Strategic Planning in the Small Business

Unit

3

HO 3-3 (continued)

Capsule

4-2

The Blue

Ribbon Car Wash

Sue

and Jim Acres operate

the Blue Ribbon

Car Wash in an

affluent part

of the city.

They do not market

their car wash

to the general public,

and

the general public

would not typically

frequent it anyway.

This is because

of both

the cost and the

nature of the service

provided. Charging

more

than

thirty dollars

for a wash job and

fifty for a wash

and wax, Blue

Ribbon

caters oniy to

those who drive expensive

cars such

as Mercedes,

BMW's, Audi's,

Cadillacs, and

Lincolns. Cars

are accepted by

appointment

only and must be

left for at least

four hours.

car

The

is

washed by hand

using only top

quality cleaners

and waxes and it

is

cleaned

and vacuumed

inside. A fabric

protector is applied

if desired.

Wheels

are scrubbed and

wire v heels are

carefully attendcd

to-if

necessary

with a toothbrush.

For an

additional charge,

the engine

compartment

can be cleaned,

the trunk can be

vacuumedt, and the

oil can

be changed.

Sue reports

that business

is brisk-six cars

a day. Some

owners

wait as long as two

weeks for an appointment.

The Expansive

Growth Posture

A business

that assumes an expansive

growth posture

builds on one

or more of the previously

discussed

postures. Due

to past success and

promising outlook,

management realizes

that there

are

opportunities to expand

the company's

scope of operations.

An expansive

growth posture

will generally

take one of two

forms.

First,

the business may

undergo an expansion

of its primary

locatioa. This may

entail enlarging

the

present facility or

relocating to a lager

facility. There

is no attempt to alter

current products

or markets.

In fact, it

is the overall strength

of the market

and acceptance of

the products that

necessitates

expansion.

The business

will do the same things

it has always

done, but additional

capacity will

enable it to reach

larger numbers and

hopefully realize

greater returns.

A

second form of

expansive growth

is when a business

establishes additional

facilities in

promising

new market

areas. One must

realize that this multilocation

approach

is oriented

toward

new market areas,

but not new or

different target markets.

Further, the

product remains

unchanged.

The customer

and product characteristics

of the

target market that

have provided

past

success are still

emphasized. However,

new geographical

markets that

are consistent with

these

characteristics, and

that possess the

potential for developing

existing product

lines are

identified and

tapped.

The Crystal Rug Cleaners

example in

Capsule 4-3 shows

the adoption of the

expansive growth

posture after

successful -utilization

of the single

product/market

posture. As the

example

illustrates,

an expansive growth

posture allows

the business to

reach the capacity

necessary to

garner returns from
additional business.
Of course, careful
environmeital
and internal analysis

,.s
critical to the success
of this posture.
A misreading of
competitive forces
or target market

demands
and characteristics
could result
in expensive capital
expenditures and
underutilized

facilities.
Difficulties may
arise if unnecessary
expansion occurs,
most notable
are questions of

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