Summarize ChemBright, Inc. Case Solution in 600 Words
The case in this scenario deals around the problems that are being faced by a company (ChemBright) due to the excessive price wars that one of its more established opponents (Paulson) in the running to the point of even sabotaging its own price margin. The company being a fledgling in its business life cycle at the moment takes this as a very serious threat and is thus trying to tackle it by any means possible without completely eroding their market capital or profit margin
There are in my view two types of steps that the company could take that would make it successfully fend off such advances from the competitive company.
One is extended production. Through this technique, the company will need to reduce their price to the minimum possible limit in comparison to its cost thus coming almost neck to neck to its break-even margin. This might reduce the cost to a level that though is a bit higher than Paulson but with the shorter lead time will reduce the outflow of clients from ChemBright. However, the reduction of cost will heavily affect the company as it being still in the early growing phase money and profit are of the utmost importance. ChemBright should thus plan to change the production system from inventory based to Just in Time-based which will drastically reduce the inventory cost even though the lead time doubles for that still it will be far lesser than Paulson. The introduction of Just in Time and a strong supply system may also pave the way for ChemBright to increase its product base to the other product families and thus not only drastically diverse its business but also create potential profit-making subdivisions that they will be able to fall back on in any scenario where one product may be suffering from a beat down.
The other and the more preferred technique that I would suggest ChemBright follow is based on completely coming out of the price models and create a niche for itself with a base on superior quality. The products of ChemBright are already known for its superior quality which is also added benefit to its already heavily low lead time that will give it a different stature among the clients. It should completely focus its campaigns on the exceptional qualities that its products boast of and should stick to it, in a similar way that Apple though being of a far higher cost than the average smartphone market still manages to be at high customer demand. If the company through targeted client promotions and quantity based discount can implement into the head of the clients that taking the product made by ChemBright will not only help them to get the items on the shelf art a much lower time but will also be able to fight off the quality of the competing brands and may even create products superior to them may tilt the favours of such companies towards spending those extra bucks to buy ChemBright products. Also, a technique such as this will surely wear out the provisions of Paulson who is taking a loss in order to weed ChemBright out, and it will be forced to take the prices back to its previous levels thus given ChemBright a breathing ground as well as a loyal and tested customer base.
To summarize there can be a multitude of steps that can be taken by the company in order to stave off the encroaching competition but all the steps will be useless until the company has the zeal to implement it in the long run and tackle all the problems that come with it. If the company is able to zero in on a target the steps to achieve them and stick to it , it will soon come out victorious.
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