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Competition

Innovations might not last long - unless protected by patents (G). TR, like all companies, buy their competitors' products and take them to pieces - they call it 'tear-down' - to see what's new about them, how they are made and whether any innovations have been introduced. It's not that new ideas are simply copied, they are used to spur even newer ideas. A technique known as 'cost down evaluation' is used to assess whether the same results, to the same quality could be achieved at an even lower cost or to achieve another advantage. This is often carried out to bring a part cost down to the customer's specification. No company can afford to be left behind by its competitors since every competitive company wants to continuously improve their products.

  Task 5 - Product Tear Down

What TR Fastenings Ltd expected from their innovation in supplying Hydro Raufoss and BMW was to go on to supply other companies and more BMW models with similar bumper nuts. However, little further demand followed and they found that the automotive sector was inclined towards competition on price grounds alone, potentially driving down TR's profit margins and therefore the success of the company over time. So they couldn't rest on their success but had to think again about the company's future in a changing marketplace.

Self-clinching nuts in general have though proved to have a strong future and TR felt that this would continue to give them some continuity. However, they had to change their 'recipe for success'; something that they have done several times over the years. This was how they found themselves thinking up to the year 2000:

Established reasons for TR being successful against competitors

Quality of product
"Quality is now assumed", ie all competitors had reached the highest reasonable quality assurance standards. Customer companies could assume that any of these suppliers could supply to this level of quality.

Quality of supply management
"Supply systems are now assumed", ie all competitors could be relied on to institute an effective and cost-advantageous supply system monitoring their customer companies' needs and supplying 'just-in-time' to ensure, a) lower fastener cost, b) a smooth flow of production, c) lower supply management costs and d) no excess stocks and associated storage costs.

Price
TR have never competed mainly on price, preferring to charge more and attract customers through the comprehensiveness of what they could supply, the quality of their products and, later, through the benefits of their supply management services. Competing head to head on price with other fastener supply companies would mean that all the companies would lose as their profits fell and risks (eg through 'loss-leaders') rose.

The answer, they concluded, was to go for continuing innovation

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