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To evaluate weak areas of the current strategy and propose solutions for improvement.
2.0 LITERATURE REVIEW
According to Zou and Cavusgil (1995), the subject of global strategy has attracted a lot of attention in the recent past. Zou and Cavisgil (1995) calim that a major reason behind this has been the increasing progress in the telecommunications and other technological areas that has brought the world closer and transnational existence of organizations
Eastcompeace culture has been building momentum as a congruent culture. Its aspiration to achieve continuous growth in the field of research has ensured the sustainability and viability of its products in the market. Moreover, Eastcompeace ensures highest standards of corporate compliance from the highest C-level management to the employees at lowest level (Teece, Piassano & Shuen, 1997).
The low employee turnover of Eastcompeace is the evidence of Eastcompeace's congruent culture, low employee turnover is very good sign for any company especially for Eastcompeace who puts lot of investment on R&D. Therefore, consistency in R&D Employees is very important. A low employment turnover would mean that Eastcompeace would lose less of its skilled workforce to the competitors. It further implies that employees at Eastcompeace enjoy job satisfaction, which in turn is an evidence of their motivation and work efficiency.
There are various external forces that implicate the performance of Eactcompeace Inc. And in turn implicate on the firms national and transnational expansion and growth strategies. Along with conventional forces this also includes technological problems such as issues pertaining to counterfeiting.
Nowadays, people are more and more informed even in technology related issues thanks to the internet, technology publications and television shows. They are now able to play a more important active role in their treatment decision-making. Government legislations pertaining to security concerns and registrations of smart cards have significant implications on the firm's strategic goals.
The American Bank Note Holographics (ABHN) consistently asserts the notion that counterfeiting issues are on the rise. While smart card technology itself is a cure to counterfeiting and piracy issues, problems such as hacking of information stored on chips is still a major issue of concern of many consumers and stakeholders that are highly dependent on smart card technology.
Economic conditions such as interest rates and inflation have little impact on the profitability of the industry. The smart card industry appears to be immune to external economic conditions. This is because smart cards have huge applications in industries such as credit cards and sim cards. Moreover, further innovations can move for further massive implications. This means economic recession has minimum effects due to B2B nature of the business.
Technology has several impacts on the smart card industry. Complex equipments enable companies to develop smartcards to specific sectors but they also enable to faster their development. Companies can now examine compounds that would have taken years without technology (Keegan, 2002).
The continuous trend to maintain state of the art technology continues to drive competition in the smart card industry. Overhauling expensive equipment may slow performance at first, but will serve to produce an overall increase in long run production (Afuah, 2009). An important global trend in the industry is the growing need to develop and market smart cards in developing countries. Overseas markets provide a vast, endless supply of costumers who are in desperate need of smart cards. There are a great deal of trends emerging in the smart card industry that will affect competition and performance within the industry. It will be those firms that catch on early who will have the greatest chance of survival inside the industry (Davies & Walters, 2004).
Demographic trends also make the customer more and more important as they will generate more and more need in smart card products (Keegan, 2002). Social and cultural trends include the heavy reliance on 21st century smart cards by society worldwide. With modern emphasis on increasing security concerns law enforcers and security experts will continue to prescribe smart cards and businesses and consumers will become more and more accepting of smart cards. Again this raises demand for smart cards, which leads to increased competition, which in turn may lower individual firm's performance. An emerging cultural trend within the industry seems to be consolidations and mergers to offer broader ranges of products, capital to expand and share of the costs of R&D (Grant, 2005). Such mergers can lead to competitive advantages over smaller capital-based firms.
All companies involved in smart card development are battling to reduce this time expenditure. Firms are now taking a proactive stance to communicate early on with agencies for ideas on how to design smart card development. Those firms, which successfully plan with agencies, will have a quicker development time and be able to introduce their smart card to markets faster, giving them a competitive edge. Better planning also reduces wasteful spending on irrelevant processes, thus increasing performance.
The smart card's resistance to most economic conditions has a major drawback; it is highly sensitive to government regulations. Therefore political forces influencing policies in regulatory agencies can have a profound effect upon the smart card industry.
The generic producers are able to price their smart cards at significantly lower prices, competing at the price level. The generics thus gain a competitive advantage through price differentiation those appeals to many Americans and foreigners' abroad. So even in the highly attractive industry of smart cards there still exist roadblocks to seizing opportunity and making a profit. It is important for the smart card firms to realize these threats and implement strategies to counteract them (Vaidyanathan, 2005).
As long as the human remains imperfect and their desires remain endless, there will always be a need for smart card. Many opportunities exist within the smart card industry that can produce unimaginable profits. The increased security concerns will continue to be a growing market for smart card firms throughout the industry. Security and financial sector will continue to provide a profitable market for the sale of smart cards.
In order to strengthen position in the market, we must find the major competitive advantages of Eastcompeace Ltd. To be able to analyze that, we used M. Porter's five forces concept, that you can follow below:
The most important thing to point out is that the barriers of entry in the smart card business are very high. The capital cost of setting up a smart card company is enormous. The construction of facilities, high-tech equipment and research and development involve huge investments (Belton & Stewart, 2002). Government issues and regulations are a crucial thing in this industry. Different laws and acts can make a hard time for existing companies, not to mention for the potential entrants. Laws on television advertising for smart cards are an example. Differentiation is a huge advantage for the firms already in the market. For new companies it is difficult to achieve a product that will be perceived as better than existing ones
In most cases substitute of Eastcompeace smart card is a product from a competitor. However, there is little threat from this side as while most companies specialize in certain sectors only Eastcompeace diversifies in range of products and providing integrated services. Moreover, there is no technology so far which can substitute smart card technology all together.
For the supplier in this case the buyers industry is very important. There are not many buyers and the supplier has little room for negotiation with individual buyers so the company itself has high bargaining power towards its supplier. The nature of their business does not force them, unlike other industries, to rely on suppliers. Scientific tools, materials, computers, and testing equipment are highly specialized (Bryson, 2004), but the likelihood of these companies invading on their line of business is not very high. With the amount of key ingredients being marginal it is the suppliers who are bargaining for business with major smart card companies. With competition among suppliers the switching cost is low. The profitability of Eastcompeace highly depends on the prices of technology that is needed to develop smart cards and machines used for this.
First of all in this industry there are many sellers and many buyers, sellers being the strong group. Buyers are not likely to purchase in very large quantities and there is no one single buyer that is a large customer to the company (Bryson & Alston, 2004). Buyers do not have a low priced alternative source of supply. A company that sells smart card smart cards has thousands of individuals as their customers and doesn't need to worry too much about a buyer revolt. In conclusion I can say that the power of customers to bargain is not very significant but prices of smart cards can be bargained for them by the government.
Threat of rivalry is high. Smart card industry is highly competitive. Companies are racing to launch new products before other companies release similar ones.…[continue]
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