Jim Beers has been running his own business for 20 years. Jim’s company produces levels. You know the type the carpenters use to level bricks or that people use to level pictures when they are hanging things on the wall. The technical name for Jim’s products is a spirit level which has been used since Roman times. Jim remembers that 15 years ago there were over 100 manufacturers of levels but now there are only 4 or 5 American based businesses.
Jim’s manufacturing procedures have changed little since he began the business. He uses aluminum and plastic to produce his light weight but highly durable levels. His products are premium priced and enjoy a reasonable market share of the high end level business.
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Lately, Jim has noticed his sales falling due to a new competitor that produces a laser level which makes the brick layers job easier by extending the working area of the level. Jim’s levels are 4 to 6 feet long for bricklayers and laser levels are short, easy to carry and extend for over 100 feet. Jim has noticed that most bricklayers like to stick to the old methods but some are adopting the laser levels along with his standard level depending on the job.
Jim is not sure whether to go into the laser level business, he has a friend who knows a European supplier of laser level technology but he is not sure whether the new product will enhance or degrade his product lines. He also is not sure about the investment since very few of the laser levels are being used in his traditional target markets.
1.What stage of the Product Life Cycle are Jim’s Levels? Explain why.
2.What are the Foster Curve effects of Jim’s business?
3.What should Jim do about the new competitor?
4.Should Jim move into the new technology and divest his current products?
5.What other factors should he consider? What is his Porter Strategy?