Ace Company: Breadth or Depth Growth Strategy?
(10 pages of text)
Ace Company (Ace) was a Chinese start-up developing software for the Internet of Things (IoT). The company was founded in February 2015 by three colleagues for the initial purpose of providing an unprecedented universal IoT operating system, the absence of which was severely crippling developing development in IoT. By mid-2017, having proven the technical viability and market acceptability of its offering, the company was ready to scale up. However, the co-founders disagreed on the choice of growth strategy. One founder advocated extending Ace’s business to as many industrial scenarios and companies as possible, while the other founder was in favour of Ace focusing on and penetrating deeply into a few industries. The third founder was stuck in the middle and wanted to know which path they should choose.
This case can be taught in a graduate- or executive-level course in entrepreneurship and emerging markets. The case deals with the choice of growth strategy for a Chinese IoT start-up and illustrates the process of building that strategy. The case is structured to enable discussion of the process of developing a growth strategy for a new venture, the potential for disagreement between co-founders on the growth strategy, and the challenges and opportunities faced by a new venture in an emerging market. After working through the case and assignment questions, students will be able to do the following:
- Outline the options available to scale up a technology start-up, and explain the main advantages and disadvantages of each.
- Explain why it can be difficult for members of a relatively new management team to reach consensus regarding a firm’s growth strategy.
- Describe the main challenges and opportunities of establishing a technology start-up in an emerging market like China.
Information, Media & Telecommunications
China, Small, 2017
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