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Part 3: Strategic Actions: Strategy Implementation
■■ Acquisitions are another means firms use to obtain innovation.
Innovation can be acquired through direct acquisition, or firms
can learn new capabilities from an acquisition, thereby enriching their internal innovation abilities.
■■ The practice of strategic entrepreneurship by all types of firms,
large and small, new and more established, creates value for
all stakeholders, especially for shareholders and customers.
Strategic entrepreneurship also contributes to the economic
development of countries.
KEY TERMS
corporate entrepreneurship 419
entrepreneurship 419
entrepreneurial opportunities 419
entrepreneurs 420
entrepreneurial mind-set 421
invention 420
innovation 420
imitation 420
international entrepreneurship 421
strategic entrepreneurship 418
REVIEW QUESTIONS
1. What is strategic entrepreneurship? What is corporate entrepreneurship?
5. What is international entrepreneurship? Why is it important?
6. How do firms develop innovations internally?
2. What is entrepreneurship, and what are entrepreneurial
opportunities? Why are they important aspects of the strategic
management process?
7. How do firms use cooperative strategies to innovate and to
have access to innovative capabilities?
3. What are invention, innovation, and imitation? How are these
concepts interrelated?
8. How does a firm acquire other companies to increase the
number of innovations it produces and improve its capability
to innovate?
4. What is an entrepreneur, and what is an entrepreneurial
mind-set?
9. How does strategic entrepreneurship help firms create value?
Mini-Case
An Innovation Failure at JCPenney: Its Causes and Consequences
Former CEO Ron Johnson designed and tried to implement
a new strategy for JCPenney (JCP). However, the firm’s target “middle market” customers did not respond well to the
new strategy and the innovations associated with it. In fact,
some say that Johnson’s innovations and strategy alienated
what had historically been the firm’s target customers.
Johnson came to JCP after successful stints at Target
and Apple. At Apple, he was admired for the major role
he played in developing that firm’s wildly successful
Apple Stores, which a number of analysts say brought
about “a new world order in retailing.” It was Johnson’s
ability to establish what some viewed as path-breaking
visions and to develop innovations to reach them that
appealed to JCP’s board when he was hired.
Comparing JCP to the Titanic, Johnson came to the
CEO position believing that innovation was the key to
shaking up the firm. Moreover, he reminded analysts,
employees, and others that he came to JCP to “transform”
the firm, not to marginally improve its performance.
Describing what he intended to do at JCP, Johnson said
that “in the U.S., the department store has a chance to
regain its status as the leader in style, the leader in excitement. It will be a period of true innovation for this company.”
The essence of Johnson’s vision for JCP was twofold.
First, he eliminated the firm’s practice of marking up
prices on goods and then offering discounts, heavy promotions, and coupons to entice its bargain-hunting target customers. Instead, Johnson introduced a three-tiered
pricing structure that focused on what were labelled
“everyday low prices.” To customers though, the pricing
structure was confusing and failed to convince them that
Copyright 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
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Chapter 13: Strategic Entrepreneurship
the “everyday low prices” were actually “low enough”
compared to competitors’ prices.
Innovation was at the core of the second part of
the new CEO’s vision, with one objective being to give
JCP a more youthful image. The innovations Johnson
implemented to create this image included establishing
branded boutiques within JCP stores. To do this, JCP set
up branded boutiques “along a wide aisle, or ‘street’ dotted
with places to sit, grab a cup of coffee, or play with Lego
blocks.” With an initial intention of having 100 branded
shops within JCP stores by 2015, Johnson asked people “to
envision an entire store of shops with a street and square
in the middle representing a new way to interface with the
customer.” Disney was one of the brands to be included as
a shopping destination, as were Caribou Coffee, Dallasbased Paciugo Gelato & Café, and Giggle, a store dedicated to making “it a whole lot easier to become a parent”
by offering innovative and stylish “must-have baby items.”
In addition, and as noted in Chapter 4’s Opening Case,
Levi’s, IZOD, Liz Claiborne, and Martha Stewart branded
items were to be included as part of the boutiques.
But, these innovations and the strategy used to exploit
them did not work. So what went wrong? Considering
the components of the model shown in Figure 13.2 yields
a framework to answer this question. While it is true
that Johnson had an entrepreneurial mind-set, cross-
functional teams were not used to facilitate implementation of the desired innovations such as the boutique
stores. In essence, it seems that Johnson himself, without the involvement of others throughout the firm, was
instrumental in deciding that the boutiques were to be
used as well as how they were to be established and operated within selected JCP stores. In addition, the values
associated with efforts to change JCP from its historic
roots of being a general merchant in the space between
department stores and discounters to becoming a firm
with a young, hip image were not shared among the firm’s
stakeholders. Finally, Johnson’s work as an entrepreneurial leader was, seemingly, not as effective as should have
been the case. Because of mistakes such as these, the level
of success desired at JCP through internally developed
innovations was not attained.
Sources: 2013, J.C. Penney ousts CEO Ron Johnson, Wall Street Journal,
www.wsj.com, April 8; D. Benoit, 2013, J.C. Penney asks customers for
second chance, Wall Street Journal, www.wsj.com, May 1; D. Benoit, 2013,
Ackman thought Johnson could turn around ‘Titanic’ JCPenney, Wall
Street Journal, www.wsj.com, April 8; S. Gerfield, 2013, J.C. Penney rehires
Myron Ullman to clean up Ron Johnson’s mess, Bloomberg Businessweek,
www.businessweek.com, April 11; S. Clifford, 2013, J.C. Penney’s new
plan is to reuse its old plans, New York Times, www.nytimes.com, May 16;
S. Denning, 2013, J.C. Penney: Was Ron Johnson’s strategy wrong?
Forbes, www.forbes.com, April 9; M. Halkias, 2012, J.C. Penney’s Ron
Johnson shows off his vision of future to 300 analysts, Dallas News,
www.dallasnews.com, September 19.
Case Discussion Questions
1. The new CEO tried to be innovative. Were the innovations
introduced, more incremental or more novel? Please explain.
3. What are the reasons that the innovations implemented by the
new CEO failed?
2. Do the innovations implemented by JCP sound interesting to
you? Would you shop at a store with these features? Why or
why not?
4. What recommendations do you have for turning around the
performance of JCP?
N OT E S
1.
2.
B. Fritz, 2015, Disney unveils details on ‘Star
Wars: VIII’ and ‘Frozen’ Sequel, Wall Street
Journal, www.wsj.com, March 12; M. Lev-Ram,
2015, Empire of Tech, Fortune, January 1,
48–56.
B. Yu, S. Hao, D. Ahlstrom, S. Si, & D Liang,
2014, Entrepreneurial firms’ network
competence, technological capability, and
new product development performance,
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687–704; A. Lipparini, G. Lorenzoni, &
S. Ferriani, 2014, From core to periphery
and back: A study on the deliberate
3.
shaping of knowledge flows in interfirm
dyads and networks, Strategic Management
Journal, 35: 578–595.
L. Dai, V. Maksimov, B. A. Gilbert, &
S. A. Fernhaber, 2014, Entrepreneurial
orientation, and international scope:
The differential roles of innovativeness,
proactiveness and risk taking, Journal of
Business Venturing, 29: 511–524; P. C. Patel,
S. A. Fernhaber, P. P. McDougall-Covin, &
R. P. van der Have, 2014, Beating
competitors to international markets: The
value of geographically balanced networks
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for innovation, Strategic Management
Journal, 35: 691–711.
M. Gruber, S. M. Kim, & J. Brinckmann, 2015,
What is an attractive business opportunity?
An empirical study of opportunity
evaluation decisions of technologists,
managers and entrepreneurs, Strategic
Entrepreneurship Journal, in press.
M. Wright, B. Clarysse, & S. Mosey, 2012,
Strategic entrepreneurship, resource
orchestration and growing spin-offs from
universities, Technology Analysis & Strategic
Management, 24: 911–927.
Copyright 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
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