IN 1981 THE PORTABLES DIVISION of Tektronix faced a problem that is familiar to many U.S. companies; the Japanese had entered Portables’ market for electronic meaurement instruments, creating intense competitive pressures. The Japanese priced their products substantially below the prevailing market. They were able to capture market share despite limited quality and performance.
The Japanese appearance was seen as a threat to the business of the entire company. The immediate competition was limited to Portables’ low-priced products, but it seemed likely that competition would spread to Portables’ higher-priced products and eventually to the products of other Tektronix divisions. After all, the Japanese had entered other U.S. markets in a similar fashion and had succeeded in severely diminishing the role or presence of competing U.S. companies. Clearly the beachhead had to be contained, and Portables was the front line.
Portables’ charge was to “stop the Japanese, and it’s okay if you lose money doing so.” They did so by matching prices and thus denying the Japanese a price advantage. Portables was able to slow down the loss of market share, but only at the cost of heavy financial losses.
It was questionable whether this strategy would work over the long term. Portables’ costs were clearly higher than the prices they were now charging for their instruments, and probably higher than the costs of the Japanese who had established... To read the complete article, login or sign-up using the form below.
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