Reference no: EM133027994

Question - John Miller, a research associate at Applegate State University, has discovered a novel process of extracting biodiesel out of genetically modified corn. The biodiesel may be burned in regular diesel engines like normal mineral diesel, and its use does not pollute the atmosphere nor add to the causes of global warming. The process is rather complicated, and currently, John's biodiesel is about 50% more expensive than regular diesel. John Miller estimates that if the process is adopted commercially the (current) costs may easily go down by at least 40 percent.

John is excited about an opportunity to create a business around this new process. The university encourages him to commercialize a technology expecting to establish a source of license revenues. He also considers leaving the university and starting a new venture around this invention. Yet, John is uncertain which business-level strategy to adopt. He is not sure if he can compete on price alone or if he is better off competing on differentiation. Help him understand:

(a) Based on the competitive dynamics, how would you identify the type of market John is likely to enter if he decides to pursue the opportunity? What are the key success factors in such markets?

(b) What are the possible ways for John to achieve a cost advantage?

(c) What are the possible ways for John to differentiate his product?

(d) Which business-level strategy would you recommend him? Why?