SWOT analysis
Internal strengths
Low start-up costs due to the presence of equipment and the opportunity to utilize family labour
Continuing family tradition is a positive trait for differentiation and building up the company’s image in the eyes of customers
The application of fruity fragnances, capable of attracting teenagers
Safe and natural ingredients as a key differentiation trait
Internal weaknesses
Limited ability to introduce full product lines due to the size of the business and the lack of experience
Limited awareness about the modern scientific developments in the field of skin care and an inability to apply them
External opportunities
Focus on growth (e.g., licensing operations to another firm and relying on royalties)
Introducing new products (e.g., lip balm)
Forming joint product lines with other companies
External threats
Tough competition (multiple big competitors)
Availability of substitutes (e.g., spa treatments, natural oils)
The competitive advantage of the company is represented by low start-up costs and clear differentiating features of the products. They include family nature of the business, fruity fragrances and the application of safe ingredients. The low start-up costs do not represent a sustainable competitive advantage (because this advantage is relevant over a limited time after the launch of the business). The differentiation strategy also cannot be considered a sustainable competitive advantage, because similar strategies are frequently used in the skin care industry, and are easily copied.
The reduction in a number of vendors can have both positive and negative implications for the business. In positive terms, it allows saving costs and have better control over the distribution of the business. However, if a company seeks to focus on growth and get more customers exposed to the product, it is better to apply multiple vendors. Moreover, the use of multiple vendors helps to attract broader range of customers. Therefore, if Carol chooses to emphasize growth of its business, the diversification of distribution channels shall be among her top priorities.
All three strategies, considered by Carol have their own strengths and weaknesses. Expanding the company’s current production and marketing operations is a good opportunity to go beyond a small family business and achieve a new level, attempting to continually broaden the range of products on offer. On the other hand, this strategy makes it more complex to control the business and use competitive advantage, generated due to the family nature of a business. Employing a wholesaler will give the company a boost as regards the distribution of products, but also prevent from the family business-style differentiation. Licensing could be a good way to avoid excessive responsibility, but it will prevent Carol from effective control. In this light, it is advisable to use the first strategy, trying to both expand the operations and sustain the differentiating potential of the ‘family business’ pattern.
Johnson Design
SWOT analysis
Internal strengths
Highly original and practical product (allows to avoid issues with enlarging the holes)
Different packages of “Dry Wall Fix” and QVC kit available
Focus on a highly specific target
Internal weaknesses
Limited choice of products
Products not of interest for the broad groups of customers
External opportunities
Broadening product range to include other building materials
Creating sustainable partnerships with the companies, selling building materials
Developing new kits
External threats
The idea can be mimicked, and new substitutes can be developed
Bad financial performance
The company invested $27 000 into machinery. The cost per clip, mentioned in the case, cannot e viewed as the total costs due to the further investments related to product promotion and PR. Getting clips from China significantly lowered the costs of production.
Steve Johnson could have licensed the operations and marketing to another company (possibly, a large manufacturer of building materials) get royalty payments. He could also consider producing and/or retailing other building materials to be able to go beyond clips and consider them as one of the products on offer, but not the key one.
I would suggest that the best option for the author of the “Dry Wall Fix” will be to try expanding his product range to go beyond clips. If the company manages to introduce a broad range of products, apart from clips, that will help it level strong financial dependence, stemming from the limitedness of a target group of its major product and its low price. An introduction of new products and kits, including new products and clips, could give a boost to the company, especially if it continues close cooperation with the suppliers of building materials from China.
Initially, the author of the “Dry Wall Fix” relied too much on the idea of concentrating on clips for repairing walls without thinking about the extremely low cost of this product and limitedness of the target group to which it can be offered. In view of the above, a strategic turn in the functioning of the company is required.
