STRATEGICLOCK IN

Topics: Monopoly, Patent, Economics Pages: 2 (460 words) Published: April 26, 2015
STRATEGIC LOCK-IN
Model Description
Strategic Lock-In describes the term when users become dependent on a product since alternatives do not exist or are related with high switching costs. These products thereby are inimitable and non-substitutable and thereby serve as sustainable competitive advantage (Johnson and Whittington and Scholes and Angwin and Regnér, 2014, p.204). Different ways of creating a Lock-In relevant to Lindt Germany can be seen in the following:

Strategic Lock-In

Controlling complementary products or services:
In general hardly possible as chocolate, as a product, does not require any complementary products Creating a proprietary industry standard:
Patent on recipe
In the short run: secures that recipe is not shared with anyone external In the long run: patent expires after 10 years (recipe will be accessible to public) As Lindt Germany does not operates in a hypercompetitive industry and the recipe remains the same since 1845 (Lindt & Sprüngli, 2014b),  it would not be recommendable to patent it. The best option is to maintain its recipe secret as they already do.

Size or market dominance:

Lindt’s Germany company shares in 2014: 9,2 % of German Confectionery market (Euroomonitor International, 2014k) makes company 3rd biggest Nevertheless Ferreros : 21,48% (Euromonitor International, 2014k) Difficult to assume position without enormous invention or product diversification Therefore possible but unlikely way of creating a lock-in.

First mover
dominance:

Create chocolate with Stevia, Green Tea, etc.:
Capture health trend and the demand for low-carb chocolate (Morris JA, 2014) Be the first- to launch and create a monopoly in this domain (Chance to patent this to preserve advantage as it is likely that competitors work on the same trend)

Insistence on preservation of position
Does not exist for the chocolate industry since neither Lindt Germany nor any other competitor is likely to be able to insist on...
Continue Reading

Please join StudyMode to read the full document

Become a StudyMode Member

Sign Up - It's Free