Question 1 Response
BIG’s business model involves developing innovative toy concepts and sharing them with manufacturers who develop the products. Despite being a relatively small and young company, Big has managed to bring into the market the most innovative concepts when established companies feel they lack the necessary innovation. One of the reasons why BIG is so successful in developing innovative toy concepts when major companies find it difficult is because BIG is mainly focused on understanding consumers rather than technology. Big is not concerned with latest technologies that can be incorporated into the toy industry. Rather, the company goes out and studies consumers’ needs and perceptions about toy products available within the market. The company then develops concepts based on those ideas. In contrast, established companies concentrate only on the latest technologies because of fear of risks associated with developing new concepts. For example, there are risks that new concepts may not be innovative once commercialized.
Another reason that makes BIG so successful in developing innovative toy concepts is because it does not manufacture. Therefore, it can build relationships with many players in the industry and beyond. These include manufacturers, marketers, customers, engineers and designers. Manufacturers shy away from building such kind of relationships with fellow manufacturers for fear of competition. As explained in the case study, the toy market in the United States is saturated. This means that no manufacturer may want to take the risk of sharing its innovative concepts with rivals. Capitalizing on this fear, BIG built strong relationships with several stakeholders in the industry to commercialize its innovative concepts. Additionally, BIG has invested in continuous product improvement systems and programs to keep its innovation pace ahead of stiff competition.
Question 2 Response
Just like any other business, it is possible for other companies to replicate BIG’s business model. However, as illustrated in the case study, BIG has put adequate measures in place to deter potential competitors from replicating its business model. The first measure that ensures that the company’s products are commercially successful is innovation. BIG has invested in developing innovative toy concepts, which it sells to manufacturers. Since the products are very innovative and capable of adding value to consumers, manufacturers find the concepts to be commercially viable. If the concepts are accepted by a large number of toy manufacturers, BIG will have monopoly in the market. Currently, the company controls a substantial market share for its kind of business. This will certainly deter any competitors from replicating BIG’s business, thereby making it very sustainable (Edvardsson, 32).
Secondly, BIG’s innovative concepts are versatile. This means that the company can succeed in a world of changing customer demands and volatile prices. Essentially, BIG’s business is guaranteed to be sustainable despite uncertainties of the future. Sustainability is a key aspect that will deter competitors from replicating the concepts. Competitors understand that if BIG is very successful, it will have enough resources to influence future developments in the lucrative industry.
The last measure that makes it difficult for competitors to replicate BIG’s business model is continuous innovations. Unlike other companies, which rely on the R&D department to come up with innovative solutions, BIG hold shows where independent innovators showcase their products. BIG then selects the best products. Through this process, BIG does not incur unnecessary expenses in hiring and training innovators. Competitors may lack the capacity to organize for such large shows and hence cannot replicate BIG’s business. Even if competitors were to replicate BIG’s business, they would find it difficult to negotiate with manufacturers because BIG has already signed contracts with the majority of the manufacturers.
Question 3 Response
It is possible for BIG to replicate its business in other industries such as lawn and garden. Part of the reasons why BIG was so successful in the toy industry is that the industry is very dynamic as customers demand change very often. BIG realized that this was not a challenge for toy manufacturers but an opportunity to develop more innovative products. Accordingly, the company ventured into the business of developing innovative toy designs and selling them to manufacturers. The same can happen in the lawn and garden industry. This industry is very dynamic just like toys industry. Consumers in the lawn and garden industry have high expectations in regards to product quality and price. These expectations can only be met by replicating BIG’s business models.
According to Edvardsson (31), successful businesses in one industry can be replicated in other industries if the underlying business concept is similar. Just as children always desire better new toys, homeowners also expect better and innovative gardening equipment and tools. Therefore, BIG can organize similar shows such as the toys shows to get ideas from lawn and garden innovators. To effect this, BIG only needs to identify problems facing users of laws and gardening products. The company can also get vital information from manufacturers and sellers of these products. With such information, BIG can develop innovative solutions.
Work Cited
Edvardsson, Bolly. Quality in new service development: Key concepts and a frame of reference. International Journal of Production Economics, 52 (2): 31–46, 2007.
