2. Licensing and Franchising: It is used to enter into a new market when a company wants
more control over their own operation.
1. Licensing A contractual arrangement in which a company receives a royalty or fee in
exchange for the right to use its tradem
It depends on the environment of the existing firm such as:
A. Market Dependence This is the degree of concentration of a firms business
in a particular industry. When an existing firm has more at stake, it reacts more
Competitive Dynamics Is the intense rivalry, involving actions and responses, among similar
competitors vying for the same customers in a marketplace.
1. New firms have a lot of competition from the existing firms that are threatened.
The following are th
o Why do both pioneers and imitative method of new business offer a different
Differentiation is often associated with strong brand identity, and
establishing a brand is usually considered to be expensive because of the
Consider the following elements of a Blue Ocean Strategy:
1. Create Uncontested Market Space By seeking opportunities where
they are not threatened by existing competitors, blue ocean firms can focus
on customers rather than on competition.
2. Make the Co
Imitated New Entry A firms entry into an industry with products or services that capitalize on
proven market successes and that usually has a strong marketing orientation.
o When a firm enters a new market that already has similar products & services but
Motivation and Capability Respond: The existing firms decide to respond in a certain way.
They examine why and how they should respond to the new competition in the market.
4. Types of Competitive Actions that are taken to compete with new firms:
There are several different organizational structures that firms can use. Below are a few
1. Simple Structure An organizational form in which the owner-manager makes most of the
decisions and controls activitie
Chapter 10 Creating Effective Organizational Design
Whether a firm is new or already exists, as it grows, the strategy needs to be changed.
After changing strategy, we need to change the organizational structure to match the new
1. Regionalization Increasing international exchange of goods, services, money, people,
ideas, and information; and the increasing similarity of culture, laws, rules, and norms
within a region such as Europe, North America, or Asia.