Strategic and Operation Management in Domain Synthetic Fibre Plc - Case Study Example

Strategic and Operation Management Table of Content Introduction 3 Current Strategic Position of DSF 4 Resource Planning Implications 5 A Critical Exploration on Generation and Evaluation of Options Available to DSF 7 Conclusions and Recommendations for Future Direction and Growth 9 References 11 Introduction Domain Synthetic Fibre Plc (DSF) has been trading in the chemical/synthetic fibres industry since 1946. For years, the company has been concentrated on serving the marketplace with Britlene, which is recorded to be a major textile category in the UK. Although the company has been a leader in the market since decades, with the discovery of new fibres, it has been losing its market share proportion, as the old fibre market got replaced. Britlene, as the patented fibre by DSF was used to produce heavy-duty clothes, tyre cords as well as industrial belts. Subsequently in 2007, the research and development team of the company developed Crylon fibre, which comprised of all the qualities to be counted as superior to Britlene, especially with its better heat resistant mechanism as compared to other fibres. It is noteworthy in this context that with the development of new products in the market sphere of the industry, the company has been losing its monopolistic positioning. Eventually, the company has been focused on developing new products to regain its leadership positioning, which was already threatened by the expiration of their previous patent on Britlene apart from the rising competition in the market being intruded by local as well as international traders. It is thus expected that the development of Crylon will prove effective in rewarding the organisation with its competitive advantages (Jones, n.d.). The paper particularizes on the critical analysis of the current strategic positioning of the company. Correspondingly, emphasis has been laid on evaluating the implication of change with due regards to resource planning. The options available to the company with the generation of new product, i.e. Crylon have further been assessed on the basis of Ansoff matrix, focused on evaluating its feasibility, suitability and acceptability in the market, as compared to its prior product performance of Britlene. Findings from these analyses have further been summarised to draw upon recommendations for DSF. Current Strategic Position of DSF In general, the strategic positioning of any company is mostly concerned with the impact of its undertaken initiatives in respect with the internal and the external sources persisting in the business environment, observing the influences of the stakeholders and competences of the firm (CIMA, 2008). When marketing a new product, observing the market trends from an overall perspective is essential. It is in this context that a company expanding business in the same product line thus becomes subjected to many speculations to adopt new marketing strategies and reposition its brand image. Under such circumstances, differentiating the new product from the old one as well as from its competitors becomes crucial to ensure ultimate success of the same (Khan, 2013). Correspondingly, based on these elements, the current strategic positioning of DSF can be related with the changing trends observable in the market. The current fibre industry trends exhibit a lower entry and exit barrier that promotes the threat to new entrants, which in turn increases the essentiality to promote the company’s focus on developing a unique market strategy, which would help them segregate their products from the other available brands (Jones, n.d.). One of the key strategic initiatives adopted by the company in the current market is brand extension, wherein DSF has been entrusted by the general customers to be a superior producer of textiles. Correspondingly, the company plans to use quality as one of its key Unique Selling Propositions (USPs) to introduce the newly designed product, i.e. Crylon, under the same product line, to differentiate it from other available competitor brands and substitutes and therefore, facilitate brand extension (Vukasovič, 2012). Correspondingly, in its current strategic positioning, the company has been focused on lowering its cost of promotion and marketing in order to regain financial competencies (Kushwaha, 2012; Jones, n.d.). It is noteworthy in this context that with its patent becoming obsolete within the short term for its key product, i.e. Britlene, the company has already entered its maturity phase, wherein its focus has eventually shifted towards turnaround. Concerning the company has already entered its maturity phase, being highly dependent on its primary product Britlene, the challenges of a declining market becomes apparent in its case. Accordingly, stakeholders’ expectations, both internal and external, has also increased manifold, following its competitive performances in the previous decades. This particular factor has also rewarded the company with added advantages wherein, owing to its previous performance, investment market for DSF have been favourable (Centers for Disease Control and Prevention, 2008). To be precise, the current strategic position of DSF can be characterised on the basis of few elements that signify rising threat of new entrants, threat of substitution, increasing competition, augmenting stakeholders’ expectation, challenges of being dependent on one particular product and its gradual shift towards the decline phase from its maturity phase on the product life cycle curve. Resource Planning Implications Based on the above discussion concerning the current strategic positioning of DSF, it can be inferred that major challenges are posed on its competitiveness owing to its dependence on Britlene and the eventual decline of the same. Correspondingly, as was mentioned above, to retain its market position, the company has emphasised introducing a new product in the market, i.e. Crylon. This particular strategic stance demands an all-inclusive resource planning to identify the available options for DSF in attaining its goal to regain its competitive positioning (State of California, 2007). It is in this context that in order to develop its new product line, DSF has to go through an additional line of production, which will again require resources in terms of capital, intellectual property rights, research and development as well as labour (Jones, n.d.). It is in this context that with the increased requirement of production, the company has to bear a huge amount of cost, to make the existing factories adept in terms of its infrastructure as well as to implement the human resource requirements and maintain the prolonged chain of production. The conversion process is also quite lengthy wherein the new factories, in order to operate in full swing, would require considerable time. This stagnation in the production would also cause gaps in the product to reach the ultimate customer owing to which the company will require highly efficient management personnel, with adequate understanding of market trends and customer preferences. In this regard, undertaking rigorous financial planning will also be mandatory to identify the corresponding benefits of the available strategic options to DSF, to better its positioning in the industry. Notably, the financial planning conducted with a similar aim revealed that the conversion of Britlene factories to produce Crylon would produce only half of the currently produced quantity with the same amount of investment made. Subsequently, it can be asserted that the Crylon production requires huge amount of capital investment as well as human resource as compared to Britlene. The company also requires investing in training personnel and integrating new technology prospects to ensure that the targeted competitive and sustainability objectives are accomplished successfully. To be mentioned in this context, investing in intellectual property rights, if the company intends to produce Crylon, will also be important, besides building its production capacity (Jones, n.d.). A Critical Exploration on Generation and Evaluation of Options Available to DSF According to the Ansoff Matrix, there are four divisions of a market viz. Market Penetration, Market Development, Product Development and Market Penetration. Applying the same categorisation in identifying the strategic options for DSF, it can be observed as presently aimed at extending their existing brand in the market under the same product line and hence, can be asserted as targeting the product development sector addressed in the Ansoff Matrix (ZID TU Graz, 2014; Jones, n.d.). Correspondingly, when developing a product in the existing market, the company should be planning and observing the criteria about the projected prospects of the same. It is in this context that owing to the individuality of the newly developed products, the company will be free from the adverse effects of the close competitors in the market. To be precise, the unique characteristics of the company shall prove highly beneficial in differentiating it from the existing competitor brands (ZID TU Graz, 2014). While differentiation may seem to be a much effortless process in introducing the new product in the market, the acceptability of the new product amid the customers shall be a major concern for the company (Jones, n.d.). Concerning the above discussion, it can be observed that the similarities of Crylon with other available brands in the market as well as Britlene, which the company was trading previously, can hamper the differentiation prospects of the product among the consumers. To overcome this particular challenge, the company will have to invest extensively on its marketing and promotional strategies with the intention to make the product easily identifiable among the consumers. Contextually, the ease of channelizing and distributing the product with the existing market strategy would cut down costs of the company, but would also lead to the lack of effective product differentiation of the newly developed product (Luxinnovation G.I.E., 2008; Jones, n.d.). Notably, while opting for product development, the company has to follow a series of market research functions, in order to develop the product to meet the demands of the new markets. The identification of the need of the customer can be identified as a major requirement for the company, which has to undergo product development, which is again subjected to its efficiency in identifying market trends and likewise, interpreting the strategic requirements to attain the desired industry position (Royal Institute of Technology, 2002). It is worth mentioning in this context that providing emphasis to customer requirements will not be sufficient to acquire the desired proportion of market share through the introduction of Crylon by DSF. It is also essential to suffice the requirements and interests of the company stakeholders to establish the product successfully in the market. When considering the same issue in the case of DSF, it can be apparently observed that the strategy adopted by the company has been protested among its key decision makers. It is primarily owing to the fact that the decision of the product development contradicts the existence of the present product, Britlene, which the company is dealing with currently. To be noted, strategically Britlene may have entered its maturity phase but has a considerable scope to turnaround and regain its market positioning with certain differentiations in its product characteristics. Herein, the company should consider that Crylon is only different from Britlene on the basis of its advanced and more reliable fire protection features. It is also expensive than Britlene, making it more difficult for the company to differentiate and capture the aimed market share through the new product development strategy. Undoubtedly, as consumers in the sector are much acquainted with the brand image of Britlene, the new product may be more acceptable to them if the company emphasises improving its existing product through innovative technology integration in its production process. Herein, the company has the strategic option to develop the features of its existing product, which will also be feasible in terms of capital requirements and promote the same with a new patent name keeping similarity with Britlene (Jones, n.d.). Considering the feasibility of this strategic option, it can further be asserted that the company will also have to invest limited resources in training its personnel or rebuilding its production capacity. Accordingly, focusing on the suitability of this strategic option as compared to the option of introducing a completely new product in the market it is likely that with similar brand name and added or improved features, the new product will be able to attract a larger proportion of loyal customers, making the market investment of DSF less risky (Kas, 2009). Conclusions and Recommendations for Future Direction and Growth In its strategic practices during the 20th century, DSF has been planning its product development strategies, depending on the projected changes in the market when the copyright of its existing product expires. This again displays the possibility that the present line of business, which DSF was following, has increased its brand value in the market owing to which the organisation desires to expand its product line rather than differentiating to another market segment (Stahl & et. al., 2011). However, introduction of a new product, with a new brand name, has always been subjected to the acceptability, suitability and feasibility of the same in relation to the observed market trends. Thus, it is likely that the proposed market venture to expand its product line, especially when the company has been dependent on one particular brand, shall be highly risky. Correspondingly, the company should focus on generating options to overcome these challenges, wherein, improving its existing product, Britlene may be considered noteworthy, to generate profits with limited risk factors active (Luxinnovation G.I.E., 2008; Iowa State University, 2007). In this context, DSF can categorise its market development objectives in two terms, i.e. short-term and long-term. In the short-term, the company should emphasise holding back its acquired market share as well as expanding the same in the targeted market. It is suggestive in this regards that the company promotes its existing product with innovative improvements in its features, rather than introducing a completely new brand in the market. Accordingly, in the long run, the company should focus on diversifying its product line, so that its dependency on one particular product gets reduced and subsequently, the market risks associated with having one particular product can be mitigated. These suggestions can be further considered as noteworthy and likely to be more beneficial for the company than its current proposal of launching Crylon, owing to the fact that it addresses the lacuna persisting in organisational product development planning identifiable in terms of risk management. Hence, it is also recommendable that prior to deciding upon any of the strategic options, the company should also be considering risk analysis of the same to avoid any future discrepancies concerning its industry positioning. 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