Critically evaluate the strategies available to the firm in respect of its proposed entry into the Hong Kong toothbrush market. To what extent do you feel it would be possible to gain a competitive advantage in this marketplace?
1. Introduction to the available strategiesâ€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦...page 2
2. The Methods used to understand Oral Hygieneâ€™s strategic position and its ability to gain competitive advantageâ€¦..page 2
3. Evaluation of strategiesâ€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦.page 6
4. Can Oral gain competitive advantage?..â€¦â€¦â€¦â€¦â€¦â€¦â€¦..page 7
The Methods used to understand Oral Hygieneâ€™s strategic position and its ability to gain competitive advantage
Pest Analysis (see appendix A)
Particularly important as the groupâ€™s previous experience of marketing toothbrushes is in very different areas i.e. USA and Europe. It shows HK to be a very different market, which will therefore need a different approach. The Chinese, who have a much lower average income than Europeans and Americans, have so far shown little willingness to pay a premium for a â€˜professionalâ€™ toothbrush and dentists have little belief in preventative medicine.
SWOT Analysis (see appendix B)
It should contribute to the strategic analysis. It points to strategic choice and issues that need to be addressed such as retaliation.
5 Forces of competition (see appendix C)
5 brands have already 75% of the market that Oral will be trying to steal a share of, so there will be great rivalry and it would be very easy for these brands to introduce a similar product to Dura into their ranges.
Market Segmentation (see appendix D)
What Hong Kong customers value and how Oral and its rivals are positioned to meet these needs should be a critical element in formulating its strategy and evaluating its strategic capability.
It has identified its strategic groups (although the TV adverts are aimed at consumers, retailers and dentists must list the product). The market has also been segmented by age, income, price and bristle type and the Dura will have been plotted on a directional policy matrix, all of which should inform the strategy.
Resource Audit (see appendix E)
The main points to note are that it is already manufacturing for Europe and America and soon to move production to Korea, where production costs are lower. It has an infrastructure in HK.
Good local market knowledge exists from a team already supplying related products.
The American brand is likely to prove popular and adverts already exist which can be used to leverage this.
Lily is also likely to have identified core competencies and strategic capabilities using an Activity Map.
Figure 1: The Value Chain
Source: M E Porter, Competitive Advantage, Free Press, 1985
The key linkages between the activities within the chain to notice are that in terms of segment scope the broad range of products within related sectors might allow more interrelated contacts within buying departments and economic streamlining of deliveries and in terms of vertical scope the advertising is supplied from one of the organisationâ€™s own business units. These are the critical activities which contribute most to the distinctive nature of the products and services offered by Oral Hygiene.
Value network (see appendix F)
It is necessary to examine how well Oral Hygieneâ€™s value chain links to the value chains of the retailers and the dentists to estimate the likely success of positioning strategies.