Chapter 3 (risk reduction/new entry)

Question 1

New entry can be both … and …

Answer 1

Good and bad

Question 2

What does entrepreneurial strategy do?

Answer 2

Maximizes benefits of newness and minimizes its costs

Question 3

New entry performance depends on what?

Answer 3

-entry strategy
-risk reduction strategy
-organizational structure
-competence

Question 4

What is considered a building block in new entry?

Answer 4

Resources, to achieve superior performance

Question 5

A resources is set to be valuable if …

Answer 5

it enables the firm to pursue opportunities, neutralize threats and offer products and services valued by customers

Question 6

A resource is said to be rare if…

Answer 6

Few or no other competitor has it

Question 7

A resource is said to be inimatible if…

Answer 7

when it is hard to replicate and/or costly for competitors

Question 8

Draw the scale with the factors that influence the decision to enter the market now or delay entry

Question 9

What does performance depend on environmental instability

Answer 9

depends on the fit between a firm’s bundle of resources and the external environment

Question 10

What is likely to happen in emerging industries

Answer 10

Environmental changes

Question 11

What makes it difficult to estimate demand

Answer 11

Demand uncertainty

Question 12

First movers often need to commit to…

Answer 12

To a new, unproven technology resulting in technological uncertainty

Question 13

What are the two types of things entrepreneurs can use to reduce customer uncertainty

Answer 13

-informative advertising
-comparison marketing

Question 14

What is informative advertising

Answer 14

Advertising that aims to educate people on the product or service providing them with info they need to make a decision

Question 15

What is comparison marketing

Answer 15

comparing your product to the one of competitors with the intention of showing that yours is better

Question 16

What does lead time allow a business to do, before competition in the market increases

Answer 16

-build customer loyalties
-building switching costs
-protecting product uniqueness
-securing important sources of supply and distribution

Question 17

If there is not enough customer demand, what can be done

Answer 17

Allow competitors into the industry to share pioneering costs

Question 18

What are the 3 risk reduction strategies

Answer 18

1) market scope strategies
2) imitation strategy
3) managing newness

Question 19

What is market scope risk strat

Answer 19

Choice between narrow or broad scope
-Narrow offers small product range to small number of customer groups
-Broad offers wider approach and offers a range of products

Question 20

Name a disadvantage of narrow scope

Answer 20

Vulnerable to the risk that market demand does not materialize or change overtime

Question 21

What is an advantage of broad market scope

Answer 21

Reduces major risk of uncertainty over customer preferences

Question 22

What is imitation strategy

Answer 22

Use other companies and imitate their business model

Question 23

Name some advantages of imitation strategies

Answer 23

-easier than conducting a systematic and expensive search
-can help develop skills necessary for industry success
-organizational legitmacy
-reduces R&D costs
-less customer uncertainty

Question 24

Is a franchise a type of imitation strat?

Answer 24

Yes, get the proven formula from the franchisor

Question 25

What is managing newness strat

Answer 25

idea behind being able to manage being new

Question 26

What are some pitfalls to newness

Answer 26

-learning new tasks costs time and money
-a structure takes time to establish

Question 27

What are some advantages of newness

Answer 27

-entrepreneur can benefit from the asset of newness
-start with a clean slate

Question 28

when do new ventures have strategi competitive advantages over mature competitors

Answer 28

In dynamic and changing environments