Business Strategies

A Case Study on Growth Strategy

Firms need to grow, but some choose to grow at a rapid pace to establish a strategic advantage while other firms choose to grow more slowly to control costs, control quality, and to maintain a foothold in the communities in which they have invested. Knowing how you want to grow is a critical element to running a successful business.

Some entrepreneurs grow their companies to unimaginable sizes, with out ever planning on expanding past their first store.

The founders of companies such as Subway, who started his first sandwich shop with a $1,000 loan from a friend, expanded through franchising to one of the number one restaurants in the United States. The founder of Sleep Train, the #1 mattress retailer in the Western United States opened his first store while his parents were on vacation. He leased a store, rented a truck to deliver, and bought a few mattresses and scraped his way to creating a profitable first store.

Both founders did not plan or expect to be able to expand even past a first store, they were simply trying to do something they thought could succeed at a very small level in the communities in which they resided. Now both founders run wildly successful and well established multi-million dollar companies.

These stories of accidental growth are examples of the all-American dreams. However, for other firms, large growth is planned for and executed in their business strategy.

A local company here in San Francisco, Body Time, was founded in 1970 as the original Body Shop. It wasn't until 1987 when an English woman visiting the Bay Area, visited Body Time and decided to open her own stores back in Britain. Wanting to expand her Body Shop internationally to the United States, she convinced the owners of Body Time (at the time named the Body Shop) to sell her the exclusive rights to use the name the Body Shop. So the original Body Shop changed their name to Body Time, while the new Body Shop expanded westward into the U.S. and began their huge growth by franchising regional stores.

The owners of Body Time clearly made a personal and strategic decision to stay small and local. With only a handful of stores in the San Francisco Bay Area, Body Time has never had the desire to expand beyond the local community, yet they obviously had a successful concept that could have expanded worldwide and with it brought them huge success and fame as it did for the current Body Shop.

Size doesn't guaranteed success and many entrepreneurs are satisfied with opening one store, for others, they want to build an empire from day one. Some of those entrepreneurs who planned on opening only one store went on to build and create some of the most successful businesses in the U.S., others have been content on staying local and immersing their business in the communities in which they have established themselves.

For those founders who seek to build a national chain from day one, such as Howard Schultz from Starbucks, the path followed and strategy implemented is much different, however the results are the same. Some make it, some don't. The commonality between founders who found their way to national success either by planning it or by not-planning it, was by offering customers something of value and continuing to find new ways to offer customers that same value.

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