The microchip industry is very competitive probably because it is very dynamic. You can rarely find chips that were used, say like five years ago. This means that the microchip companies work round the clock to come up with even much better chips than the previous ones. However, the companies have to deal with culprits who are very good at cloning their newly developed chips.
The makers of clones have mastered the art of imitation such that the consumers cannot draw a line between a clone chip and the original chip. This paper will focus on the strategies that Smart Chip Company can employ to beat these criminals in their game.
Smart Chip Company has been in the microchip industry for long and has been able to build its reputation in the market. The efforts of this company are only helping few individuals who tend to reap from where they did not sow. In the case of smart chip company it would cost them a lot of money and time if they decided to trace the imitators. The best approach is to outperform such competitor (Robbins & Coutler, 2008).
The Porter’s Value Chain Management proposes a differentiation strategy in a case like the microchip company. In this kind of competitive strategy, the smart chip company must select one unique attribute and capitalize on it. This is because the clone makers do not know the concepts that are involved during the manufacturing processes. King (2005) states that most people would expect the cost of this company’s products to go up.
This is considered as one of the ideal approaches of adding value into a product. For instance, the company can decide to focus on durability and by doing so, the company will have a competitive advantage in the market. However, before the company decides to utilize a given attribute, it must first evaluate the needs of the consumers with the purpose of establishing the most desired attribute.
For differentiation to be effective, the smart chip company must identify ways of cutting back on the costs of production. This suggests that the costs incurred during differentiation should fall within the set limits of production costs (Kotler, 2003). The company should extend the reduction in production costs to all departments.
For instance, the cost of labor can be trimmed by automating most of the tasks so that there are fewer employees. Similarly, the company can negotiate for reduced prices of raw materials such that the company spends less on acquisition of raw materials.
The smart chip company can also get rid of competitors by eliminating the distributors. In this approach, the company will be interacting with the consumers directly and will earn more returns that were initially reserved for the distributors. Alternatively, Mitchell and Coles (2003) agree that the smart chip company can purchase or acquire the clonners. This move will eliminate unfair competition because the competitors will be forced to adhere to the policies of the acquiring company.
The company can also decide to explore other markets that are yet to be exploited. This is because customers tend to be loyal towards brands that have been in the market for long or in other words, pioneers. By the time the clone makers realize what the Smart Chip company is up to it would be too late because the company would have acquired a bigger client base. Alternatively, the company may opt to increase its authorized dealers in the market. This is one of the strategies employed to bring the product closer to the consumers.
Morover, for Smart Chip company to remain competitive, it must encourage its employees to be innovative by allowing them to do things differently while performing their tasks. Most clone makers are people who have worked for reputable companies and left when they felt they were not being appreciated for their efforts.
The Smart Chip Company must therefore focus on employee retention and succession plans. The company can also have a competitive advantage by issuing product guarantees. This will enhance the firm’s image in the market because customers will feel assured while making the purchase. This is because counterfeits rarely come with guarantees because their manufacturers are not certain about their quality.
Additionally, the Smart Chip Company can conduct awareness campaigns to sensitize the public on the risks of buying counterfeit goods. This is because most customers are not aware of the risks they are getting into. Once the public is sensitized on how to identify the brand made by this company, the competitors would have lost the battle.
Besides, the company can issue licenses to other related but registered companies to allow them to make chips. This way the clone makers will have been locked out of the market. This is because every company that wishes to use the technology developed by the Smart Chip would have obtain a license (Mullins, 2005).
The managers of the Smart Chip Company must remain vigilant at all times. This will enable them to notice when new opportunities approach. The company must also foresee threats and address them before they get out of hand. Once a clone maker has been identified, the company should monitor the operations of the competitor to understand their trading patterns.
In general, adding value to the product is the best approach because this is what attracts customers. Most customers do not care about the price of an item as long as it meets their needs. Therefore, differentiation should be employed with care so that the returns are not jeopardized. If Smart Chip Company is able to deal with customers, suppliers, new entrants to its market, and substitute products and services, the firm can be able to realize competitive advantage.
References
King, J.B. (2005). The Top 10 Reasons Businesses Succeed. Web.
Kotler, P. (2003). Marketing Management. Millennium Edition. New York: Prentice Hall.
Mitchell, D. & Coles, C. (2003). Ultimate Competitive Advantage: Secrets of Continually Developing a More Profitable Business Model. Francisco, CA: Berrett-Koehler Publishers.
Mullins, L. (2005). Management and Organisational Behavior (7th ed.). London: Pitman Publishing.
Robbins, S.P. & Coutler, M. (2008). Management (10th ed.). New York: Prentice Hall.