developing innovative ideas for new companies3
TRANSCRIPT
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Entrepreneurs andstrategic decisions
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Objectives
Discuss the fundamental elements ofentrepreneurial decision-making
Connect cognition to the
entrepreneurial process
Examine strategic decision-making as
a unique and significant tasks for
entrepreneurs
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Decision making is a cognitive process.
Cognitive = Thinking Cognition involves individual decision-making
involving the selection of a specific course of
action that is supposed to bring a certain result.
Decision-making implies choice. Alternative are available is a decision exists.
Exact outcomes are unknown, albeit estimated.
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Reducing uncertainty is critical to effective
decision-making.
How to reduce uncertainty? Gather information
Primary
Secondary Leveraging experience
Past personal experiences
Direct or indirect experiences
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Strategic decisions typically share the same
process.
1. Recognizing a problem situation
2. Generating alternatives
3. Evaluating the various alternatives
4. Selecting the alternative that best
satisfies our evaluation criteria
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What strategic options make sense to enter
the home video rental market?
Source http://www.filmsavior.com
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What strategic options make sense to enter
the home video rental market?
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Source http://tommytoy.typepad.com
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What strategic options make
sense to enter the home
video rental market?
Source http://www.fastcompany.com
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Study of entrepreneurial decision-making
leads to better decisions.
Decisions of entrepreneurs differ from companymanagers
Operate with limited information
Must be action-oriented and decisive Accept risk
Involve major consequences
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Decision-making is a strategic activity.
Setting specific courses of action to reach strategicgoals.
Revenue and profit goals
Market share and competitive advantage Product superiority and technical advantage
Strategic decisions involve critical analysis, resource
investment, and company commitment.
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Strategic decisions share four fundamental
characteristics.
Complexity: facts, variables, and contingencies relevant for thedecision at hand
Uncertainty: all possible outcomes are not known and are
difficult to forecast
Rationality: a specific goal is intended by making a decision
Control: intentional and deliberate actions are made by
decision-makers
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Environment of entrepreneurs is uniquely
challenging.
Source: M.C. Escher
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Environment of entrepreneurs is uniquely
challenging.
Source: M.C. Escher
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Environment of entrepreneurs is uniquely
challenging.
Entrepreneurs are doing new things. Entrepreneurs are without the resources and
relationships typical of established
companies.
Uncertainty and complexity levels are high.
Consequences of failed decisions include failed
businesses; significant financial and emotional
pain.
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Summary
Understanding entrepreneurial decision-making critically important for earliest
stages
Without opportunity discovery, theres no
venture
Decision-making is a unique and significant
tasks for entrepreneurs
Requires quick, high-stakes decisions with
incomplete information in a dynamic market