Dr. Onoda’s Lanchester Theory: Science to win the competition, brings all the basic principles and theories that form the calculus and statistics of the Lanchester Laws together in a single volume. Although reading this book requires some special knowledge of mathematics, I strongly [...]]]> Lanchester Readings 1914 to present

J. Schuler (Editor)

Review

Dr. Onoda’s Lanchester Theory: Science to win the competition, brings all the basic principles and theories that form the calculus and statistics of the Lanchester Laws together in a single volume. Although reading this book requires some special knowledge of mathematics, I strongly recommend it as a required textbook for the study of lanchester. I would like to express my deepest praises to Dr. Onoda for his hard work over so many years. — Dr. Nobuo Taoka, author of Lanchester Strategy Volume 1 –This text refers to the Paperback edition.

Product Description

This book presents the interested reader/researcher a collection of all the various papers in the public domain published since Lancher’s 1914 contribution. The publisher welcomes and submissions of papers and/or case studies of “Lanchester Strategy” for inclusion in the next edition of the work.In large sie 8.5 ins x 11 ins format, 17 articles, bibliography.

Language Notes

Text: English (translation)
Original Language: Japanese –This text refers to the Paperback edition.

About the Author

J. Schuler is the founder president of Lanchester Press Inc., a publishing company dedicated to works by and about F. W. Lanchester (1868-1946) including the development in Japan of the Lanchester strategy of sales and marketing.

F.W. Lanchester – the visionary and Renaissance man

To say that the Lanchester was different hardly does justice to one of the most remarkable automobiles of the Edwardian Age. Even in 1910, its bug-eyed, hoodless appearance was so unorthodox that the directors of the Lanchester Motor [...]]]> Frederick Willliam Lanchester the “Leonardo” of the Machine Age

1910 Lanchester Double Landaulet Car-Engine: 3.6 liters, -42 horsepower at 2200 RPMTop Speed: 54 mph -Price: 750 pounds sterling

F.W. Lanchester – the visionary and Renaissance man

To say that the Lanchester was different hardly does justice to one of the most remarkable automobiles of the Edwardian Age. Even in 1910, its bug-eyed, hoodless appearance was so unorthodox that the directors of the Lanchester Motor Company in Birmingham, England, feared it would be spurned. Since the turn of the century, the long hood and cowl had enjoyed wide public acceptance in Europe. The Lanchester possessed neither of these features, and thus flew in the face of fashion. But that was nothing new. It’s inventor was uninterested in how it looked as long as it satisfied his exacting standards for fleet, dependable transportation with optimum comfort for its riders. Frederick Lanchester was a Renaissance man whose visionary automotive achievements are reflected in many modern cars – seldom with any acknowledgment of their origin. His costly and smooth-running automobiles bore what came to be called the “Lanchester look.” Depending on who applied the label, it was either intended to convey contempt or acclaim.

F.W. Lanchester – the inventor

As a young engineer who specialized in the development of gasoline engines, Lanchester’s true interest was mechanical flight. To avoid being branded a lunatic, he wisely applied his considerable genius to an interim problem that he believed would advance the science of aeronautics. In 1895, after two years of careful study and experimentation, he produced the first serviceable four-wheeled gasoline car in England. He did it by studying and then improving upon what had been done on the Continent up to that time. Instead of relying on the components of others, however, he designed and built his own. When he needed a tool to make a part, he built that, too. His objective was to create a car completely from scratch, and in doing so he made history.
He was the first to use the live axle and worm drive – a feature later widely adopted for heavy transport vehicles. He introduced the tubular frame and the intermediate speed, or second gear, in his transmissions. His effortless system of shifting gears foreshadowed the automatic transmission. He was the first to stabilize steering. From the outset, he manufactured interchangeable parts machined to the finest tolerances. He did all of this before 1900, and he still found time to patent a process for color photography (1895) and to study mechanical flight. He perfected and patented the wick method of carburetion, he employed detachable wire wheels, and he invented disc-type brakes (1903), stamped steel pistons, hollow connecting rods, the torsional vibration damper, and the harmonic balancer. To prevent bolts from being jiggled loose from his cars – a common problem in early motoring – he designed and manufactured the finely cut M thread. He was the first constructor to use an accelerator pedal and the first to attach scraper rings to pistons.

F.W. Lanchester – the manufacturer

With the backing of Birmingham businessmen, Lanchester launched his 10-horsepower production automobiles in 1901. Rudyard Kipling was among the early buyers. A loyal clientele soon developed. Contrary to the custom of the times, Lanchester insisted on manufacturing bodies for his cars, instead of offering them as bare chassis to be finished by coachbuilders. Using jigs, he pioneered interchangeable bodies that could be removed in minutes.

A new and improved line of Lanchesters was announced in 1905, featuring models of 20 and 28 horsepower. The car in the Behring Collection is believed to be the only vintage Lanchester in the United States and is one of the few survivors from its period. It is a six cylinder, 28-horsepower Double Landaulet on the long wheel base of 11 feet, 5 inches. Displacement is 3.6 liters. The engine develops 42 horsepower at 2200 RPM, producing a top speed of 54 MPH. The Price was 750 Pounds, or approximately 3,750 dollars. The canopy over the chauffeur’s seat is removable, the windshield tilts backward, and the landaulet collapses, creating an open car. Carried on cantilever springs that were later copied by Rolls-Royce, the car glides along the roadway. Crankshaft vibrations that made the earliest six-cylinder cars shake like a barrel of bones were deadened as a result of Lanchester’s inventiveness. ”I overcame this difficulty,” he said modestly, “by fitting the flywheel at the front end of the engine instead of the rear end, and employing a pressure lubricated multi-disk clutch for the transmission which acted as a damper.” Other six-cylinder manufacturers simply told their customers by way of reassurance that what they were hearing-and feeling-was “the power rattle.”

F.W. Lanchester – the pioneer

The Lanchester automobile owed its unusual appearance to the position of its engine, which sat longitudinally between the two front seats, well behind the axle. While this configuration gave the car greater stability, it also made it look like a motorboat with engine amidships. The gas tank sat beneath the chauffeur’s seat. A small pump fed the famous wick carburetor, which, when opened, resembled a dishpan sprouting stalks of celery. The cotton wicks absorbed gasoline from a reservoir below and emitted the vapor into a chamber above. Heated air carried the vapor into the induction port, where it was mixed with cooler air before entering the combustion chamber. The wick carburetor was oderless, clogless, and in other ways superior to contemporary spray carburetors, which often failed at high speeds. For proper maintenance of the carburetor, the manufacturer recommended that the wicks be removed and washed every ten years.
If this seems like a commendable record of performance, consider the transmission, whose parts often functioned for three decades without replacement. All over England, vintage Lanchesters were still being driven daily during the late 1930s-long after the company had been absorbed by Daimler and its inventor had turned his talents to optics, music, relativity, radiation, and poetry. Frederick Lanchester died on March 8, 1946, at the age of seventy-seven. Much of the framework for modern automobile technology had its genesis in his fertile mind, half a century before.

This article is reproduced with permission of the Behring Automobile Museum of California
and is copyrighted by the Behring Automobile Museum.

by Dr. Nigel Campbell, Manchester School of Business UK
with permission of the Financial Times Newspaper England.

The connection between F. W. Lanchester, who designed one of the first British cars, Admiral Lord Nelson, the famous British hero, and a modern Japanese marketing consultant is [...]]]> A British Military Theory Finds Favor Among Japan’s Businesses

by Dr. Nigel Campbell, Manchester School of Business UK
with permission of the Financial Times Newspaper England.

The connection between F. W. Lanchester, who designed one of the first British cars, Admiral Lord Nelson, the famous British hero, and a modern Japanese marketing consultant is not one that immediately springs to mind. And yet to the Japanese business community this eccentric link is becoming increasingly familiar as managers learn of the military strategy used by all three to great effect.

Dr. Nobuo Taoka

The consultant in question is Nobuo Taoka, who, since its foundation in 1976 has turned his firm, Lanchester Systems KK, into one of Japan’s leading marketing consultancies. His company bases its advice entirely on Lanchester strategy, a strategy of military confrontation developed by the British engineer and mathematician F. W. Lanchester (1868 – 1946) which adds considerable weight and precision to the well-known American principles of market segmentation and “niche strategy.” Since its emergence from the shadows of history in the early 1970s, Lanchester strategy has reinforced the Japanese tendency to adopt a “laser beam” approach to market penetration into one precise segment after another, until the onslaught becomes a veritable “cascade” into the market as a whole.

Discovery of Lanchester’s laws

It became quite by chance that Taoka came across a cursory reference to Lanchester Strategy 30 years ago in a Japanese government document. He was intrigued to discover that it had been used by the U.S. Navy against the Japanese during the war in the Pacific. Along with a colleague, Taikohboh Onoda, he began seriously to research Lanchester’s military principles and to develop ways of applying those principles to business competition.
Over the past 13 years, Taoka’s ideas have become well known and widely accepted in Japan. Tokyo bookshops have shelves full of his works, including such titles as “Lanchester: An Introduction to the Strategy (published in 1972), and more recently, “Practical Applications of the Lanchester Strategy” (1982). Total sales of his books have reached over 1.5 million copies and on top of that, over 1,000 copies of his video tape have also been sold.
Taoka’s following among the Japanese business community is such that two lanchester Clubs have been founded, in Tokyo and Osaka, at which practical applications of Lanchester Strategy are regularly discussed by senior executives from large organizations such as Matsushita, Sumitomo and Kanebo cosmetics, as well as from smaller enterprises.

F. W. Lanchester

A latterday Leonardo da Vinci, F. W. Lanchester was responsible for far more than the construction in 1985 of the first in a line of pioneering British cars. He filed more than 400 patents and wrote on such diverse subjects as music, poetry and aerodynamics. It was during the great war that he published his work on the theory of conflict. [Aircraft in Warfare, the Dawn of the Fourth Arm - ed]

Man-to-man

He developed two laws to govern military combat. The first applies to ancient warfare where the battle is a series of man-to-man duels. In this case the fighting strength of an army is proportional to the efficiency of its weapons times the number of troops. The second law applies to modern warfare. Here, the fighting strength of an army is proportional to the efficiency of its weapons times the square number of troops. The square function arises because in a modern battlefield concentration of fire power is possible and the larger army is able to wipe out the smaller army at a much greater rate than might casually be supposed.
Based on Lanchester’s work, Taoka has built a quantitative framework for the analysis and formulation of market share strategy. It gives particular strategic significance to certain market share targets, to the degree of market share differences between competitors, and to the overall market share “patterns” that these create.

Concentration and the Battle of Trafalgar (1805)

The over-riding message from Lanchester’s second law is the importance of concentration. Although Lanchester was the first to show the effects mathematically, the importance of concentration has been known to military and naval strategists for some time. For example, Admiral Lord Nelson , had fewer ships at Trafalgar than the combined French and Spanish fleets. If he did battle in the conventional manner, he would be defeated. He therefore planned to sail his ships through the middle of the enemy fleet. Having boldly cut the enemy in half, he then planned to concentrate his ships on encircling and attacking one half of the opposing fleet. With the square law in his favour, he would achieve such a crushing victory over one half of the enemy fleet that he would still have enough ships to take on the second half with some hope of success.

Concentration strategy in business today

For today’s business strategist, intent on entering a new market, the concept of concentration by splitting the enemy force, and attacking one part at a time, is one of the most important to be derived from Lanchester Strategy. Another is the principle of aiming for dominance, which follows from the extra stability gained from a high market share. The third is the principle of target separation. Strategy must distinguish between smaller competitors which can be attacked, and larger competitors against which the company must protect itself.
Combine the principles of domination and concentration, it becomes eminently clear that market penetration depends on building a series of strong positions in different segments of the market. Whenever possible, Taoka recommends dividing the market geographically, as well as by product and consumer category.

The Canon – Xerox copier battle

This was part of Canon’s strategy against Rank Xerox in the UK in the late 197s and early 1980s. First its resources were concentrated on Scotland. Having captured about 40 percent of the market, Canon began to attack selected and tightly defined regions in England, before making a determined push in London with a numerically larger salesforce.
Having penetrated the market by achieving dominant positions in a series of geographic markets the newcomer is then ready to invest more heavily in product development in order to broaden its range of product markets and consolidate its position in the marketplace. Following these strategies – they have national coverage and distribution, and concentrate particularly hard on product development and differentiation.

The Pedigree Petfoods – Unilever battle

Thus Pedigree Petfoods has used its comprehensive product range and regular launch of new products to hinder attempts by Unilever which possesses low-cost raw materials and considerable marketing strengths, to penetrate the British petfoods market.
These strategies can be further refined by considering the most appropriate course of action for companies, with various rankings within different market share patterns. Take the strategy for market leaders. At one end of the scale – a “premium” market where it has over 42 percent and fulfils other conditions – it can rely mainly on innovation and product development to defend its various market segments. But at the other extreme, where no company has over 26 percent of the market, the market leader must take all sorts of action to achieve a more stable position. This may include trying to acquire competitors and taking advantage of newly emerging parts of the market to make a pre-emptive strike.

Segments

The strategies for companies ranked number two, three or four are roughly similar to each other in all of the market share patterns. Like newcomers, they must look for segments of the market which they can dominate, and which wherever possible are insulated from attack of stronger companies. This may involve attacking other “followers” in order to build a stronger position for the final attack on the market leader.
Of course, business strategy is more than just market share atrategy. But given the emphasis which the Japanese place on this aspect of corporate strategy it is unfortunate that lanchester’s followers in the West are largely confined to the narrow worlds of mathematics and operations research.

This article originally appeared in the Financial Times in 1986 and is reproduced with permission of the Financial Times of London England

For Contributions to the Fundamental Theory of Aerodynamics
Citation 16th September 1931 London

Frederick William Lanchester, now residing at Dyott End, Oxford Road, Moseley, Birmingham, England, was born 23 October 1868, at Lewisham. His father was Henry Jones Lanchester, architect.

He studied at the Royal College [...]]]> THE DANIEL GUGGENHEIM MEDAL
FREDERICK WILLIAM LANCHESTER

For Contributions to the Fundamental Theory of Aerodynamics
Citation 16th September 1931 London

Frederick William Lanchester, now residing at Dyott End, Oxford Road, Moseley, Birmingham, England, was born 23 October 1868, at Lewisham. His father was Henry Jones Lanchester, architect.

He studied at the Royal College of Science, South Kensington, England, 1886 to 1889, but did not graduate. There was no third year engineering at the college. Lanchester took mining but abandoned the course, read for engineering in South Kensington Library and attended engineering lectures and workshop tuition at the Finsbury Technical College in the evenings. In recognition of his great contributions to engineering science and aerodynamics, the University of Birmingham conferred on him in 1920 the honorary degree of Doctor of Laws.

Dr. Lanchester is a Fellow of the Royal Society, a member of the Institution of Civil Engineers, the Institution of Mechanical Engineers, and the Institution of Automobile Engineers, an Associate of the National Academy and the Institution of Naval Architects, and an Honory Fellow of the Royal Aeronautical Society. He was a member of the (British) Advisory Committee for Aeronautics from 1909 to 1920. He was President of the Institution of Automobile Engineers 1910-11 and President of the Junior Institution of Engineers 1916-17 and 1917-18.

On 27 May 1926, the Royal Aeronautical Society of Great Britain bestowed upon him its gold medal which had previously been awarded to only five persons, Orville and Wilbur Wright in May, 1909; Octave Chanute in July, 1910; Professor George Hartley Bryan and Mr. Edward Teshmaker Busk in May, 1915. On the occasion of receiving the medal Dr. Lanchester also read the Wilbur Wright Memorial Lecture for 1926 on the subject “Sustentation in Flight.”

Among his valuable contributions to the literature of aeronautics are the following books and papers:

Paper to Brimingham Natural History and Philosophical Society, on the theory of flight, 1894.

Theory of Stability (Patent 3608), 1897.

Aerial Flight, a two-volume treatise with the subtitles,
Aerodynamics, 1907,
Aerodonetics, 1908. (Translated into German by Professor C. Runge, of Gottingen; published by Teubner, Leipzig. Translated into French by Commandant C. Benoit; published by Gauthier Villars, Paris.)

Aircraft in Warfare, 1914.

Flying Machine from an engineering standpoint, 1914.
(James Forrest lecture of the Institution of Civil Engineering Congress, San Francisco, 1915. (Revised and corrected as an appendix to the Reprint edition of the James Forrest Lecture.)

A Contribution to the Theory of Propulsion and the Screw Propeller. (Read at the Spring Meeting of the 56th Session of the Institution of Naval Architects, 25 March 1915.)

TheAerofoil in the Light of Theory and Experiment. Paper before the Institution of Automoblie Engineers, 1916.

The Screw Propeller. Paper read before the Institutiuon of Automobile Enginers, 1916.

The Wilbur Wright Memorial Lecture before the Royal Aeronautical Society, October 1926.

Lanchester was one of the original members of the Aeronautical Research Committee under the Chairmanship of Lord Rayleigh. He contributed many papers to the Committee.

Lanchester was the foremost person to propound the now famous theory of flight based on the Vortex theory, so brilliantly followed up by Prandtl and others. He first put forward this theory in a paper read before the Birmingham Natural History and Philosophical Society on 19th June, 1894. In a second paper in 1897, in his two books published in 1907 and 1908, and his paper read before the Institution of Automobile Engineers in 1916, he further developed this doctrine.

In a lecture delivered in 1915, Lanchester said: “The author’s theory of sustentation in flight is based on the more general theory of vortex motion. The author believes he can claim priority as far as the discovery of the vortex or cyclic system surrounding the aerofoil is concerned, this having been the basis of a paper read before the Birmingham Natural History and Philosophical Society in 1894, and a further paper submitted by him to the Physical Society of London in 1897. The theory in question, with the results of a considerable number of other investigations, eventually received full publication in the year 1907 in the treatise ‘Aerial Flight’.” That is Lanchester’s great achievement, the Vortex theory, and upon it his fame chiefly rests.

The work presented in “Aerial Flight” which is new and original includes many things besides the cyclic theory: for example, the equation of the free flight paths (preasaging the looping of the loop amongst other things) and giving at once the relation between the stress under normal conditions and undulating or looping flight paths given inVolume 2 and plotted from the equations. Also the theory of longitudinal stability founded thereon, was all new. The theory of stability as presented is now recognized as a special case of Bryan’s more general work, but it is the real kernel of the subject and the special case of great importance.

Dr. Lanchester believes the different forms of stability and their inter-relation was stated for the first time in Volume II, and some of the implications of this work have scarcely yet been recognized; for example, the use of distributed vertical surface (as exemplified in the two tandem fins used in all his model gliders) as rendering a “flat spin” impossible.
Chapter IX of Volume II deals with the problem of soaring flight in a fuller and more comprehensive manner than had been previously attempted and everything in that chapter stands today. For example, the Soarability of air under cumulus clouds, i. e., the latter as an indicator of up-currents, was dealt with, a subject that has only quite recently come into prominence and been “rediscovered” in connection with human gliding. The distinction between the up-current and dyamic soaring is clearly defined and fully discussed. The fundamental theory of least resistance, and longest duration (time) of flight is expounded in Volume I, also the importance of skin friction is demonstrated and the reasons for Langley’s failure to recognize this are pointed out.

The medalist more recently expressed himself in the following paragraphs taken from a letter dated 6th June 1931 to the Secretary of The Daniel Guggenheim Medal Fund, Incorporated:
“If I were to say what I think to be the salient feature of my carreer, I think it would be to point to the fact that my work has been almost wholly individual. My scientific and technical work has never been backed by funds from external sources to any material extent, or been assisted by the holding of a position such as would give me command of any material resources. All research work that I have done was paid for out of my own pocket.

“So far as aeronautical science is concerned, I cannot say that I experienced anything but discouragement; in the early days my theoretical work (backed by a certain amount of experimental verification), mainly concerning the vortex theory of sustentation and the screw propeller, was refused by two leading scientific societies in this country, and I was seriously warned that my profession as an engineer would suffer if I dabbled in a subject that was merely a dream of madmen! When I published my two volumes in 1907 and 1908 they were well received on the whole, but this was mainly due to the success of the brothers Wright, and the general interest aroused on the subject.”

As a youth Frederick Lanchester was especially interested in engineering, and his memory cannot recall the beginning of that interest. His elders used to tell him that when he was four years old he had fully made his mind what he was going to be.

From 1889 to 1892 he was designer and assistant works manager of the Forward Gas Engine Company, specializing in internal combustion engines. From 1892 to 1895 he was engaged in development work on high speed motors and experimental work in aerodynamics. Experimental work and development of petrol engines, motor launches and the Lanchester car occupied his energies from 1894 to 1899. The Lanchester Motor Company, Limited, was formed in 1899; he was general manager and chief engineer from that year until 1904. He was consulting engineer to that company from 1904 to 1914, and consulting engineer and technical adviser to Daimler Company, Limited, and Birmingham Small Arms Company, Limited, 1909 to 1929. He was consultant from 1928 to 1930 to William Beardmore & Sons, Limited (Diesel Engine Works). From 1909 to 1920 he was a member of the British Advisory Committee for Aeronautics.

Lanchester made numerous successful inventions relating to the internal combustion engine, including the gas engine starter (adopted by Messrs. Crossley Brothers, Limited), 1890; the balanced reciprocating engine, 1895, the surface carbureter, 1895, the torsional crankshaft damper, 1910, the harmonic balancer, 1911, and a process for manufactur of piston rings, 1909.

Dr. Lanchester is also well known for his work in other fields; his invention of the pendulum accelerometer, which dates from 1889, opened up a new method of measuring and recording tractive and brake effort. His work on the design and production of worm gears and his worm gear dynamometer are widely known.

Dr. Lanchester is now (1931) absorbed in the subject of musical reproduction at the Lanchester Laboratories, Ltd., Spring Road, Tyseley, Birmingham. He first directed his attention to problems of musical reception and reproduction in the year 1927. The year 1928 saw perfected the acoustictube moving coil speaker is the “diffractaphone” aperture (Patent G B Number 317,339), a characteristic of which is constant acoustical impedance which is a counterpart to constant electrical impedance. Associated with this speaker is the “diffractaphone” aperture (Patent G B Number 325, 339). This invention is directed to insure the more perfect distribution of tones of different pitch in a concert hall or in the open.
Dr. Lanchester married Dorothea, daugther of the Reverend Thomas Cooper, of Field Broughton, near Grange over Sands, Westmoreland, in 1919. They have no children. His eldest brother, Henry Vaughan Lanchester, following his father’s profession, is one of the eminent arhitects of England.
The Daniel Guggenheim Gold Medal was presented to Dr. Lanchester on 16 September 1931, in London, on the occasion of the reading of the Wilbur Wright Memorial Lecture before the Royal Aeronautical Society by Mr. Glenn L. Martin, President of The Glenn L. Martin Company, Baltimore, U.S.A. In the presentation for this year, on behalf of the Board of Award. Mr. Griffith Brewer, of London, the member representing England on the Board of Award, delivered the medal and the accompanying certifcate of award to the medalist.

This article is reproduced with permission of the Daniel and Florence Guggenheim Foundation
950 Third Avenue 30th Floor
New York. NY 10022

This paper is a continuation of the work in progress presented at the eleventh Symposium on Quality Function Deployment Novi Michigan June 1999 [1], [2]. This paper outlines the use of Lanchester Strategy in Quality Function Deployment (QFD) and concludes with [...]]]> Images of Lanchester Strategy part II, presented at the QFD conference, Belo Horizonte Brazil

This paper is a continuation of the work in progress presented at the eleventh Symposium on Quality Function Deployment Novi Michigan June 1999 [1], [2]. This paper outlines the use of Lanchester Strategy in Quality Function Deployment (QFD) and concludes with a number of case studies of interest to the business community in Brazil.

Abstract

The Lanchester Strategy of sales and marketing based on F. W. Lanchester’s equations of combat [3] has been extensively developed in Japan since the early ’60s [4]. The strategy is based on a rigorous mathematical analysis of military and marketing warfare that uses elements of game theory, probability, ecology and calculus to show that the Lanchester laws are verified in theory and practice [5]. As this knowledge filters out into the business world [6], the interest is in real life case studies [7, 8 and 9] that illustrate the application and practice of the Lanchester Strategy. However, companies are reluctant, if not paranoid about releasing information on strategic planning, market share and business strategies to potential competitors, as any case study of more than superficial interest will cover these areas in detail. An approach to gaining real world case studies is to view recent articles in the business journal through the lens of Lanchester Strategy. Using data taken from recent Wall Street Journal articles, we will provide sufficient market share and background information to generate a number of case studies that illustrate the Lanchester strategy.

Introduction: Lanchester Strategy and QFD

In his QFD tutorial at the recent 11th Annual QFD Symposium [10], Glen Mazur pointed out that new product sales count for some 50% of company sales and companies now average 40 to 50 new products per year. Fueling this are R&D expenditures of about 2.8% of Gross Domestic Product in developed countries. Despite the importance of new products and this huge investment in resources and technology, the failure rate for new products runs at about 35% [11].

The Lanchester strategy enables the QFD process to take into account the structure of the marketplace, the relative position of the company based on the “shooting range,’ and shows that the attributes of the new product must be at least 1.7 times better than competing products [1], [7]. The Lanchester strategy thus “closes the loop” in the QFD cycle by correctly positioning company position and new product in the marketplace.

Hotel Brazil, the hospitality industry – competing with Marriott

Brazil is a top tourist destination with many large local and international hotel chains competing for clients. So how does a small hotel succeed in competing with the big guys? Like competing with Microsoft or Intel, or wrestling with alligators, very carefully. In the hospitality industry we know from the literature that the Marriott hotel chain is very highly regarded in quality and customer satisfaction, so the question for a small hotel in a Marriott city is how to compete.

The answer that Lanchester strategy tells us is in providing the client something that the large well funded hotel chains cannot possibly have and charge a premium for it. The solution is a hotel with funky furniture and staffed with iconoclastic individuals. Staff reporter Nancy Keates writing in the Wall Street Journal of October 31st 1997 provides the background to this case study.

A growing number of small, chic hotels are finding that hostility sometimes sells better than hospitality. Places like New York’s Royalton, Miami’s Delano Hotel and San Francisco’s Diva Hotel charge $200 to $400 a night and tend to offer small rooms, weird furniture, little conference space and the aloof service of an exclusive restaurant. But they have something else: 90% occupancy rates, even at prices that can run 20% higher than competitors. “They dramatically outperform the market,” says Bjorn Hanson, who heads Coopers & Lybrand’s lodging division.

Most of this hotel’s decidedly unglamorous occupants say they just can’t resist the glitter. “The attitude of these hotels is intentional,” says James Eyster, HVS Professor at Cornell University’s School of Hotel Administration. The managers of such hotels say they try to be more casual and “edgy” than traditional luxury hotels. “We hire people to be themselves,” says Robert Dann, general manager of the Mondrian. Ian Schrager, who owns the Mondrian, likens running a hotel to a stage production, where sets and appearances are crucial. He denies that his staff are rude, but readily admits he has held “casting calls” to hire some employees. The bellmen wear cream-colored faux Armani suits, and the lobby resembles a museum of contemporary furniture. By contrast, traditional hotels, like Ritz-Carlton Hotel Co. and Four Seasons Hotels Inc., recruit heavily from hotel schools.

Hotel case review: Lanchester strategy tells us that to compete with a larger well entrenched company, the new entrant must differentiate its product/services which can then be sold at a premium. Eclectic furnishings and an individualistic approach to staffing are a combination that the major hotel chains find difficult to compete with.

Carrefore cleans up Wal-Mart in Sao Bernardo

In a lead article on the front page of the October 8, 1997 edition of Wall Street Journal, staff writers Jonathan Friedland and Louise Lee describe how Wal-Mart Stores Inc. is finding out that what plays in Peoria isn’t necessarily a hit in suburban Sao Paulo. Adapting to local tastes may have been the easy part. Three years after embarking on a blitz to bring “everyday low prices” to the emerging markets of Brazil and Argentina, Wal-Mart is finding the going tougher than expected.

Brutal competition, market conditions that don’t play to Wal-Mart’s ability to achieve efficiency through economies of scale and some if its own mistakes have produced a flood of red ink. Moreover, the company’s insistence on doing things “the Wal-Mart way” has apparently alienated local suppliers and employees. No one is counting Wal-Mart out, of course. With sales of nearly $105 billion last year and a profit of $3.1 billion, the Bentonville, Ark., behemoth has deep pockets. And it has revised its merchandising in Brazil and Argentina and made other changes. Its four newest stores are smaller than the initial outlets in Sao Paulo and Buenos Aires and are in midsize cities where competition isn’t so fierce.

At a recent supercenter opening in the midsize Brazilian city of Ribeirao Preto, shoppers practically beat down the doors to scoop up ovens and television sets. But such enthusiasm is hard to sustain. At an older supercenter in Avellaneda, a suburb of Buenos Aires, few shoppers are in the store during peak hours on Sunday. Hugo and Mariana Faojo help explain why. Browsing in the shoe section, the young couple says they see little difference between goods at Wal-Mart and those at a nearby Carrefour. For groceries, they prefer Supermercados Jumbo SA, a Chilean-owned chain, where they say they find high-quality produce and fresh meats.

Not only did Carrefour arrive first – it now has a total of about 67 hyper markets and 48 supermarkets in Brazil – but also it is maneuvering with prices and promotions to keep Wal-Mart off balance. When Tomas Gallegos, who manages Wal-Mart’s new store here, prints up a flier advertising bargains, the nearby Carrefour responds in just a few hours by offering the same products at a few cents less – and its fliers are handed out at the entrance to the Wal-Mart parking lot.

Wal-Mart’s effort to stock a wide variety of goods and squeezing the costs out of the supply chain are also in trouble. Carrefour in La Plata, Argentina, stocks 22,000 items, while the Wall-Mart next door carries 58,000. Some items like American footballs and leaf blowers (useless in the concrete jungles of the inner city) found few buyers. But timely delivery of merchandise is a relative concept in the bumper-to-bumper traffic of Sao Paulo where Wall-Mart depends on suppliers or contract truckers to deliver most of its goods directly to stores. Because it doesn’t own its distribution system, it can’t control delivery nearly as well as it does in the U.S. Stores here sometimes process 300 deliveries daily, compared with seven shipments a day at U.S. locations. But logistics aren’t the only issue. Eleven South American suppliers have taken umbrage at Wal-Mart’s aggressive pricing policies and for a time refused to sell goods to the chain. Wal-Mart doesn’t get special deals just because it’s a big U.S. company, some domestic suppliers say.

Wal-Mart has also been slow to adapt to Brazil’s fast-changing credit culture. Not until last February did the company start accepting postdated checks, which have become the most common form of credit since Brazil stabilized its currency in 1995.

Supermarket case review: Lanchester strategy tells us that the leading company entering a new market place cannot use the same strategy, going one-on-one with the leader in the new location is a recipe for disaster. Better strategy is using the strength of the parent company for acquisition of a minor player (particularly if no company has over 26.1% market share) that can serve as an entry points to markets and culture. Carrefour has been in Brazil since the mid 70s is the leading chain with 115 stores and has just acquired control of 14 supermarkets of the Roncetti group in Espirito Santo state. Department store JC Penney is pursuing a different strategy for its Brazil market entrance. Penny is renting 23 to 26 department stores owned by the Mesbla and Mappin group. Lanchester strategy tells us that a good strategy for entering a new market is by merger, acquisition or some other cooperative venture [7].

Chrysler innovation for small truck market penetration

The Brazilian truck and auto market is shaping up as one of the most competitive anywhere writes Wall Street Journal staff reporter Gregory L. White in the August 13 1998 edition. He goes on to write: A total of 13 auto companies from Europe, North America, Japan and Korea have announced plans to spend $19 billion by year 2000 building new factories in Latin America’s most populous nation. At Chrysler’s $315 million Brazilian plant, which makes Dakota pickup trucks, the most radical manufacturing innovation is known as the rolling chassis. At a plant about two miles down the road from Chrysler’s, Dana Corp. of Toledo, Ohio, assembles the truck’s frame, axles, brakes and wheels – a total of 320 parts, complete with fully inflated tires – all within 108 minutes of getting an order by computer. Dana’s chassis accounts for about one-third of the value of the Dakota, a far larger share than any individual supplier-built unit would take up in traditional auto manufacturing.

This concept of “modularity” in which suppliers assemble dozens of parts into subassemblies for the automaker is the Holy Grail of the automobile industry. This process could slash manufacturing costs by thousands of dollars a vehicle, some of which could be passed on to the car buyers. At minimum, this advance promises to hold retail prices stable for years. Big price differentials are a sure way for a new entrant to muscle into a competitive market and gain a chunk of market share in a short time. Lanchester strategy tells us that when no company holds more than 26.1% of the market share, the market is essentially unstable, allowing easy access to new entrants with a differentiated product.

In Brazil, the rolling chassis allowed Chrysler to hire fewer people and make its factory smaller, reducing upfront investment and shortening start-up time. The rolling chassis also provides Chrysler big discounts on import duties on parts, equipment and the thousands of other vehicles it brings into Brazil from the U.S. Because Dana assembles the rolling chassis in Brazil, Chrysler can count the entire value of the unit as local, allowing it to import other parts, such as body panels, engines and transmissions, from the U.S.

Including imports, company officials expect Chrysler sales in Brazil to reach $1 billion next year, up 3% from $750 million expected in 1998, and more than double the $450 million recorded in 1997. Executives say profit margins in Brazil have been well above those in North America, although they decline to provide figures. Part of the reason for the higher profits is Chrysler’s decision to aim at the top of the market in Brazil, a departure from its broader approaches its larger competitors are taking here.

That kind of narrow appeal also fits well with Mercedes, which has long focused on the top end of the market. In fact, some analysts suggest that Brazil could become a testing ground for joint dealerships for DaimlerCrysler, something the companies wouldn’t dream of in the U.S., where Mercedes and Chrysler have very different images.

Chrysler Brazil case review: Lanchester strategy tells us that in a fragmented market where no company owns more than 26.1% share, there is opportunity for a new entrant to secure a foothold with a differentiated product as the other companies engage in ferocious competition. In addition, aiming at the top end of the market ensures higher profitability and recognition. [Note the classic example of this with the introduction of the Lexis and Infinity luxury cars].

Brazilians like Coca-Cola, but what they love is to drink Guarana

For a company that considers that it’s main competitor is water (as in H2O) the Coca-Cola Company can be a daunting competitor. In Japan, Coke came on with a rapid-fire product imitation campaign that replicated new drink tastes developed by small innovative companies. In Brazil however, Guarana based beverages account for more than one-quarter of all soft drink sales. Whether consumed as a powdered additive or a soft drink that tastes a little like bubble gum, guarana packs a bristling caffeine punch, reports Wall Street Journal staff reporters Matt Moffett and Nikhil Deogun in their July 8 front-page story.

According to Amazon jungle legend, the first guarana-berry bush sprouted on the spot where a lightning bolt struck a pair of star-crossed lovers from rival Indian tribes. While Coke has countered with two guarana brands of its own, patriotic Brazilian consumers have been less than rapturous about gringo guaranas. Coke’s fiercest Brazilian rival, a guarana bottler called Cia. Antartica, which controls one-quarter of the market for the Amazon elixir, has been ridiculing the soft-drink giant on TV ads that, in effect, accuse Coke of guarana envy. Now, Antartica says it’s merging with Brazil’s No. 2 guarana maker, a giant beverage firm called Cia. Cervejaria Brahma SA, to form a juggernaut that will give Coke even bigger headaches.

Antartica’s current ad campaign in Brazil is less about making love than making war – with Coke. In one television commercial, an Antarctica pitchman stands before a rain-forest guarana plantation and directs a pointed question towards viewers: “Now ask Coca-Cola to show you the Coke tree.” That ad came in retaliation for a Coke spot in which taste tests showed Brazilians preferring Kuat. Unfortunately for Coke, Kuat fared better against the competition in the ad than it has been doing at checkout counters [perhaps Coke has a new product in line called Quat, after the hallucinogenic plant leaf widely consumed in North Africa and the Middle East -Ed].

And Coke is now facing a new threat from mom-and-pop beverage producers taking advantage of cheap, nonreturnable bottles – and Brazil’s ancient love affair with guarana. Not long ago, Maria Leticia Sanchez de Oliveira put some new life in a failing family bottling company in central Brazil by launching a guarana called Ginga, which means “jiggle.” “We wanted a name that represented Brazil,” she says. “We weren’t thinking about sex. But if people are thinking about that when they buy Ginga, that’s fine.”

Coke wars case summary: Lanchester strategy tells us that a policy of “me-to” replicating the competitor product can wear down a market follower. Guarana drinks have a unique position in the Brazilian market place that is difficult for an interloper to displace. Coke’s immediate response has been the price cut. Lanchester strategy tells us that an alliance between lesser ranking companies can give economies of scale and pose a serious threat to the market leader [7]. Just released data shows an over all gain of market share by Coke in Brazil of 1% in April May of 1999, with sales of Kuat also rising 0.2%.

Summary

Based on Lanchester’s equations of combat, developed in Japan, the Lanchester Strategy of sales and marketing will give you greater insight into the dynamics of the marketplace. The tools and techniques of Lanchester Strategy show how to penetrate a new market, and how to defend an existing market position. Companies are reluctant, if not paranoid about releasing information on strategic planning, market share and business strategies to potential competitors, as any case study of more than superficial interest will cover these areas in detail. An approach to gaining real world case studies is to view recent articles in the business journal through the lens of Lanchester Strategy. Using data taken from recent Wall Street Journal articles, we re-examine the published data to understand company planning and strategy within the context of Lanchester Strategy.

Bibliography

[1] Proceedings, Eleventh Symposium on Quality Function Deployment, Novi Michigan June 1999. Published by the QFD Institute, 1140 Morehead Court, Ann Arbor MI 48103. http:www.qfdi.org

[2] Lanchester Readings, 1914 to Present, edited by John Schuler. 1999 Lanchester Press, ISBN 1-57321-016-1

[3] F. W. Lanchester, Aircraft in Warfare, the Dawn of the Fourth Arm, (new edition of Lanchester’s 1916 work) 1995, Lanchester Press, ISBN 1-57321-17-X.

[4] Dr. N. Taoka, Lanchester Strategy: an introduction, Volume 1, 1997 Lanchester Press, ISBN 1-57321-009-9.

[5] Dr. T. Onoda, Lanchester Theory: Science to Win the Competition, 1999, Lanchester Press, ISBN 1-57321-015-3.

[6] Dr. Ted Lewis, Friction Free Economy, 1997, Harper Collins Books, ISBN 0-88730-009-0.

[7] Shinichi Yano, New Lanchester Strategy an Introduction, 1996, Lanchester Press, ISBN 1-57321-000-5.

[8] Shinichi Yano, New Lanchester Strategy: Sales and Marketing for the Strong, 1997, Lanchester Press, ISBN 1-57321-005-6.

[9] Shinichi Yano, New Lanchester Strategy: Sales and Marketing for the Weak, 1998, Lanchester Press, ISBN 1-57321-004-8.

[10] Glen Mazur, QFD Tutorial, Eleventh Symposium on Quality Function Deployment, Novi, Michigan, June 1999. Published by QFD Institute, 1140 Morehead Court, Ann Arbor, MI 48103. ISBN 1-889477-81-8

[11] Robert G. Cooper, Winning at New Products, 2nd ed. Addison-Wesley, ISBN 0-201-56381-9

Acknowledgements, from the following articles in Wall Street Journal,

1. Hotels find hostility sells better than hospitality. October 31, 1997 by staff reporter Nancy Keates.

2. The Wal-Mart way sometimes gets lost in translation overseas. October 6, 1997, by staff reporters Jonathan Friedland and Louise Lee.

3. Chrysler makes manufacturing inroads at plant in Brazil. August 13, 1998, by staff reporter Gregory L. White.

4. Brazilians like Coke, but what they love to drink is Guarana. July 8, 1999 by staff reporters Matt Moffett and Nikhil Deogun.