Lojack and the Micrologic Alliance free essay sample

Financially, sales are climbing, but year over year growth is declining. The distribution system through auto retailers seems stuck to new car sales. The Lock strategy at the present time consists of several discrete variables. Lock has elected to expand into new geographic areas and markets which is a logical growth strategy for the firm which has established an enviable reputation in terms of asset recovery systems.This company has developed a new tracking unit that permits it to move Into new segments such as trailers while simultaneously reducing costs for such units, therefore, establishing itself as a cost leader in the sector. This combined with a strong differentiation of product through law enforcement networks ivies Lock a strong competitive advantage. These are strengths that cannot be quickly or easily duplicated and because of the proprietary technical aspect of this product.Competitors would have to try and find substitute products to compete directly with Lock. We will write a custom essay sample on Lojack and the Micrologic Alliance or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page Competitive Environment If we use Michael Porters 5 forces as a measure of the competitive environment, we see the following: New Entrants Telemeter and other competitors were on the market prior to Locks entrance and other competitors are entering the market through GAPS based systems such as Instars. These systems are not a onetime purchases but Incur monthly fees to maintain service and may require the use of a cell phone. Absolutes Just as with GAPS, there is a threat of substitute products coming on-line through new technology, but this threat should be mitigated by Locks network with local law enforcement agencies. Suppliers Suppliers are also a threat as the auto industry is developing its own telemetric OFF accelerate the design cycle. Further, their inability to deliver state-of-the-art entertainment, communication, navigation, and other telemetric (navigation, driver- airing, and communication systems) clearly highlights the manufacturers reluctance at relying on these sta ndards.The good news is that the automakers appear to have realized their errors and limitations and are participating in the development of new network standards for both mission-critical and convenience or entertainment systems. (Wright, 1999) Lock must continue to market its law enforcement advantage to thwart off this threat. Buyers At this stage, buyers have relatively limited buying power due to the lack of alternative technology. However, the threat is the heavy reliance on car dealers to sell he product.If there is no incentive to do so, then the buyer may lack the knowledge that would drive the purchase. Intensity of Rivalry Although the product is in its growing stages, and there is no clear competition, the increased activity in this sector could be conducive of a threat to achieve a large enough market share to make the implementation worthwhile. S. W. O. T. Analysts INTERNAL STRENGTHS WEAKNESSES Impeccable consumer franchise ; Brand strength Proven track record Law enforcement network ; Proprietary technology ; Reliance on alliances for distribution ; backbone outsourcedReliance on automotive industry Limited distribution systems New Markets Expanded distribution channels Leverage strong brand Strategic alliances Expand existing technology ; New Entrants Substitute products ; Local bureaucracy (political environment) Shift in alliances Telemetric OPPORTUNITIES THREATS EXTERNAL Perspective on network level strategy Technical Both Lock and Microcosmic embrace the embedded organizational structure. While these technologies. Locks technology would not have been possible without the alliance with local law enforcement agencies, Motorola, and Microcosmic.Microcosms existence, until recently, had been to partner with organizations to leverage its technical creativity to further develop the companies that it works for. It would take an equi ty stand in these companies and take a long term approach. In order for Microcosmic to be successful in this venture, it would need to rely on Locks distribution and marketing systems. Not only to sell its products but also to ensure its own financial stability. And if Lock is to review its long term strategy, it must understand that research and development are not at the core of its operation.Motorola is a key component to both Lock and Microcosmic and has been a strong partner providing vital assistance. However, moving forward, they cannot be relied on to only provide this technology to Lock. They are a much larger company and will look to broaden their reach. In the fall of 1999 Motorola was already working to become a driving force in the telemetric industry and moved to position itself with the major car companies. Who can you count on to bring the promise of telemetric to the world? The same people who have been changing the way we communicate on-the-go since 1928. Motorola is driving innovation with telemetric -? the newest way to take your world with you. Come to think of it -? is Motorola reinventing the car radio for the Internet? (Boroughs, 1999) Motorola is designing the 3rd generation Lock, and it should be available in the fall however a continued alliance with Motorola could combine Locks strong results with another up and coming GAPS capabilities, and Lock could potentially lose its strong brand if it became a part of a larger offering. Recommendations Short Term Lock should look to form a loose alliance with Microcosmic. This would allow forLock to expand into the new market of construction equipment where need exist and no clear provider exist. An alliance between these two organizations has a proven track record and a proven product that can be marketed. The first step in the alliance would be to tackle the construction equipment market. This is a market that has a strong need for a location and asset management technology there i s no clear market leader. The combination of Lock;s proven solution for tracking and the ability of Microcosmic to develop strong asset management software would allow for strong penetration in his market.As in the past, both organizations should look to work in their core areas of expertise. Lock understands how to market and distribute the products and Microcosmic should immediately assume the RD function. This will allow both companies to continue to drive down cost. Lock currently has enough cash on hand to assist the need for cash with Microcosmic. At this point, the cash infusion should be done as a low or no interest loan to Microcosmic. The partnership work well in the beginning, and over time, Microcosmic can determine if this is their core business. If to, they will be able to sell this product back to Lock Just as it did the first time and move in a different direction or become a subsidiary. Motorola is currently working on the 3rd generation Lock and Microcosmic should work directly with Motorola on Medium Term Once a clear hold on the construction market is secured, then the alliance will have the opportunity to move into the trailer market. A proven track record in auto recovery and construction equipment asset management will allow strong credibility and should allow Lock and Microcosmic to become the market leader.During this take both organizations will need to determine the structure of the company and if they are able to grow construction equipment sales to the same rate as existing auto sales then Lock would be in a position to either absorb Microcosmic into the existing organization (assuming this is agreeable to both parties) or turn Microcosmic into a subsidiary. Long Term Emerging markets will be critical to the l ong term success of Lock. With a strong foothold on the construction market this area would be a logical first step into emerging markets as contraction equipment would usually surpass new car sales.Immersing markets will provide the strongest revenue growths for the company and is possible this may need to be moved into the mid-term focus depending on the success for the technology. Critical Success Factors Industry critical success factors need to include a standard platform for technology on both the asset management device and vehicle retrieval systems. If too many technologies exist, it will become confusion for consumers, and they may abandon products all together. The following list the critical success factors for a Lock Microcosmic alliance in terms on timing each holds the same importance.The two companies must have a willingness and desire to form an alliance 2 Microcosmic must be able to finish the work on asset management software in the short term and it must be fully compatible with the existing Lock technology it must come in-line with existing cost estimates 3 Lock will need to develop a strong marketing and distribution plan to enter the construction market and a strong foothold must be established to keep back competition 4 The technology in the construction market must be compatible with trailer and fleet market needs 5 Current US distributio n systems must be compatible with overseas markets alack just be able to understand and successfully maneuver in immersing markets and it needs first mover advantage to establish itself as the market leader.Financial Financial projections are highly dependent on the critical success factors being met and I will only give a small example to the entrance into the construction market as it exists today. With 170,000 to 200,000 pieces of construction equipment being produced in the US each year, I believe that we could start by collecting 5% of that market in the first year and the 10% the following year and leveling out at 15% for the bequest 3 to 5 years. There are approximately 180,000 pieces of equipment in rate as new sales. Lock is currently running at a 43% profit margin and had an 8 year high of 53%. We will use the high (53%) for a cost as there will be quite a bit more expenses in rolling out a new product. The unit should sell at the $1,000 used price point and a $50 per month management fee.Based on these conservative projections, the yearly revenue in this market would level out at $mill with and a net income of $4. 7 mil per year, assuming all cost stay in line with current financial. This would add 14% in E. P. S. The first year and 200% the following year finally leveling out at 100%. Implementation Because of the history of the two parties and the nature of the work, progress could begin immediately. The matter of a cash infusion for Microcosmic should be resolved quickly as well as the nature of the strategic alignment. Lock should continue to develop the third generation with Motorola and determine their role, with Microcosmic, moving forward.