individual initiative </li></ul></ul><ul><ul><li>promote cooperation and group ownership of an innovation </li></ul></ul>Click Here Return to Discussion Questions
  13. 13. Discussion Question 2 <ul><li>What are the two major types of innovation? </li></ul>
  14. 14. Innovation Types: <ul><li>most innovations are incremental </li></ul><ul><li>builds on existing knowledge bases </li></ul><ul><li>provides small improvements in the current product lines </li></ul>Incremental Innovation Incremental innovation
  15. 15. Innovation Types <ul><li>provides significant technological breakthroughs </li></ul><ul><li>creates new knowledge </li></ul><ul><li>is rare because of difficulty and risk </li></ul><ul><li>requires substantial creativity </li></ul><ul><li>radical innovations are often best developed in separate units that start internal ventures </li></ul>Radical Innovation Click Here Return to Discussion Questions Radical innovation Incremental innovation
  16. 16. Discussion Question 3 <ul><li>What are the two central processes associated with internal corporate venturing? </li></ul>
  17. 17. Internal Corporate Venturing Concept of corporate strategy Strategic context Autonomous strategic behavior Structural context Induced strategic behavior
  18. 18. Internal Corporate Venturing: <ul><li>Autonomous strategic behavior is a bottom-up process in which product champions: </li></ul><ul><ul><li>pursue new ideas, often through a political process </li></ul></ul><ul><ul><li>develop and coordinate the commercialization of a new good or service until it achieves success in the marketplace </li></ul></ul>Autonomous Strategic Behavior
  19. 19. <ul><li>A product champion is an organizational member with an entrepreneurial vision of a new good or service who seeks to create support for its commercialization </li></ul><ul><li>Autonomous strategic behavior </li></ul><ul><ul><li>based on a firm’s wellsprings of knowledge and resources that are the sources of the firm’s innovation </li></ul></ul><ul><ul><li>a firm’s technological capabilities and competencies are the basis for new products and processes </li></ul></ul>Internal Corporate Venturing: Autonomous Strategic Behavior
  20. 20. <ul><li>Induced strategic behavior is a top-down process whereby </li></ul><ul><ul><li>the firm’s current strategy and structure foster product innovations </li></ul></ul><ul><ul><li>innovations are associated closely with that strategy and structure </li></ul></ul>Internal Corporate Venturing: Induced Strategic Behavior
  21. 21. <ul><li>To be innovative and develop internal ventures requires </li></ul><ul><ul><li>an entrepreneurial mindset </li></ul></ul><ul><ul><li>risk propensity </li></ul></ul><ul><ul><li>an emphasis on execution </li></ul></ul><ul><li>Individuals with an entrepreneurial mindset </li></ul><ul><ul><li>engage the energies of everyone in their domain </li></ul></ul><ul><ul><li>both inside and outside the organization </li></ul></ul>Internal Corporate Venturing: Induced Strategic Behavior Click Here Return to Discussion Questions
  22. 22. Discussion Question 4 <ul><li>Will horizontal organization in general and cross-functional teams in particular facilitate appropriation of value from innovation? </li></ul>
  23. 23. Cross-Functional Product Development Teams <ul><li>facilitate efforts to integrate activities associated with different organizational functions </li></ul><ul><li>design, manufacturing, marketing, etc. </li></ul><ul><li>new product development processes can be completed more quickly </li></ul><ul><li>products can be more easily commercialized when cross-functional teams work effectively </li></ul>The Firm Cross functional product development team
  24. 24. Cross-Functional Product Development Teams <ul><li>product development stages are grouped into parallel or overlapping processes </li></ul><ul><li>this approach allows the firm to tailor its product development efforts </li></ul><ul><ul><li>unique core competencies </li></ul></ul><ul><ul><li>needs of the market </li></ul></ul>The Firm Cross functional product development team
  25. 25. Barriers to Cross-Functional Team Effectiveness <ul><li>Different orientations and perceptions </li></ul><ul><ul><li>individuals from separate functions have different orientations on issues </li></ul></ul><ul><ul><li>perceive product development activities in different ways </li></ul></ul><ul><li>Organizational politics </li></ul><ul><ul><li>aggressive competition for resources among different organizational functions </li></ul></ul><ul><ul><li>must achieve cross-functional integration with minimal political conflict </li></ul></ul>
  26. 26. Creating Value Through Internal Innovation Processes Click Here Return to Discussion Questions Creating value through innovation Entrepreneurial mindset Cross functional product development teams <ul><li>Facilitating integration </li></ul><ul><li>and innovation </li></ul><ul><ul><li>Shared values </li></ul></ul><ul><ul><li>Entrepreneurial </li></ul></ul><ul><ul><li>Leadership </li></ul></ul>
  27. 27. Discussion Question 5 <ul><li>Are strategic alliances a viable way to get innovations? What are the tradeoffs with strategic entrepreneurship through alliances? </li></ul>
  28. 28. Cooperative Strategies for Entrepreneurship and Innovation <ul><li>Firms may need to cooperate and integrate knowledge and resources to successfully commercialize inventions </li></ul><ul><ul><li>entrepreneurial new venture firms may need investment capital and distribution capabilities </li></ul></ul><ul><ul><li>more established companies may need new technological knowledge possessed by newer entrepreneurial firms </li></ul></ul><ul><li>To innovate through a cooperative relationship, firms must share their knowledge and skills </li></ul>Click Here Return to Discussion Questions
  29. 29. Discussion Question 6 <ul><li>How do acquisitions affect innovative inputs (R&D) and outputs (patents)? How does a firm prevent innovation problems associated with the acquisition process? </li></ul>
  30. 30. Acquisitions to Buy Innovation <ul><li>Acquisitions </li></ul><ul><ul><li>rapidly extend the product line </li></ul></ul><ul><ul><li>increase the firm’s revenues </li></ul></ul><ul><li>A key risk of acquisitions is that a firm may substitute the ability to buy innovations for an ability to produce innovations internally </li></ul><ul><ul><li>firm may lose intensity in R&D efforts </li></ul></ul><ul><ul><li>firm may lose ability to produce patents </li></ul></ul>
  31. 31. Discussion Question 7 <ul><li>How can venture capital be used as an external approach to strategic entrepreneurship? </li></ul>
  32. 32. Capital for Entrepreneurial Ventures <ul><li>Venture capital firms </li></ul><ul><ul><li>seek high returns on their investment </li></ul></ul><ul><ul><li>value competence of the entrepreneur or the human capital in the firm </li></ul></ul><ul><ul><li>place weight on the expected scope of competitive rivalry the firm is likely to experience </li></ul></ul><ul><ul><li>evaluate degree of instability in the market addressed </li></ul></ul>
  33. 33. Capital for Entrepreneurial Ventures <ul><li>Initial public offerings (IPOs) </li></ul><ul><ul><li>new stock </li></ul></ul><ul><ul><li>firm needs high potential in order to sell new stock </li></ul></ul><ul><ul><li>often quite larger than the amounts obtained from venture capitalists </li></ul></ul><ul><ul><li>investment bankers frequently play major roles in the development and offering of IPOs </li></ul></ul><ul><ul><li>firms that have also received venture capital backing usually receive greater returns from IPOs </li></ul></ul>
  34. 34. Creating Value Through Strategic Entrepreneurship <ul><li>Newer entrepreneurial firms often are more effective than larger firms in identifying opportunities </li></ul><ul><li>Larger and well-established firms often have more resources and capabilities to exploit opportunities </li></ul><ul><li>Firms can be simultaneously entrepreneurial and strategic regardless of their size and age </li></ul>
  35. 35. Creating Value Through Strategic Entrepreneurship <ul><li>To be entrepreneurial firms must </li></ul><ul><ul><li>develop an entrepreneurial mindset among managers and employees </li></ul></ul><ul><ul><li>emphasize the development of their resources, especially human and social capital </li></ul></ul><ul><ul><li>seek to enter and compete in international markets </li></ul></ul><ul><li>Enterpreneurial firms can achieve competitive advantages and create value for their customers and shareholders </li></ul>

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