978-1259278211 Case 6 Solution Manual Part 2

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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.