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\u2022CASE: CHUN KING CORPORATION
\u2022A CASE OF COW ABUSE
\u2022WHEN A DOG BECOMES A COW
\u2022WHEN THE HAT IS BIGGER THAN THE HEAD
\u2022LIMITATIONS OF THE PORTFOLIO APPROACH AS A
An extensive literature can be found that provides guidance to SMEs. In the literature on SMEs\u2019 strategy decision-making, the studies can be categorised into three areas. These are: the identification of success factors for SMEs (e.g., .Moore and Longenecker, 1987; and Cook, 1992), the prescription of strategic planning processes (e.g., Waterworth, 1987; Scarborough and Zimmer, 1991; and Bhide, 1994), and the derivation of heuristics for day-to-day operations of SMEs (e.g., Bennett, 1989; and Tarkenton and Boyett, 1991). In the marketing literature, studies have looked into the marketing mix strategy formulation of SMEs. For instance, Waterworth (1987) and Paley (1989) discussed how the 4 P\u2019s of marketing and the product life cycle concept, respectively, should be adapted for SMEs. Williams (1990) and Gerson (1994) also identified a set of new \u201cP\u2019s\u201d to assist SMEs in their marketing planning.
Although the focus is on the SMEs, most of these works fail to take into account explicitly the resource limitations faced by SMEs in their prescriptions to SMEs on strategy decision-making. Instead, strategy frameworks implicitly designed for bigger firms with plentiful resources are liberally borrowed and sold as solutions to SMEs, with little regards that resource constraint affects the latters\u2019 competitive strategy formulation. In addition, the existing literature on SMEs contains strategy recommendations that are at best na\u00efve.
This is because these strategy recommendations do not take into account competitive reactions, especially those from the bigger firms. Competitive reactions from bigger firms are crucial in determining the survival of SMEs in the market place. This is because the SMEs\u2019 margin of error is narrow by virtue of their resource limitations, and the fact that the
In short, there is little literature to guide SMEs with resource constraints in their competitive strategy formulation. There is also none that we know of to guide them in anticipating and reacting to competition from the bigger firms, which explicitly takes into account the SMEs\u2019 resource limitations and the competitive reactions of the bigger firms. When faced with competition from the bigger firms, it is therefore of no surprise therefore that SMEs turn to popular strategy approaches for directions, without realising the potential dangers in doing so.
Two of the most popular strategy frameworks in the literature are the portfolio approach in strategy decision-making (eg., Kotler, 1996) and Porter\u2019s (1980) framework of 3 generic strategies. For the rest of this chapter, we shall examine in depth the applicability of these conventional strategy approaches to SMEs. An actual case of a SME, Chun King under the new ownership of Yeo Hiap Seng, competing against bigger firms like La Choy (owned by ConAgra) in the market is studied. By doing so, we hope to highlight the hidden assumptions and flaws of the popular strategy approaches, which made them unsuitable for SMEs with resource constraints.
Chun King has been a household name associated with Chinese shelf-stable foods since Jeno Paulucci, who started and incorporated the company, single- handedly introduced chow mein to Americans. Sales, bolstered by award-wining consumer advertising, increased every year and exceeded $50 million in 1965. The
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