Technology Ventures: From Idea to OpportunityChapter 4: Summary

Praise competitors. Learn from them. There are times when you can cooperate with them to their advantage and to yours.

George Mathew Adams

How can ventures create a strategy to fit the new business opportunity?

Every new venture has a strategy or approach to achieve its goals. The strategy is developed using the business model, an understanding of the industry, and the context and the key factors for success.

Summary

Technology Ventures: From Idea to OpportunityChapter 4: concept

A strategy is a plan or road map of the actions that a firm or organization will take to achieve its mission and goals, but it is not static.

Technology Ventures: From Idea to OpportunityChapter 4: Table 4.1

The Management Process for Developing a Strategy

1. Develop the vision and mission statement, and business model.2. Describe the firm's core competencies, its customers, and its competitive advantage.3. Describe the industry and context for the firm and describe the competitors.4. Determine the firm's strengths and weaknesses in the context of the industry and environment.5. Describe the opportunities and threats for the venture.6. Identify the key factors for success using the six forces model.7. Formulate strategic options and select the appropriate strategy.8. Translate the strategy into action plans with suitable measures and controls.

Technology Ventures: From Idea to OpportunityChapter 4: Figure 4.2

Why are we pursuing this objective?

The vision

Where will be active?

The customer and market

How will we achieve our objective?

Innovation

Acquisitions

When will we act and at what speed?

What will differentiate our product?

Who will we compete with and cooperate with?

The six questions for creating a dynamic strategy. Profitability rests on six solid answers to these questions.

Profitability

Technology Ventures: From Idea to OpportunityChapter 4: Figure 4.3

b

c

a

d

e

5. Bargaining power of complementors 6. Bargaining Power of

suppliers

2. Threat of entry by new competitors

3. Threat of Substitute Products

4. Bargaining Power of complementers

1. Firm Rivalry

Note: Firms are represented by a circle  represents firm a. The size of the circle indicates the size of revenues of the firm. The six forces are numbered for clarity. The rivalry of the firms is shown as a vortex of competition.

a

Technology Ventures: From Idea to OpportunityChapter 4: Table 4.4

Organizational Environmental  

1. STRENGTHS:Highly productive pilots, ground and flight crews.Low costs

1. OPPORTUNITIES:Ability to add scheduled flights to new cities.Low prices enable market share growth

2. WEAKNESSES:Inability to provide non-stop long distance travel

2. THREATS:Inability to secure new gates at airports. Competition from a potential low cost rival such as JetBlue

SWOT analysis for Southwest Airlines

Technology Ventures: From Idea to OpportunityChapter 4: Table 4.5

Potential Barriers to entry into an industry

• Economies of Scale• Cost advantages Independent of Scale• Product Differentiation• Contrived Deterrence• Government Regulation• Switching Costs

Barriers to entry are factors that make it costly for companies to enter an industry.

Distinctive competencies lead to competitive advantage.

Technology Ventures: From Idea to OpportunityChapter 4: Figure 4.5

Capabilities

Distinctive competencies

Resources

- Innovation- Efficiency- Quality- Customer Relations- Supply Chain Relations

- Differentiation- Cost

Competitive Advantage

Technology Ventures: From Idea to OpportunityChapter 4: Table 4.6

FACTOR TYPE OF STRATEGY

Differentiation Low Cost Differentiation Cost

Niche

Distinctive Competencies

Innovation, Relationships

Processes, Logistics

Innovation and Processes

Relationships

Product Differentiation

High Low Medium Medium

Market Segmentation

Many Segments Mass Market Many Segments One or Two Segments

Examples Intel

Microsoft

RadioShack

Wal-Mart

Dell

Southwest Airlines

Getty Images

Incyte

Four Common Types of Strategies and Their Characteristics

Technology Ventures: From Idea to OpportunityChapter 4: Principle 4

Principle 4

A clear road map (strategy) for a new venture states how it will act to achieve its goals and attain a sustainable competitive advantage.

Technology Ventures: From Idea to OpportunityChapter 4: Exercise

Briefly describe the strategy of your college or school using the questions of Figure 4.2 and using success rather than profitability as the desired outcome.

Technology Ventures: From Idea to OpportunityChapter 4: Venture Challenge

VENTURE CHALLENGE1)Develop a SWOT analysis using the format of

table 4.4.

2)Select your strategic approach from table 4.6.

3)Describe your strategy in one or two sentences that could be circulated to your employees and allies.

Technology Ventures: From Idea to OpportunityChapter 4: DVD Video

DVD Video

“Timing is Important: The Same Idea Can Have Different Fates”

Jerry Kaplan (Winster)