Name of Case: AlarmForce Industries Inc Decision Maker: Joel Matlin
Year of Case: 2009 Position: President, CEO
1.) Launching the AlarmFog system or not. Launching the AlarmFog could potentially expose the company to risks associated with easier competitor entry, if the product is not accepted by customers or fails to deliver as promised.
Strategic importance: High, this could be a potential threat to the company.
Time sensitivity: High, decisions regarding the launching of a product have to be made as soon as possible.
2.) Deciding whether to stick to the practice of providing products free of charge to customers or to depart from this strategy.
Strategic importance: High. It is one of the company’s strengths.
Time sensitivity: high. Competitors might begin to lower prices to compete.
3.) Target market: if the product were to be released, what would be the target market for the product? Should the company segment the existing customers into target markets or keep catering to the demands of each class?
Strategic importance: High, identifying a target would help to direct the company resources towards its target in terms of promotion, research and development and pricing.
Time sensitivity: Medium. Reaching a target audience might not be a timely issue because all customers purchase the same product for different needs.
4.) Upon activation, the AlarmFog is seen to leave a thin film on the carpets and the furniture in the home. This raises questions of potential damage of consumers’ properties.
Strategic importance: High. Consumers are worried about the potential damage to their property
Time sensitivity: Medium. Research might take a while; consumers could keep using current products.
THE MAJOR CONCERN
The main issue here is whether to launch the product or not. This would require heavy costs in terms of gaining the first mover advantage over other competitors. Also, the company’s annual report is due in a few months and investors are already inquiring about new and upcoming products.
1.) Industry, Market Environment
The Canadian security industry is marked with high level of fragmentation. Companies range from small operators working out of cars, to a few large international corporations. The business model used in the market prior to the entry of AlarmForce, was to distribute the hardware technology for a profit, after which the consumers are locked into a long term contract which these companies secure in order to protect against low switching costs for the consumers.
AlarmForce penetrated the existing market by introducing a more affordable and user friendly technology which is one of its strengths. It is the first to develop and launch the two way voice technology which is less costly and labor intensive than other existing security systems. In 1993, the company decided to start providing the security hardware to its customers, free of charge. This action was responsible for a 60% increase in subscriber base the following year. Also, the company spent a substantial amount of its resources in creating brand recognition among consumers, making it one of the top security companies in the industry.
Major competitors in the industry are ADT Ltd, Chubb security systems and the security divisions of Honeywell Ltd. AlarmForce’s innovative strategies have made it to stand out, amidst other competitors in the market. However, these competitors are currently not offering similar products to that of AlarmForce. Instead, they offer advanced systems that monitor the customer’s home for incidences of fire, floods, and temperature changes. Possible threats include wider distribution network of these prior existing competitors and greater access to capital or...