Case Study: Hendrick's Way

When Hendrick Harding started his consumer products firm, he was convinced he had a winning product. His small, compact industrial drill was easier to use than any other on the market and cost 30 percent less than any of the competitors' drills. The orders began to pour in, and within six months Hendrick's sales surpassed his first year's estimate. At the end of the first 12 months of operation his firm was grossing more than $50,000 a month, and he had a six-week backlog in filling orders.

The rapid growth of the firm continued for two years. Beginning about four months ago, however, Hendrick began to notice a dip in sales. The major reason appeared to be a competitive product that cost 10 percent less than Hendrick's drill and offered all the same benefits and features. Hendrick believes that with a couple of minor adjustments he can improve his product and continue to dominate the market.

On the other hand, Hendrick is somewhat disturbed by the comments of one of his salespeople, George Simonds. George spends most of his time on the road and gets to talk to a great many customers. Here is what he had to say to Hendrick: "Your industrial drill has really set the market on its ear. And we should be able to sell a modified version of it for at least another 36 months before making any additional changes. However, you need to start thinking about adding other products to the line. Let's face it; we are a one-product company. That's not good. We have to expand our product line if we are to grow. Otherwise, I can't see much future for us."

The problem with this advice is that Hendrick does not want to grow larger. He is happy selling just the industrial drill. He believes that if he continues to modify and change the drill, he can maintain a large market share and the company will continue to be profitable. As he explained to George, "I see the future as more of the past. I really don't think there will be a great many changes in this product. There will be modifications, sure, but nothing other than that. I think this form can live off the industrial drill for at least the next 25 years. We've got a great thing going. I don't see any reason for change. And I certainly don't want to come out with a second product. There's no need for it."

1. What, if anything, is the danger in Hendrick's thinking? Why would some be concerned about his line of thought and the potential outcomes? Explain in detail.

2. Could the concept of understanding managerial versus entrepreneurial as described in the chapter be of any value to Hendrick? Why or why not? In your answer, be sure to compare and contrast the two concepts and give at least two examples of each.

3. How would you describe Hendrick's focus? Based on your evaluation, what recommendations would you make to him?