entrepreneurship innovation and global operations
TRANSCRIPT
Entrepreneurship Innovation and Global
Operations Business Policy
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Please note that these slides are not intended as a substitute
to reading the recommended text for this course.
Various stages of entrepreneurial growth
Characteristics of the entrepreneur / entrepreneurial relationship
How entrepreneurs create strategy
Innovation as a source of competitive strategy
Innovation process
Variables involved in conducting business globally
Strategic alternatives in new geographical markets
Chapters 8 & 9: Johnson, Scholes & Whittington
Objectives
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Entrepreneurship
– Strategic thinking and risk-taking behavior that results in the creation of new opportunities for individuals and/or organizations.
Entrepreneurs
– Risk-taking individuals who take actions to pursue opportunities and situations others may fail to recognize or may view as problems or threats.
What is entrepreneurship?
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Be able to take risks and live with uncertainty
Be able to see how new innovations satisfy a market
Be either creative or able to utilize those who are
Be willing to crate an environment of continuous learning
Sense of urgency
Recognize self shortcomings
Characteristics of the Entrepreneur
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A SBU that is new to the company and carries a much higher risk of failure than other departments.
Due to the level of uncertainty, it is often managed separately
Corporate ventures undertaken to move the company in new directions
Entrepreneurial Relationships - Corporate Venture?
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Effective way to create new revenue streams
Entrepreneurial activities stimulate product/process innovation
CV is a source of organizational growth
Entrepreneurial activities spur the company to take risks and pioneer, making it more competitive
Entrepreneurial Relationships - Benefits of CV
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Screen out losers quickly.
Minimize the resources devoted to researching ideas.
Don’t wait for all the answers, and be ready to change course.
How Entrepreneurs Craft Strategies
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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
What is Innovation?
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Introduction of a new product or a qualitative change in an existing product
Process innovation new to an industry
Development of new sources of supply for raw materials or other inputs
Definition of innovation
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Product innovations
– product used by consumers
• Microwaves, computers, mobile phones, etc
– Products use by firms
• Shipping containers, computers, robots, etc
Process innovations
– Used by consumers
• Fast food, air travel
– Used by firms
• Assembly lines, software
Product and process innovations
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The reasons for going abroad are the desire to increase profits and sales and to protect them from competition.
Guaranteed supply of raw materials
Acquire technology and management know-how
Geographic diversification
Satisfy management’s desire for expansion
Why Companies Go Global
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Type of Entry Characteristics (+; -)
Exporting Incremental start; High cost, low control
Licensing Low cost, low risk; Little control, lower returns
(royalty payments)
Strategic alliances Shared costs, resources, and risks; Cultural
differences, integration problems
Acquisition Quick access to new market, new product,
existing distribution and employees; High cost,
complex negotiations, regulatory restrictions,
integration problems
New wholly owned
subsidiary
Maximum control, potentially the most
profitable; Complex, costly in time and money,
high risk
Choice of International Entry Mode
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Globalization is a process of closer integration and exchange between different countries and peoples worldwide.
Made possible by:
– Falling trade and investment barriers
– Advanced telecommunications
– Reduced transportation costs
What Is Globalization?
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Global money and Capital Markets
– Hedging / access to global financial marketplace
Emergence of a symbol based economy
– Knowledge / information
Deregulation of Markets
– International trade
Global Trade
– Technology / infrastructure have aided the growth in foreign trade
Demographic Changes
– Education / age profile
Environmentalism
– Global warming / CSR / Sustainability
The Global Environment - Trends
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Gain access to a larger market
– Capitalize on market potential, such as China, India, and emerging economies
Gain access to low-cost input factors
– Labour, natural resources, technology, logistics
Managing corporate risk
Leverage core competencies
Develop new competencies
– Location economies
– Unique location advantages
Global Strategies
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Management / Human Variables
– Cost of coordination across diverse geographical business units
– Institutional and cultural barriers
– Understanding strategic intent of competitors
– The overall complexity of competition and the business environment
– Shortage of internationally equipped leadership
Limits to International Expansion
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Political risks include:
• Instability in national governments
• War, both civil and international
• Potential nationalization of a firm’s resources
Economic risks are interdependent with political risks and include:
• Differences and fluctuations in the value of different currencies
• Differences in prevailing wage rates
• Inflation /deflation
• Tax consideration
Risk in the International Environment
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