To Expand or Not: Strategic and Cultural Concerns in a Family Business

Tyler Burch, Idaho State University, Neil Tocher, Idaho State University, Dennis Krumwiede, Idaho State University
May 1, 2018
North America
Human Resources & Organizational Behavior, Strategy & General Management, Entrepreneurship
6 pages
family business, culture, psychological contract, stakeholders, Expansion
Student Price: 
$4.00 (€3.82)
Average rating: 

This decision-based case discusses whether Road Warrior Parts (RWP), an automotive recycling business owned equally by five brothers, should expand and divide its operation to better serve customers, or maintain operations at the current site. RWP had been growing rapidly in the past couple of years, due to automation and a new, high-margin, wholesale customer base. However, the firm had also served a lower margin retail customer base in a small town for over 20 years. Ownership was thus struggling with a decision of whether to expand the business to better serve both customer bases, continue serving both customer bases from one location, or stop serving its longtime retail customers. Cultural concerns were associated with all three options.

Learning Outcomes: 
  1. Identify and compare the advantages and disadvantages of each strategic option.
  2. Comprehend the cultural issues associated with the decision.
  3. Describe differing customer bases, and compare and contrast their needs.
  4. Identify key stakeholders and analyze how to balance their varying concerns while making business decisions.

Application: This case is appropriate for use in Organization Behavior, Management, Leadership, and Small Business/Family Business courses, as well as other courses that focus on culture or decisionmaking. The main issues in the case are the strategic decision of whether to expand the family business or not, as well as the cultural concerns associated with each decision alternative. Course discussions will want to spark creative thinking about advantages and disadvantages of each strategic option and steps that must be taken to minimize cultural issues resulting from any of the three decisions. The epilogue explains the brothers’ decision to expand, and the positive outcomes resulting from that decision.