Summary of WL Gore case Session I

Like Dashman, we began by approaching the case in steps. Since Gore is a success story, it becomes
more complex to analyse it as it does not revolve around a given problem or situation. We have to
identify our own puzzles from the case and move towards forming conjectures. To start with, we have
the below two puzzles:

1. How can a firm relentlessly create cutting edge innovations in products and processes function
without a dedicated R&D unit?
2. How can a manufacturing company requiring to produce batch after batch of thousands of
varied products, to most exacting standards, and for customers who would be among the
most demanding, function with so much informality?

Let us call this identification of two puzzles as Step Zero.

Step One: Put down your first thoughts quickly

Caveats: a. So as to not lose any of them.

b. So as to not get blinkered/caged by them.

Step Two: Identify the Genre to which your firm belongs

Genre is identified by:

a. Identifying the immediate competitors/other players in the same industry
b. Identifying the two sets of markets Product Market and Factor Market

Step Three: Extract from the two sets of Markets as many insights as possible w.r.t.:

a. The firm (Gore)

b. The puzzles (Since we do not have a situation to worry about in sight)

Analysis at Steps Two and Three:

Step Two (a): Identification of competitors

The case reveals that Gore produces thousands of products, which are not related to each other. Note
that the word thousands is plural, which means multiple thousands. Being conservative, we take
the minimum, i.e. >= 2000 products. These are all varied products and hence represent >= 2000
markets where the buyers of one product may not be common to other products.

So who are its competitors? Well, none. There is no firm which has presence in all the markets as Gore.

With the huge variety of offerings, Gore can be positioned among the topmost level of complexity in
the Quartz-Jaguar complexity scale.

Unlike other firms, Gore does not have SBUs.

Step Two (b) and Step Three:

Product Markets of Gore:

There are 3 broad patterns/market structures for Gore:

1. Create new market:

They created a new market that did not exist earlier. For example, Cardiovascular Graph This
was invented by Gore and hence a new market got created, which had no supply/demand
curve earlier. Hence, Gore had the maximum control of this market.

Buyers Sellers
B1
B2
Gore
.
.
Bi

2. Enter existing market:

They entered the existing markets, with far better products, which increased the demand in
the product market, thereby increasing the market size. The superior product created a
demand which was met more or less by Gore and hence, Gore had control over the demand-
supply curves of the market.

Buyers Sellers
B1 S1
B2 S2
. .
. .
Bi Sj
Gore
3. Generic competition:
They entered markets with such products that took up on other markets. For example, when
the airlines drop their fares, customers of airlines continue to travel in airlines, at the same
time, customers of railways get poached by airlines. Another example would be the advent of
bikes in the market. Bikes were different than scooters but they almost completely killed the
scooter markets by converting the scooter customers to bikes.

New Product Generic Product

Buyers Sellers Buyers Sellers
b1 B1 S1
b2 B2 S2
Gore
. . .
. . .
bk Bi Sj
(Gore created a market and also tapped on another generic product market)
 Gore had control over the new product market and also controlled the generic product
market.

Hence, all the three patterns of markets converged to monopolistic market for Gore.

Taking Case 2 (Enter Existing Market), since it has multiple players, we can settle with the
below graph.

We take 2 time frames here:

a. Before Gore entered the market D1-D1 was the Demand Curve, Q1 the market size and S1-
S1 the Supply Curve.
b. After Gore entered the market The demand in the market increased due to superior quality
products and so did the supply due to Gore. The new demand curve is shown by D2-D2, Q2
the market size and S2-S2 the Supply curve. P1P is the premium.

Factor Markets of Gore:

a. Raw Material
b. Labour/Talent
c. Capital
d. Land
e. Others

Raw Material:

Gores products were based on only one raw material PTFE, which it purchased from Du Pont.

Buyers Sellers
Gore
B2
Du Pont
.
.
Bi
The relationship between Gore and Du Pont was important because of 3 reasons:

i. Du Pont had discovered PTFE.

ii. Gore, as employee, had worked for Du Pont earlier and hence, had strong relationship
with the firm. It would not be surprising if Du Pont showed favourism towards Gore in
times of high PTFE demand in the market.
iii. Gore was a major buyer of PTFE as all its products were based on only that material.

Discussions in Session II will be taken from this point.