Session 07 & 08

Entrepreneurship and Innovation Management

Program Title: Post Graduate Diploma in Management

Course Title: Entrepreneurship and Innovation
Management
Number of Sessions: 32
Session Duration: 75 minutes
Total Class Hours: 40 hours
Credit: 3
Part Unit Topic
I ENTREPRENEURSHIP AND YOU
Understanding Entrepreneurship: Concept of Entrepreneur and
I Entrepreneurship, Characteristics of entrepreneurs, Functions of
entrepreneurs, Types of entrepreneurs, Reasons for growth of
entrepreneurs, Reasons for entrepreneurial failure, Concept of
Intrapreneurs, Difference between Intrapreneurs and Entrepreneurs
II Doing Business in India: Problems to do the business in India, Types of
ownership, Regulations follow to do the business in India

III Entrepreneurs and Their World: Business eco-system, Entrepreneurial

environment, Importance of network, Entrepreneurial network
II BUILDING THE BUSINESS
IV Idea Generation and Creating the Concept Statement:
Sources for generating ideas for new ventures,
Innovations in business
V Making a Business Plan: What is business plan? Uses of
business plan, Steps in writing business plan, Kinds of
business plan
VI Entrepreneurial Strategies: Defy Competition and Enter
the Market: Product or service innovation, Process and
concept innovation, Risk associated with various
entrepreneurial strategies
VII Creating New Products and Services: Common reason
to fail the new product or service
III EXTERNAL ENVIRONMENT AND COMPETITIVE
LANDSCAPE
VIII Building a Strategy: Understand the Industry and Competition

IX The Market and Customer Groups

IV GROWTH AND EXIT STRATEGIES
X Growth: Diversification, Joint Ventures, Acquisitions, Mergers,
Franchising

XI Exit Strategies: Reason for exit

V Practical: The student can perform the following according to the
instruction of the faculty in charge: Do the idea generation exercise and
make a business plan and make group presentations in the class.
 ASSESSMENT PLAN:
Timing Mode Marks

During the 1. Startup Market Study Report 50 (15+10+25)

term Submission=15 marks (sub
tentatively 3rd week, Feb 2020)
2. Group Case Analysis written
submission=10 marks (sub
tentatively 1st week, Mar 2020)
3. Group Presentations on B-Plan for
MNCs =25 marks (sub tentatively 4th
week, Mar 2020)

End of the Written Test 50

term
 New Entry
 New entry refers to:
 Offering a new product to an established or new
market.
 Offering an established product to a new
market.
 Creating a new organization.
 Entrepreneurial strategy – The set of
decisions, actions, and reactions that first
generate, and then exploit over time, a new
entry.

3-7
 Entrepreneurial Strategy:
The Generation and Exploitation of New Entry Opportunities

3-8
 Generation of a New Entry
Opportunity
 Resources as a Source of Competitive
Advantage
 Resources are the basic building blocks to a
firm’s functioning and performance; the inputs
into the production process.
 They can be combined in different ways.
 A bundle of resources provides a firm its capacity to
achieve superior performance.
 Resources must be:
 Valuable.
 Rare.
 Inimitable.
3-9
 Generation of a New Entry
Opportunity (cont.)
 Creating a Resource Bundle That Is
Valuable, Rare, and Inimitable
 Entrepreneurs need to draw from their unique
experiences and knowledge.
 Market knowledge - Information, technology,
know-how, and skills that provide insight into a
market and its customers.
 Technological knowledge - Information,
technology, know-how, and skills that provide
insight into ways to create new knowledge.

3-10
 Generation of a New Entry
Opportunity (cont.)
 Assessing the Attractiveness of a New Entry
Opportunity
 Depends on the level of information and the
willingness to make a decision without perfect
information.
 Information on a New Entry
 Prior knowledge and information search
 More knowledge ensures a more efficient search
process.
 Search costs include time and money.
 The viability of a new entry can be described in
terms of a window of opportunity.
3-11
The Decision to Exploit or Not to Exploit the New
Entry Opportunity

3-12
 Entry Strategy for New Entry
Exploitation
Being a first mover can result in a
number of advantages that can enhance
performance. These include:

• Cost advantages.
• Less competitive rivalry.
• The opportunity to secure important supplier
and distributor channels.
• A better position to satisfy customers.
• The opportunity to gain expertise through
participation.
3-13
 Entry Strategy for New Entry
Exploitation (cont.)
 Environmental Instability and First-Mover
(Dis)Advantages
 The entrepreneur must first determine the key
success factors of the industry being targeted
for entry; are influenced by environmental
changes.
 Environmental changes are highly likely in
emerging industries.
 Demand uncertainty - Difficulty in estimating the
potential size of the market, how fast it will
grow, and the key dimensions along which it will
grow.
3-14
 Entry Strategy for New Entry
Exploitation (cont.)
Technological uncertainty - Difficulty in
assessing whether the technology will
perform and whether alternate
technologies will emerge and leapfrog
over current technologies.
Adaptation - Difficulty in adapting
to new environmental conditions.
 Entrepreneurial attributes of persistence and
determination can inhibit the ability of the
entrepreneur to detect, and implement, change.

3-15
 Entry Strategy for New Entry
Exploitation (cont.)
 Customers’ Uncertainty and First-Mover
(Dis)Advantages
 Uncertainty for customers - Difficulty in
accurately assessing whether the new product or
service provides value for them.
 Overcome customer uncertainty by:
 Informational advertising.
 Highlighting product benefits over substitutions.
 Creating a frame of reference for potential customer.
 Educating customers through demonstration and
documentation.

3-16
 Entry Strategy for New Entry
Exploitation (cont.)
 Lead Time and First-Mover (Dis)Advantages
 Lead time – The grace period in which the first
mover operates in the industry under conditions
of limited competition.
 Lead time can be extended if the first mover can
erect barriers to entry by:
 Building customer loyalties.
 Building switching costs.
 Protecting product uniqueness.
 Securing access to important sources of supply and
distribution.

3-17
Risk associated with various
entrepreneurial strategies
Risk Reduction Strategies for
New Entry Exploitation
 Risk is derived from uncertainties over
market demand, technological
development, and actions of competitors.
 Two strategies can be used to reduce these
uncertainties:
 Market scope strategies - Focus on which
customer groups to serve and how to serve
them.
 Imitation strategies - Involves copying the
practices of others.

3-19
Risk Reduction Strategies for
New Entry Exploitation (cont.)
 Market Scope Strategies
 Narrow-scope strategy involves offering a small
product range to a small number of customer
groups to satisfy a particular need.
 Focuses on producing customized products, localized
business operations, and high levels of craftsmanship.
 Leads to specialized expertise and knowledge.

3-20
Risk Reduction Strategies for
New Entry Exploitation (cont.)
 Broad-scope strategy involves offering a range
of products across many different market
segments.
 Strategy emerges through the information provided by
a learning process.
 Opens the firm up to many different “fronts” of
competition.
 Reduces risks associated with market uncertainties but
increases exposure to competition.

3-21
Risk Reduction Strategies for
New Entry Exploitation (cont.)
 Imitation Strategy
 Why do it?
 It is easier to imitate the practices of a successful firm.
 It can help develop skills necessary to be successful in
the industry.
 It provides organizational legitimacy.
 Types of imitation strategies
 Franchising - A franchisee acquires the use of a
“proven formula” for new entry from a franchisor.
 “Me-too” strategy - Copying products that already exist
and attempting to build an advantage through minor
variations.

3-22
Innovation
 The 4 phases of innovation

The phases of an innovation, ie an innovation process, can be

divided into four main steps:
• Idea: collection of innovation potentials, derivation of ideas,
evaluation and release of ideas.
• Concept: Extensive analysis and derivation of concepts for the
solution, implementation and marketing.
• Solution: Development and testing of the solutions to the
finished product.
• Market: Arouse and fulfill a customer's needs by
implementing in procurement, production and logistics as
well as marketing and sales.
Each phase has its own characteristics. If the front phases are
more creative and less structured, the phases of
implementation and marketing are very process-oriented and
focused.
 Conceptualisation stage
KA – Key VP – CR – CS –
Activitie Value Customer Customer
KP – Key s Proposi Relations Segments
hips
Partners tion

KR – Key CH –
Resources Channels

C$ - Cost Structure R$ - Revenue Streams

Product or service innovation
 Creating New Products and Services

WHY DO FIRMS CREATE NEW PRODUCTS?

• Changing Customer Needs
• Market Saturation
• Managing Risk through Diversity
• Fashion Cycles
• Improving Business Relationships
 How Firms Develop New Products
• IDEA GENERATION Development of viable new product ideas.
• CONCEPT TESTING Testing the new product idea among a set
of potential customers.
• PRODUCT DEVELOPMENT Development of prototypes and/or
the product.
• MARKET TESTING Testing the actual products in a few test
markets.
• PRODUCT LAUNCH Full-scale commercialization of the
product.
• EVALUATION OF RESULTS Analysis of the performance of the
new product and making appropriate modifications.
Common reason to fail the new product or
service