Environmental Analysis of Quiet Cat
The Quiet Cat is an organization aimed at providing innovative products to be used in administering subcutaneous fluids to pets at home. Contrary to its name, the company will develop products that can be used to administer subcutaneous fluids to all pets, mainly cats, dogs, and pet birds. Research indicates that most pets especially felines suffer from some of the illnesses that human beings suffer from. Administering the drugs is often a painful process for both the owners and the pets that usually cannot stay still for the procedure. The innovative products produced by the company will help the pet owners to administer the drugs to their beloved pets quietly and easily all on their own. The products essentially render the pets unconscious much like anesthesia for humans so that the drug administration can be smooth.
Five Forces of Competition
The five forces of competition model were developed by Michael Porter of Harvard University. These forces are those closest to a company that affects its ability to make a profit and serve its customers (Porter, 2008). The five forces are discussed below in connection to the start-up under review:
a). threat of new entrants- there is really no threats of new entrants at this point because the industry is still small. Initial profits will be very small until further technological developments are made in the industry. The high cost of research on new products will also be a deterrent to many potential competitors.
b). threat of substitute products- this threat is minimal because there are no products similar to the company’s on the market at the moment.
c). bargaining power of customers- this force of competition is low because we are the only company offering the product
d). bargaining power of suppliers- the threat is moderate owing to the fact that we are the only company willing to buy certain inputs in order to turn them into the desired outputs.
e). intensity of competition- as of now, the rivalry has not come to full effect due to the lack of competitors in the market.
Sources of Competitive Advantage
The main source of competitive advantage that the company has is that it is the first company to come up with the idea of these pet drug administration products. As an early entrant with an innovative product, the company has the ability to set the prices to its advantage. The company will also have a large market share through its marketing strategy. Because it is the only company in the market offering the innovative products, marketing will be relatively cheaper as its brand image becomes recognized around the country and the globe. The reduction in marketing costs will enable the company to put more effort in expansion as well as research and development of new, more innovative products.
Modes of Entry and their Characteristics
According to Hitt (2009), there are four main mechanisms through which a company can enter a foreign market. These mechanisms include exporting, licensing, entering into a joint venture agreement and direct investment. Each of these foreign market entry modes has a number of significant advantages and disadvantages.
Quiet Cat has selected the export method as its primary mode of entry into foreign markets/ international trade. The process involves selling the company’s products to another country directly or indirectly. The company is opting to go for the direct export mode because the company can capitalize on economies of scale at home and the mode affords Quiet Cat direct control over distribution. Another reason the company selected direct exportation as its main mode of entry into foreign markets is because the volumes of the products the company is willing to export are small.
The main advantage of this type of market entry is that the company will receive reliable feedback from the intended market, and there is better protection of the company’s goodwill, patents, and trademarks.
Forecast and Trends for the Organization
There is a huge demand for the products the company is offering but there is no one willing to offer the products. Therefore, the likely scenario would see Quiet Cat being the leading manufacturer and distributer of pet drug administration products in the country and across the borders. Being an incumbent, the company is likely to enjoy a formidable market share for a long time even with the entry of new competitors. R&D is crucial in this industry, and analysts foresee a situation whereby companies such as Quiet Cat having to develop numerous innovative products in order to remain competitive.
Hitt, A. (2009). Strategic management competitiveness and globalization. Nelson Education Ltd.
Porter, M.E. (2008). The five competitive forces that shape strategy. Harvard Business Review.