CASE STUDY: Orbital Engine Company
Introduction of Business Background
(4) Key issues Highlights
Two Wise Decision
Large Car Manufactures Appeared not ready to adopt OCP Engines
Marketing Lessons Can be Learned
Marketing Mix and 4P s
OEC’s Porter Five Forces
Licensing and Joint Venture
In this severe economic environment the management of time, in the meaning of the ability to pioneer the market with new products or services, becomes crucial. OEC was in the favourable position of being able to provide customer with solutions that incorporate the latest state of technology; however, OEC was slow reactions to shifts in customer needs and technological advancements which did not allow OEC to realize economies of speed, even though customers are willing to honour fast reactions with higher prices. Furthermore, being the first on the market with an innovative product creates a temporary monopoly and brand recognition. In this market situation the pioneering company is relatively free to set adequate prices in order to recover the usually considerable cost for research and development. Once other companies come up with similar products prices drop immediately, due to the increased competition. In this situation, it becomes much more difficult to repay investments in research and development. Finally, being innovate creates a positive image among customers and, thus, strengthens the competitive position of OEC in the marketplace.
During the process, OEC had experienced the changes and made some wise decisions. OEC is a potential company which has a lot of opportunities to diversify its products in cope with the market change through licensing, joint venture and product diversification. According to Porter’s model, increased bargaining power of suppliers would lead to increased costs for major input factors, exerting heavy pressure on the critical success factor costs. This also enhanced bargaining power of customers requires companies to consider customer needs to a larger extent. Basically, the same effect derives from the increased rivalry of existing competitors within the same industry. The severe competitive situation is even enhanced as the higher probability of new entrants increases the demand for low costs, flexibility, and economies of time. Finally, the market implies an increased threat of substitutes. Thus, OEC needs to improve their cost and quality position in order to stay competitive.
Introduction of business background
Orbital is an international developer of innovative technical solutions for a cleaner world. Orbital’s innovative design and its product development and operational improvement services are attracted to the world’s car makers and end users of engines. Orbital’s headquarter is based in Perth, Western Australia, and is traded on the Australian Stock Exchange (OEC).
OEC is a pioneer for engine innovation that it keeps on trying to improve the product in cope with the market change and need. With its breakthrough of fuel injection and electronic combustion process (OCP) for two-stroke design, it benefits to both vehicles and engines becomes cheaper in price and lighter in weight, which leading to a big saving on the fuel consumption with lower emission levels.
This report provides a discussion of the consequences of OEC’s marketing strategies and its activities that I think what OEC is making their wise decisions on, why has OEC failed to have its engine adopted by any major Car manufacturer at the time of the case, in spite of the engine having many apparent benefits, and what marketing lessons can be learned from the fact that some of OEC’s technology has been adopted by the makers of marine...
References: Kotler, P., Brown L., Adam S., Burton S, Armstrong G., (2007), Marketing 7th Edn, Pearson Education, Australia.
Manley, K.J., 1994, Factors Leading to Offshore Manufacture of Australian Inventions: The case of The Orbital Combustion Process Engine, Murdoch University, Western Australia.
Porter, M. E.: ‘Competitive Advantage. Creating and Sustaining Superior Performance’,
2nd Ed., New York et al: The Free Press 1998.
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