Question

Frederick Cooper Lamp Company was founded in Chicago in 1923 by Frederick Cooper, an artist specializing in sculpture and watercolor art. The firm was launched in response to requests from clients that Cooper incorporate his works of art into lamps.

Relying on hand labour alone to make its lamps, chandeliers, and sconces, Cooper’s company quickly became recognized as a manufacturer of high-quality, distinctive products. Throughout its history, one of Cooper Lamp’s signature treatments was “the use of silk and other fine and exotic materials to produce unique hand sewn lampshades, many of which are adorned with distinctive bead and fringe treatments.” The firm used the focused differentiation business-level strategy, which essentially means that Cooper Lamp made expensive products that provided unique value to a small group of customers who were willing to pay a premium to purchase uniqueness (we fully describe the focused differentiation strategy later in the chapter).The words of a company official reflect Cooper Lamp’s strategy: “We offer a very high quality product. Our shades are hand-sewn, using unique fabrics. We use unique materials. We put things together in a unique fashion and as a result we have a very good name among the designers and decorators, and the stores. We sell to very high-end stores, [including] Bloomingdale’s, Neiman Marcus, [and] Horchow.” Thus, Cooper made “really expensive lamps for a niche market.” Cooper’s cheapest lamps sold for $200, while its crystal chandeliers cost upwards of thousands of dollars.

The reason we use the past tense to describe Cooper’s strategy is that the firm as it was known changed in August 2005. At that time, Cooper left its historic Chicago manufacturing facility, as required by the terms of its sale to developers who intend to convert its historic 240,000- square foot building into residential condos. The four-story building was sold and workers were laid off because the firm had to reduce the costs it incurred to manufacture its high-quality products. Some of the dismissed workers had been with the company for over 40 years. Other changes were in play as well, as indicated by the following comments from an employee: “We’ve sold the name but we can’t say who bought it. That was part of the deal. But we can say Frederick Cooper will not be who it was before. But we’re not going out of business. The new name will be Frederick Cooper Chicago.”

What caused the demise of Frederick Cooper Lamp Company? The answer is perhaps familiar: declining demand for high-quality handmade products; inefficient, high-cost manufacturing facilities; and cheap imports from other nations that offer customers a reasonable degree of quality at a substantially lower price. From a strategic perspective, the firm’s demise resulted from its below-average returns, which was a direct result of its not successfully implementing its business-level strategy.

Sources: R. Berg, 2005, Frederick Cooper workers to strike, Chicago Indymedia, www.chicago.indymedia.org,

Question: Using the case example of the Frederick Cooper Lamp, Identify evidence of the different types of generic strategies being pursued by the company. Then, explain what factors are influencing the choice of strategies that you identify and why? Provide current examples to support your answers by exemplifying each generic strategy alone.

Answer 1

The above case of Frederick Cooper Lamp uses the following strategies for its business

1. Focus Market Strategy :- Here the company focuses only on expensive lamps which will be bought by the elite members of the society. they are targeting a particular section of society. it is clear from the statement " Coper lamp made expensive product that provided unique value to a small group of people who are willing to pay a premium to purchase uniqueness.
2. Differentiation market Strategy :- The company uses exotic mateiral for making its lampshed. They are hand sewed by skilled worker who have been in the profession for may years. the beads and silk used for the shed is also rare and expensive, which increases the value of the lamp.

The factors which are influencing the choice of strategies are the following

1. Focus market Strategy:- Here they are concentracting only on the elite class of society. The product is only sent to the high class stores. They also have good name with high end designer and decorator. They are keeping their product line confined to the high end people of society who are willing to spend money for a expensive product.
2. Differentiation market Strategy :- Here the product uses unique material in the manufacturing like exotic silk, unique beads. Due to this they have a different value addition than the regular lamps in the market. The price is also bit high, but it compentiate against the rare material used for its decoration.

Current Examples which represent the generic strategies are:

1. Focus Market Strategy :- Here we can consider the automobile brand Rollsroyce. It produces very less number of cars and they are very expensive. They are sold only to the elite section of society who can afford such high price. Owning a rollsroyce car is also a luxury and matter of pride, which differentiate the brand from other car brands.
2. Differentiation market strategy :- Here we can consider the example of blackberry mobile phones. They use their own secured network so that data is secured and there is no leakage. Due to this they offer a unique product and stand different against other mobile phone brand.
3. Cost Leadership Strategy :- This is another strategy in generic model where the focus is on having low cost material for the manufacturing and due to this they can offer competitive price in market. An example of this is MI television brand. The use local assembly and local manufacturing model where the components are manufactured locally and assembly is done. Due to this they are able to have a low manufacturing cost saving on imported item.