One of the most consistent patterns in business is the failure of leading companies to stay at the top of their industries when technologies or markets change, especially in emerging markets. What may work in the United States, may not necessarily work as well in other countries. Many companies invest aggressively in the technologies necessary to attract and retain their current customers but sometimes fail to ensure other investments are made to keep up or keep ahead with future demand.
Taking a look at Novozymes and their success, they seemed to be doing everything right. They were the leading global provider in enzymes for industries such as household care, textiles, and goods and beverages. The company met its sales growth goal, increased its sales each year, and acquired a pretty large percentage of the market share (Palepu & Misztal, 2012). Being a premium player in detergents and food, they focused on technological innovation to stay successful. Additionally, Novozymes was producing very dependable and consistent products which kept them prominent in Chinas high tech enzyme market. But was this good enough?
Novozyme also commoditized in sectors with fierce price competition such as textiles and brewing which threatened them by the low-cost Chinese rivals (Palepu & Misztal, 2012). Novozymes produced high quality goods but couldn’t keep up with the local players that were gaining scale with low-end market segments. Not only were these products more cost appealing, the competitors of those products started to gradually broaden their offering while improving their product quality in order compete with those higher-valued segments. This guaranteed the loyalty from their current customers while gaining others. Because Novozymes competitors were already well-know to its consumers, improving the quality of their products made them even more appealing regardless if