Nanophase
Business strategy
Nanophase is a company dealing in some of the latest technologies available today. Nanotechnology is being seen as the greatest inventions of the modern day. This being the case, Nanophase is a pioneer commercial enterprise dealing in the new technology.
The most notable character of the company’s business organization is that it is market oriented. The company is focused on developing technologies which are commercially viable based on nanotechnology. The most important sector offering the largest customer base for the company is the manufacturing sector.
It is clear that all business entities are aimed at optimizing the resources available to them. This being the case, Nanophase was established to offer the new technology which has the potential to revolutionize the way manufacturing processes are conducted.
Due to the above described characteristics, the company operates a customer orientation model of business. The most important principle of this business model is that the customer is king. The company has to constantly develop customized technologies to suite the unique requirements of the entire spectrum of customer base.
Due to the expansiveness of application of the technology, product development becomes a major component of the company’s business model. New products are continually being developed as a way of expanding the customer base for the company as the new technology is yet to be fully entrenched in the market.
However despite the wide application of nanotechnology, the company mainly focuses on products and market opportunities in material science which can be developed within a time frame of 12 to 18 months (Brady, & Cronin, 2001, p245).
Due to the need to develop confidence among the constantly expanding customer base, the company has several unique strategies for introducing the new technology. The most important of these strategies is the provision for experimentation of the technology among customers.
This way, customers are able to gauge the effectiveness of the technology in fulfilling their expectations way before fully applying the technology (692).
Nanophase has partnered with institutions like Rodel Inc, a global leader in polishing technologies for silicon wafers and semi-conductors. The aim here is to develop global markets while at the same time engaging in a strategic alliance which offers immense value addition to the company’s commercial technology (694).
The main advantage of the customer oriented model is that it ensures customer satisfaction and builds customers royalty. It also ensures that the company better understands their customers.
However, the fact that each customer has different specifications means that the company incurs higher costs than in a case where duplication of products is possible.
Marketing Strategies
Nanophase employs a host o marketing strategies in promoting its technologies. The 4Ps (Price, Product, Promotion and Place) marketing mix are in full application. The price is set at very competitive rates due to the fact that the customer base is mainly composed of business entities whose main aim is cost cutting.
There is constant product development to meet the demands of the different customers. The company also employs aggressive promotion campaigns for its operations through the mass media especially the internet. It also engages a host of agents for its distribution network (Marketing mix (Price, Place, Promotion, Product), Para 2-6).
However, two more marketing strategies are well applied by the company. These are collaboration as well as relationship marketing. Collaboration in marketing involves engaging specialized third parties to propagate the product in the market.
Indeed the largest proportion of the company’s revenues comes from the licensing arrangements with manufacturers who wish to apply the technologies offered by the company in developing better quality products.
Licenses have been issued to manufacturers of products such as ceramics and thermal sprays, conductive and anti-static coatings, environmental and chemical catalysts as well as transparent functional coatings.
The company has also significantly employed relationship marketing. This strategy involves the establishment of strategic partnerships geared towards value addition and with the aim offer bigger benefits to the partners.
Relationships established by Nanophase have been focused on offering certain solutions to the production processes of the partner and therefore being entitled to the returns derived from the solutions over the life of the partnerships (Relationship Marketing, 2010, par3).
A notable relationship under this strategy is that established between the company and Rodel Inc. Through this partnership the company is able to benefit from the already established distribution network as well as productive capacity to drive its business.
Nanophase is actually entitled to a portion of the returns got from the use of its technologies by the partner to the exact scale of use.
The main advantage of both the collaborative and relationship marketing is that the company is able to use the already developed infrastructure for production as well as distribution to expand its markets.
This way, it can concentrate more on the core function of developing suitable technologies for production processes as opposed to the actual production of final products (Gronroos, 1997, p326).
However, the specifications given by the different customers differ hence increasing costs of delivering new technology. In addition, these marketing strategies acutely narrow the company’s customer base presenting additional risks to the company’s operations.
Over 85% of the company’s revenues are from a few customers. The risk element arises because should some unforeseen event happen to one of the large customers, the effect on the company’s performance could be significantly high.
Nanophase competitiveness
The company is fully acknowledged as a market leader in production of nanomaterials. To date, only Nanophase is capable of producing nanoparticles to rigid standards and in substantial quantities for effective application in commerce.
This puts the company on the global map as the top company a position which offers competitiveness in the industry. All the potential competitors are yet to unveil commercial production.
This means that the company has already made a name in the industry and potential customers will have to first contact the company before considering any competitor.
In addition, the company has already developed strategic alliances or partnerships over the years of operation and though it continues to make losses, the customer base continues to get stronger and wider.
The fact that it concentrates on establishing partnerships with established companies means that it is largely able to lock out possible competition in the numerous sectors where nanotechnology is applicable. However, there are possible areas which may present opportunities for competitors to come up and compete with the company.
First is the possibility that new lower cost materials may be discovered. This would mean that the usefulness of the company’s technologies would be drastically reduced hence posing a threat to the company while offering opportunity to rival firms to take up the market.
It is however notable that such development is likely to take a long time to occur. In addition, normal business practice emphasizes on risk reduction. This is not limited to the market side of the business but also on the supply side.
It is therefore expected that customers being served by Nanophase may wish to acquire new suppliers as a strategy to reduce risks which may originate from having only one supplier for a vital material. However, the extent of such action is largely determined by the reliability of the company in ensuring steady supplies.
Management team
The success of a management team is mainly determined by the ability of a management to achieve the set goals of the specific business organization. The fact that the management has been able to constantly grow the company’s market is commendable despite the stream of losses made.
It is understandable that in the introduction phase it may be plausible to concentrate on expansion as opposed to profitability in a bid to secure a substantial market share to drive future growth.
In this sense Nanophase management team was a success. However, the company requires to be put on the profitability track as a substantial market share is available already.
The appointment of Joseph E. Cross as a Director and president was a major turnaround for the company. He introduced a bigger sense of business mind in the research focused company.
He also developed six major areas for concentration by a more enhanced management team comprised of experienced people in the field of technology and business. This strong management team is clearly able to drive the company’s growth prospects and maintain its position as a global leader.
Reference List
Brady, M., & Cronin, J., 2001. Customer Orientation: Effects on Customer Service Perceptions and Outcome Behaviors. Journal of Service Research, Vol. 3(3), 241-251.
Gronroos, C., 1997. Keynote paper: From marketing mix to relationship marketing – towards a paradigm shift in marketing. Management Decision, Vol.35 (4) Page: 322 – 339.
Marketing mix (Price, Place, Promotion, Product), 2010. The Times100. Web.
Relationship Marketing, 2010. jimnovo. Web.