Problem
Scenario Question: Hammerbarn - For over 100 years, Hammerbarn has been a leader in developing handcrafted outdoor wooden furniture (adirondack chairs, benches, porch swings, hammocks, etc.). The company's reputation for craftsmanship and quality have led it to control 40 percent of sales in a nearly $2 billion market. At the same time, its largest competitors control less than 20 percent each of the market. Over the last two decades, however, Hammerbarn has seen the outdoor wooden furniture market slow in growth to 2 percent annually. As a response, Hammerbarn has sought out a number of alternative businesses to attempt to capitalize on its brand name, including the following:
A. ShapelySheds - Outdoor wooden sheds have been growing in popularity (nearly 18 percent per year!), particularly among the gardening crowd who typically have not purchased wooden furniture in the past. ShapelySheds now have 10 percent of the shed market; however, their largest competitor has 25 percent market share.
B. PlayItAgain - About 10 years ago, Hammerbarn decided to begin altering its wood furniture slightly to sell as high end playground equipment for city parks and schools. Because of its durability and quality, Hammerbarn has quickly gained the top position in the market (30 percent market share, while next closest competitor is 20 percent). As the number of individuals moving to cities have grown and investments have been made in safe outdoor play, the market is expected to grow at 12 percent per year for the foreseeable future.
C. Birdhouses of the Soul - Further leveraging their craftsmanship, Hammerbarn decided to complement their ShapelySheds line by introducing a line of birdhouses made out of maple, cedar, and pine. The brand's lack of awareness among gardeners and bird enthusiasts, however, has limited sales (Hammerbarn has less than 5 percent of the market, where two dominant players each hold 40 percent market share). Further, recent changes in the industry have slowed growth rate to 4 percent per year.
D. Plantificating - As a second extension to their line for gardeners, Plantificating is a line of finely crafted wooden planters of various sizes. As gardening has grown rapidly in recent years (16 percent growth), Hammerbarn has found its planters to have taken off quickest (nearly 20 percent market share) in a market that is relatively unconcentrated (5 other competitors combine make up less than 60 percent of sales with all other players being small).
E. ShakeItOff - Finally, as part of its eco-friendly line of wood products, Hammerbarn has been trying to bring back the wood shake shingle roof. Unfortunately, customers have not flocked back to shake shingles in recent years, losing market share to asphalt shingles and leading to negative industry growth (-8 percent). Hammerbarn is one of 6 players attempting to lead the return to wood shake shingles and each competitor has approximately 15 percent market share, while Hammerbarn has 10 percent.
Task
I. How does Hammerbarn's corporate level strategy create value / synergies? What are the competencies / resources that are likely shared between the businesses?
II. Using the Boston Consulting Group (BCG) portfolio analysis matrix, how would you define each of the 6 businesses Hammerbarn has? Why?
III. Based on your BCG portfolio analysis, in what businesses and with what funds would you encourage Hammerbarn to grow in the future?