Editors note
Article Type: Editors note From: Journal of Business Strategy, Volume 35, Issue 2
Two of the papers in this issue of JBS talk about business developments, actually business successes, that go against the grain and defy conventional wisdom and strategy.
When leading car manufacturer Renault bought a struggling car company in Romania in 1999, few observers expected that the brand would soar to current heights. But in 2013, the low-price Dacia brand showed “the greatest gain of any car brand in Europe, with sales this year [2013] surging 21.1 percent through November... well above the second-place finishers, Mazda and Jaguar, each with 15.6 percent increases, according to The New York Times (December 17, 2013). The Times called the Dacia “the hottest car in Europe for the year, with most of its sales in France, not the country of origin, Romania. Dacias success attests to Renaults prescience in rescuing the Romanian car maker and creating a subsidiary that draws upon French and Romania strengths. But Dacias success is also a result of the contracting car market in Europe, the financial crisis that began in 2007, and the consequent appeal of a very low priced car. Dacias start at 5,000 euros. But Romanias low wages, which help make Dacia affordable for many consumers, may not continue in the future. Worker demands for higher wages, according to the Times, may drive jobs to Morocco, which is similar to what happened in the USA when union demands contributed to the closing of plants in the USA.
In the meantime, Renault has created thousands of jobs in Romania. The JBS paper discusses the upgrading phenomenon. When a big company with deep pockets and a strategic vision launches a subsidiary in a lesser developed country, there are ripple effects, all of them positive. Renault and Dacia created jobs not only at the subsidiary but at suppliers and vendors, who were all located in Romania. The upgrading extended to universities and other educational knowledge institutes because the car maker needed expert human talent on a local basis. With Dacia recently introduced in six countries – the UK, Ireland, Denmark, Cyprus, Malta and Norway – in addition to the countries where it is already available, the brand should be a continuing success story.
Another JBS paper, on laggard innovation, also discusses appealing to market easily dismissed by most companies. While the youth market can hardly wait for the newest, most high tech phones to appear, another, quieter, segment refuses to join the tech party. Many older people do not need or want the variety of bells and whistles that new cell phones feature. They find the displays hard to read and the instructions hard to follow. The paper on laggard innovation focuses on an Austrian manufacturer of cell phones that found a market niche with a population eager to adopt simpler phones that functioned better for their needs. In many cases, this niche can easily afford the newest technology, but they do not want it.
We hope readers enjoy the range of international papers in this issue of JBS. We welcome comments and suggestions.
