Entrepreneurial growth

Question 1

New entry means

Answer 1

managing newness

Question 2

Liabilities of newness arise from unique conditions

Answer 2

− Costs in learning new tasks
− Conflict arising from overlaps or gaps in responsibilities
− Unestablished informal structures of communication

Question 3

• Capitalize on assets of newness

Answer 3

− Lack of established routines, systems, and processes provide a learning advantage
− A heightened ability to learn new knowledge in a continuously changing environment is an
important source of competitive advantage

Question 4

First-mover strategy

Answer 4

Pros:
* Less competitive rivalry
* Opportunity to secure supplier and
distributor channels
* A better position to satisfy customers
* Gaining expertise through participation

Cons:
* Technological uncertainty
* Market uncertainty
* Uncertainty in value creation for
customers

Question 5

Late-mover strategy

Answer 5

Pros:
* Refining is easier than inventing
* Reduced R&D costs.
* More organizational legitimacy as type for
business is known
* Lower levels of uncertainty

Cons:
* Customers/ users might be loyal to first
mover
* Access to resources more expensive
* Need to catch up with first movers

Question 6

Imitation strategies

Answer 6

Franchising - A franchisee acquires the use of a “proven formula” for
new entry from a franchisor.
* Copying products that already exist and attempting to build an
advantage through minor variations.

Question 7

Entry strategies: Narrow-scope strategy

Answer 7

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.
* High-end of the market represents a highly profitable niche.
* Reduces some competition-related risks but increases the risks
associated with market uncertainties.

Question 8

Entry strategies: Broad-scope strategy

Answer 8

• Involves offering a range of products across many different market
  segments
  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

Question 9

Firm size

Answer 9

Micro firm
Small firm
Medium-sized firm
Large firm

Question 10

growth categories

Answer 10

High/Rapid growth firm
* ≥ 10 employees at start of observation period
* Average annual growth > 20%
over 3 years (sales or employees)

Gazelle
* ≤ 5 years old
* ≥ 10 employees at start of observation period
* Average annual growth > 20% over
3 years (sales or employees)

Unicorn
* Startup company valued at over $1 billion
* 223 in 03/2017 worldwide, e.g. Uber, Airbnb
* TUM unicorns: Celonis, Lilium

Question 11

A process model of firm growth

Answer 11

crisis of:
leadership
autonomy
control
red tape
growth

Question 12

How does the entrepreneurial role change over time?

Answer 12

Key activities of
start-up entrepreneurs
* Entrepreneur as a spider in its web
* Broad overlapping roles
* Focus on internal activities:
− Resource acquisition
− Product development /prototyping
− Purchasing major equipment
− Analytical / conceptual work
− Environmental monitoring
* Obtaining and dealing with customers

Key activities of
growth stage entrepreneurs:
* Recruiting professional staff taking on
suvervisory roles
* Spezialized roles
* Focus on external &
internal activities:
− Strategic management
− Strategic alliances & personal networking
− Supplier relationships
− Management of culture and vision
− Business and organizational development
* Dealing with / empowering employees

Question 13

The Ansoff matrix

Answer 13

The Ansoff matrix is a strategic planning tool that provides a framework to help executives, senior managers, and marketers devise strategies for future business growth.

Question 14

Penetration strategy

Answer 14

• A strategy to grow by encouraging existing customers to buy more
  of the firm’s current products.
  − Marketing can be effective in encouraging frequent repeat purchases.
  − Does not involve anything new for the firm.
  − Relies on taking market share from competitors and/or expanding the size of the existing
  market.

Question 15

Market development strategies

Answer 15

• Strategy to grow by selling the firm’s existing products to new
  groups of customers.
  − New geographical market: selling existing product in new locations.
  − New demographic market: selling to a different demographic group.
  − New product use: selling an existing product, which may have a new use, to new groups of
  buyers.

Question 16

Product development strategies

Answer 16

• A strategy to grow by developing and selling new products to
  people who are already purchasing the firm’s existing products.
• Advantages:
  − Chance to capitalize on existing distribution systems.
  − Capitalizing on the corporate reputation the firm has with these customers.

Question 17

Diversification strategies

Answer 17

• A strategy to grow by selling a new product to a new market.
  − Backward integration: a step back (up) in the value-added chain toward the raw materials.
  − Forwards integration: a step forward (down) in the value-added chain toward the
  customers.
  − Horizontal integration: occurs at the same level of the value-added chain but simply
  involves a different, but complementary, value-added chain.