Entrepreneurship Innovation and Global Operations

Transcription

1 Entrepreneurship Innovation and Global Operations Business Policy Please note that these slides are not intended as a substitute to reading the recommended text for this course. 0

2 Objectives 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 1

3 What is entrepreneurship? 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. 2

4 Stages of Entrepreneurial Growth 3

5 Stages of Entrepreneurial Growth 4

6 Characteristics of the Entrepreneur 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 5

7 Entrepreneurial Relationships - Corporate Venture? 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 6

8 Entrepreneurial Relationships - Benefits of CV 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 7

9 Entrepreneurial Relationships - Ecosystems 8

10 How Entrepreneurs Craft Strategies Screen out losers quickly. Minimize the resources devoted to researching ideas. Don t wait for all the answers, and be ready to change course. 9

11 What is Innovation? Innovation is the specific function of entrepreneurship (Drucker) It is the means by which the entrepreneur either creates new wealthproducing 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 10

12 Definition of innovation 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 11

13 Product and process innovations 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 12

14 The innovation process 13

15 Why Companies Go Global 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 14

16 Development of Global Operations 15

17 Choice of International Entry Mode Type of Entry Characteristics (+; -) Exporting Incremental start; High cost, low control Licensing Strategic alliances Acquisition New wholly owned subsidiary Low cost, low risk; Little control, lower returns (royalty payments) Shared costs, resources, and risks; Cultural differences, integration problems Quick access to new market, new product, existing distribution and employees; High cost, complex negotiations, regulatory restrictions, integration problems Maximum control, potentially the most profitable; Complex, costly in time and money, high risk 16

18 Entry Modes of International Expansion 17

19 Pros & Cons of different entry modes 18

20 What Is Globalization? 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 19

21 The Global Environment - Trends 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 20

22 Global Strategies 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 21

23 Limits to International Expansion 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 22

24 Risk in the International Environment 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 23

25 Other Variables Physical: Difficulties in enforcing property rights Unemployment Availability of natural resources Climate conditions hurricane ally 24