Strategic Planning in the Small Business

HO 2-4

(continued)

Unit 2

Capsule

1-1

Minnetonka, Inc.

Minnetonka, Inc. is a classic story of entrepreneurial

zeal and

astute environmental

awareness. Robert

Taylor, an enterprising

young entrepreneur

sought to enter the

highly lucrative, yet

competively saturated,

soap manufacturing business. Successful,

new products seemed

highly unlikely given the size,

experience,

and public awareness

of his competitors companies

like Proctor

&Gamble, Armour-Dial,

Lever Brothers, and Colgate-Palmolive.

Yet, Taylor recognized

an untapped niche within the industry

and

felt that liquid soap dispensed

from a plastic container

with a

pump possessed significant

advantages over traditional

bar soap.

Thus,

Minnetonka's Softsoop was

born. The success of Softsoap

was

nothing short of fantastic.

In its introductory year (1980),

Softsoap

sales soared to thirty-five million

dollars. Major com­

petitors, who initially dismissed

Softsoap as a short-lived

fad,

soon recognized

the potential to be gleaned

from this innovation.

To his credit, Tayk, was not

blinded by success. Infcct,

his fore­

sight was as strong as ever.

Rather then rest on his laurels,

Taylor

reasoned that his success placed

him in a most precarious po­

sition.

His business hod grown by

carefully positioning Softsoap

to appeal to consumer

needs and to avoid

head-on, direct com­

petition with

the soap industry giants. Yet,

he knew that eventually

his admirable profit picture

would lure larger firms

into the soft­

soap market,

thereby establishing a direct

competitive base. He

reasoned that Minnetonka

could not withstand such

competition.

So, before

this competitive threat

eventuated, Taylor was

plan­

ning his next move-the Showermate--a

new product aimed at

a new niche. He realized that if

this proved successful, he again

would

be inundated by competition

so back to the drawing board.

The result was a new product-a placque-fighting

toothpaste in

a pump

called Check-Up. Minnetonka

was again positioning

,: elf in a major

industry, but avoiding direct competitive

threats.

WHAT

IS ENVIRONMENTAL ANALYSIS?

The business' environment

establishes the context

within which

the

firm functions. A business'

environment isis comprised

of a

set of factors (conditions

and forces) that affect the

business

and impact its performance,

but are external to

and largely

beyond

its control. When

managers perform an external

or

24 Part One

The Analysis Phase

167