Read the case study in Chapter 4, page 130, Strategies for Success under “In the

Question

Read the case study in Chapter 4, page 130, Strategies for Success under “In the Entrepreneurial Spotlight.” Answer the following questions:

1) What advantages does successful execution of their strategies produce for Shaw & Tenney and The Resort at Paws Up?

2) What are the risks associated with the strategies of these companies?

Shaw & Tenney

Started in 1858 on the Stillwater River in Orono, Maine, by Frank Tenney, Shaw & Tenney is the one of the oldest manufacturers of marine products in the United States. Although owner Steve Holt, a former mechanical engineer, has added wooden masts, spars, flagpoles, and hand-woven baskets to its original product line of wooden paddles and oars, little else about the historic company has changed. “We are still manufacturing the same high quality products, using virtually unchanged designs,” says Holt. “Some of the original machinery used in 1858 is still in operation today.” Although the company’s Web site generates some sales, the majority of Shaw & Tenney’s sales originate from its existing base of satisfied customers who tell others about the superior quality of the company’s signature paddles and oars and its passion for customer service. “We’re known as an icon for our products,” says Holt. “If you want a solid, one-piece, high-quality paddle or oar, you’re going to end up calling us.”

Holt credits much of the company’s success to the master craftsmen who take great pride in producing the finest quality, hand-crafted wooden paddles and oars. “No one else in the world makes paddles and oars like this,” says Holt. “Making these products takes a lot of eye–hand coordination. The key is the wood, but the craftsmen know how to respond to the wood.” Because of the sheer beauty of Shaw and Tenney’s paddles and oars, many customers treat them as works of art rather than tools for moving canoes and boats through water. “A lot of our paddles never touch the water,” says Holt, noting that some customers purchase them to hang on the walls of their homes, vacation getaways, or company board rooms. Shaw & Tenney sells about 3,000 paddles and oars each year to customers in all 50 states and through foreign distributors in Australia and Germany. The company recently partnered with another Maine icon, L.L.Bean, to create a line of limited-edition paddles in celebration of the centennial anniversary of Bean’s founding. The paddles are made from spruce and pine trees, some of which are more than 500 years old, that were reclaimed from the bottom of Lake Quakish, where they sank on their way to sawmills in Millinocket more than 100 years ago. “L.L.Bean is an icon in the state,” Holt says. “They’re known all over the world. And in our little niche, Shaw & Tenney is known worldwide for making oars and paddles.”

The Resort at Paws Up

Larry Lipson and his family own a 37,000-acre working cattle ranch on the banks of the scenic Blackfoot River (that inspired the novel and the film A River Runs Through It) near Missoula, Montana. Recognizing that other people would enjoy the breathtaking views and outdoor activities their ranch offered, Lipson built 28 luxuriously appointed cabins to rent to guests. Building on the success of their cabins, in 2005, Lipson started The Resort at Paws Up, four luxury camps where guests stay in safari-style tents that include all of the appointments of a luxury hotel room (including electricity and twice-daily housekeeping services) but with more spectacular views of rivers, lush meadows, and majestic mountains than most hotels can offer. Guests who go “glamping” (a mashup of “glamorous camping”) at Paws Up “rough it like royalty,” says Lipson. Guests sleep on king-size beds with designer linens; enjoy gourmet meals prepared by talented chefs; have access to a private master bathroom and Wi-Fi; sip cocktails while relaxing in comfortable, rustic furniture; and can summon an attentive camp butler for anything they need. “We refer to it as ‘nature served on a silver platter,’” he says. Although managing a ranch and a glamping resort can be challenging at times, Lipson says the benefits outweigh the costs. Revenues from Paws Up have increased each year even though nightly rates range from $875 to $3,275 per night. “We’ve discovered that there is very little price resistance among those who want to experience nature without giving up the creature comforts of a fine hotel,” says Lipson. “We’ve not only made each successive camp that we’ve built more luxurious than the last, but we’ve also increased the nightly rate. What truly differentiates Paws Up is that we are a very high-end resort situated on one of the most beautiful ranches in the west.”

(Scarborough 130-131)

Scarborough, Norman M. Entrepreneurship and Effective Small Business Management, 11th Edition. Pearson, 20140828. VitalBook file.

The citation provided is a guideline. Please check each citation for accuracy before use.

Explanation / Answer

Answer: (1) For Shaw and Tenney their strategy of creating a differentiation at the marketplace by making hand crafted wooden paddle and ores have worked well. They because of sticking to their old manufacturing and marketing process have been able to create a niche for themselves at the marketplace. They have evolved more as a marine artwork company rather than just any other marine product manufacturer. This has helped them to develop strong loyal client base which can help them in the long term. These strategies have certainly produced a competitive advantage in form of product differentiation.

The resort at Paws up has used a strategy of creating differential at the marketplace based on the unique experience and scenic beauty it offers. It has successfully projected itself as a high end resort offering a different experience. This has helped it to create a niche at the marketplace and create competitive advantage and charge premium for its services.

(2) The major risk associated with the strategy of Shaw and Tenney is that it can prove to limit the growth of the company. As the company’s products are becoming more of an art work and they have a limited market. As the products are handmade they cannot be mass produced and this limits the sales volume for the company. Also the company lacks expansion plans and product line and offering are as per the old pattern only and nothing new has happened. This may stagnate, the growth of the company.

The resort at Paws up may face similar risks like Shaw and Tenney where the growth upside for the company is very low. The company has only one resort with limited capacity for expansion. It is not easy for the company to extend its operations beyond this resort and create a similar experience. The company because its high end image has an appeal only to the high end customers and hence its target market is limited.

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