Capacity for innovation is mainly the courage to try. A couple from the municipality of Vila Nova de Famalicão, Portugal, started growing a vegetable garden at home in 2013, hardly knowing that this would become the project of their lives. The experiments that this professional designer and this computer engineer carried out were successful with family and friends, and so, motivated on entrepreneurial spirit, they decided to encourage others to grow their own food, even in confined spaces. That is how the company Life in a Bag was born. This chapter discusses the strategic dimension of the company and its relationship with the market, through the application of the model of Porter's Five Forces, Bowman's Strategy Clock, and the types of diversification. This analysis was enriched by company document analysis and a meeting with the owners of the startup to gather more details.
TopIntroduction
Life in a Bag is a Portuguese brand founded in 2013 when the adoption of more sustainable lifestyles and biological products started to trend among the population, giving rise to the so-called green economy movement. Green economy can be defined as the improvement of people's well-being due to a greater concern for social equity, environmental risks and the scarcity of natural resources (Commission of the European Communities, 2002).
At the same time, the company also presents the beginning of a new venture and the exploitation of a potentially prosperous business idea (Mergemeier, Moser, & Flatten, 2018), materializing the concept of nascent entrepreneurship, considered as individuals involved in setting up a business they will own or co-own (Nishimura & Tristán, 2011), being that, for this case, pursuing an opportunity (Hmieleski & Lerner, 2016) seems central, rather than the fast ownership of a given resource.
Bearing this context in mind, consumer awareness regarding the role of food in their general health and well-being has grown, thus contributing for the growth in demand for healthier food. Life in a Bag took this opportunity to develop a truly innovative concept by combining the demand for healthier products with more sustainable options that promote a healthier lifestyle.
This chapter describes Life in a Bag's implementation and growth strategy through a market analysis using Porter’s Five Forces model (Porter, 2008) to evaluate the internal and external variables of this startup. This market analysis is complemented by Bowman’s Strategic Clock, which allows us to analyze the competitiveness of the company. Life in a Bag is also characterized on the scope of diversification strategies, which shows if a business adds or expands its existing product lines or markets (Rong & Xiao, 2017).
An analysis of the competition is also performed through the analysis of several factors, such as the origin of their products, the foundation year, financial resources, brand characteristics, price policy, competitive advantages and disadvantages, for a clearer understanding on how innovative and distinctive Life in a Bag is.
This chapter intends to answer four main questions: (1) how is Life in a Bag’s industry sector characterized?; (2) how did the opportunity to enter the market arise?; (3) how is the implementation and development strategy of the company defined in a green market context and as a startup?; and finally, (4) considering the success of the current business model and its position in an increasingly competitive market, what is the brand’s growth strategy for the upcoming years?
TopBackground
Some key factors influencing individuals’ willingness to start up new businesses are related with flexibility, persistence or self-confidence (Klyver & Schenkel, 2013; Nishimura & Tristán, 2011). Of course, economic aspects influence entrepreneurship, and individuals may be looking for income opportunities, as well as, a strong believe in their ideas as potential innovations (Zanakis, Renko, & Bullough, 2012). At the same time, the entrepreneur’s confidence in his/her ability to face market challenges is important for moving a business past the startup phase to operation.
The effects of sustainability and/or green economy in the corporate strategy may be subject to a debate, although in less specific contexts the relationship with organizational commitment, reflecting the business’s responsibilities towards all its stakeholders, is undisputed (Gallardo-Vázquez & Sanchez-Hernandez, 2014). At the same time, the negative business shocks resulting from environmental disasters or poor labor protections are clearly harmful, with strongly negative market reactions (Dupire & M’Zali, 2018). The green economy movement brought a change in market and consumer behavior – the green market – aiming at improving the lives of individuals, communities, society, and the natural ecosystem (Guyader, Ottosson, Frankelius, & Witell, 2019). This market change includes a transformation of the productive process, and considerations of sustainability bring further complexity (Vickers & Lyon, 2014), carrying the concepts of sustainability, environmental impact, and responsibility, among others. Consumer behavior has changed and is now increasingly putting pressure on companies to address environmental issues (Elkington, 2013), since an accurate profile of the green consumer cannot be constructed without considering environmental consciousness (Diamantopoulos, Schlegelmilch, Sinkovics, & Bohlen, 2003).