1. Novozymes is considered a prominent player as it relates to innovation. The strength of Novozymes is in its ability to exercise an efficient use of its operations while capitalizing on a premium leadership profile within the enzymes industry. China is a country that is dominated by the enzyme market. The company, Novozymes, in their estimation of how well they would perform in the Chinese marketplace was based on the economic policy of the government within the country. The policy in effect, shaped the marketplace, being mostly in favor of firms nationally. The environment for enzymes in China is quite a competitive one. The players within the enzymes industry particularly embrace low cost and high volume strategy over profitability in an effort to remain a viable part of the country in terms of attraction. Much of Novozymes' success and competitive advantage over the other local players in China are its production processes, open-door-policy on productivity, eco-friendly solutions, and higher-end product line. Through these particular objectives, Novozymes was able to capitalize significantly and project a strong impact in sales among many verticals including household care and food and beverages.
Novozymes was able to position itself as the leading provider of enzyme solutions and command their customers to see them as such. Novozymes management reasoned that through stability and the right breakthroughs in innovation, the company would be able to withstand others in the marketplace. In certain vertical areas, Novozymes adapted to a less expensive presence and still were able to remain viable. Much of the Chinese environment for Novozymes was focused on positioning itself tremendously within the detergent and biofuels areas. The rationale also lent itself to expanding the dynamics of the textile sector in 1999 when it created a low-cost brand known as Suhong, which appealed to many customers due to its relatively low cost, yet high quality.
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2. Despite the dominance of Novozymes within the country of China, there were still challenges as there are with most companies and corporations that compete on an international and domestic scale. Novozymes management sought ways to address the commoditization that were affecting them. One potential alternative to the commoditization challenge was to formulate a two-tier market strategy within the current model that was being utilized. In addition to this, there would also be a task force that would be established to serve only the areas that were being challenged with commoditization. Another alternative that was suggested was making the Suhong brand more affordable than it had been.
3. With the suggestion of repricing the Suhong products, what was brought up in a meeting with Novozymes management was the possibility of getting aggressive cost-wise with the products should the suggested two-tier strategy not work as effectively and efficiently as they had hoped. With this, there was a durability doubt. Thus, it might be a good idea for Novozymes to get aggressive cost-wise rather than ignore a market completely. Reasoning suggests that when companies ignore certain sectors of the marketplace as far as areas where they have traditionally dominated that their competitors often move up and capitalize on what the dominator has faltered on. Even with the suggestion of being fiercely on cost, Novozymes would have to be cautious due to the radical new model that they would be projecting given the price game within the country of China. The situation then could be said to be a catch 22. If Novozymes leaves the plain vanilla market alone, then its rivals would/could potentially dominate and if they got too aggressive in price, then they could also fail in the long term. Therefore, management would need to consider the pros and cons of both and make the best decision accordingly.
4. Novozymes would need to increase its marketing efforts if they kept their prices the way they are. Consumer loyalty is a key advantage of defending its entire market base. While the entry of low price competitors from emerging markets may cause some battle in the price war area, Novozymes has an established consumer base to work with and to strengthen. There is reason to believe that the Suhong brand will be able to sustain the Novozymes' area in terms of battling it out with other low-cost competitors because of the low prices that the brand has. The solution is not as simple as lower prices, but it is not as simple as keeping things the way they are either in an ever-changing marketplace.