Recommendation:
After a thorough evaluation of various options available to Nucleon Inc. to bring their product to market, we recommend that Nucleon Inc. pursues the option of In-house Pilot Plant for Phase I and Licensing for Phase III.
The available options for Phases I/II/III can be summarized as below: Phase I / II Phase III
Option # 1 In-house Pilot Plant In-house Large Scale Commercial Manufacturing
Option # 2 In-house Pilot Plant Licensing manufacturing to a marketing partner
Option # 3 Contract Manufacturing In-house Large Scale Commercial Manufacturing
Option # 4 Contract Manufacturing Licensing manufacturing to a marketing partner
Option # 5 Licensing product and manufacturing
Each of the available option/strategy for Phase I/II
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The NPV will drop significantly if Phase III decision is not to enter in the in-house large scale commercial manufacturing.
• Knowledge Transfer: Allows protection of IP (intellectual property). Allows development and protection of manufacturing and technology know-how. Knowledge transfer is relatively easy to transfer as the transfer occurs internal to organization
• Scalability: Relatively easy to scale up due to complete control over the processes
• Core competencies, capabilities and capacity: This option would require a high level of changes within the organization. Nucleon’s existing core competencies and capabilities is in the area of R&D. It has no prior experience of production and manufacturing. Manufacturing is significantly different than R&D. It would require Nucleon to acquire different talent, skillsets, experience and very difference focus in developing manufacturing competencies and capabilities.
• Risks: Due to lack of core competencies in the area of manufacturing, there is a high risk of failure due to mistakes and poor execution particularly working on a first large scale project. There is also a risk that if the trial is unsuccessful, the plant will be
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Also, Nucleon is mainly a R&D firm and lacks core competencies and capabilities to support large scale manufacturing. As discussed earlier, the changes in organization required to pursue large scale manufacturing for the first time with no significant skill sets, manufacturing know-how and experience can pose a very high risk and detrimental impact on Nucleon’s long term success. Licensing with a proven partner will be a low risk and safe strategy in short term.
Conclusion:
The global growth market in the industry where Nucleon competes is dynamic and complex. Many of the large pharmaceutical enterprises have R&D capabilities along with in-house manufacturing technologies. Some also have collaboration with startup companies.
A great competitive advantage in the industry will be to have an integrated enterprise that is capable of R&D and large scale commercial manufacturing. In this context, Nucleon’s long term strategic goal should be to gain this competitive advantage by continuing to leverage its existing R&D competencies along with acquiring in-house manufacturing
Once the Phases I&II are finished, raising the required capital for own manufacturing plant should not be a problem. For marketing and distribution Nucleon would do better to find a marketing partner. Licensing manufacturing and marketing rights at Phase III stage would also be an option, though only receiving 10% partner’s gross sales, so own in-house manufacturing would bring in more revenues as well as having more control over product quality.
More attention to own business than to competitors is their strategy. South magazine observed that Nucor is “stripped down, no nonsense” organization. It keeps maintaining low cost and efficiency, which is the key to making profit in steel industry, by keeping the employee force at the level it should be, empowering them, being totally honest, involving them in decision making process, and using effective incentive compensation system.
risks and determine the likelihood and consequence of that risk occurring during the project. The
Nucor has been facing many industry challenges including the overall development of the industry. They are competing with foreign firms on cost and efficiency. Nucor has a low cost strategy because as they say their product is not necessarily very attractive. It does not have attractive or unique selling features other than its cost. The commodity of steel is in a very competitive market. Nucor understands that innovation and productivity are going to be key factors to keep their buyers satisfied with their prices. Nucor is facing many challenges with a growing world market and many of their competitors merging in order to create stronger more dominate
The challenges faced by Nucleon, Inc. present more of an issue with how to take full advantage of an opportunity in front of them, rather than a problem that poses a threat to the company. As a company in its early stages, only putting out its first product, it is critical that it is done in a manner that allows the budding firm to grow. The main issue here is determining the most effective means by which they are to manufacture and market their first product, CRP-1. Doing so requires in-depth evaluation of three strategic options, all with their own benefits and potential risks. The problem statement, therefore, is as follows:
Northrop Grumman is primarily involved in four related by also distinct industries which are also their core competencies. They are involved in aerospace systems, electrical systems, information systems and technology systems. Involvement in these key areas allows them to focus on their customers’ needs for unmanned air systems; command, control, communications, computers, intelligence, surveillance, and reconnaissance (C4ISR); logistics, and cyber security.
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Nucor Corporation is made up of 11,500 teammates whose goal is to "Take Care of Our Customers." We are accomplishing this by being the safest, highest quality, lowest cost, most productive and most profitable steel and steel products company in the world. We are committed to doing this while being cultural and environmental stewards in our communities where we live and work. We are succeeding by working together.
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