Cambridge Labs: A Case Discussion on Global Strategy
Successful companies that have a vision to grow beyond their domestic borders establish global strategic objectives based on their mission, vision and core competencies. This framework includes four major aspects, which help firms analyze their current status, the environment, the alternative strategies, and their partner selection. Cambridge Laboratories, an industry-based entrepreneurial firm modeling its strategy based on the industry’s competitiveness, is contemplating a partnership with Canterbury Proteomics Labs, a resource-based firm focusing its strategy based on the value and rarity of its products. This case analysis will determine if an alliance between these two firms is a sound strategy that fits the global objectives of both parties. The case was divide in the following sequence to retain the flow of these three phases; the central question; the strategic issues; the strategic objectives; the analysis; the mission, vision, core competencies, and competitive advantage; the industry and firm’s analysis; the country’s business environment; the country-specific entry strategies; the deal and management of the venture relationship; the alternative strategies, the recommendation, and an update on the case at hand. Central Question
There are few essential questions Cambridge Laboratories is facing. Should the firm invest in Canterbury Labs (CPL) and is a joint venture the best strategy? If a joint venture is the right decision, under what terms should Cambridge Laboratories move forward with the proposal from CPL? These questions are central to the firm because proteomics markers have the potential to become a major stream of revenue for Cambridge Labs. Pharmaceutical companies are starting proteomics programs and this market is projected to grow to $6 billion in 2005. Laboratory services have the potential to capture 20% of that market equaling $1.2 billion. Strategic Issues
There are a few concerns, which make the firm’s decision more challenging. First, will the partnership with CPL be a strategic fit in the global growth strategy? It seems that partnering with CPL labs in a joint venture may oppose the business model. It has been established the firm is not opposed to taking risks; after all, there has been some dedicated growth to new technology-related businesses with high return potential, but it potentially could be too soon after the recent PMC acquisition. Second, the focal strategies for both corporations are completely different. Cambridge is a business-oriented, service-providing organization with short-term profitability goals, CPL is a science-based discovery company focused on making its mark in the industry as a pioneer and achieving the highest long-term potential. Third, Cambridge’s pricing strategy is based on a high volume fee-for-service model; while CPL opts for the high dollar, low volume royalty-based approach. These differences in business philosophy can be an obstacle for the global direction of the joint venture. Finally, Cambridge Labs needs to take its largest customers into account. Although the organization is trying to grow the technology business platform by 5-8% by investing in other companies, the largest growth potential for the company would still come from its core competency business, which is laboratory outsourcing. With its top 20 largest customers only accounting for less than 3% of its total revenue, targeting its largest customers for its core business growth would most likely be at the forefront of Cambridge’s business development strategy. It is necessary to evaluate the potential risks the JV with CPL Labs could pose on the firm’s current relationships with its largest customers. In this joint venture, there would be the possibility of discovering and patenting a new drug. Taking an intellectual...