PasteThe diversification strategy that is used by Luck Companies is dominant-business diversification strategy. Luck Companies is broken up into four different strategic business units: Luck Stone, Luck Stone Center, Luck Development Partners, and Har-Tru. Luck Companies employ the dominant-business diversification strategy because Luck Stone brings in over 80% of the total net sales and profit, and this specific type of strategy is employed when 70-95% of the revenue comes from a single business (Hitt, Ireland, Hoskisson p.177) In addition to that, Luck Companies has diversified itself into other markets and have made several acquisitions of other businesses.
These four units have several commonalities as well as differences. Luck Stone is the unit that operates crushed stone plants, a sand and gravel plant, distribution yards, and one specialty products operations. They strive to implement the business strategy centered on “superior customer service and logistical excellence”. Har-Tru is their unit that deals with tennis courts/accessories which Luck Companies acquired in 1997. They are also the leader in their respective industry. Luck Stone Center, which was rebranded multiple times, focuses on supplying architectural stone and manufactured products to middle to higher-end customers. Luck Development Partners focuses on the real estate/land Luck Companies own and the development potential. Each of these businesses are different in their own way as they all perform different functions and are even in different industries. One of the key commonalities between the four units is their innovation and growth. All four units have the common goal and strategy of continuously growing and innovating. For example, Luck Stone innovated and added sand and gravel to their product, and their strategy focuses on customer service and logistics as opposed to their competitors’ cost-leadership. Luck Stone Center added new products to their mix, started internationally sourcing, and focused on a different market. Har-Tru acquired several tennis product companies, which helped strengthen the brand name. Luck Development Partners continuously looks for new and unique places for real estate. Each unit strives to keep improving, growing and adapting but each also makes sure the companies values is the first priority. They all follow the same “value-based leadership system”.
Throughout the case, Charles Luck shows great ability to fulfill the strategic leadership responsibilities that is needed in his position. His leadership ability has grown and changed over time, which has allowed the company to be both successful and unified. In the early 2000’s Charles was able to realize that, despite their record sales, the company was not working together as a team as well as it could. Luck Stone was specifically brought up and it was believed that employees there were making decisions that didn’t correlate with the values that the company traditionally employed (Hitt, Ireland, Hoskisson p.c117) He implemented the Values Journey which resulted in the company transforming into a values-based company. In addition to this, he had emphasized the decentralization of his company. Charles thought this value-based mindset would better their results, but more importantly, do the right things. Their initial values in the journey were commitment, integrity, creativity, and leadership.
Charles and the company faced three unexpected events during Phase II of the Value Journey. The first event was 2008 recession that the economy faced. It hit the whole stone industry hard and caused the demand for their products to drop. Charles reduced expenses wherever he could but was forced to let go of 125 associates. Charles handled this in a superb manner as he gave them all kind severance packages and dedicated resources to those employees’ job hunts after. The second event was the firing of the president of the aggregate division. This firing proved just how committed Charles was to this new value-based leadership system. The president of the aggregate division had a great performance track record, but decided that he needed to go because his values were not aligned with the company’s. The last event was Charles being ill for a few months. This illness gave Charles a new perspective though, allowing him to think about his purpose and how to fulfill it. He came back from this illness with a new vision, “We will ignite human potential around the world and positively impact the lives of others through values based leadership.” (Hitt, Ireland, Hoskisson p.c121) Charles took this illness and created something positive from it.
The current five-year growth strategy and objective that Luck Companies is following are built on the four objectives of Financial Performance, Leadership Development, Business Excellence, and Growth. The company developed specific objectives and goals for each of their business units. They believe they will reach their goal growing their worth and revenue from $240M to $450M through the strategy of acquisition and internal growth and following their philosophy. These strategic plans for each of the units are major tools in the overall success of the company as a whole.
The company will face obstacles and challenges along the way. For example, challenges similar to the firing of their aggregate division president due to misaligned values could repeat with other employees who may not agree with the strategy. Another challenge might be their aggressive revenue of $210M. The company needs to innovate and grow significantly in order to reach this, but they have to tread carefully with their decisions on where to expand so they don’t start competing with their customers (which they are already aware of). To go hand in hand with the potential revenue challenge, the company might face of the challenge of expanding in order to reach this goal. It will be very difficult for the company to reach this increase without growing in each of their business units. With Charles Luck at the helm though, his great leadership, values, and strategy will guide the company to success.
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