Strategy in the Small Business IGOR ROITBURG
Learning Objectives LO1 Describe the decisions needed to establish a foundation for strategic planning.
LO2 Identify the forms of imitative and innovative businesses.
LO3 Articulate the bene ts that win over customers.
LO4 Assess how have industry changes a ect strategy.
LO5 Explain the major strategies of business—di erentiation, cost, and focus.
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LO6 Determine how to sustain competitive advantage through attracting customers and discouraging competition.
Strategy in the Small Business
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What makes a strategy good is its t to the particulars of your business and the resources you can bring to it
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Good strategy leads to greater chances for survival and higher pro ts for small businesses
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Figure 7.1


The Small Business Strategy Process
Goals: The First Step of Strategic Planning
There are ve ini al key decisions:
1. As owner, what do you expect out of the business?
2. What is your product or service idea (and its industry)?


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3. For your product or service, how innovative or imitative will you be?
Goals: The First Step of Strategic Planning
4. Who do you plan to sell to—everyone or targeted markets?
5. Where do you plan to sell—locally, regionally, nationally, globally?
Owner Rewards
Magic number
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The post-tax income the entrepreneur personally seeks from the business.
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Industry •
Industry
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The general name for the line of product or service being sold, or the rms in that line of business
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Key is selecting an industry that o ers good potential for making a pro t
Also needs to o er attractive opportunities to work with a minimum of risk and competition
Attractiveness of Selected Industries and Lines of Business
Imitation and Innovation •
Imita ve strategy
An overall strategic approach in which the entrepreneur does more or less what others are already doing.
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â?– Innova ve strategy !
An overall strategic approach in which a rm seeks to do something that is very di erent from what others in the industry are doing.
Imitation and Innovation Degree of similarity
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The extent to which a product or service is like another.
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â?– Parallel compe !
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An imitative business that competes locally with others in the same industry.
Incremental innova on
An overall strategic approach in which a rm patterns itself on other rms, with the exception of one or two key areas.
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Imitation and Innovation
Imitation and Innovation
Pure innova on
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The process of creating new products or services, which results in a previously unseen product or service.
Also called blue ocean strategy
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Markets •
Market
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Scope
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business term for the population of customers for your product or service
geographic range covered by the market
Local to Global
Markets Scale
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Mass market
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Niche market
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narrowly de ned segment of the population that is likely to share interests or concerns
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large portions of the population
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size of the market
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Scope: Local to Global Scope is important for two reasons:
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Knowing your market scope helps deciding where to focus sales and advertising e orts
Knowing your target market gives you a way to know which competitors to worry about most, namely those within your market scope
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Customers and Bene ts
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Local customers
Loyal customers
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❖ Passionate customers fi
❖ Corporate customers
Thank You