WE.K9
Read the following situations, then answer the questions that…
Read the following situations, then answer the questions that follow.
Situation 1
Jonathan Lugar, 17, had just finished helping his mom with a garage sale when it occurred to him that he might build his business to do the same for others and make a little money for college. The idea was to offer a service that would take the headache out of running a garage sale. Lugar would handle all advertising and sale setup, and his experience with other garage sales in the area would allow him to coach sellers on pricing so that items would actually be purchased. He figured he could charge $200 per job for sales that bring in $400 or less, but he and the seller would split sales above $400 on a 50-50 basis. Lugar believes the greatest value added from his services would be from his pricing insights, since most people rarely have a garage sale and thus have little idea about how much to ask for items. Careful pricing would make his customers happy, since they could maximize their sales and minimize the risk that they would be left with the very items they were trying to get rid of. In fact, Lugar plans to keep track of how much things sell for to fine-tune his pricing advice. He estimates that his startup costs will be minimal and come mostly from the use of his truck and some fuel.
Situation 2
Willy Whitlock loves to restore classic cars. But run-of-the-mill classics are not what he goes forhis fascination runs to rolling stock from the 1950s and 1960s that are rebuilt to be fast, fun, and true works of art. And that is the focus of his restoration garage startup, Smokin’ Wheels by Willy, a company name so good that it immediately gives away the essence of the business. Since the launch of his Tucson, Arizona-based company in September 2012, Whitlock has driven his new venture to $2 million in sales by offering classic beauties (at $45,000 to $150,000 each) that are “tricked out” to the specific tastes of very picky collectors and classic car enthusiasts.
Uniqueness is key to the company’s strategy, but it goes further than that. Whitlock uses stunning paint work, creative pin striping, and lots of chrome to create breath-taking cars that are guaranteed to turn headsbut customized in each case to suit the precise tastes of the car lover who orders them. These are true works of art that balance high performance and stunning aesthetics. Whitlock’s work allows clients to add time-honored classic car models to their collections, but with high-performance drivetrains and one-of-a-kind paint applications and design details.
Situation 3
Overcoming jet lag on international trips is crucial to making good decisions when working with overseas counterparts, especially when difficult negotiations are involved. If an executive wants to be refreshed and on top of his or her game, Phillip Sanderson has a solution. Perfect Illuminations, his five-year-old company, has been offering sleep-recovery services through business-class hotels in prime cities around the world. So far, he has worked out deals with eight partner hotels in four cities: New York, Tokyo, London, and Paris. His system provides booths in which guests can bask in 30 minutes of simulated sunshine generated from electronic light boxes. Science has shown that this form of light therapy can help to restore the body’s natural sleep rhythms well ahead of the recovery time that it normally takes to reset one’s internal clock. The price of the service varies, depending on the city and the specific deal worked out with each partner hotel, but client response so far has been encouraging. Now Sanderson is trying to identify other cities where he can help weary travelers reset their internal clocks.
Based on the frameworks introduced in this chapter, what kind of strategy is Whitlock following in his new venture, described in Situation 2?
Identify the strengths on which the business described in Situation 2 is built. Do you see any weaknesses that may be of concern to the company?
Are there any particular threats that will put Smokin’ Wheels by Willy (described in Situation 2) at risk as time goes on? Can you see any opportunities that may allow the company to expand in the future?
What resources and capabilities form the foundation for the business described in Situation 2? Do you think these will be sufficient to build a sustainable competitive advantage for the company? Why or why not?
Will the market for Sanderson’s service (described in Situation 3) continue to grow in the years ahead?
In Situation 3, given the company’s success so far, what sources of competition should he expect?
What steps would you recommend that Sanderson take to protect his company (described in Situation 3) from the onslaught of competition that is likely to come?
