As elaborated in a recent Kline & Company article from the November 2011 edition of the Harvard Business Review Brazil, commodity and specialty businesses have disparate needs and markets, and consequently a danger lies in attempting to consolidate these and falling into what authors Jonathan Goldhill, Sergio Rebello and Sunanda Desai deem the ‘specialty trap’.
The article points out that because of the major differences in competitive dynamics between these two types of businesses, management’s focus is also very different. Managers in commodity driven businesses rightly focus on cost minimization: low cost raw materials, operational optimization and efficient channels to market. Conversely, managers in specialty businesses focus on understanding and responding to customer needs, product innovation and targeted marketing and sales. (more…)