GROWING YOUR BUSINESS
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From the excerpt, one can conclude the following to be some of the mistakes Nau’s management made in executing their strategy. First, the company was going too big too fast. Instead of building its brand progressively and slowly establishing itself as a force to reckon with in the industry, Nau was quickly trying to exploit available markets without precaution. After opening its first store in March 2007, the company was in the course of opening an additional eight stores within the same year. With such a fast growth pace, it was a matter of time before the firm began to encounter significant challenges.
Secondly, the company’s business model was flawed. Instead of embracing the brick and mortar business model, the firm practiced the disintermediation alternative. While the objective of this strategy was to lower the costs to the customer and maintain a direct relationship with them, it was highly involving and costly to implement. However, the brick and mortar technique would have been an ideal option for Nau because of its flexibility. The organization needed to develop a user-friendly website that they could employ to reach even a wider range of consumers and also use it to maintain excellent interpersonal relationships with its customers.
Another mistake was that the company failed to assess the volatility of the capital markets, and it had not put in place contingency funds to facilitate its rapid expansion. Just a year shy of its inception, Nau closed its operations via a statement on its website blaming the highly risk-averse capital markets. From this declaration, it is clear that the company had failed to conduct extensive research on their potential investors, and it had no backup funds to facilitate its operations in case of risk occurrence. The organization’s management failed to persuade existing investors on the venture’s viability and the enormous return on investment that they were to obtain in the long-run. There is also the challenge of specialization. From its approach, it is evident that the organization was overextending itself right from the number of styles it was offering to the various market penetration strategies that it was using. Adopting a specific market entry technique such as the customer focus approach or the product focus methodology could have come in handy for the company.
I strongly believe that it was a wise decision for Nau to partner with Horny Toad for the following reasons. First, the company had an excellent brand image in its market segment, i.e., the outdoorsy look, a perfect fit for Nau. Therefore, Nau could use its unique brand and reputation to re-invent itself in the market. Secondly, Nau could immensely benefit from the distribution networks of Horny Toad. The fact that some of Nau’s products currently sell in stores such as Uncle Dan and Paragon is a testament to this fact. It was a dwindling enterprise, but its newly formed partnership has revived the firm, and slowly it is regaining its competitive advantage.
Thirdly, affiliating itself with a top-notch brand such as Horny toad helped restore the faith of both shareholders and potential investors. It depicted to the public that the firm has turned on a new leaf and had been transformed for the better. In conclusion, the symbiotic relationship between Nau and Horny Toad was beneficial for both entities. Horny Toad could take advantage of Nau’s back-office support and infrastructure, and Nau could use Horny Toad’s unique image to regain its market identity.