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Edward Marshall Boehm, Inc.

Teaching Note
Overview
This case is an excellent vehicle for introducing the basic concepts of corporate strategy,
the structure of strategy, niching, and certain relationships between values and corporate
strategy choices. It should be used early in a business policy course. As a short case, it
literally can be read in class on the first day, if necessary. It allows the professor to begin
the class with a discussion orientation, yet obtain rather complete closure on a complex
strategy issue. The case itself concerns the positioning of a high quality, porcelain, art
objects company. It goes well with readings on strategy formulation, value chains and
differentiation, and the entrepreneurial context.
Session Structure
The case can be used to allow students to arrive at a definition of strategy empirically by
formulating a strategy in their own words. The question What should the strategy of
Edward Marshall Boehm be? tends to be an adequate opener. On the blackboard, the
professor can then capture and catalog the comments of the students as they come
forward, suing any of the many structures provided in the book that he or she finds
useful. A series of more structured questions (which follow) can be used to bring out
different aspects of strategy.
Since this is a small company, it is normally useful to develop the strategy functionally,
while emphasizing the interactivity between the functions. The marketing strategy
deserves special attention, but should not become isolated from the production strategy,
organization strategy, finance strategy, personnel strategy, or R&D strategy. These can be
clearly related by using a category such as corporate strategy or company concept to
show how the overall strategic concept drives and holds together the various component
strategies.
Marketing Strategy
Normally, executives or students immediately dive into the marketing strategy by
defining the product as a high quality art objects line. Some students will want to limit
the line severely and increase its price. Others may want to exploit the lines potential by
large scale production. Others will want to develop a multiple product line,
accomplishing several objectives for the corporation by using different product lines for
each goal. Following are some of the more important issues from a marketing viewpoint.
Product strategy: Should the company present a collectors art line? A limited line? A
high quality gift line? High quality porcelain products? Functional products such as
plates? Strictly art items? Multiple product lines? What degree of diversity is desirable
in the product line? Just porcelain products? Paste and bone china? Birds and flowers?
Other nature objects?

Pricing Strategy: What should be the pricing of the larger pieces vs. smaller pieces?
Margins at retail and wholesale? Pricing relative to other porcelain? Pricing relative to
other art objects? Should pricing be based on costs? Should potential speculation gains
in market value be shared with customers or absorbed by Boehm? How should each line
be priced? Each product within the line? Should Boehm or its retail distributors ultimate
pricing? Why?
Advertising Strategy: This should depend on the product positioning taken. Should
Boehm use electronic media? Printed media only? Which selected media? What
message should be carried? How should the ads be formatted to differentiate the
product? To whom should the ads be targeted? How should they attract attention?
Promotion: what kinds of promotions should Boehm use? Contests? Auctions? Gifts?
Shows? Museums? Non-paid promotions (e.g., articles)? Talk shows? And so on?
How can these be stimulated?
Distribution: Should distribution be broad-based? Selective? Exclusive? What are the
advantages and disadvantages of each? If selective or exclusive distribution is used, what
types of retail distribution outlets? How many per city? How many cities? Should mail
order be used? Should selling be direct? Or through wholesalers? How many
wholesalers/distributors? National or international? What controls should be maintained
over distribution channels? How can this be done?
Marketing Research: how can Boehm determine what products will be successful? It is
notably difficult to forecast sales for art objects. The company can use sales records from
previous customers to identify patterns. But much will depend upon the intuition of
Boehms management. Little research on a particular products potential is useful until
the product is actually produced and demonstrated to customers.
Overall Company Concept
The marketing strategy leads naturally to a discussion of the overall concept of the
company and the goals of Mr. and Mrs. Boehm. More astute students will suggest that
one should very quickly talk to the Boehms and see what their personal goals and values
are. These should be used to obtain a balance among various overall corporate goals.
The Boehms were interested in: (1) having Mr. Boehms art recognized and honored in
the art world, (2) supporting nature and wildlife causes in a significant way, (3) and being
very wealthy as a result of their companys success. Students will try to determine
distinct priorities among these. Point out that the Boehms wanted to meet all three goals.
But Mr. Boehm was more interested in art and nature. Mrs. Boehm was more interested
in art and profitability. Both were interested in wildlife causes. This sets the stage for a
discussion of the multiple goals of corporations and the impact personal values have in
selecting the balance among such goals. Profit maximization alone would not be an
appropriate goal in this situation. Students must then consider optimization vs.
maximization.

Manufacturing Strategy
Manufacture of porcelain requires first the development of artistic sketches of the
product. These must then be rendered in clay. The clay renderings are then rough cast in
porcelain. The porcelain must then be finely sculptured into a positive master. The
positive master casting must be very carefully designed, oversized relative to the ultimate
casting, to allow for differential shrinking during kiln baking. Much hand work is needed
both in the initial sculpting process and in later painting and glazing processes.
It is very difficult to automate a kiln for a wide variety of products. Balance of the size
and shape of products within the kiln is a highly judgmental process. This raises the
question of what skills are needed to expand production, in what sequence they should be
obtained, and whether or not production should (1) purposely remain hand work to keep
each product relatively unique or (2) be as mass production-oriented as possible. One
can raise questions as to how to train workers when the output is a highly artistic piece.
What kind of controls, motivation systems, inventory controls, etc. should be used?
Once the master negative molds have been made, a large number of similar castings can
be made with relatively little further capital cost. Mr. Boehm could perhaps design one
major piece per year (like Fondo Marino), plus perhaps one intermediate sized creation
per month, plus a large number of the small fledglings if so desired. The
distinctiveness of the ultimate product is clearly dictated by the sketch design and by the
sculpturing, casting, and coloring techniques used in the final product.
Initial molds for the large art objects might run well over $100,000. Molds for the
intermediate line might run $40-75,000; molds for the fledglings might cost only a few
hundred dollars. Variable costs depend primarily on the complexity of the product and
the degree of coloring and glazing they require. Variable costs per unit for the major art
line might run multiple thousands of dollars. Variable costs for the intermediate line
would run a few hundred dollars. Variable costs for the fledglings were tens of dollars. If
a limited line strategy is adopted, approximately how many should be run in each
category? Should the molds be broken?
Research and Development Strategy
Given the marketing and production strategies, what should R&D concentrate on? New
clays? Cost reduction? Diversification? Quality control? Should the company seek
patents or practice secret art? Its porcelain formulation is probably patentable. Process
are generally open art. How large should the R&D program be? How should it be
staffed?
Personnel and Organization Strategy
What kinds of people should be sought? In what sequence? Where would you find the
needed skills? What is the most crucial aspect of personnel policy? How should

employees be motivated? How can Mr. Boehms skills be transferred to other people?
How should the company be organized? Why?
Diversification Strategy
In what directions should Boehm diversify? Why? What portion of Boehms revenues
should be devoted to the bird line vs. diversification into other products? How should
this diversification be sequenced? Guided? Motivated?
Financial Strategy
How should Boehms proposed strategy be financed? Internally? By banks? Through a
stock issue? Through venture capitalists? What should Boehms long-term financial
concerns be? How can they maintain adequate control over the company in the long-term
future? How can they get their own money out of the company? How rapidly can the
company realistically grow? What will they do with it as they begin to age?
Policy and Limits
The case offers an interesting opportunity in each area to define the specific policies
(rules or limits) that give focus to a strategy. These are crucial to a niche or focus
strategy. In military strategy terms, the company can concentrate its forces in a single
segment and become the dominant factor in that segment. As the company dominates, it
produces higher margins through relative scale economies, can reinvest more than its
competitors, and thus increase its dominance even more. To do this, it must limit
distribution, limit its use of media very selectively, set strict rules on pricing, retailer
control, image control, production and quality control, personnel hired, and so on. Each
of these policies in the functional areas should be consistent. If they are, they create an
additive, or synergistic effect, which gives them even higher impact. The case provides
an ideal vehicle for discussing the difference between policies and goals, policies and
programs, and the use of policy in strategy.
Sequence of Actions
It is very productive to ask the students at a certain stage what actions they would take
first, second, etc. This brings up the use of sequencing to conserve resources and gain
focus in strategy. In this case, probably the first step is to gain better insights through
certain market information sources, then build the name of the company through careful
promotion and advertising, rapidly create a replacement for Mr. Boehm, develop support
skills in the organization for production, then change the distribution channels to match
the selected concept of the company, develop extremely careful quality and cost controls
during the buildup period, and later diversify the line slowly, diversify internationally,
and plan for a transition in management toward at least some percentage of professional
management.
Overall Strategy

The discussion should at certain crucial stages address who potential competitors may be.
Just porcelain manufacturers? All porcelain manufacturers? All art objects producers?
By clipping some advertisements, it is interesting to demonstrate the different positions of
competitors in this marketplace. Boehm has to define its basis for distinctive competitive
advantage. Is this just in design? Design and porcelain? Design, quality production, and
porcelain material? Design, quality, porcelain, distribution and image? If a high end
focus strategy is taken, each element in the companys value chains should support this.
Using the Porter structure one can carry this through very thoroughly. To integrate all
these functional strategies, a very interesting discussion can be developed on how one
conceptualizes the difference in appearance between Boehms birds and those of perhaps
Mr. Dowdy (in England), Royal Copenhagen, or other specialty porcelain groups. How
does one build on Mr. Boehms unique strengths in achieving this conceptual focus?
SUMMARY OF OUTCOMES
Students should not be asked to second-guess the actual decisions of management. Nor
do such decisions provide right or wrong answers to a case. Nevertheless, a brief
summary may be helpful to both professor and students in considering their own
analyses.
Mr. Boehm died shortly after the date of the case. Fortunately, an extremely talented
younger artist had been working with him for some time. This man had begun to share
some of Mr. Boehms own personal values concerning wildlife art and had developed
substantial skills in the design of porcelain art objects. Mrs. Boehm, however, was the
driving entrepreneur behind the future history of the company. Over a period of time, she
did the following things. She first concentrated on developing a firm reputation for a
limited line of collectors porcelain art objects. The major art objects were largely used
as promotional pieces to extend the reputation of the Boehm line. The mid-sized birds
were used as the major cash generator of the business. The fledglings were kept to sell to
younger people, to extend the reputation of Boehm to a wider marketplace, and to train
artisans for the company.
To establish the name of the company on a permanent basis, Mrs. Boehm called it The
Studio of Edward Marshall Boehm just as there was a Studio of Rubens, etc. in the past.
She then got Richard Nixon, who was then President of the United States, to let the
company design a Boehm statue as a gift of state for a significant occasion. Mr. Nixon
chose a Boehm mute swan as a symbol of peace for his impending visit to China with
Mao Tse-tung. This extraordinary piece began to symbolize the continuing capabilities if
the Studio of Edward Marshall Boehm.
Mrs. Boehm in earlier years had used as promotions ales of Boehm products to major
museums. She had arranged a gift of Boehm porcelain from President Eisenhower to
Prince Phillip and from President Eisenhower to Prime Minister Diefenbaker of Canada.
She was also very talented in placing articles in major art and living magazines about
the Boehm product and company. She also had obtained interviews on the major

television talk shows, etc. Along with Mr. Boehm, she had developed near the Trenton
Boehm factory one of the worlds finest private aviaries. She created a museum of
Boehm art next to the factory. The factory itself is a showpiece to help interest people in
Boehm porcelain.
When the name Boehm was sufficiently established, she cut the distribution of Boehm
products to approximately 50 retail outlets. These were very carefully selected to be the
premier department stores in their areas. The company very carefully controlled the way
in which the product was displayed, sales clerks were trained, compensated, etc. Boehm
maintained a careful control list of those who owned major Boehm products in order to
ensure that no one cornered the market. The product was priced well above its
competition. Nevertheless, Mrs. Boehm saw to it that purchasers obtained the major
benefit of any appreciation in value on the products. This supported their positioning as
collectors items in the art market.
The Boehms did not want to lose control over their product or concept. Consequently,
with some minor exceptions, they financed the operation internally. As the companys
profitability grew, its capacities to borrow grew. At key junctures, the company also
financed itself by encouraging its large, well-known customers to pay on relatively short
terms to maintain cash flows for the company.
In its technological strategy, Boehm tried to avoid disclosing its process or formulas for
porcelain through patent publications. It tended to practice its porcelain art quietly to
avoid competitive incursions. As the Boehm birds became more successful, the company
diversified its product line into other art objects such as flowers, special art displays
having to do with a geographical area (such as Egypt or China), and into thin porcelain
pictures. The latter product represents perhaps the most difficult of all porcelain arts.
Casting a thin porcelain picture with square edges, and maintaining key dimensions
during firing, is most difficult. The company has done very well. Boehm further
diversified by an acquisition of a bone china company (Malvern) in England. And its
products are now recognized worldwide. Mrs. Boehm is now beginning to face the
difficult question of what to do with the company in the long run.