Strategy of Cellox
Cellox is a company designed to make products that can be used by customers in their homes. The products are made of polystyrene. Cellox produces products including insulated containers, coolers, protective packaging. They also manufacture insulated concrete forms that are safe, and durable for their customers use. When David Pace took over the management of the company, it was at a point of losing its customer and business was going down. Therefore, Mr. Pace took it upon himself to work out new strategies that would enhance revival of the business (Stone & Redmer 2007).
a) Using the concepts developed by Collis and Montgomery in Competing on Resources describe how the Cellox could attain a sustainable competitive advantage.
In the past, most business owners thought to have known the strategies that they needed to use in order to enhance the growth of their business. However, most of the business owners struggle to catch up with competition in the market. Most company owners noted that they were lagging behind in business, and their strategies were slow. As a result, companies have opted to change marketing strategies to bring them to their advantage. Therefore, Cellox changed their organization and restructured their system of work. Their strategies were tailor-made to fit the completion in the market. This was based on their products and the company’s capabilities.
The strategies would then raise the potential, of the company’s production. This approach is called resource-based view. This strategy explains that the differences in the companies can be a source of competition between the companies. The exceptionality in production and managing strategy makes the difference in the company’s sales. According to the resource-based view strategy, no company has the same managing plan like the other. Hence each company can set its own marketing and managing plan depending on its potential and resources that they apply. These include the company’s routine, principles, and processes. These are specific to the company’s particulars and targets. Such will determine the efficiency of the company’s performance and functional activities. If these strategies are well planned practiced and put in place, an organization or company is likely to succeed.
For a company to have stable growth, there are resources that are fundamental for the managing team to consider. Valuable resources can be grouped into two. They can be physical, or intangible. Physical resources include items such as raw materials used to enhance production of commodities by the company. Intangible resources will include the brand name, or technological approaches use by the marketing and production team.
There are several factors that make a resource valuable to the business. Valuable resources have to be distinct. They should suit demand of the product and be appropriate the company’s target. The resource should not be easy to copy or be substituted by competitors. Valuable resources have to be different in every way. The resource is to be exceptional and different from the others in the other companies.
For instance, a brand name is to be different from that of a competitor’s product. It has to be in that will attract consumers and increase the demand for the product. The brand name should also speak a message to the buyer. That is it needs to be appropriate for the product. Hence all resources should be examined against these factors. This is to ensure that the resources chosen are capable of making effective strategy.
b) Clearly, state the competitive advantage and indicate how the following impact the competitive advantage
Competitive advantage refers to the approach used by a business organization in order to raise their sales in the market. The competitive advantage for Cellox is mainly based on the products which they manufacture. Celblox products are durable and can stand strong storms.
c) Consider as part of the sustainable advantage, the role of specific resources as described in Competing on Resources pages 3-7-how would you apply these tests in this case?
They offer a solution of safety of consumers that are intending to build homes in areas affected by harsh storms.The characteristics that are critical to competitive advantage include valuable resources in the company. The most critical stakeholders of competitive advantage are a brand name, and the use of technology. This is because these two play a significant role in raising the sales of products. Other factors like production and customer service follow suit.
The company management should consider ways in which they can produce products that are environmentally friendly. That is, to use technology to make and recycle raw materials to manufacture products. They can also restructure their factories to ensure that the manufacturing system does not pollute the environment. That is the manufacturing company should be able to ensure environmental sanity at all times.
a) Does Cellox have specialized or general resources? Give three or more examples to illustrate your answer.
Cellox has a generalized resource. This is because the competitive advantage which is used is a general approach that is not specific. It uses resources including excellent customer service and improved product manufacturing.
b) Is the scope of the business wide or narrow? Why?
The scope of business is wide. This is because Cellox as a company has many products. In addition, the company has a plan to bring up more products. These are products that are precise to the desires of consumers.
c) What are the (three or more) factors that make up Cellox’s competitive advantage?
Cellox banked on several factors to re-establish the company that was falling apart. According to Collis & Montgomery 1995, the valuable resources in Cellox include improved technology, high-quality expertise and working personnel, excellent customer service and relations.
d) How would you describe this competitive advantage?
This strategy is ideal for the company. If the managing team can follow the strategy as proposed, they are able to bring the company back to raise their sales.
It is true that Cellox represents an excellent opportunity for synergy. This is because Cellox has a good and well-known brand name to its consumers. They have also maintained a close relationship with their customer. As a result, they are able to meet the demands of their consumers despite their challenges. Its products are also exclusive, fashioned to meet the needs of consumers.
a) Why does the Cellox represent a good opportunity for synergy?
Give three examples of where in the Cellox operations synergy could be achieved as part of these examples indicate what companies, groups, or partnerships might be used to achieve synergy? Manufacturing, distributions and sales department are among the key operations of the company. The combination of these departments in the company makes an exceptional operation synergy. Cellox could hire expertise from other companies to assist in the distribution and sales of products. Such companies include construction companies and contractors. Cellox management will also have to involve personnel that can improve customer service. This will help their clients in a time of difficulties when using their products, and also to inform them of the new products in the market. The use of these partnerships will go a long way in improving the sales of its products.
b) From information in the case how can this synergy be used to achieve a competitive advantage (e.g., which one of the forms in the article Desperately seeking synergy by Gould and Campbell which include Shared Know-How, Coordinated strategies, Shared Tangible Resources, Vertical Integration, Pooled Negotiating Power, and Combined Business Creation)? What factors, issues, biases, or other considerations will make synergy difficult to achieve? Explain why.
According to Prahalad & Lieberthal 1998, there are several factors which lower the synergy and slow down sales in the market. As much as tailor-made products are fit for sale, most clients are not willing to pay a fair price for the products. Often clients shy away from the products with the thought of high price. The cost of marketing can also be a factor that may slow down productivity. This is especially when an investing company is introducing a product to the market. The company has to stay close to ensure that their market is not preyed on by their competitors. Continuous advertisements and constant reminders may then be expensive for the company. The management of Cellox needs to rethink about their brand name. They should use a brand name that cannot be imitated by its competitors. In addition, they should also consider the capital and financial status of the company. If these are not taken care of, the company may end up collapsing.
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a) Discuss the management roles of Mr. Pace: what are his major challenges concerning the future success of Cellox?
David Pace was the owner of the company who was responsible for the management of Cellox. He was the head of manufacturing, marketing, distribution, and sales of the products (David 2007). He had a hard time in maintaining his customer. This was due to the stiff competition that was reigning in the market at that time. After buying the company, David chose to work tooth and nail to retain the consumers that were buying products from the company. David had a major challenge in marketing and selling of products. The traditional style of manufacturing building was resistant to change despite the fact that the hurricanes would threaten its stability.
b) Develop a Cellox vision for Mr. Pace-write out that vision and indicate two or more strategic goals that Mr. Pace would have to establish for the vision to be implemented
The company’s vision: to manufacture excellent products suitable for all our clients to make suitable shelters in all seasons. For Mr. Pace to accomplish this vision, he should consider the market trends and consumers he is targeting.
- He should focus more on the valuable resources that are at his disposal. He should consider the use of the new technology that is in the market to produce items that are strong and more durable.
- Mr. Pace can put up more and better manufacturing companies that can help in the production of better products and at a faster rate. This in conjunction with the marketing team, the products will be distributed faster.
- He can employ more qualified and trained workers. The company should employ more personnel to be in charge of distribution and sales.
Mr. Pace will have to include more experts to the distribution channels and sales department. New personnel will help in the implementation of a better strategy. However, Mr. David pace is likely to face challenges in the implementation process. Raising the capital to pay these experts so that they can perform better. Nonetheless, together with his managing team, they should focus on the end term goal. If they put maximum effort on the valuable resources, they will have a significant improvement in the sales of their products.