Entrepreneurial Strategy and Risk Mitigation
Entrepreneurial strategy refers to the plan and actions an entrepreneur takes to achieve business goals and gain a competitive edge in the market. It involves identifying opportunities, navigating risks, and utilizing resources effectively to succeed in the business environment. This strategy helps an entrepreneur make informed decisions and choose the right path for business growth and sustainability.
A new entry involves considerable risk for the entrepreneur and his or her firm. The risk here refers to the probability and magnitude of downward loss. As a BBA student, I would employ the following strategies to mitigate risks for new entry exploitation:
– Market Scope Strategy
– Imitation Strategy
1. Market Scope Strategy
Scope means a choice about which customer groups to serve and how to serve them. The choice of market scope ranges from a narrow to a broad scope strategy.
i. Narrow scope strategy: It offers a small product range to a small number of customer groups in order to satisfy a particular need. It produces and provides customized products to the customers which allows them to charge premium prices.
ii. Broad scope strategy: It offers a wide product range to a large number of customer groups to satisfy their needs and wants. The entrepreneur can gain an understanding of the whole market by determining which products are the most profitable. Unsuccessful products can then be dropped.
2. Imitation Strategy
Imitation involves copying the practices of other firms, whether those other firms are in the industry being entered or from related industries. It helps to acquire skills required for the industry without any trial and error methods. It involves:
i. Franchising: Franchising is an imitation strategy where the franchisee adopts the proven formula from the franchisor. It focuses on imitation to reduce the risk of downside loss for the franchisee.
ii. Me Too Strategy: Me Too strategy is an imitation strategy where an entrepreneur copies an established product and tries to gain a competitive edge through simple modification.
Entrepreneurial strategies like Market Scope and Imitation help reduce risks and guide business success. By learning from others and targeting the right market, entrepreneurs can grow and stay competitive.