Question

This is a 3-part question based on the following information (only). Be sure to answer all three parts for full credit. Each part is worth 10 points.

A start-up entrepreneur short on resources, but long on ingenuity and vision, sees an opportunity before others. He establishes the market with first-mover advantages and sales begin to grow and the customer base is increases rapidly - too fast for the entrepreneur to keep up (few resources).

Entry barriers are low, and switching costs are quite high, therefore speed in capturing the growing customer base is crucial to locking in repeat business. However, speed-to-market is quite expensive. The market appears to have strong growth and profit potential for an efficient company able to keep costs down, which will be crucial to long-term profitability given the high fixed costs of the operation.

The entrepreneur has very little production capacity, no company recognition, and a domestic supply chain with high costs. The fundamental strategic question is, should the entrepreneur attack (take out additional debt to increase plant capacity and economies of scale); defend (keep resources at the same level), or retreat (sell off when the inevitable large company approaches them with a buyout offer.)  

1) Analyze the entrepreneur's expectancy (10 points)

2) Analyze the market's valence (10 points)

3) From your analyses, recommend a strategic resource decision - ADRA (5 points).

Answer 1

Answer 1= Expectancy can be defined as having hopes that something good would happen. As in the given case, the entrepreneur is the first mover in a high growth industry, thus he must be having the expectancy that his company will be able to capture the largest chunk of the market, with a high level of profits and it will become the household name for the customers of this industry segment.

Answer 2= Here valence indicates the expected value that the market holds from the business initiated by the entrepreneur. The  market's valence can be seen as having a lot of profit earning opportunities, the chances of having a higher return on investments and the profit level s to be quite high if the company is able to manage its different operations effectively and can invest huge sum initially

Answer 3- In my opinion, the entrepreneur must develop its concept and try to realize it into reality through proper coordinative and integrative efforts. he must develop a team of dedicated individuals and try to attract the funds through crowdsourcing or through venture financing. Even bank loans can also be a good option. As there is a high risk with the investment and greater chances of high growth, the entrepreneur must try to develop an effective business plan including the different opportunities and possible threats to be witnessed in the future.