Problem statement
Given their entrepreneurial skills, Harvey Nickerson and Lewis Cobb, founders of NCA Microelectronics, identified a market opportunity with regard to controlling illegal usage of airwaves. This opportunity motivated them to design the Interact/R1000 technology, which aimed at monitoring airwave usage.
After conducting a thorough environmental scan, NCA Microelectronics identified government agencies as its target customers. Despite the successful idea conceptualization, NCA Microelectronics faced a challenge in an effort to introduce the new product to the market. The problem came up during the new product development and market introduction phase.
Entrepreneurs should have sufficient funds to develop a new product successfully. The funds are necessary to undertake market research and product development conclusively. During the development of the R1000, NCA and the Department of Communication (DOC) were required to fund the product partly.
Each of the two parties contributed $100,000. Additionally, the Department of Communication in collaboration with governments of other developing countries provided NCA with the necessary technical support to ensure successful completion of the project. The project commenced successfully and the involved parties estimated the project to take 12 months.
NCA management team outsourced the services of an expert marketing firm, Fundy Cable, to introduce the new product in the market. However, during the market introduction phase, the new project experienced a hitch due to a difference that arose between NCA and the Department of Communication.
The subject of contention was with regard to the final features that R1000 would have. According to NCA, it was not possible to incorporate the features that the Department of Communication needed within the forecasted budget. Additionally, incorporation of such features would make the new product expensive.
Considering the price-conscious nature of customers, the new product would not gain sufficient market acceptability. NCA and the Department of Communication came agreed to develop the R900 version instead of the R1000 to prevent the project from failing completely.
The problem with changing the version is that it would experience a challenge during marketing because a German company had already ventured in designing and developing the R900. Therefore, R900 would face intense competition from the German company whose products had already gained market acceptance.
Despite this scenario, the firm went ahead and produced R900 which were purchased by the Department of Communication. During the spring of 1990, the Department of Communication experienced a financial constraint, which made it difficult to continue purchasing the product.
Considering the fact that the Department of Communication was the principal customer for R900, its inability to purchase the R900 presented a problem to NCA with regard to generating sales.
The problem heightened given the fact that other government agencies did not consider using R900 in monitoring and controlling illegal usage of airwaves.
Situation Analysis
Strengths of the business
One of the major sources of NCA Microelectronics strengths arose from its founder’s risk taking characteristics. The two entrepreneurs managed to conduct a comprehensive environmental scan to identify feasible business opportunity.
After comprehensive analysis with regard to viability of the identified business opportunity, the founders of NCA Microelectronics were ready to risk their resources in implementing idea generated by the business. Additionally, the entrepreneurial characteristic of the two entrepreneurs made it possible to identify new market niche.
Therefore, the firm managed to design new products for the identified market niche; for instance, the firm’s plan to venture into the Cable Television industry illustrates this aspect. However, the idea did not succeed because the industry was more cost conscious compared to being technology conscious.
The firm’s development of the new product, Chameleon, underscores its success in studying the environment and identifying feasible business opportunities. The designers intended to use the new product at solving theft of Pay-TV signals.
Another strength that NCA Microelectronics had developed is associated with its ability to establish a strong bond with its clients. This aspect increased NCA Microelectronics’ ability to source for funds externally.
For example, during the development of the R1000, NCA collaborated with the Department of Communication, which partly funded the project in addition to providing technical support.
Due to its innovativeness, the firm developed new technologies that revolutionized government’s efforts in monitoring and controlling illegal use of airwaves. The fact that the two entrepreneurs were technology experts enhanced the firm’s innovativeness with regard to technological products.
The new product developed would enable the government to monitor airwaves remotely. Initially, airwaves transmission towers were situated on hilltops, which made it expensive and inconvenient for the government to control airwaves. The new technology was remarkably effective according to the Department of Communication.
Weaknesses
In its operation, NCA Microelectronics faced a severe budgetary constraint; for instance, it could not undertake the new product development project on its own. The budgetary constraints experienced forced the firm to join forces with potential clients such as the Department of Communication, who partly supplied finance for the project.
Despite the firm’s commitment in revolutionizing the airwaves control through innovation, it experienced a weakness with regard to ensuring that the new products successfully penetrated the target market.
The two entrepreneurs did not have sufficient market expertise hence the products could not penetrate the market easily due to lack of proper market entry strategies. The firm could not formulate an effective marketing strategy.
Due to its marketing weakness, NCA considered outsourcing the services of expert marketing firms such as Fundy Cable.
Services of expert marketing firms were outsourced to analyze the prospects of the new product succeeding upon its introduction in the market. However, this move further compounded the firm’s financial challenge.
Alternatives available
From the case, it is evident that the technology industry is characterized by a relatively high market potential. Therefore, NCA Microelectronics should consider ways of exploiting the market opportunities presented. The firm should conduct a comprehensive market research to exploit the potential in the technology industry.
The research should focus on two main market variables, which include the consumer and the competitor. Consumer market research will enable the firm to review its competitors’ strengths and weaknesses.
Findings of the competitor market research will enable the firm establish the competitors weak points and thus capitalize on the identified weaknesses. On the other hand, consumer market research will enable the firm to understand the consumers’ needs and wants.
This aspect will increase the probability of the firm developing a product that is in line with market demand and thus increase the probability of generating high sales. However, the firm will incur a substantial cost in undertaking market research. One of the areas that the firm should focus on during its research is the TV cable industry.
In its quest to increase profitability, the firm should not only focus on one client, but also identify other potential clients to prevent abrupt decline in sales in the event of one customer experiencing budgetary constraint, which would affect their purchasing power.
In addition, the firm should consider manufacturing the new product rather than outsourcing manufacturing services to ensure that the project is implemented successfully. This move will enable the firm to produce new products cost effectively considering the price conscious characteristic of firms in the TV industry.
Consequently, the firm will manage to influence television companies to purchase the new product because it will be priced more optimally. Additionally, NCA will also control the quality of the products. However, the problem of establishing a manufacturing plant is that the firm will incur high financial costs.
Course of action recommended
For the firm to deal with the challenges it is experiencing effectively, the management team should consider the following:
- The firm should first consider developing a strong long-term capital base to succeed in its product development. One of the external sources of finance that it should consider is issuing shares to the public.
- The firm should also nurture other core competencies and capabilities. One of the core competencies and capabilities that the firm should take into account is marketing.
Implications of the recommended course of actions
- By issuing shares to the public, the firm will develop long-term capital, which will improve its effectiveness in undertaking the necessary research and development to undertake product development.
- Improving its core competencies and capabilities with regard to marketing will increase the probability of the new product succeeding upon introduction in the market considering the fact that this area was one of the main challenges of product market entry after the establishment of NCA Microelectronics.