Although evolutionary notions about business often lack direct grounding in Darwin’s work, evolutionary theory can still help us understand how organizations, institutions, and markets change. Unfortunately, when used to illuminate business strategy, many evolutionary concepts are misapplied. This paper strives to address the garbled strategic advice created by misinterpretations of evolutionary theory, which have led to incorrect assessments of markets and market participants. We examine three widely held beliefs that are based on misapplications of evolutionary theory: 1) profit-maximization strategies inevitably lead to the best outcomes, 2) business is survival of the fittest, and 3) specialization makes you stronger. Applying four standard games (Prisoners’ Dilemma, Chicken, Battle of the Sexes, and the Stag Hunt) to the business world, we created models of competition to track interactions between market entities and demonstrate why many business ideas are based on garbled interpretations of the evolutionary concepts of selection, frequency dependence, and adaptation. The key takeaways from our research are: 1) selection on outcomes does not dictate that aiming for profit maximization will always lead to the best outcomes, 2) frequency dependence means there can be no unidimensional fitness to aspire towards, and 3) it is not survival of the fittest, but best fitted for any particular contest. Simply put, adaptation (both proactive and reactive), not specialization, is the key to success. Recognizing this requires a fundamental shift, inverting the normal strategy sequence by suggesting firms change themselves, rather than seeking to change their world.
AquaBounty Technologies, Inc. (AquaBounty) was a small, U.S. biotechnology company that focused on improving productivity in commercial aquaculture. In 2015, the company had received approval from the U.S. Food and Drug Administration to sell its genetically modified AquAdvantage salmon in the United States. Public reaction was mixed, with heavy criticism from some environmentalists. One year later, in May 2016, AquaBounty received approval from Health Canada to sell AquAdvantage salmon in Canada. The company’s director of Corporate Communications needed to prepare for the announcement of Health Canada’s approval, to be made public later that week. What should he include in the company’s issues management plan to ensure that AquaBounty would receive balanced feedback from the Canadian public?
The owner/operator of Spruce Lawn Farms, a cash crop farm located near London, Ontario, was thinking of expanding his operation to include identity-preserved soybeans and a grain dryer. The farm had been in operation for 12 years and consisted of 650 acres of owned land with plans to increase this through renting neighbouring fields to 2,000 acres by 2015. Current crops included genetically modified winter wheat, corn and soybeans, but given the growing backlash against genetically modified foods in Europe and Asia, he was considering adding certified identity-preserved soybeans as well. His back-of-the-envelope calculations seemed to indicate that the venture would pay off. However, when he approached his financial institution for a loan, they were concerned about how the new venture would change the farm's financial structure.
After the successful launch of their virtual grocery stores in South Korean metro stations, Tesco UK is trying to determine whether the virtual grocery store concept should be launched in their home market. In order to make this decision, Tesco needs to determine the role of the virtual store(s), the location(s) of the store(s) and the product range. At the same time, Tesco needs to compare the Korean and U.K. markets in order to determine whether the virtual store concept is viable.
Uralkali, the giant Russian potash producer, decided to stop export sales through the Belarusian Potash Company – an export cartel it had formed with Belaruskali. Uralkali planned to increase potash production and export it independently through its own trading company. This move threatened to reduce global potash prices by up to 25 per cent. Immediately, the stock prices of major potash producers around the world plummeted. This set of three cases looks at the potential competitive strategies of three key players in the industry: PotashCorp, the firm with the world's largest potash reserves; Agrium, a firm in the midst of a large potash mine expansion; and BHP Billiton, the world's largest mining company planning huge potash mine development. See A case 9B14M031A and B case 9B14M031B.
Uralkali, the giant Russian potash producer, decided to stop export sales through the Belarusian Potash Company – an export cartel it had formed with Belaruskali. Uralkali planned to increase potash production and export it independently through its own trading company. This move threatened to reduce global potash prices by up to 25 per cent. Immediately, the stock prices of major potash producers around the world plummeted. This set of three cases looks at the potential competitive strategies of three key players in the industry: PotashCorp, the firm with the world's largest potash reserves; Agrium, a firm in the midst of a large potash mine expansion; and BHP Billiton, the world's largest mining company planning huge potash mine development. See A case 9B14M031A and C case 9B14M031C.
Uralkali, the giant Russian potash producer, decided to stop export sales through the Belarusian Potash Company – an export cartel it had formed with Belaruskali. Uralkali planned to increase potash production and export it independently through its own trading company. This move threatened to reduce global potash prices by up to 25 per cent. Immediately, the stock prices of major potash producers around the world plummeted. This set of three cases looks at the potential competitive strategies of three key players in the industry: PotashCorp, the firm with the world's largest potash reserves; Agrium, a firm in the midst of a large potash mine expansion; and BHP Billiton, the world's largest mining company planning huge potash mine development. See B case 9B14M031B and C case 9B14M031C.
A stock market analyst was reviewing one of his fund’s holdings, Alliance Grain Traders Inc. (AGT). One of the world’s largest traders of pulse crops, AGT was in the midst of entering a new line of business and expanding its non-core operations. On one hand, AGT would have been able to use its dominance in pulse trading as an advantage in expanding up the value chain. On the other hand, it was moving into sectors that were already mature and highly competitive. The key question for the analyst was whether he should continue to hold AGT stock given its stated objectives.<br><br>The case set is split into an “A” case, where AGT’s history and the food value chain are laid out. The “B” case, 9B14A043, provides an update two and a half years later when it became evident that AGT had committed to expanding beyond the trading and distribution of pulses.
This B2B case describes a common situation that arises when channel partners gain success and the perceived balance of power shifts from the supplier to the channel. The manager for Bolster Electronics, one of the largest suppliers in Canada of state-of-the-art industrial video equipment for harsh environments, must consider a request from Vickers Industrial Supplies, a regional dealer, to be upgraded from a dealership to a distributor. Vickers was generating a growing business volume for Bolster in an important market segment, the Canadian oil sands in northern Alberta. Approving Vickers’ request will generate slimmer margins for the manufacturer, which may be made up with higher projected volume, if the projections are reasonable. The potential reaction of the company's national distributors is causing concern. Although Bolster sells to regional dealerships in the United States, its policy is to distribute its products in Canada through two national distributors, and it fears that increasing Vickers’ role will alienate these distributors. Each alternative has benefits and risks.
In February 2008, the president of Vacances Paradis Inc. (Paradise) was assessing his options for the company's competitive strategy for the future. Paradise was Quebec's market leader in the tour operating industry but was facing a significant challenge: FunTours Holidays (FunTours) had stolen a sizeable portion of Ontario's market share in only two years and was planning on conquering the Quebec market for the 2008/09 winter season. FunTours' aggressive strategy was to provide large capacity at low prices, thus creating a price war and decreased margins. The president had to consider how to meet FunTours' threat in the face of several challenges: the tour industry was fundamentally changing as a result of shifting from traditional travel agents towards Internet distribution; limited differentiation in product offering forced competing on price; and a growing customer base as more people could afford travel. Price had emerged as the dominant criteria for travelers and a huge consideration for tour operators. The president wondered which strategy would be best for the company's short- and long-term viability.
In November 2007, Barack Obama, along with his chief strategist and campaign manager, was faced with a Gallup Poll of Democratic Presidential Candidates that indicated among Democratic voters Hillary Clinton held 48 per cent support of voters, compared with Obama's 21 per cent. Pundits and analysts essentially declared the race over; however, the triumvirate was convinced they had devised a perfect campaign strategy to overcome the long odds and win the nomination. Their confidence was validated when Barack Obama was elected the President of the United States in November 2008. This win was aided by a strategy that focused on competing in markets that other candidates did not, and embracing technological developments in a manner that other candidates would not. The Obama campaign employed such tools as lowering the target donation from potential donors, competing in non-traditional markets, unique resource allocation and use of technology to gain tactical advantages.
The vice-president of marketing at Arts & Crafts was reflecting on the company's extremely successful year in the music business. New artists had been added to the company's roster, experiments with digital releases and marketing campaigns had been successful, and plenty of international licensing opportunities were emerging. In addition, one of the company's artists, Leslie Feist, had received multiple music awards. On the other hand, the music industry was facing some difficulties and most analysts predicted nothing but doom and gloom. The vice-president of marketing had to consider the future strategy of Arts & Crafts while considering the overall health of the industry.
The manager of business development for Carvel Asia Limited is trying to determine how best to increase ice cream cake sales in Beijing. In doing so, he needs to develop a complete marketing program which includes decisions about product offerings, pricing, placement (distribution) and promotion - the 4 Ps. Carvel Asia was a 50-50 joint venture between Carvel (USA) and China's Ministry of Agriculture.
McDonald's, one of the world's strongest and most recognizable brands, intends to extend its world's best quick service restaurant experience brand into the hotel industry by launching a hotel in Illinois. An industry observer examines the hotel venture's positioning options and the McDonald's brand extension into a different product class.
Logitech is an international company that designs and manufactures computer peripheral products. The retail pointing devices unit director is thinking about the development of the next generation of his device, the Logitech io Digital Pen. The digital pen is about to be launched in less than two months, and he is still unsure which features were valuable to potential users, who these potential users were and for which applications the digital pen could be used.
This is an abridged version of Compaq Computer Corporation 1995, case 9A95A011. The case describes the evaluation of Compaq's marketing strategy in the personal computer industry from its founding in 1982 up to 1995. The market environment and the strategies of key competitors and Intel are discussed. Compaq management must decide how to respond to the changing market and competitive environment.
The new CEO of Compaq Computer, the world's second largest computer company, is facing some difficult decisions about how to combat the increasing threat posed by Dell Computer Corporation. The case describes the strategic moves made by Compaq in the late 1990s under the leadership of a previous CEO who was dismissed by Compaq's board earlier in the year. It also describes in some detail the history of Dell Computer and the evolution of the Dell Direct model. Compaq's new CEO faces some major issues, one of which is the resolution of the channel issues, particularly in the commercial personal computing segment. It is clear he faces some very tough strategic and marketing choices. The power of information technology and standards that have allowed Dell to build a powerful ecosystem with its customers, suppliers and complementers are illustrated in this powerful teaching case. With the support of these other players, Dell has been able to topple one of the great companies of the late 20th century from its leadership position. It also illustrates how difficult it is for a market leader to effectively respond to such a challenge.
The vice-president and general manager of Mitel's semiconductor division is faced with a rapidly growing market for the company's business communication chips, but has limited capacity at the semiconductor plant. There is little industry capacity to outsource production. He must determine how to pursue the growing market and how to secure additional capacity. Options include modifications to the current facility, construction of a new facility, or the acquisition of a plant from another company.
The manager of business development for Carvel Asia Limited is trying to determine how best to increase ice cream cake sales in Beijing. In doing so, he needs to develop a complete marketing program which includes decisions about product offerings, pricing, placement (distribution) and promotion - the 4 Ps. Carvel Asia was a 50-50 joint venture between Carvel (USA) and China's Ministry of Agriculture.