Oxo International – the Growth Challenge

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OXO International – The Growth Challenge

Entrepreneurship – Case write up

Bharat Sharma

Section A – Full time MBA

Class of 2016

1. In your opinion, what was the single most important factor to OXO’s success as a business? How did the company create this success?

The key success factor for OXO has been their ability to successfully design superior products, keeping customer usage as a differentiator to meet latent needs in the kitchen space. This product design capability coupled with their expertise in delivering these products at competitive prices has ensured that OXO has not only grown 50% YoY, but also ensured big profit margins.

OXO’s founding team, led by John Farber and his son John understood had a headstart in the fact that John knew the industry well and had already built a company (Copco) in the past. Their ability to leverage their industry knowledge and network was a differentiator.

John’s network brought about the association with Smart Design, that turned out to be a win-win engagement for both companies, as both companies grew symbiotically over the years. Together they formed the process for development of new products – a simple 7 step approach for launching new products.

The team also identified the challenges correctly. Knowing the need for flexibility and cost competitiveness in manufacturing, they used Asia as a low cost manufacturing base. Where tooling costs were low and quality consciousness was relatively high – since they were already producing similar products.

The team also enjoyed the cushion interms of initial funding, with both promoters and their family providing sufficient startup capital. They understood their limitations well too and started lean – no extravagant investments (infrastructure / promotions etc.)

1. How have the boundaries of the firm been set and how do the critical business processes work? How has OXO developed the skill set for managing its outsourcing? What are the risks inherent in OXO’s business model?

The firm inherently has no fixed boundaries - they identify product needs based on market demand, take help from Smart Design to develop the designs and prototypes, use the low cost manufacturing base in Asia to produce, outsource logistics, stock keeping and warehousing. The front-end sales is management by retailers and luxury stores who regularly front other kitchenware too. The only “functional activity” in-house is thus to market these products (Identify needs and develop the value proposition and identify the appropriate marketing mix).