Dropbox Assignment

Question

A Hidden Champion

Hidden champion is a term that was coined by a German business consultant, Hermann Simon. A hidden champion is a small to medium-sized company that is narrowly focused on a small, highly specialized market. Such companies are usually not well known yet are very profitable. One example of a hidden champion is the French company Essilor.

Staying the Course

Essilor manufactures ophthalmic lenses, which is the formal name for contact lenses and lenses for eyeglasses. Over the years, Essilor has reinforced its single focus and avoided branching out into eyeglass retailing. Instead, the company concentrated its effort on going global. Today, Essilor is the industry's leader. Besides staying specialized and having a clear strategy, Essilor kept innovations coming. For example, Essilor invented progressive lenses. These alternatives to bifocal lenses have a gradual change in correction power from top to bottom. Like most other hidden champions, Essilor invests a notable four to five percent of its annual sales on research and development. Other characteristics of hidden champions include tight financial management, superior customer service, and foresight.

How would you evaluate this hidden champion based on the 4 functions of business we learned in this lesson? Submit your complete evaluation to the dropbox titled: Business Opportunities

Answer 1

Evaluation of Essilor as a Hidden Champion Based on the 4 Functions of Business

1. Planning

Essilor demonstrates strategic planning through its clear focus on the ophthalmic lens market. The company has identified its niche and successfully carved out a leadership position within it. By choosing to concentrate on manufacturing rather than retailing, Essilor has streamlined its resources towards innovation and market expansion. The company’s commitment to investing 4-5% of its annual sales in research and development highlights its forward-thinking approach in anticipating market needs and technological advancements. This planning is evident in the introduction of products such as progressive lenses, which signifies a keen understanding of customer demands and market trends.

2. Organizing

Essilor has well-organized operational structures that facilitate its specialized focus on ophthalmic lenses. The company likely employs a flat management structure that emphasizes cross-functional teams, enhancing communication and collaboration among departments involved in research, production, and marketing. This organization helps in swiftly bringing innovations to market and responding efficiently to customer needs, ensuring superior customer service. Moreover, efficiency in its supply chain and meticulous financial management illustrates a coherent organizational strategy that supports its specialization.

3. Leading

Leadership at Essilor has been pivotal in maintaining the company’s competitive edge in a highly specialized market. The company’s vision aligns with its operational execution, focused solely on developing advanced lens technologies rather than spreading resources across unrelated sectors. Strong leadership also reflects in its innovative culture, empowering employees to contribute ideas and improvements that can lead to better products. Furthermore, the emphasis on customer service implies that leadership is not only about internal management but also about cultivating strong relationships with customers, thereby enhancing brand loyalty and trust.

4. Controlling

Essilor exhibits effective control mechanisms through its focus on research and development and financial performance. Investing a consistent percentage of sales into R&D ensures that the company remains at the forefront of technological advancement, rather than falling behind competitors. The rigorous financial management practices likely involve setting clear performance metrics and closely monitoring both costs and revenues, enabling the company to maintain profitability while driving growth. By closely analyzing market trends and consumer feedback, Essilor can adapt its strategies promptly, ensuring that it meets its business objectives and stays aligned with its long-term goals.

Conclusion

Overall, Essilor exemplifies the characteristics of a hidden champion through its focused strategic planning, organized operational structure, strong leadership, and effective control mechanisms. By honing in on a specific market and continuously innovating, Essilor not only solidifies its position as an industry leader but also showcases how small to medium-sized companies can achieve global success in niche markets. Its dedication to customer service and financial prudence cements its status as a model for other hidden champions in various industries.