1. Entrepreneurial Strategies

2. A Major Shift... From financial capital to intellectual capital – Human – Structural – Customer

3. Strategic Management and Competitive Advantage Developing a strategic plan is crucial to creating a sustainable competitive advantage, the aggregation of factors that sets a company apart from its competitors and gives it a unique position in the market that is superior to its competition. Example: Whole Foods

4. Building a Competitive Advantage Consider five aspects of a small company: 1. Products they sell 2. Service they provide 3. Pricing they offer 4. Way they sell 5. Values to which they are committed

5. Key: Core Competencies Unique set of capabilities a company develops in key areas, such as superior quality, customer service, innovation, team-building, flexibility, responsiveness, and others that allow it to vault past competitors. – They are what a company does best. – Best to rely on a natural advantage (often linked to a company’s “smallness”). Example: Cane’s Chicken

6. Building a Sustainable Competitive Advantage Superior value for customers Sustainable competitive advantage Capabilities Core competencies Skills Lessons learned

7. Strategic Management Process Step 1 Develop a vision and translate it into a mission statement Step 2 Assess strengths and weaknesses Step 3 Scan environment for opportunities and threats Step 4 Identify key success factors

8. Strategic Management Process Step 5Analyze competition Step 6Create goals & objectives Step 7Formulate strategies Step 8Translate plans into actions Step 9Establish accurate controls (continued)

9. Step 1: Develop a Vision and Create a Mission Statement Addresses question: “What business are we in?” The mission is a written expression of how the company will reflect an entrepreneur’s values, beliefs, and vision – more than just “making money.” Serves as a “strategic compass.” Examples: Chick-fil-A, Google

10. Step 2: Assess Company Strengths and Weaknesses Strengths – Positive internal factors a company can draw on to accomplish its mission, goals, and objectives. Weaknesses – Negative internal factors that inhibit a company’s ability to accomplish its mission, goals, and objectives.

11. Step 3: Scan for Opportunities and Threats Opportunities – Positive external factors the company can exploit to accomplish its mission, goals, and objectives. Threats – Negative external factors that inhibit the firm's ability to accomplish its mission, goals, and objectives.

12. Step 4: Identify Key Success Factors Key success factors (KSFs): factors that determine the relative success of market participants. The keys to unlocking the secrets of competing successfully in a particular market segment. Example: Five Guys Burgers and Fries

13. Identifying Key Success Factors List the skills, characteristics, and core competencies that your business must possess to be successful in its market segment. Key Success FactorHow Your Company Rates 1. Low 1 2 3 4 5 6 7 8 9 10 High 2. Low 1 2 3 4 5 6 7 8 9 10 High 3. Low 1 2 3 4 5 6 7 8 9 10 High 4. Low 1 2 3 4 5 6 7 8 9 10 High 5. Low 1 2 3 4 5 6 7 8 9 10 High Conclusions:

14. Step 5: Analyze Competitors NFIB study: Small business owners believe they operate in a highly competitive environment and the level of competition is increasing. Yet, 97 percent of all U.S. businesses do not systematically track the progress of their key competitors.

15. Competitor Analysis Direct competitors – Offer the same products and services – Customers often compare prices, features and deals among these competitors when they shop Significant competitors – Offer some of the same or similar products or services – Product or service lines overlap but not completely Indirect competitors – Offer same or similar products in only a small number of areas

16. Competitive Profile Matrix

17. Step 6: Create Company Goals and Objectives Goals: Broad, long-range attributes to be accomplished. Objectives: More detailed, specific targets of performance that are: ► Specific ► Measurable ► Assignable ► Realistic (yet challenging) ► Timely ► Written down

18. Step 7: Formulate Strategies Three basic strategies: Strategy? Cost Leadership Differentiation Differentiation Focus Focus

19. Three Strategic Options

20. Step 8: Translate Strategies into Action Plans Survey of senior executives: Companies achieved only 63% of the results in their strategic plans. Create projects by defining: ► Purpose ► Scope ► Contribution ► Resource requirements ► Timing

21. Step 9: Establish Accurate Controls Plan establishes the standards against which actual performance is measured. Entrepreneur must: ► Identify and track key performance indicators. ► Take corrective action.

22. Business Model Entrepreneurs do not lack creative ideas, but …once the idea has been developed, a business model is needed. A business model defines the process a company will use to generate sales and a profit.

23. Feasibility Analysis Is a particular idea a viable foundation for creating a successful business? Feasibility study addresses the question: “Should we proceed with this business idea?”

24. A feasibility study: ► Is not the same as a business plan ► Serves as a filter, screening out ideas that lack the potential for building a successful business before an entrepreneur commits the necessary resources to building a business plan ► Is an investigative tool

25. Elements of a Feasibility Analysis Industry and Market Feasibility Product or Service Feasibility Financial Feasibility

26. Industry and Market Feasibility Analysis Two areas of focus: 1.Determining how attractive an industry is overall as a “home” for a new business. 2.Identifying possible niches a small business can occupy profitably.

27. Product or Service Feasibility Analysis Determines the degree to which a product or service idea appeals to potential customers and identifies the resources necessary to produce it. Two questions: 1.Are customers willing to purchase our product or service? 2.Can we provide the product or service to customers at a profit?

28. Financial Feasibility Analysis Capital requirements –an estimate of how much start-up capital is required to launch the business. Estimated earnings – forecasted income statements Return on investment – Combining the previous two estimates to determine how much investors can expect their investments to return.