Dollinger index

108 ENTREPRENEURSHIP

general-cleaning service, the company offers

more comprehensive spring-cleaning over-

hauls and professional organizing services for

homes that are too cluttered to clean.

Neither of these services is inexpensive:

Zen Home Cleaning’s rates start at $120 for a

regular cleaning, and Slate NYC charges $60

per week. But both firms are located in

Manhattan, where there is a large base of

professionals who can afford premium prices.

“The consumers buying eco products are not

very price conscious,” observes Zabludovsky.

“They are willing and able to pay up to 200

percent premiums.”

Both companies became profitable in their

first year. Hains is currently exploring fran-

chising opportunities in three locations out-

side of New York City, while Zabludovsky

hopes to build his company to a point at

which an investor will buy him out and extend

his service to other communities.

SOURCE: Adapted from Riva Richmond, “Two Urban

Start-Ups Mix Ecology, Luxury,” The Wall Street Journal,

February 28, 2006. Retrieved from the Web February 28,

2006.

http://www.online.wsj.com/article_print/SB1 141081937448

84661.html, http://www.zenhomecleaning.comand

http://www.slatenyc.com.

Case Questions

1. Do you think Hains and Zabludovsky have been successful in developing a differentiation
   strategy to make their products distinctive? Why or why not?


2. Under the conditions described here, what kind of power do buyers or customers have
   with these firms? What kind of power do suppliers or businesses have?


3. Are these businesses vulnerable to the threat of substitution? What are some of the dif-
   ferent ways in which another firm could compete with them?


4. Are the conditions right for the paradox of entrepreneurship here? What are some of the
   structural barriers? What might some of the retaliatory barriers be?


5. Would a franchise for either of these companies work in your community? Why or why
   not?