Strategic management competitiveness globalization concepts and case 10e chapter 13

PART 3: STRATEGIC
ACTIONS:
STRATEGY
IMPLEMENTATION

CHAPTER 13
STRATEGIC
ENTREPRENEURSHIP
Authored by:
Marta Szabo White, PhD.
Georgia State University


THE STRATEGIC MANAGEMENT PROCESS

©2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.


KNOWLEDGE OBJECTIVES
● Define strategic entrepreneurship and corporate
entrepreneurship.
● Define entrepreneurship and entrepreneurial
opportunities and explain their importance.
● Define invention, innovation, and imitation, and
describe the relationship among them.
● Describe entrepreneurs and the entrepreneurial
mind-set.
● Explain international entrepreneurship and its
importance.
©2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.


KNOWLEDGE OBJECTIVES
● Describe how firms internally develop innovations.

● Explain how firms use cooperative strategies to
innovate.

● Describe how firms use acquisitions as a means of
innovation.

● Explain how strategic entrepreneurship helps firms
create value.
©2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.


OPENING CASE
OPEN INNOVATION: COMBINING EXTERNAL TECHNOLOGIES
AND IDEAS WITH INTERNAL R&D CAPABILITIES

■ The world’s 10 most innovative firms in 2011:
Apple Google
Twitter Dawning Information Industry
FacebookNetFlix
Nissan Zynga,
Groupon Epocrates
Source: Fast Company

■ Continuous innovation, the common
denominator, is a potent competitive weapon,
especially during tough economic times
©2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.


OPENING CASE
OPEN INNOVATION: COMBINING EXTERNAL TECHNOLOGIES
AND IDEAS WITH INTERNAL R&D CAPABILITIES

■ Open innovation occurs when a firm finds
that a good idea is not commercially viable,
given a firm’s present strategy; rather than
shelving the idea, commercialization can take
place through licenses, spin-offs, and joint
ventures
■ P&G launched the concept of open
innovation in 2001, with its Connect & Develop
program
©2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.


OPENING CASE
OPEN INNOVATION: COMBINING EXTERNAL TECHNOLOGIES
AND IDEAS WITH INTERNAL R&D CAPABILITIES

■ Open innovation examples:
● P&G - Tide Total Care was developed

through Sweden’s Lund University and two small
chemical companies as partners
● P&G - Glad brand plastic bag joint venture
with Clorox, a historical rival
● P&G - Food product joint ventures with
ConAgra and General Mills

©2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.


OPENING CASE
OPEN INNOVATION: COMBINING EXTERNAL TECHNOLOGIES
AND IDEAS WITH INTERNAL R&D CAPABILITIES

■ Open innovation examples:
● Nike and Apple developed a sensor that
transmits data from inside a shoe to the
runner’s iPod or iPhone
● GlaxoSmithKline and Oratech partnered to
develop Aquafresh White Trays, a toothwhitening strip

©2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.


OPENING CASE
OPEN INNOVATION: COMBINING EXTERNAL TECHNOLOGIES
AND IDEAS WITH INTERNAL R&D CAPABILITIES

■ Open innovation examples:
● Kimberly-Clark and SunHealth Solutions
developed Little Swimmers Sun Care, an
adhesive sticker that changes color to alert
parents to the risk of sunburn
● Kraft and Hershey developed S’mores, a
mixture of hot marshmallows that melt the
chocolate between two graham crackers

©2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.


OPENING CASE
OPEN INNOVATION: COMBINING EXTERNAL TECHNOLOGIES
AND IDEAS WITH INTERNAL R&D CAPABILITIES

■ Three paths for open innovation solutions:
● Customer-driven: tapping unmet customer
needs
● Technology-driven: substantial R&D
investments
● Competitor-driven: Fast follower of
competitors’ successful strategies
■ Senior-level championing is critical for
success
©2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

IMPORTANT DEFINITIONS
•

•

Organizational culture: the complex set of ideologies,
symbols, and core values shared throughout the
firm and that influence how the firm conducts
business
• The social energy that drives—or fails to drive—
the organization
Strategic entrepreneurship: entrepreneurial actions
(exploiting found opportunities in the external
environment) through a strategic perspective
(innovation efforts)
• Entrepreneurship dimension: identifying
opportunities to exploit through innovations
• Strategic dimension: determining the best
way to manage the firm’s innovation efforts

©2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.


IMPORTANT DEFINITIONS
•

Strategic entrepreneurship actions
can be taken by:
• Individuals

• Corporations
Corporate entrepreneurship:
the use or application of
entrepreneurship within an
established firm

©2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.


•

ENTREPRENEURSHIP AND
ENTREPRENEURIAL
OPPORTUNITIES
Entrepreneurship is concerned
with:
•

•

The discovery of profitable
opportunities
The exploitation of profitable
opportunities

Entrepreneurship: the process by
which individuals or groups identify and
pursue entrepreneurial opportunities
without the immediate constraint of the

resources they currently control

©2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.


ENTREPRENEURSHIP AND
ENTREPRENEURIAL
OPPORTUNITIES

Purpose of entrepreneurship:
•

To create wealth

Firms that foster entrepreneurship
are:
•
•
•

Risk takers
Committed to innovation
Proactive in creating opportunities
rather than waiting to respond to
opportunities created by others

©2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

ENTREPRENEURSHIP AND
ENTREPRENEURIAL
OPPORTUNITIES
Entrepreneurial
opportunities:
•

•

•

•

•

Are opportunities others do not see or for
which they do not recognize the
commercial potential
Are conditions in which new products or
services can satisfy a need in the market
Exist due to competitive market
imperfections and unevenly distributed
information
Are studied at the level of the individual
firm
May be the economic engine driving many
nations’ economies in the global

©2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.


ENTREPRENEURSHIP AND
ENTREPRENEURIAL
OPPORTUNITIES

Creative Destruction
(Schumpeter)
•

Entrepreneurship, as a process, results in
the ‘creative destruction’ of existing
products (good or services) or methods of
producing them, and replaces them with
new products/production methods

•

Entrepreneurial firms value individual
innovations and the ability to continuously
innovate across time

©2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.


KEY CHAPTER POINTS
THREE ‘I’s
Three types of innovation activities

according to Schumpeter
● Invention
● Innovation
● Imitation

THREE WAYS TO INNOVATE
● Internal - autonomous vs. induced
● Cooperative strategies (e.g., strategic
alliances)
● Acquisitions
©2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.


INNOVATION
•

•

•

Innovation is the “specific function of
entrepreneurship” (Drucker)
It is “the means by which the entrepreneur
either creates new wealth-producing resources
or endows existing resources with enhanced
potential for creating wealth” (Drucker)
It is a source of competitive success, especially
in turbulent and highly competitive environments
For global markets, innovation is key for

competitive parity at a minimum, much less for
competitive advantage

©2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.


INNOVATION
Invention

•

•
•

The act of creating or
developing a new product or
process
Brings something new into
being
Technical criteria determine
the success of an invention

©2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.


INNOVATION
Invention

Innovation

•

•
•

Process of creating a
commercial product from an
invention
Brings something new into use
Commercial criteria determine
the success of an innovation

©2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.


INNOVATION
Invention

•
•

•

Innovation

Imitation

•

Adoption of an innovation by similar firms
Usually leads to product or process
standardization
Products based on imitation often are
offered at lower prices and without as
many features
Results of imitation
•
Product or process
standardization
•
Products made with fewer
features
•
Products offered at lower prices

©2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.


THE IMPORTANCE OF
INNOVATION
•
•

•

•

Entrepreneurship is the linchpin between
invention and innovation
Inventions are easier than
commercializing those inventions:
roughly 80% of R&D occurs in large firms,
but these same firms produce fewer than
50% of the patents
Note: Google Labs was created to
facilitate the transition from invention to
innovation
Especially in the U.S., innovation is the
most critical of the three types of
innovative activities

©2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.


ENTREPRENEURS
•

Entrepreneurs
•

•

Individuals, acting independently or as
part of an organization, who see an
entrepreneurial opportunity and then

take risks to develop an innovation to
exploit it

Entrepreneurial Mind-set
•

Values uncertainty in the marketplace
and seeks to continuously identify
opportunities with the potential to lead
to important innovations

©2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.


ENTREPRENEURS
Entrepreneurial characteristics:
•
•

•
•
•

•
•
•

Highly motivated
Willing to take responsibility for their

projects
Passionate
Optimistic
Emotional about the value and
importance of their innovation-based
ideas
Entrepreneurial mind-set
Able to deal with uncertainty
More alert to opportunities than others

©2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.


INTERNATIONAL
ENTREPRENEURSHIP
● Firms creatively discover and exploit
opportunities outside their domestic
markets in order to develop a competitive
advantage
● Entrepreneurship has become a global
phenomenon as internationalization
typically leads to improved firm
performance
● EXAMPLE - Large multinational companies
(MNCs) generate roughly 54% of their
sales outside their domestic market, and
more than 50% of their employees work

©2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.