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Chap007 - Chapter 07 Small Business Strategies Imitation...

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Chapter 07 - Small Business Strategies: Imitation With a Twist CHAPTER 7: SMALL BUSINESS STRATEGIES: IMITATION WITH A TWIST Chapter Summary This chapter introduces a number of tools – some of which have been touched on in earlier chapters: industry analysis, value chain analysis, SWOT analysis, industry life cycle, VRIO Analysis, and Porter’s generic strategies. The strategic planning process is discussed as are the strategic options a firm faces. The types of benefits that win customers are explored and the concept of competitive advantage is introduced. Learning Objectives After studying this chapter, the student should be able to: 1. Learn the decisions needed as a foundation for strategic planning. 2. Know the forms for imitative and innovative businesses. 3. Articulate the benefits that win over customers. 4. Use SWOT analysis to identify strategic options. 5. Understand the major strategies of business – differentiation, cost and focus. 6. Use value chain analysis to apply strategy throughout the firm. 7. Learn how to sustain competitive advantage through attracting customers and discouraging competition. Focus on Small Business: Mindnautilus.com Taking a family idea that had been proposed at the wrong time, Nick Tostenrude and Dennis Moulton formed Mindnautilus, a firm that sold cognitive functioning software via the Internet to people recovering from brain trauma. They have since expanded into related assistive devices and other software for disabled or injured people through their firm Enablemart. The key to their success? Finding the right niche. Instructor information: The Mindnautilus case is a great example of the idea of the “corridor principle.” While most folks in entrepreneurship think of it as coming from Bob Ronstadt (Ronstadt, R.C. 1988. The corridor principle. Journal of Business Venturing , 3, no. 1: 31-40), the idea was actually a major tenet of career theorist Samuel Osipow’s open systems model of careers ( Theories of career development, 1973 ) . Both authors liken career experience (regular or entrepreneurial) to walking down a corridor full of closed doors. As you walk down the corridor of life as an entrepreneur, you get the chance to open some of the doors. Some of the doors may set you on a new path. 7-1
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Chapter 07 - Small Business Strategies: Imitation With a Twist That is what happened to Nick and Dennis. They ended up changing the fundamental strategies of their business – from software to retailing, from conventional sales to the fledgling internet sales, and from a focus on their own products to a focus on the products of others. What was comparatively constant in their approach was their focus on their customer segment (those with handicaps who would benefit from assistive devices), and how to best serve this group.
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