Strategy of Cellox Capstone Project

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Cellox case

Using the concepts developed by Collis and Montgomery in Competing on Resources describe how the Cellox could attain a sustainable competitive advantage. Clearly state the competitive advantage and indicate how the following impact the competitive advantage

The Resource-Based View (RBV) combines internal analysis of phenomena within companies with external analysis of industry and competitive environment. Since no two companies are alike, a company is best positioned for success if it has the best and most appropriate pool of resources for its business and strategy. Resources may be both physical such as needed element for the product, and intangible such as the brand name or technological know-how. It is these specific resources slanted to the need of the particular company that make the company an outstanding, rather than mediocre, organization in the long run. Competitive advantage gives the company an edge over competitors. For Cellox, therefore, to become distinct and gain competitive advantage it needs to have resources that match its company's value and use these resources in a strategic manner.

Cellox's sustainable competitive advantage is clearly its Insulated Concrete Forms (ICF) named Celblox that has the potential to withstand hurricanes. Celblox is durable, long lasting and has additional insulation and sound-benefits advantages.

Cellox's secondary competitive advantage is their custom-made Point of Purchase (PoP) material (i.e. polystyrene forms that Cellox has distinguished by custom finishing) but this can clearly be simulated by others and is only secondary in potential profit to their ICF material.

To develop and realize their competitive advantage, Cellox would be recommended to focus on its most outstanding resource that, according to the tests mentioned by Collis and Montgomery, seems to be auspiciously Celblox. This is because: (1) Its resource is inimitable hence its profit stream is likely to be sustainable. More so it has a physical uniqueness that would make its inimitability even more durable. (2) The resource has appreciative value; it can sustain competitive advantage over time. (3) It seems seemingly unlikely that another will trump this resource at least for the foreseeable present. This, however, is where Pace can conduct research to see if such may be the case; (5) Price's resource does seem to have competitive superiority. Even though it loses out in other factors such as construction costs and unfamiliarity to contractors (only about 4% of the market have homes constructed of this material) as well as steeper shipping costs which compel it to limit its geographical market, its durability and ability to withstand hurricanes give it a definite edge.

Pace would now need to formulate clever strategies that could successfully market his distinctive resource in order to overcome contractor's reluctance and mudslinging of product as well as to publicize the virtues of the product directly to the customer. This may mean continual investment in the resource in order to maintain and build it as well as make the public more familiar and comfortable with its uniqueness. At the same time, Pace should examine the competitive aspects that give other companies their edge, and see how he could match those in order to circumvent and transcend his own problems.

Pace could also diversify. In other words, he could ask himself how well ICF could be extended to other markets and leverage this material in all markets where it could compete to discernible advantage. Possibly by introducing it to other markets, contractors will begin to recognize and acknowledge the potential value of the material, and Celblox could then be used for construction.

Most critical for competitive advantage of Celbox are its instructors who teach how to make it. Its manufacturers (over 40 nationwide); carpenters, contractors, and distributors as well marketing specialists who publicize and markets its competitive advantage. Although each of these different fields are necessary for promoting Celblox, perhaps the stakeholders / partners most crucial for building its sustainable competitive advantage are its manufactures since the Celblox quality has to remain untarnished for it to be successful. Distributors, architects, marketing and sales specialists, and contractors are important too but these could be trained and specially hired by the company.

The business security goals would involve some of the following: environmental concerns, i.e. that environment remains suitable for promoting product, such as the regions of south and south-east USA where hurricanes are common. Legal factors: that the insurance and mortgage industries continue favoring the product. Economic stability includes factors of Cellox using its resources wisely so that the customers wants and needs are fulfilled in the long run and that they discern the potential benefits of Cellox.

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The best marketing will be achieved by word of mouth (otherwise known as buzz). Economic security is another factor where Cellox would be able to thrive despite difficult economic times. This may be one of its hardest problems since consumers may then well prefer the cheaper construction, as well as it being more expensive and time-consuming for Cellox to produce. Social factors are another stability goal that Cellox needs to pursue where contractors are aware of the merits of the material and familiar with how to procure / construct it, as well as eager to tout its value to prospective customers rather than to dissuade them from employing it. Finally, the company would like to achieve price stability where the price is on a continuous keel rather than varying according to supply and need. To that end, a possible goal may be to find cheap and local distributors who would be willing to distribute the product. This recourse could enable Cellox to further cut its costs. Marketing remains one of its gravest concerns.

2. Does Cellox have specialized or general resources? Give three or more examples to illustrate your answer. Is the scope of the business wide or narrow? Why? What are the (three or more) factors that make up Celloxs competitive advantage? How would you describe this competitive advantage? Will they be able to sustain this competitive advantage? Why or why not?

Cellox has both specialized and general resources. Its specialized resources are ICF that it has patented as Celblox as well as (in a smaller sense) its new molding blocks that can make 8 blocks an hour. Its generalized resources are PoP and PPM. ICF is best for certain instances, i.e. For strong winds, although it can be a generalized product too. PoP may be said to be partially specialized in that it is custom-made, PPM is the most general of all of its products since it can be used in any construction regardless. It is also, however, least profitable.

Its scope of business is wide in that it deals with a variety of situations (see Cellox website). Its competitive advantages are clearly its Insulated Concrete Forms (ICF) structured into CELBLOX that has the potential to withstand hurricanes.

Cellox's secondary competitive advantage is their custom-made Point of Purchase (PoP) material (I.e. polystyrene forms that Cellox has distinguished by custom finishing) many of its pieces are hand-painted and possess high standards of quality. The material is light and easy to handle. More so, the company possesses artistic skill and innovation that is evidenced, for instance, by its ability to craft a product that appears to be three-dimensional and 'real'.

A third competitive advantage seen by its PPM resource is the ability to quote potentially lower prices that generate additional sales volume. An alternate competitive advantage would be its "automated molding press with an automated web-loading shuttle press that is available to mold ICF panels" (http://www.cellox.com/)

As its website shows, it offers a continuous spectrum of general to specialized resources therefore it can appeal to both a wide as well as narrow market. Its P.O.P displays have been requisitioned by Fortune 500 companies. On the other hand, its EPS protecting packaging products are used generally for shipping and handling. No particular competitive edge exists here (excepting, possibly, lower price).

Cellox also points to its insulated containers as distinctive edge. It most specialized product is however its ICF that is touted to "resist tornados, fires, pests, drafts and noise as well as reduce your heating bills by up to 50% and you insurance costs by up to 20%. All these benefits for a price that is competitive with a comparable stick built home" (ibid.).

3. Why does the Cellox represent a good opportunity for synergy? Give three examples of where in the Cellox operations synergy could be achieved -- "as part of these examples indicate what companies, groups, or partnerships might be used to achieve synergy? From information in the case how can this synergy be used to achieve a competitive advantage

Synergy in a business context refers to the individuals functioning as a team rather than seperately. Greater opportunity exists for this in Cellox, since the products are so closely linked and verge along the spectrum of general to specialized that the skills of each individual regardless of the divison that he/she works in contributes to the betterment of the corporation as a whole and each of their skills and capabilities are needed….....

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