To study the challenges of low cost competition and develop the strategy to fight low cost competition

Abstract

1) Objective: To study the challenges of entry of low cost competition on incumbent and develop thestrategy to fight low cost competition.During the course of study we also plan to address following questions:* How the firm reacts, when they face the low cost competition?.* Can firm compete in low cost and premium segment together and retain.their competitive advantage? 2) Methodology: 1. Study of secondary data and publically available information for selectedcompanies. ( Companies selected : SKF India Ltd, TI Cycle and KingfisherAirline ).2. Study of available research on responding to low cost competition.3. Interview with Industry experts or company executives to understand challenge.and steps taken to combat the low cost competitor. 3) Introduction: Incumbents firms are constantly under pressure due to entry of low cost rival. This lowcost competition is from domestic as well foreign players. With liberalization ofIndian economy and reduction in import duty, Indian firms are facing strong threatfrom new players particularly from low cost countries like China, Indonesia andTaiwan. Challenges of low cost is continuously growing on establish players.This phenomenon was observed in the manufacturing and service Industry in US. Established players in US lost their competitive position to the products from low costcountries as well the new emerging players in their own countries. This trend is alsohappening in Indian Manufacturing and service Industry. SKF India Ltd is continuously losing its market share to domestic and imported low cost bearingfrom Chinai. This phenomenon was also observed in case TI cycle in India. TI Cyclelost its market share to its domestic rival like Hero cycle, Avon and Atlas. This wasprimarily due to its inability to compete on Priceii. Another bearing manufacturing company, Timken sold its needle roller bearing segment to JTEKT Japan, due toconstant pressure on price and their inability of compete in standard product. Theycontinued their focus on high precision bearing in Aerospace, high speed rail segment,off highway segment and selling of solution rather than product.