The USTech Company is facing extensive competition problems in the US as the other two player in the market Caltech and Textech who were both providing similar innovative products at high prices are now offering innovative and diverse products at reduced prices, therefore taking away a significant share of the USTech target market.
The company as a result is forced to reduce the cots of production for its products. As mentioned the company out sources its production to a Taiwanese company call Taisource which manufactures the products in Taiwan as well as in Japan while carrying out R&D activities and for USTech as well.
Another problem that is faced by the company is that the company cannot continue to outsource its operations to Taisource. This is because Taisource has become a potential future threat for the USTech. The company has extensive operations in Taiwan and is seeking to operate independently in China as well. This enabled Taisource to use the innovative technology of production as well as the product innovations that it has worked on for USTech in order to provide competitive and similar products as that of UStech to the Taiwanese and the Chinese market. This can cost USTech considerable market share as the Taisource Company is well known in the Asian region and by having localized knowledge of the industry and the market, they have a comparative advantage over USTech
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