Academic journal article International Journal of Management

Short Delivery Time as a Competitive Weapon for a Declining Firm

Academic journal article International Journal of Management

Short Delivery Time as a Competitive Weapon for a Declining Firm

Article excerpt

In the analysis of strategic decision, a declining manufacturer is generally considering whether to use cost or quality strategy as a competitive weapon. From the management point of view, the whole market demand for the declining products is falling down. All the manufacturers share the small cake equally if there is no big quality difference and price difference in the market. Since all the existing environmental and quality standards are applied to all manufacturers equally, every one owns a small portion of the total manufacturing flow. It is very difficult for the manufacturer to find out the cost or quality advantage over the competitors. Survival becomes the utmost purpose of a firm in a declining industry. In this paper, I begin with the examination on the major factors affecting the seller's decision and then point out that the equipment manufacturer needs to formulate its advantageous strategy to seize market share by penetrating into consumer's real demand. Based on our analysis, I propose that short delivery time may be an effective strategy for a declining firm facing a changing environment.

1. Introduction

It is a changing world that some new products are rising and shining, but some of them fall and become dimmed immediately. The business environment change so quickly that the business trend is difficult to predict. Thompson (1967) argues that organization strives for survival by keeping continuous improvement and seeking for growth to adapt to environment change. If an organization fails to adapt to the rapid change from environmental threat, it is going to decline. The product life cycle theory also indicates the sales cutdown of the product means the demand for organizational products is reduced. Minuberg (1984. P. 221) states: "Once established, organizations peak in their service to society and then begin to decline". This is a deterministic model that an organization must die after some period of time. Weitzel and Jonsson (1989) review various perspectives on organizational decline and conclude that the decline moves through (1) blinded stage (2) inaction stage (3) faculty action stage (4) crisis stage and (5) dissolution stage. Many researchers focus on the analysis of organizational decline based on a dynamic framework (e.g. Ford, 1980; Murray and Jick, 1985) and some present various suggestions on the firms' strategy when facing decline (e.g. Boulding, 1975. Easton, 1975; Miles, 1980).

Tn the analysis of strategic decision, a manufacturer is generally considering whether to use cost-leadership or quality-leadership strategy as a competitive weapon. In times of decline, a firm may choose either employment cutbacks such as short-term workforce layoff, overtime working, or fixed asset reduction such as disposal of fixed assets, the sale of plant and equipment to survive. Decision makers tend to withdraw the resource input and avoid the risk-taking to avoid failure or bankruptcy. In contrast, some troubled firms select different ways by engaging in more risk-taking activities and increase its level of domain initiatives by high levels of debts. According to Hambrick and D'Aveni (1988) the troubled firms may response to environmental threat by 'traversing the inactive or hyperactive route'. Ansoff(1965) emphasize that the firms must develop their distinctive competence to avoid failure.

In the perspective of market operation, price and quality of products are major factors to influence the buyer's decision. All firms must keep closed attention and continuous effort to reduce cost and increase quality level in order to gain advantage in competition power and keep from being kicked out of business. The objective of cost leadership is to seek for cost reduction compared to competitors in the relevant market segment by keeping the competition weapons unchanged while quality leadership is aimed to develop a unique product in a particular market to earn extra profit by means of the monopoly power caused from the unique of the product. …

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