Entrepreneurial strategies

1. “Fight with all the resources”

This is the way in which the generals explain their victories: within this strategy, the entrepreneur tends toward supremacy, and even toward the domination of the new markets of industries.

This does not mean to create a big business immediately, even though, this is the goal. But the entrepreneur tends to be the best, the leader of the industry even from the beginning. This strategy is considered “par excellence”.

But this strategy is not the dominant one, having the most success rate or implying the smallest risks…not even far! This is the most unpredictable strategy, it is very cruel and there are not allowed any mistakes! There isn’t a second chance!

So, there is a very risky strategy, but if it succeed, the results are remarkable. It has to strike directly to the target, otherwise everything is lost.

Real life examplesFor many years, Hoffmann-La Roche from Switzerland, was the most known, the

biggest and probably the most profitable pharmaceutical businesses.The beginnings of the firm are modest: since 1925 the company was producing textile paints, on that market existing many big German and Swiss producers.

The first time the firm applied the “fight with all the resources” strategy, was when the vitamins were discovered and they had bought the production license, considering that then, the scientist were not accepting the vitamins. So none wanting to produce the vitamins, except for Hoffman-La Roche!

The firm employed few researchers from Zurich university, offering them twice as they were earning as professors, higher than any salary offered in the industry, and invested all the money that they had and all the money that they had borrowed for producing and selling this product. After sixty years, the firm had the largest market share – the leader of the market !

The second time for the firm when applied this strategy was in ‘30 when they entered the sulfur based medicines market – even though most of scientific researchers “knew” that these medicines could not prevent infections.

The third time the firm applied the strategy was in ‘50 when they entered the muscular tranquilizer – Librium and Valium, both considered at that time heretical and incompatible with all what the scientists knew.

2. “Hit where there is nothing else”

This strategy has two options:• “Creative imitation”

The name of this strategy contains a contradiction: what is creative must be original, but the imitation is not creative. Though, the two terms are associated to describe the following situation:

The entrepreneur does what had already been done, but what he does is creative because he understands that the innovation is better that what was done before, so he improves what had already been done.

Just as the previous strategy, “creative imitation” aspire toward the leading of the market or an industry, maybe even dominating them, but it is less more risky. Of course the initial innovator may close the competitors’ possibility to enter the market – like

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the case of Hofmann-La Roche – but the number of entrepreneurs engaged in creative imitation and their actual success are indicators of the fact that the risk that the first innovator occupies the market from the begging is very low.

Real life examplesThe most known example is IBM. The firm had developed during ’30 a rapid calculus

machine for the use of astronomic calculus in the Columbia University from New York.Few years later, they had developed another machine, like a computer, designed also

for astronomic calculus, but for Harvard University. At the end of the world war two, IBM developed a computer, a real one, the firs with “memory” and being “programmable”.

Even though, there few people knowing that IBM had developed the first computer ever, because the firm had abandoned the project after presenting it to New-Yorkers. They had instead used another project, one of developed by Pennsylvania University, called ENIAC.

The scientific researchers from the university had designed a computer very useful to be used within a firm to calculate the salaries, but they did not see this utility.

IBM had restructured the ENIAC computer to regular mathematical operations. When they have presented this computer to the public, the commercial, multifunctional for public use computer was born.

So, this is “Creative imitation”: the entrepreneur waits for someone to invent something new, but “approximately”, than he/she starts the activity, and during a short period of time, there is something really new, to satisfy the clients, to correspond to the requests. Thus, “creative imitation” establishes the standard product/service and establishes the market for itself.

Real life exampleWhen the semiconductors entered the market, in watches industry it was known that

they may be used to make the watches more exactly, better and cheaper. The Swiss bought immediately a quarts watch but, as they had invested a lot in conventional, traditional watch industry, had decided to enter the products step by step, in a longer period of time that would have been allowed them to be known as luxury products.

Hattori Company from Japan was producing for a long time conventional watches for Japanese market. Is saw the opportunity and appealed to creative imitation, creating a quart watch that was introduced on the market as a standard chronometer. For the Swiss producers was too late. Seiko watches were already asked by the customers and almost eliminating the Swiss watches from the market.

• “Entrepreneurial judo”The strategy implies first of all the occupation of the “head of the bridge” of an industry or market – a “bridge” that is poorly or at all defended - and afterwards, based on the incomes made by then, occupying the “bridge” and then the whole region.

This strategy is the less risky of all and has the highest chances of success, especially for obtaining the supremacy or domination of an industry or market.

Real life exampleIn 1947 Bell Laboratories invented the transistor and everybody agree that it will

replace the classical lamps for TVs and radios. Everybody knew but nobody did anything. The big firms from USA had studied the transistor and they had anticipated that they would use it by 1970. They said that by then “it won’t be quite ready to be used”?!

Sony was neither a known beyond the borders of Japan nor a producer of electronics for consumers. Reading in the papers about the existence of the transistor, the president of

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Sony, Akio Morita, left in USA to buy the license from Bell Laboratories to produce the transistors for the ridiculous amount of …25000$.

Two years later, Sony dominated the produced the first portable transistor light weighted and with a smaller price than the existing one. Three years later, Sony was leader on American market for cheap radios, and five years later a world leader.

The strategy is thus the one of inventing new markets, as Akio Morita did, and the one of accepting the unexpected success.The Sony example was the first for “entrepreneurial judo”: it was followed by the car producers – Toyota, Suzuki – that were producing only bicycles in ‘40 - and then by Fuji, Panasonic and others.

4. “Find and occupy a niche”

This strategy is the one of obtaining the monopoly, the control for a certain limited region. There are many options for this strategy:

• the barrier strategy

It means occupying a position on the market with a product or a service that are indispensable for another product or service having a market niche or a price too small to be competed.

It is the case of ALCON – an enzyme used in ophthalmologic surgeries – that has a ridiculous price compared with the one of the operation. Other examples would be the ones of some small markets: anti explosive disposal for the petroleum extraction and the “rubber” for the jars.

• qualification in specialty

It means concentrating over a certain product and improving it at a level that make the product unique, without any competition using a long, successful collaboration relationship.

Apart from the “barrier strategy”, the niche for this type of companies is large and unique, developed through class specialization.It is the case of electric systems for cars: Bosch and Daimler Benz (Germany) is a partnership stating from 1885, or Delco and General Motors (USA).

In a new industry, technology or market, rapidly changing and expanding, it is the most successful strategy. If the business enters the niche and maintains the position, the strategy protects the business from competition. Very few car producers from ’20 are still on the market, but the producers of electric systems for cars are still there, just because the customers does not and know and does not care about the producer of the electric systems.

• specialty market

The difference between the qualification in specialty and specialty market is that the first is concerned with the product and the second is concerned with the knowledge about a market. Otherwise they are very similar. So, this is the strategy of concentrating on a certain market with a special product.

For years, an English company was the leader of the market for automatic ovens for the use of the bakeries in non-communists countries from Europe. Their success was based on

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the fact that they understood that the process of bakery was passing from the house to the firms, and they studied what the bakers needed to cook, in terms of ovens.

This niche strategy, as the previous one, consists of analyzing the new trend, industry or market; using a specific innovation – even if this is only a new “road”, as was the above case.

4. “Change the economic characteristics of a product, a market or industry”

The most known option for this strategy is called utility for the customer. It is the strategy consisting of reinventing an old product or service. Real life exampleThe postal service was invented in 1836 by Rowland Hill, but the Romans had had a “postal service” very efficient with rapid messengers. Even though, Rowland Hill invented the modern postal service: before his reinvention of the service, every letter was paid by the receiver, the tax being different for different weight and distances, and needed to be weighted. These aspects were making the postal service very slow and expensive. Hill had actually proposed a unitary postal service for UK, no matter the distance, being used a stamp, thus the letters could have been left in a postal box.

For this strategy, the price is usually insignificant, but it offers the customers the possibility to obtain something that actually serves their interest and have utility for them. It does not need a sophisticated technology, but only concentrating over the customers needs.

Real life exampleDuring ’60 every American bide secretly dreamed of “real China”, this being though a

very expensive gift, ending by receiving pieces that she already had or some ordinary gifts. So, there were requests, but the utility was missing. Lenox China Company, a medium sized China producer, saw an opportunity to reinvent the old “wedding catalogue”, but only with Lenox Chinas

The future bride was choosing a seller, communicating him the name of the guests. The seller was asking then the guests how much they wanted to spend on the wedding gift and, in the same time, saying: “The amount you’re telling me about represents two cups for coffee” or he can inform the guest that the bride already have all the cups and needs dessert plates. The results are a happy bride and a “happy” company.

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PĂTRUNDEREA PE O PIAȚĂ NOUĂ

Dezvoltarea şi lansarea noilor produse şi servicii [Kotler, 1988]

Analiză financiară

Prima selecţie a ideilor

Dezvoltare de prototipuri

Testare în producţie

Comercializare 1 idee!

4 idei

10 idei

32 idei

100 idei

NOUTATE PE PIAŢĂ

Nivel scăzut

Nivel scăzut

Nivel înalt

Nivel înalt

NOUTATE ÎN

FIRMĂ26%

26%

11%7%

20%

10%

Noi

în

domeniu

Nou în

producţia

mondială

Adăugate celor

existente în domeniu

Repoziţionate

Costuri reduse

Revizuite

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Am defini piaţa ca fiind totalitatea cumpărătorilor actuali şi a celor potenţiali, pentru un anumit produs sau serviciu.

Piaţa potenţială (14%)

Total populaţie

(100%)

"Piaţa" pe care o estimăm este constituită tocmai din unii dintre aceşti clienţi potenţiali.

Clienţi care au interese personale, venituri diferite şi, mai ales, posibilităţi foarte variate de acces la locurile de distribuţie a produselor sau serviciilor.

Aceasta este Piaţa potenţială.

Piaţa potenţială, definită anterior, se reduce succesiv:• unii consumatori ar dori un produs sau serviciu, dar nu au banii necesari;• din cei care au şi dorinţă şi au şi banii, unii nu au acces direct la "terminalele" reţelei

de distribuţie şi renunţă.Ceea ce a rămas se numeşte piaţă disponibilă.

Dintre persoanele care alcătuiesc piața disponibilă unii nu îndeplinesc condiţiile legale! Cei rămași alcătuiesc piața disponibilă calificată.

Firma va alege: îşi va concentra eforturile asupra pieţei disponibile calificate sau va alege un singur segment din aceasta (selectat după vârstă, după venituri sau după alte criterii, unice sau agregat). Aceasta este piaţa - ţintă.

Piaţa potenţială

(100%)

Piaţa disponibilă

(42%)

Piaţa disponibilă

calificată

(33%)

Piaţa - ţintă

(21%)

Piaţa penetrată (7%)

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P

Q

R

Concentrarea firmei pe un singur segment de piaţă

În această categorie intră, spre exemplu, o firmă care dispune , într-o zonă, de două unităţi tip „fast-food”, plasate în puncte-cheie: staţia SNCFR şi autogară.

Specializare pe produs/serviciu (pe „n” pieţe)Q

P R

Un exemplu poate fi acela al unei firme care deţine hoteluri de trei stele, cu servicii clasice, în mai multe centre importante. Clienţii săi sunt din toate categoriile sociale şi de toate vârstele; singurele limitări pot veni din zona tarifelor mai greu accesibile pentru anumite categorii. Serviciile oferite sunt la nivelul de clasificare obţinut şi sunt destul de diversificate.

P

Q

R

Specializare petoate segmentele unei singure pieţe

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P

Q

RSpecializare selectivă

(pe „n” pieţe)

Firma realizează o gamă largă de produse şi/sau servicii şi îşi alege, de pe diferite pieţe, câte un segment de consumatori – cel mai atractiv pentru un anumit produs sau serviciu.

P

Q

R

Acoperirea în totalitatea pieţelor

Este o strategie ce nu poate fi asigurată decât de marile firme.

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