Fixer Upper: Expanding
the Magnolia Brand
Overview
In the spring of 2018, Home and Garden Television (HGTV) aired the Fixer Upper season finale closing five
years on the network during which the series had become increasingly more popular. Not only had the program
drawn attention to the other properties of Chip and Joanna Gaines, the stars of the show, but a spotlight had
also been focused on the site of the show—the college town of Waco, Texas. Rarely had a business have the kind
of impact on a city that Fixer Upper, renamed Magnolia, Inc., and its brand extensions—the Magnolia Table
café, the Silos and Marketplace, Magnolia House inn, the Magnolia Journal, and Hillcrest Estate vacation home
rental, among other lines of business, had on Waco, Texas, at least for the duration of the television series. With
the end of Fixer Upper, people wondered what would happen to the various Magnolia businesses, as well as to
the host city whose prominence had grown along with the popularity of not only the Fixer Upper show, but also
with that of the Gaines family.
Suggestions for Using the Case
This should be a high-interest case, particularly for aficionados of Home and Garden Television, and one that will
certainly trigger lively classroom discussion due to the critical incident that might severely impact Magnolia,
Inc.’s sustainability and growth trajectory.
This case provides a unique opportunity for students to discuss the Gaines’s attempts to gain traction in the
hospitality industry due to the notoriety provided by a television program. Students should develop an apprecia-
tion of the need for companies to tailor a strategy and develop capabilities that fit the specific industry to build
case 6 teaching note
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A winning strategy should enable a company to achieve a competitive advantage over key rivals that is
long-lasting
The mark of a winning strategy is strong company performance. Two kinds of performance indicators
tell the most about the caliber of a company’s strategy:
The two elements of a company’s business model are:
The case can also be used to introduce concepts in Chapter 2:
The process of crafting and executing a company’s strategy is an ongoing, continuous process consisting
of five interrelated stages:
1. Developing a strategic vision that charts the company’s long-term direction
2. Strategic management for measuring the company’s performance and tracking its progress in
As shown in Figure 2.1 and illustrated in detail in Table 2.1, management’s decisions that are made in
the strategic management process are shaped by
1. the prevailing economic conditions
2. the competitive environment and
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The assignment questions and teaching outline presented below reflect our thinking and suggestions about
how to conduct the class discussion and what aspects to emphasize.
To guide students in thinking about which analytical tools can be used to prepare the Fixer Upper: Expanding
the Magnolia Brand case for class discussion, we strongly recommend (1) providing class members with a set of
study questions and (2) insisting that they prepare good notes/answers to these questions.
This case is suitable for both written and oral presentations. Our recommended assignment questions are as fol-
lows:
1. As part of your internship requirements with the Magnolia, Inc. group of businesses, you have been asked to
prepare an analysis of its competitive position in the e-commerce marketplace. Your report should contain
2. Chip and Joanna Gaines, Magnolia Inc.’s owners, have learned of your considerable skills in strategic analysis
Assignment Questions
1. What are the major elements of Magnolia Inc.’s competitive strategy? How well do the pieces fit together?
Is the strategy evolving?
2. Explain the pressures facing Magnolia Inc. in its internal and external environments. How would you priori-
tize those pressures?
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Teaching Outline and Analysis
1. What are the major elements of Magnolia Inc.’s competitive strategy? How well do the
pieces fit together? Is the strategy evolving?
There elements of the Gaines’s strategy include:
Here is an ideal opportunity to ask students, which of the generic strategies illustrated in Chapter 1 might
characterize the Gaines’s Magnolia Inc. operation? Basic strategic approaches for setting a company apart
from rivals and winning a sustainable competitive advantage include a low-cost provider strategy, a broad
differentiation strategy, a best cost provider strategy, and a focused differentiation strategy.
We think a good case could be made that Magnolia Inc. has implemented a best cost provider strategy. A
2. Explain the pressures facing Magnolia Inc. in its internal and external environments. How
would you prioritize those pressures?
Here is an ideal place to preview one or more of the situation analysis concepts and frameworks that will be
covered in greater depth in Chapters 4 and 5, and strategy implementation concepts that will be covered in
later chapters, such as 8 and 10.
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TABLE 1. SWOT Analysis for Magnolia, Inc.
Strengths/Competitive Assets l > $2 million in TV revenues over 5 seasons & Gaines’ combined net worth
of ext. $18 million (case Ex. 2)
l Organic growth of diverse businesses under same brand umbrella
l Supportive of Waco’s mission, “Do good work that matters”
Conclusions about Magnolia’s
situation:
l Develop a company vision & mission (previews Ch. 2)
l Pursue differentiation focus generic strategy (previews Chs. 1 & 5)
l Curtail further diversification or retrench from business unrelated
to real estate, as owners have limited experience outside that arena
(previews Ch. 8)
l Recruit & hire professional management team capable of good strategy
execution (previews Ch. 10)
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3. What strategic issues confront Magnolia Inc. in 2018? What market or internal circumstances
should most concern owners Chip and Joanna Gaines and the company’s senior management
team?
But their biggest strategic challenges are likely to be in the aftermath of the HGTV cancellation, despite
the announcement of a spinoff series with an unknown network and unknown audience. It is also somewhat
likely that the novelty of their original Fixer Upper series has long worn off. The strategic challenges are:
Sustain the pace of growth
4. What recommendations would you make to Magnolia Inc. to address the strategic issues
confronting it in 2018 in order to sustain its growth in revenues and profitability?
Students should engage in an active discussion / debate to defend their recommendation(s) to continue the
Wrapping-up the case:
We believe strongly that although the new TV series may indeed turn out to be a success, at least temporarily,
absent a clear company mission and vision for Magnolia Inc., it is difficult to tell what the longer-term future
might hold for Chip and Joanna Gaines.
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Monitor relationships with key stakeholders in the City of Waco and strive to be a socially responsive
and socially responsible business (covered in Chapter 9)
Hire an experienced management team (covered in Chapter 10)
• Safeguarding the Gaines’s primary assets (resources and capabilities) is increasingly important now
that the family’s net worth is in in distance of an eight-figure range ($5 million as of 2018)
Epilogue