The EVA Challenge: Implementing Value-Added Change in an ...

The Need for a Winning Strategy and Organization 31
can be all things to all people. We must pick our punches.” Briggs &
Stratton had long been the cost leader in the industry for highvolume
basic small engines, but in recent years it had ventured into
the high end of the market, only to lose money consistently. “I think
we’ve proven that we cannot profitably serve as an engine ‘job shop’
for the upscale OEMs [original equipment manufacturers],” the
memo argued. “The low-volume, high-featured segments of the industry
are characterized by the presence of numerous aggressive players
(primarily Japanese), with superior design engineering skills, and
low barriers to entry.”
On the other hand, the high-volume, low-cost end of the industry,
which offered engines without unnecessary bells and whistles,
was populated by two companies: B&S and a considerably smaller
competitor, Tecumseh. And barriers to entry were high, because of
the capital requirements. “It seems axiomatic,” the memo concluded,
“that the likelihood of high returns is greater on those battlefields
where there is only one currently viable competitor, and where a high
learning curve and economies of scale serve as a significant . . . barrier
to potential entrants. If we scrupulously adhere to this scope, I
think it is highly unlikely we would ever see an offshore frontal assault....If
we deviate from that scope, such a move by both offshore
and domestic competitors becomes much more likely, as [our] resources
are stretched and the competitive edge is lost.”
The decision was taken to concentrate all efforts on the value
end of the market. That was to be B&S’s core business, and it would
strive to again become the industry’s broad-scope cost leader. If
there were to be any forays beyond the core business, the company
decided that it would only be in a joint venture requiring a relatively
modest investment and with a partner that already had a competitive
edge in the relevant niche.
To become the cost leader and to boost sales with the Wal-Marts
and Kmarts, Briggs & Stratton needed to economize on both the
use of capital and labor costs. The EVA discipline focused attention