ENTREPRENEURSHIP

Lecture No: 13
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 Objectives

• Analyzing Competitors
• Create Company Goals and Objectives
• Formulate Strategy
• Translate Strategies into Action Plan
• Establishing Control
 Step 5: Analyze Competitors
• NFIB study: Small business owners believe they
operate in a highly competitive environment
and the level of competition is increasing.
• Yet, 97 percent of all U.S. businesses do not
systematically track the progress of their key
competitors.
 Step 5: Analyze Competitors
Analyzing key competitors allows an entrepreneur to:
• Avoid surprises from existing competitors’ new
strategies and tactics.

• Identify potential new competitors and the threats

they pose.

• Improve reaction time to competitors’ actions.

• Anticipate rivals’ next strategic moves.

 Step 5: Analyze Competitors
Techniques do not require unethical behavior:

• Monitor industry and trade publications.

• Talk to customers and suppliers.

• Regularly debrief employees, especially sales

representatives and purchasing agents.

• Attend trade shows and conferences and study

competitors’ sales literature.
 Step 5: Analyze Competitors
Techniques do not require unethical behavior:
• Watch for employment ads from competitors to get an
idea about their plans for the future.

• Conduct patent searches for patents competitors have

filed.

• Learn about the kinds of equipment and raw materials

competitors are importing.

• Buy competitors’ products and “benchmark”

them.
 Step 5: Analyze Competitors

Techniques do not require unethical behavior:

• Get competitors’ credit reports.

• Check out the reports publicly held competitors must file

with the SEC.

• Use the World Wide Web to learn more about

competitors.

• Visit competing businesses to observe their operations.

 Knowledge Management
• The practice of gathering, organizing, and
disseminating the collective wisdom and experience
of a company’s employees for the purpose of
strengthening its competitive position.
• Knowledge management involves:
– Taking inventory of the special knowledge the people in
the company possess.
– Organizing that knowledge and disseminating it to those
who need it.
 Step 6: Create Company Goals
and Objectives
• Goals - broad, long-range attributes to be
accomplished.
• Objectives - more detailed, specific targets of
performance that are S.M.A.R.T.
– Specific
– Measurable
– Attainable
– Realistic (yet challenging)
– Timely
 Step 6: Create Company Goals
and Objectives
• SMART GOAL EXAMPLE
Broad Goal: I want to grow my business.
Specific: I will acquire twenty new clients for my consulting
business.
Measurable: I will measure my progress by how many new
clients I bring on, while maintaining my current client base.
Attainable: I will ask current clients for referrals, launch a
social media marketing campaign and network with local
businesses.
Relevant: Adding additional clients to my business will allow
me to grow my business and increase my revenue.
Time-Based: I will have twenty new clients within six months.
 Step 7: Formulate Strategies

• Strategy - a road map of the actions an entrepreneur

draws up to achieve a company’s mission, goals, and
objectives. It is the company’s game plan for gaining
a competitive advantage.
• Three basic strategies:
Cost
Cost leadership
leadership

Differentiation
Differentiation
Strategy?

Focus
Focus
Three Generic Strategy Options
 Cost Leadership
• Goal: to be the low-cost producer in the industry
(or market segment).
• Low-cost leaders have an advantage in reaching
buyers who buy on the basis of price, and they
have the power to set the industry’s price floor.
• Works well when:
• Buyers are sensitive to price changes.
• Competing firms sell the same commodity products.
• A company can benefit from economies of scale.
• Example: JetBlue Airlines
 Cost Leadership
• WHEN A LOW-COST PROVIDER STRATEGY WORKS
BEST
• Price competition among rival sellers is vigorous.
• Identical products are available from many sellers.
• There are few ways to differentiate industry products.
• Most buyers use the product in the same ways.
• Buyers incur low costs in switching among sellers.
• The majority of industry sales are made to a few, large
volume buyers.
• New entrants can use introductory low prices to
attract buyers and build a customer base.
 Cost Leadership
• Securing a Cost Advantage:
• Use lower-cost inputs and hold minimal assets
• Offer only “essential” product features or services
• Offer only limited product lines
• Use low-cost distribution channels
• Use the most economical delivery methods

• Cost Driver
• Is a factor with a strong influence on a firm’s costs.
• Can be asset- or activity-based.
 Cost Leadership
• Drivers of Cost Leadership
 Differentiation
• Company seeks to build customer loyalty by
positioning its goods or services in a unique or
different fashion.
• Idea is to be special at something customers
value.
• Key: Build basis for differentiation on a distinctive
competence, something that the small company is
uniquely good at doing in comparison to its
competitors.
• Examples: Outfitters and the Ice Hotel
 Differentiation
• BROAD DIFFERENTIATION STRATEGIES
• Effective Differentiation Approaches:
• Carefully study buyer needs and behaviors, values and
willingness to pay for a unique product or service.
• Incorporate features that both appeal to buyers and
create a sustainably distinctive product offering.
• Use higher prices to recoup differentiation costs.
• Advantages of Differentiation:
• Command premium prices for the firm’s products
• Increased unit sales due to attractive differentiation
• Brand loyalty that bonds buyers to the firm’s products
 Differentiation
Keys To Create Differentiation Advantage
 Focus
• Company selects one or more customer segments
in a market; identifies customers’ special needs,
wants, or interests; and then targets them with a
product or service designed specifically for them.
• Strategy builds on differences among market
segments.
• Rather than try to serve the total market, the
company focuses on serving a niche (or several
niches) within that market.
• Examples: Rolls Royce
 Focus
• WHEN A FOCUSED STRATEGY IS ATTRACTIVE
• The target market niche is big enough to be profitable
and offers good growth potential.
• Industry leaders chose not to compete in the niche—
focusers avoid competing against strong competitors
• It is costly or difficult for multi-segment competitors to
meet the specialized needs of niche buyers.
• The industry has many different niches and segments.
• Rivals have little or no interest in the target segment.
 Step 8: Translate Strategies
into Action Plans
• Survey of senior executives: Companies achieved
only 63 percent of the results in their strategic
plans.
• Create projects by defining:
• Purpose
• Scope
• Contribution
• Resource requirements
• Timing
 Step 9: Establish Accurate Controls

• Plan establishes the standards against which

actual performance is measured.
• Entrepreneur must:
– identify and track key performance
indicators.
– take corrective action.
 Lecture Review

• Analyzing Competitors
• Create Company Goals and Objectives
• Formulate Strategy
• Translate Strategies into Action Plan
• Establishing Control
You Be The Consultant..

CASE
STUDY

25
• YOU BE THE CONSULTANT
There is an unlimited amount of useful knowledge and information to gain from any
company in any industry. The Crowley family has proved that many times over by
borrowing techniques used in their bottling plant (Polar Beverages), applying those to their
ski area (Wachusett Mountain), and vice versa.
A key factor for the success of both operations is filling unused capacity. An hour of unused
or inefficient production time in the bottling plant has the same effect as an hour of unused
or inefficient time on the ski slopes. The ski area was able to fill its idle capacity by targeting
a number of diversified markets that use the slopes at different times of the day and week.
The bottling plant was able to fill its idle capacity by reshaping the size of its bottles to
better pack trucks.
On the surface, companies in different industries may appear to have little in common. The
entrepreneur recognizes the opportunities of technology transfer--applying the lessons
learned in one business and applying those same principles to assorted others.

Q1. Explain the core competencies that Wachusett Mountain has built. What is the source
of its core competencies?
Q2.Explain how Wachusett Mountain uses knowledge management to
build a competitive advantage. What other steps would you suggest the
company take in this area?