Chapter 2

Generating and Exploiting

New Entry Strategies
New Entry

► Includes:
► New product in an established or new market
► Established product in a new market
►A new organization

► Entrepreneurial strategy
► Set of decisions, actions, and reactions that
generate, and exploit, a new entry over time
► Maximizes the benefits of newness
► Minimizes its cost
Generation and Exploitation of the New
Entry
► These resources can be combined in different ways, and
it is this bundle of resources that provides a firm its
capacity to achieve superior performance
► For bundle resources to be the basis of a firm’s superior
performance over competitors for an extended period
of time, the resource must be:
► A bundle resources is:
► Valuable when it enables the firm to pursue
opportunities, neutralize threats, and offer
products and services that are valuable to the
customers
► Rare when it is possessed by few, if any,
(potential) competitors
► Inimitable when replication of this combination
of resource would be difficult and/or costly for
(potential) competitors
► Eg: Breeze Technology Incorporated appeared
to have a bundle or resources that was
valuable, rare, and inimitable. It had
invented a technology that could be applied to
the ventilation of athletic shoes to reduce
foot temperature. The technology is value by
the customers and it is rare and inimitable
Creating A Resource Bundle That is Valuable, Rare
and Inimitable
► Entrepreneurial Resource
► Ability to obtain, and recombine, resources into a bundle that is
valuable, rare and inimitable
► Drawn from the unique experiences and knowledge of the
entrepreneurs
► Knowledge is important for generating bundle of resources that
will lead to creation of a new venture with a long prosperous
life.
► Outsiders that come up with the most radical innovations
► Eg: Pioneers of mountain bikes were biking enthusiast, and it
was quite a considerable time before the industry giants
reacted to the trend
► Those wishing to generate an innovation need to look to unique
experiences and knowledge within themselves and their team
Market Knowledge
Technological Knowledge
Assessing the Attractiveness of a New
Entry Opportunity

► Having created a new resource combination,

the entrepreneur needs to determine whether
it is in fact valuable, rare and inimitable by
assessing whether the new product and/or
the new market are sufficiently attractive to
be worth exploiting and developing
► Depends on:

Entrepreneur’s
The level of
willingness to make
information on a
a decision without
new entry
perfect information
 Information on the New Entry
Prior Knowledge and Information Search

►More knowledge ensures:

► Entrepreneur starts from a position of less
ignorance about assessment task at hand
► Less time is spent on information search
► Knowledge can be increased by searching for
information that will shed some light on the
attractiveness of this new entry opportunity
► More knowledge the entrepreneur has the more
efficient the search process
Information on the New Entry
Window of Opportunity

►Favorable environment for entrepreneurs

to exploit a new entry.
►Window of opportunity closing is when
another entrepreneur has entered the
industry and erected substantial barriers to
entry and to imitation
►While more information is desirable, the
time spent in collecting additional
information increases the likelihood that the
window opportunity will close
Comfort Making Decision Under
Uncertainty

► Likelihood that the window of opportunity

will close leads to the dilemma of
choosing between
► Errorof commission: Negative
outcome from acting on the perceived
opportunity
► Error of omission: Negative outcome
from not acting on the new entry
opportunity
Decision to Exploit or Not to Exploit the
New Entry
► The decision to exploit or not to exploit the new entry
opportunity depends on whether the entrepreneur has
what she or he believes to be sufficient information, and
on whether the window is still open for this new entry
opportunity
► A determination by an entrepreneur that she or he has
sufficient information depends on the stock of information
and the level of comfort that this entrepreneur has with
making the decision without perfect information
► It is important to realize the assessment of new entry’s
attractiveness is less about whether this opportunity
“really” exist or not and more about whether the
entrepreneur believe he or she can make it work – that is,
created the market demand, efficiently produce the
product, build reputation, and develop customer loyalty
and other switching cost
Entry Strategy For New Exploitation
► Being first can result in a number of advantages that can enhance
performance. These include:
► First movers do not always prosper. Many first movers with
new products in new markets have been surpassed by firms
that entered later
► Eg: in the market for video recorders, the first movers
were Ampex and Sony, yet they were surpassed by JVC
and Matshusita
► When considering whether to be one of the first to enter
with a new product and/or into new market, entrepreneurs
must determine whether the first mover advantages
outweigh the first mover disadvantage.
► Such assessment depends on:
Environmental Instability and
First-Move (Dis)Advantages
► Firm performance depends upon the fit between external
environment and resources
► If there is a good fit between its resources and the external
environment the firm will be rewarded with superior performance;
however if the fit is poor, then the performance will be poor
► First movers are unaware of key success factors
► Key success factors is the requirement that any firm must meet to
successfully compete in a particular industry. However the first
mover will not know these key success factors in advance; rather,
the entrepreneur must commit the firm’s resources based upon his
or her best guess of what these key success factors might be
► Emerging industries
► Emerging industries are those industries that have been newly
formed. The entrepreneur has considerable freedom in how he or
she achieve success, including establishing the rules of the game for
the industry such that the firm is at a competitive advantage
 Customer Uncertainty and
First-Mover (Dis)Advantages
► Uncertainty for customers
► Customers may have considerable difficulty in accurately
assessing whether the new product or service provide
value for them
► Offering superior product is not sufficient to enable a first
mover to make sales; the entrepreneur must also reduce
customer uncertainties
► The entrepreneur must reduce the customer uncertainty
by offering informational advertising that, for example
provide customers with information about how the product
performs and articulates the product’s benefit
► Creating a frame of reference for potential customers
► Educating customers through demonstration and
documentation
 Switching Cost
The cost that must be
Lead Time and First-Mover borne by customer if
they are to stop buying
(Dis)Advantages from the current
supplier and begin
purchasing from another

► Lead time
► Grace period in which the first mover operates
in the industry under conditions of limited
competition
► Lead time can be extended by:
► Building customer loyalties
► Building switching costs (reward program)
► Protecting product uniqueness
► Securing access to important sources of supply
and distribution (exclusive relationship)
Utilizing social media for new
business
Copywriting
Copywriting
Copywriting is the process of writing persuasive marketing and
promotional materials that motivate people to take some form of
action, such as make a purchase, click on a link, donate to a cause,
or schedule a consultation.

These materials can include written promotions that are published

in print or online. They can also include materials that are spoken,
such as scripts used for videos or commercials.
Soft sell copywriting
Purpose of soft sell
► Thank you
 Generation of a New Entry
Opportunity
Resources as a Source of Competitive Advantage
► When a firm engage in a new entry, it is hoped that this
new entry will provide the firm with a sustainable
competitive advantage
► Understanding where a sustainable competitive
advantage comes from will provide some insight into
how entrepreneurs can generate new entries that are
likely to provide the basis for high performance over
and extended period of time

Resources:
Basic building blocks to a firm’s functioning and performance. A
firm’s resources are simply the inputs into the production process,
such as machinery, financial capital, and skilled employees