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Strategy Implementation

The Strategic Management Process. Chapter 2 The External Environment. Strategic Intent Strategic Mission. Strategic Inputs. Chapter 3 The Internal Environment. Strategy Implementation. Strategy Formulation. Chapter 4 Business-Level Strategy. Chapter 5 Competitive Rivalry

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Strategy Implementation

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  1. The Strategic Management Process Chapter 2 The External Environment Strategic Intent Strategic Mission Strategic Inputs Chapter 3 The Internal Environment Strategy Implementation Strategy Formulation Chapter 4 Business-Level Strategy Chapter 5 Competitive Rivalry and Competitive Dynamics Chapter 6 Corporate- Level Strategy Chapter 10 Corporate Governance Chapter 11 Organizational Structure and Controls Strategic Actions Chapter 7 Acquisition and Restructuring Strategies Chapter 8 International Strategy Chapter 9 Cooperative Strategy Chapter 12 Strategic Leadership Chapter 13 Strategic Entrepreneurship Strategic Competitiveness Above-Average Returns Strategic Outcomes Feedback

  2. Strategic Entrepreneurship • Strategic entrepreneurship: taking entrepreneurial actions using a strategic perspective • engaging in simultaneous opportunity seeking and competitive advantage seeking behaviors • designing and implementing entrepreneurial strategies to create wealth • These actions can be taken by individuals or by corporations

  3. Innovation • Innovation is the process of creating a commercial product from an invention • invention brings something new into being • innovation brings something new into use • Innovation is a key outcome firms seek through entrepreneurship and is often the source of competitive success • Innovations produced in large established firms are often referred to as corporate entrepreneurship

  4. Entrepreneurs • Entrepreneurs are: • individuals acting independently or as part of an organization • who create a new venture or develop an innovation and take risks entering them into the marketplace • Entrepreneurs • can be independent individuals • can surface in an organization at any level

  5. International Entrepreneurship • Entrepreneurship can • fuel economic growth • create employment • generate prosperity for citizens • There is a strong positive relationship between the rate of entrepreneurial activity and economic development in a nation

  6. International Entrepreneurship • There must be a balance (in the culture) between • individual initiative and • the spirit of cooperation and group ownership of innovation • Successful entrepreneurial firms • provide appropriate autonomy • incentives for individual initiative • promote cooperation and group ownership of an innovation

  7. Incremental innovation Innovation Types: Incremental Innovation • most innovations are incremental • builds on existing knowledge bases • provides small improvements in the current product lines

  8. Radical innovation Incremental innovation Innovation Types Radical Innovation • provides significant technological breakthroughs • creates new knowledge • is rare because of difficulty and risk • requires substantial creativity • radical innovations are often best developed in separate units that start internal ventures

  9. Concept of corporate strategy Strategic context Structural context Autonomous strategic behavior Induced strategic behavior Internal Corporate Venturing

  10. Cross functional product development team The Firm Cross-Functional Product Development Teams • facilitate efforts to integrate activities associated with different organizational functions • design, manufacturing, marketing, etc. • new product development processes can be completed more quickly • products can be more easily commercialized when cross-functional teams work effectively

  11. Cross functional product development team The Firm Cross-Functional Product Development Teams • product development stages are grouped into parallel or overlapping processes • this approach allows the firm to tailor its product development efforts • unique core competencies • needs of the market

  12. Barriers to Cross-Functional Team Effectiveness • Different orientations and perceptions • individuals from separate functions have different orientations on issues • perceive product development activities in different ways • Organizational politics • aggressive competition for resources among different organizational functions • must achieve cross-functional integration with minimal political conflict

  13. Cross functional product development teams Creating value through innovation Entrepreneurial mindset • Facilitating integration • and innovation • Shared Values • Entrepreneurial • Leadership Creating Value Through Internal Innovation Processes

  14. Cooperative Strategies for Entrepreneurship and Innovation • Firms may need to cooperate and integrate knowledge and resources to successfully commercialize inventions • entrepreneurial new venture firms may need investment capital and distribution capabilities • more established companies may need new technological knowledge possessed by newer entrepreneurial firms • To innovate through a cooperative relationship, firms must share their knowledge and skills

  15. Acquisitions to Buy Innovation • Acquisitions • rapidly extend the product line • increase the firm’s revenues • A key risk of acquisitions is that a firm may substitute the ability to buy innovations for an ability to produce innovations internally • firm may lose intensity in R&D efforts • firm may lose ability to produce patents

  16. -.000 -.002 -.004 -.006 -.008 -.010 -.012 -4 -2 0 4 2 After Before Loss of Innovative Capability Following Large Acquisitions Firm Minus Industry R&D Intensity Years Before and After Acquisitions

  17. .032 .030 .028 .026 .024 .022 .020 .018 -4 -2 0 4 2 After Before Loss of Innovative Capability Following Large Acquisitions Patent Intensity Years Before and After Acquisitions

  18. Capital for Entrepreneurial Ventures • Venture capital firms • seek high returns on their investment • value competence of the entrepreneur or the human capital in the firm • place weight on the expected scope of competitive rivalry the firm is likely to experience • evaluate degree of instability in the market addressed

  19. Capital for Entrepreneurial Ventures • Initial public offerings (IPOs) • new stock • firm needs high potential in order to sell new stock • often quite larger than the amounts obtained from venture capitalists • investment bankers frequently play major roles in the development and offering of IPOs • firms that have also received venture capital backing usually receive greater returns from IPOs

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