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1. What is it about the initial strategic analysis process that helps a firm identify a
business opportunity? How might the external environment affect Kickstarter’s
entrepreneurial strategy?
Any discussion of strategy assumes an understanding of the strategy concept. See
Chapter 1, Exhibit 1.1: Strategic management consists of the analyses, decisions, and
actions an organization undertakes in order to create and sustain competitive
advantages:
●strategy directs the organization toward overall goals and objectives;
●includes multiple stakeholders in decision making;
Leaders face a large number of complex challenges. Leaders must be proactive, anticipate
change and continually refine changes to their strategies. This requires a certain level of
“ambidextrous behavior,” where leaders are alert to opportunities beyond the confines of
their own jobs, and are also cooperative and seek out opportunities to combine their
During strategic analysis, the leader does “advance work” to anticipate unforeseen
environmental developments, identify unanticipated resource constraints, assess changes
In strategy implementation, depending on the type of organization structure, the leader
might include key individuals in a discussion around selecting which strategies might be
best to implement at which level within the organization. The leader must ensure proper
The basic question strategic management tries to answer is: How can we create
competitive advantages in the marketplace that are not only unique and valuable but also
difficult for competitors to copy or substitute?
Vision: When Kickstarter was founded, Percy Chen had said that the concept was “not an
investment, lending or a charity. . . . It’s something else in the middle: a sustainable
Mission: Co-founder Yancey Strickler had added that Kickstarter was a place where
people could “participate in something” that they “held dear”, and that “a big part of the
Objective: It appeared the goal was for Kickstarter to ultimately become a “cultural
institution” that would outlive its founders, and NOT to participate in “the equity wave if
Were Kickstarter’s mission, vision and goals a clear enough statement of strategic intent
to fund the company’s future?
NOTE – ADDITIONAL READING, WEB LINKS:
For an article about the vision of the founders, see an extensive interview with Chen,
Strickler and Adler about what they believe it, from Fast Company in April, 2013, at
http://www.fastcompany.com/3006694/where-are-they-now/true-to-its-roots-why-
kickstarter-wont-sell
Referencing Chapter 2: Analyzing the External Environment of the Firm
Organizational leaders must become aware of factors in the overall environment that
might affect their ability to create a competitive advantage. So how do managers become
Environmental scanning involves surveillance of a firm’s external environment to predict
environmental changes and detect changes already under way. It is a BIG PICTURE
Environmental monitoring is a firm’s analysis of the external environment that tracks the
evolution of environmental trends, sequences of events, or streams of activities. Leaders
What factors or trends might be most important to Kickstarter? To assess how the
external environment might affect the company’s strategy, it’s necessary to take a look at
the factors in the general external environment. Kickstarter must consider the
Demographic: As the economy moves toward more of an entrepreneur-driven
environment, more youthful individuals from all walks of life have ideas they want to see
Socio-cultural: With traditional funding sources drying up in the arts arena, groups of
Technological: The growth of the Internet and alternative payment processes has made it
Political-Legal: New options for institutional financial arrangements made possible by
Rivalry
High
Substitutes
Threat
High
Buyers’
Power
Med-Low
Suppliers’
Power
Low
Suggested: Many
rivals compete for
market share in this
new alternative
investment form.
Suggested: End consumer
– the backer – has little
economic power, however
multiple choices are
available for the
entrepreneur seeking
funding options.
Suggested: Given the
Internet delivery platform,
suppliers are commodity
Internet service providers
without much power.
Suggested: Substitutes
include all traditional
investment vehicles.
Threat of
New
Entrants
High
Suggested: Low barriers to
entry given the Internet
delivery channel. It’s easy to
open up an alternative
investment website.
It’s also necessary to assess the segments of the external competitive environment that
include competitors, customers, and suppliers, substitutes and new entrants. Porter’s five-
The crowdfunding industry currently has profit potential, but only because there are still
opportunities for market penetration. Low barriers to entry have created increased
With the competitive landscape changing rapidly, and backers wondering if Kickstarter
projects were legitimate enough to fully support, would Kickstarter be able to maintain its
NOTE – ADDITIONAL READING, WEB LINKS:
For further information about crowdfunding in general, the instructor might want to
assign the following article as background:
Mallick, E. R. 2013. The Dynamics of Crowdfunding: An Exploratory Study. University
of Pennsylvania–Wharton School, June 26, 2013. Journal of Business Venturing.
For initial information on the JOBS Act, see Harrison K. 2013. What You Really Need To
Know About The Jobs Act General Solicitation Rule. Forbes, October 21, at
There are a lot more options for raising money these days:
The JOBS Act was finally implemented on September 23rd, 2013 after the SEC lifted the
ban on mass marketing of private securities offerings. However, it’s important to note that
the law does not seem to directly impact donation-based or non-financial-return models
There are still several issues that could prove problematic for small companies wanting to
raise money by reaching out to potential investors using social media and other online
For a list from May 2013 of the “top 10 crowdfunding sites for fundraising”, see
http://www.forbes.com/sites/chancebarnett/2013/05/08/top-10-crowdfunding-sites-for-
fundraising/ Kickstarter is listed in the number 1 position, with Indiegogo at number 2,
And here’s a “road map” from June 2013 to help entrepreneurs find the appropriate
crowdfunding site for their ideas. Again, this landscape will probably change rapidly:
One option similar to Kickstarter, GoFundMe at http://www.gofundme.com/ allows
people to set up their own websites to accept donations. GoFundMe takes 5% of
For a video story about how a small business successfully used crowdfunding via
References
Lumpkin, G.T. & Dess, G.G. 1996. “Clarifying the entrepreneurial orientation construct
and linking it to performance”. The Academy of Management Review, 21(1): 135-172.
Mallick, E. R. 2013. The Dynamics of Crowdfunding: An Exploratory Study. University
of Pennsylvania–Wharton School, June 26, 2013. Journal of Business Venturing.
