Archive for the ‘case study’ Category

by: Arnold Strub, MBA.
Entrepreneur-in-Residence, DeGroote School of Business, McMaster University.

Strub’s Pickles had already been a successful small business for 75 years when we were first contacted by an SR&ED consultant. We had the usual skepticism about the program; SR&ED is limited to lab work (of which we had little), tracking projects would be too time consuming, the cost/benefit would not make it worth the effort, and that after 75 years we likely had no SR&ED. How wrong we were!

After spending an initial hour with the same consultant, our skepticism was turned to optimism. Long story, short, we have since filed successful SR&ED claims for annual 6-figure refunds.

There are 5 reasons why you NEED to implement a culture that includes SR&ED in your food manufacturing enterprise:
1. An excellent source of funds for the continued development and improvement of your products.
2. It expands the development process outside the lab and onto the production floor and into the boardroom, creating stronger and more meaningful relationships throughout the enterprise.
3. It expands the development process to include your Supply Chain and your Customer Chain, creating valuable vertical strength and synergies amongst your key partners for future growth.
4. An expanded SR&ED process works hand-in-hand with your HACCP and Food Safety initiatives and requirements, optimizing both streams effectively.
5. Better Profits.

A year ago it looked like game over for Nintendo’s storied console business. The Nintendo Entertainment System had ushered in the modern age of video games, but was not bleeding market share due to newer, more powerful systems from Sony and Microsoft.

Nintendo’s response was the handheld DS, followed by the Wii. The DS two-screen touch handheld was a test study that focused on gameplay and “fun” instead of trying to compete with Sony and Microsoft on graphics and hardware.  The DS was a success, so the Wii followed suit.

Nintendo built the Wii: a cuddly, low-priced, motion-controlled machine that focused on interaction and unique gameplay.  Their strategy was to expand the target market, because to compete with Sony and Microsoft to develop the best hardware would have been suicide.  Nintendo used a cheaper and lower-powered processor for their Wii console because they firmly believed that they could appeal to children as young as 4 and adults as old as 70 if they could:

1. Make video games easy-to-play, interactive, and “fun.”
2. Sell a complete gaming system at an affordable price point. 

This strategy was an astounding success!  Families, women, children, and all grandparents all embraced the gameplay of the Wii, and the low $300 price point increased sales volumes drastically.  And because of the decision to adopt older technology, they were able to sell the console with a $50 profit margin! (Sony and Microsoft both sell their consoles in the $400 to $500 price range at a loss)

Nintendo now projects that the Wii will take a 40-45% market share in this generation.

This case study illustrates the fact that innovation and R&D is a necessary part of any business’ survival.  Businesses are constantly competing to build the better mousetrap.  However, the business that figures out how to deter the mouse from entering the house (at an attractive price point) will steal market share from their competitors.

Further information:

• Stringer: Wii business model superior to PS3′s
• The untold story of how the Wii beat the Xbox, PlayStation

Rising oil prices, poor currency exchange, and a sagging US economy have contributed to a decline in the Canadian manufacturing industry.  More and more products have been outsourced abroad, which has further contributed to the sagging fortunes of manufacturing companies in Canada.  However, some companies have still been able to prosper in these tough economic times.

A local manufacturing and distribution company, Algreen Products, has developed a brand new rain barrel that has revitalized their Canadian plastics manufacturing business.  Algreen Products was in a process of downsizing the business when demand for their new rain barrel suddenly rejuvenated their manufacturing operation.  Demand for this new environmentally-friendly product has been staggering.  Plans have been made to increase manufacturing capacity due to the endless orders for the new rain barrel.

Algreen attributes the success of their rain barrel to two main factors:

1. Identifying and targeting a growing niche: the North American green shift, and
2. Taking advantage of the federal government\’s Scientific Research and Experimental Development program (i.e. SR&ED funding) to finance their new product development.

Algreen’s strategy was to take advantage of SR&ED funding to finance new product development.  With revenue shrinking, most companies aren’t able to invest in R&D.  However, R&D is the lifeline of any company.   Cutbacks in R&D cause product lines to stagnate, which in turn diminishes the future competitiveness of the company.  Companies that do not continuously invest in R&D tend not to survive.  And this is why during tough economic times, it is especially import to find alternative means to finance new product development.  Unfortunately, very few manufacturing companies are aware of the SR&ED program, and thus, are not able to take advantage of the extra cash flow that this program offers.

In the meantime, orders for the new rain barrel keep on coming in.  Trucks keep on rolling into the loading docks, and Algreen is hard pressed to fill them.  Algreen seems to have hit a market niche that has struck a chord with consumers.  The new rain barrel not only helps customers to conserve water and save money, but it also combines the timeless aesthetic elegance of ceramics with the enduring longevity of modern plastics.   According to company spokesperson, Walat Yasin, “City-issued rain barrels are ugly.  The concept behind this new product has been to develop a rain barrel that homeowners could proudly display, like a piece of furniture.”