Generac Power Systems

William Castillo

Industry: Motor and Generator Manufacturing

NAICS Code: 335312

SIC Code: 3621

Market Type: New York Stock Exchange

Company Symbol: GNRC

Current Revenue of 2014: $1.49 Billion

Stock Price: $44.94

Table of Contents

Executive Summary ……………………………………………………………… Tab 1

Company Introduction …………………………………………………………….. Tab 2

Porter Five Forces Analysis ……………………………..………………………… Tab 3

External Factor Evaluation (EFE) ………………………..………………….…….. Tab 4

Internal Factor Evaluation (IFE) …………………………………..……………….. Tab 5

TOWS Matrix ………………………………………………………………………. Tab 6

Bibliography ……………………………………………………………………….. Tab 7

Executive Summary

Generac Power System’s, Inc overall strategy is to achieve competitive and long-

term profit advantages by investing in modifying existing lines of generators and

introduce them to a global market to satisfy consumer needs. By doing this will expand

Generac facilities to manufacture more generators. Siemens, Caterpillar CAT and

Cummings are Generac’s primary competitors.

Majority of Generac’s competitors compete in the same national market, except

Siemens coming from Germany, has found its way to the American market and is

satisfying consumer needs to gain profits with intentions to expand if consumer needs

grow. With Generac’s brand strength and network base, Siemens finds it hard to expand

consumer needs. Therefore, it is imperative for Generac to spread the trusted American

brand backup generators before its immediate American competitors decide to follow the

same strategy.

Generac has the opportunity to introduce an existing product line and adjust it to

meet international requirements to expand on a global scale. With the back up of

government grants for research and development in the motor and generator industry, it is

more likely for Generac Power System, Inc to be approve for expanding facilities

globally to satisfy consumer needs in international markets other then traditional

American markets.

As weather reporters report severer weather conditions around the world,

populations prepare for natural disasters and their aftermath. Generac possesses a pretty

strong reputation for quality and innovative home backup generators in the American

market. Therefore, reaching out to these needy countries when weather reports indicate

severer weather conditions approaching, would benefit Generac by advertising existing

products to a new market to supply demands.

Sun Tzu mentions a quote in his book he wrote called “The Art of War” that I feel

relates to this strategies approach. It reads, “When a falcon’s first strike breaks the body

of its prey, it was not because of speed; but of timing”. Consequently, Generac needs to

apply persistence in their already well-established management strategies to overcome

global needs by being two steps ahead in paying close observation to global weather

patterns to strike supply when demand is at its highest.

By doing so, I’ve come up with a sequence of strategies, as well as other

observations, into increasing competitive and profit advantage. First strategic approach is

named “Operation Search and Destroy”. This strategic approach consists of researching

and developing new marketing channels for distributing generators on a global scale. Not

only to increase profit but to increase production as well. With Generac’s strong brand

strength, network and quality of management, I am sure enough to say they can find or

create a global distribution channel of backup generators to a market.

Second, would be the start of “Operation Green Machine”, which suggests selling

new, unrelated products to existing consumers, such as less pollutant emitting machines

that represent an eco-friendly lifestyle. Advertising to existing customers’ will help

giving an advantage of growing a larger user base to strengthen weaknesses such as

pollution. Ecology concerns are not being recognized globally; if Generac can transform

their existing consumer base to a green population base of owners emitting less pollutant,

it will draw attention from other marketing channels that would want to invest in such a

eco-friendly lifestyle.

Third is the most crucial, “Operation Snail Speed to Success” consist of

maintaining these market trends of supplying the highest demand to increase profit share

and location expanding of manufacture facilities over sea to increase production and

reduce surpluses occurring in the American market. This gives the product development

strategy enough time to increase sales of existing products by modifying current ones to

run more efficient. Product development strategies also include heavily investing in

research and development in order to create new products.

Company Introduction

Brief History: Generac was founded in Wisconsin in the year 1959 (Profile 2014). Robert D.

Kern was 29 years old when he had an innovated vision to create smaller better

generators along side the industrial ones. With this vision he started in a diary farm barn

manufacturing generators and quickly expanded to a company called Electric Controls,

which was later renamed to Generac (History 2014). Generac quickly gained respect

when they released the first affordable home backup generator for the general public.

Later, Major retailers such as Sears took on Generac’s product and did well with it profit

wise. Lowe’s took the lead in supplying homes with the Guardian product line of

Generac’s generators (History 2014). Till this day, with Aaron Jagdfeld as current CEO,

Generac is the most trust brand in generators for businesses, homes, and one the go

lifestyles.

Company Profile:

Generac’s vision is to be the trusted generator in its industry of commercial,

portable and home product lines. Their philosophy is when owning a Generac; it brings

peace to an owners mind (Inside 2014). Generac’s mission Statement is “Our number one

priority is to exceed our customers’ needs with a superior quality product at an excellent

value” (Inside 2014). The company’s culture is revolved by a philosophical statement

that management enforces, and it reads “We never stop evolving and adding new

products that bring peace of mind to our customers” (Inside 2014). They have been in the

generator manufacturing business for over 50 years. Generac has total control of their

design, engineering and production of products, giving them the lead in innovation

manufacturing. The company supplies more than just generators, but all types of

generator motors; such as power washers, industrial power, commercial, residential,

portable, and RV vehicles (Generac 2014). Generac performs a social responsibility by

giving back to communities through charities that provide disaster relief, volunteerism,

and educational programs. These charities include United Way, GPS Education Partners,

and American Cancer Society (Generac 2014).

Product Line:

Generac has a long line of products meant to specify the consumer’s needs. The

way the company categories is products is by generators, power washers, and accessories.

Within the products there are series designed for specific needs:

Generators (Generac 2014)

- Business Standby Generators:

*Diesel power system *Quite Source Brand

*Bi-fuel power system *Commercial Brand

*Modular Power system *Gemini Brand

- Home Backup Generators:

*Guardian Series *Quite Source Series

*Centurion Series *Eco Gen Series

*Core Power Series *Protector Series

Mobile Generators (Generac 2014)

Ranges-25 Kilowatts to 1000 Kilowatts

Portable Generators (Generac 2014)

Ranges-1,999 Kilowatts to 10,000 Kilowatts

Current Trends:

Generac just released an innovative idea to the market at a builders’ show in Las

Vegas convention. The invention is app specified for a smart phone to gain totally control

of your generator through Mobile Link. This App is iOS and Android compatible and is

free via Google and Apple store. Mobile Link is compatible with most Generac,

Honeywell, Centurion, Siemens, and Eaton brand standby generators up to 20killowatts

manufactured from 2008 till now (News 2014). Also Generac just partook in a merge and

acquisition with MAC, who is a primarily serves the oil and gas and construction

markets, as well as other industrial sectors through national equipment rental companies

and independent dealers (MAC 2014). MAC’s line of flameless, indirect-fired and

hydraulic surface heaters are recognized to be some of the safest, most reliable and

efficient machines in the market (MAC 2014). Stock wise for Generac was been

fluctuating due to climate control and people being cautious by being prepared for power

outage during big storms, so there generators have been in demand but not able to sustain

a steady stock price due to uncertainty from consumers (Holdings 2014).

Key Competitors:

Such competitors involve Honeywell, Centurion, Siemens, CAT caterpillar and

Eaton (News 2014). According to the industry these companies compete in, each

company has there own product that over rules the other in very few but significant ways

that keep one higher then the other in the food chain. For Example, CAT caterpillar may

sell more products then another company in the same industry due to the trusted brand

reorganization in a specific consumer market. Construction occupations tend to rely on

CAT caterpillar instead of Generac, due to their reputation of heavy-duty products. Home

owners when shopping for a back up generator don’t look for CAT caterpillar, instead

look for Generac due to their reputation of reliable backup generator. If price was a factor

to a consumer these substitute companies such as Honeywell, Centurion, and Siemens

this may effect the decision of the consumer for buying a backup generator from

Generac. What gives Generac the absolute advantage in the demand for backup

generators is the quality Generac provides with each generator manufactured by them.

Porter Five Forces Analysis

With more than five times the selling rate of their competitors, Generac stands as

the number one home supplier of backup generators, making it quite of a challenging to

find forces that will push Generac to change. However, Generac Power Systems still

possesses flaws that can be overcome through a better understanding of its industry.

RIVALRY

Moderate

BARRIERS TO ENTRY

High

High BUYER POWER

Low

SUPPLIER POWER

High

THREAT OF SUBSTITUTES

Moderate

Rivalry:

Rivalry tends to be moderate for Generac. The top manufacturers for generators

and engine-powered products can be narrowed down to three. The first would be Generac

for their lead in innovating thinking and high quality generators and high-performance

engine products (Generac 2014). The Second leading manufacture for commercial heavy-

duty generator’s and high-powered engine products is Caterpillar CAT (CAT 2014).

Third in line for high-power engine products and digital paralleling systems is Cummins

Power Generation (Cummins 2014).

All three of these companies have a neutral understanding of their target markets,

making the industry field for high-powered engine products leveled for competition. The

reason for it is simply because each target market has a high volume of consumers that fit

specific needs for high performance engines. Primarily, homeowners, businesses, and

residential landlords, use Generac Generators to supply back-up energy, incase of an

outage due to natural disasters (Gale 2014).

Caterpillar CAT supplies trade specialist with tools that are powered by engines to

do specified jobs that were assigned to them. Building managers might buy various

equipment such as; commercial power washers, rug cleaners, floor buffers, power tools,

and construction assistance vehicles (CAT 2014). Cummings Power Generation is a

provider for engine machinery for technical firms that deal with large operations,

amongst other products like engines, alternators, digital controls, transfer switches and

digital paralleling systems. Their target market is supplying firms and industries of high

performance with a large volume of machines working together (Cummins 2014).

In this type of industry, manufacturing high-performance engines to satisfy needs

of the consumer is very broad, due to the specific need. This is why competition is

moderate; because each company selected a target market and supplied it with specific

needs but at the same time produce the same products at different qualities and functions.

What ties’ these companies together in this industry, for better or worst, is the raw

materials used to create this high-performance engines. These raw materials include sheet

metals, gas, and oil.

Without these materials, there would be no industry to produce such high-

powered engines. The high fixed cost on raw materials creates some rivalry between the

companies due to the power of the supplier. The more sales generated, the more bulk they

receive for the dollar. Generac just recently engaged in an acquisition with MAC, the

leading manufacturer of premium-grade commercial and industrial mobile heaters within

the U.S. and Canada (Generac 2014). This will give Generac the upper hand in obtaining

gas and oil. The larger the request is for the raw material the higher chance of receiving it

at a lower rate. In return, increase profit shares and production quality.

Barriers to Entry:

Generac currently has high barriers to entry making it very difficult for a start up

company to replicate. They are a major manufacture and supplier of generators and other

engine-powered products. There current sales for this year generated from engine

manufactory, is 264,100,100,000 billion dollars (Gale 2014). There firm is solely based

off of proprietary know how, when it comes to their product line of home generators,

power washers, mobile generators, and portable generators (Generac 2014). They

manufacture various generators to fit the consumer needs and satisfy brand switching.

With their various types of generators it leaves room for consumers to purchase one type,

as a starter, to become more familiarize with the performance and specific use of the

product. Down the road to mastering the products functional abilities, consumers often

buy a more sophisticated model as an upgrade for them self’s.

This cycle seems to repeat it’s self, only because Generac stays innovative and up

to date with their products. Recently, Generac released a new application compatible with

their latest models, is a smart phone app compatible with iOS and Android users to

control their personal generator wirelessly through their headset (Generac 2014). What

also gives Generac an advantage is its restricted distribution channel. In order to receive a

product from Generac, it must be ordered online then shipped to your house and installed

by professional personnel, if necessary. The reason for this is due to a high scale

threshold, no Generac products cannot be found in department stores for the simple fact

they don’t allow it.

To exit this industry is difficult as well as entering. Specialized assets such as

machinery used to built machines and cut holes in metal sheets cost a pretty penny. For

these machines to be not used will depreciate rapidly due to technology advancing every

year. As a result in products, resources, and raw material; it would be very expense to

exit the business. Also in recent news of an acquisition occurring in the firm with MAC

appliances, would be very difficult and expensive to exit out of.

Threat of Substitutes:

All substitutes come from competitors, such as Cummings Power Generation,

Caterpillar CAT, Cummings, and Siemens. These corporations supply generators and

high-performance engine products, all built to serve the same purpose; store backup

energy. Price range depends on the quality and function of a specific product. Generators

in general all serves a specific purpose depending on the brand and model. This is how

treats are formed by substitutes in this particular category of generators. Distinguishing

name brands are in the desire needs of the consumer.

When it comes to substitutes, certain needs can’t be satisfied by one-set function

machines, Generac supplies a product line of many multipurpose machines to fit the

desire needs of the consumer. The price is practically the same in every category, what

distinguishes them is the quality parts used to build the product and purpose it serves. The

way these companies stay out of each other’s sales is by targeting a specific consumer

market base. For instance, Caterpillar CAT appeals to construction and heavy duty

workers to purchase their products and advertise in that field of consumers for brand

recognition.

Generac appeals to homeowners, land lords, and small business owners for

generators and high-powered engine products that store energy for just-in-case situations.

Cummins Power Generation; supply industries with high volumes of machinery a better

control of their machines, as well as high-powered engine products. All companies tend

to profit and compliment each other in a way as an incentive to strive harder, not just with

price but also with innovated thinking. Siemens would be a high substitute threat in the

event that they supply about the same amount of generator products but still lack to

provide the consumer with satisfied needs.

Buyer Power:

The Buyers are powerful in the sense many buyers but not enough sellers to

supply consumers with the desired product creating a shortage in production (Gale 2014).

Demand for production go’s up solely because of consumers weather watching for storms

or demand go’s up from the aftermaths of a storm and consumers want to prepare for the

next storm (Gale 2014). From natural disasters, such as sandy, increased Generac’s profit.

Buyers possess a credible backward integration threat, meaning they can freely purchase

products from rivals, mainly for monetary reasons. Since the substitutes don’t supply any

more then when compared to Generac’s supply, this leaves Generac with the problem of

not enough supply of generators to consumers.

Supplier Power:

Motor and generator manufactures solely rely on the health of several industrial

markets to sustain their growth (Gale 2014). Since generators supply many fractional

horsepower motors such as house appliances, including refrigerators, microwave ovens

and air conditioners, the price had fallen for such items giving the industry a huge profit

gross of 3.7 billion in 2001 (Gale 2014). Since then generators have been on the rise in

product since the market requires a high demand for them. Reason being, is for

precaution; more individuals are becoming more dependant on household appliances or

electronic devices that require a power source to function. In such natural disasters like

hurricane Sandy where power outage lasted for about two weeks, consumers became

more aware of how important it is to have a backup power source. In this case I say

Generac’s supplier power is high.

Summary:

Michael Porter’s Five Forces Model demonstrates that the motor and generator

industry has experienced up’s and down’s in its market due to fractional motors that

power household and small business appliances, such as refrigerators and air

conditioners. Since there is not an enough supply of Generac generators in the U.S. and

Canada, due to a slow producing market and high innovative thinking. Applying

technology gives great advantage over competitors. The threat lies in the bargaining

powers of sellers to buyers; I observed that relatively because of limited products, this

creates fewer sellers and more buyers.

External Factor Evaluation Matrix (EFE)

Generac Power System is one of the largest and most successful manufacture of

high powered engines and generators in the United States, however has flaws in

sustaining a competitive advantage in global expanding and operations of manufacturing.

The External opportunities and threats for the manufacture of generators are

characterized by economic, political, social, demographic, and technological factors.

External Factor Evaluation Matrix (EFE)

Generac U.S.

KEY EXTERNAL

FACTORS WEIGHT RATING

WEIGHTED

SCORE

Opportunities

1. Extreme environmental

weather conditions

affecting America. .15 3 1.4

2. Emerging Markets .20 3 .60

3. The United States leads

in research and

development.

.15 2 .30

Threats

1. The federal Clean Air

Act .15 2 .30

2. Solar energy a

substitute of backup

energy.

.10 3 .30

3. U.S. Steel industry has

largest output decline. .25 2 .50

TOTAL 1.00 3.40

Opportunities:

1. Extreme environmental weather conditions affecting America. Due to pass

experience with power outage during a rainstorm, hurricane, and tornados across

the United States, leads to an increase in industry profit (Much 2014). Giving

Generac a great opportunity to supply consumer’s insurance during such crises.

Hurricane Irene raised first quarter profits to 36%, which is equivalent to $399.6

million dollars in 2011 (Much 2014). Strategic Analysis predicted much less for

sales then what was produced. The aftermath resulted in an increase of product

sales to 45.8%, which is equivalent to 255.2 million dollars, as demand of

homeowners and businesses saw the importance of owning a backup generator is

(Much 2014). Hurricane Sandy arrived a little after Irene and raised profits from

between 30% to 35% in 2013 (Sandy 2014). The opportunity this leaves Generac

with; is to supply more innovated products towards specific environments in need

of backup supply, to keep a competitive advantage amongst other suppliers in the

motor and generator industry. Even with no material changes in the current

macroeconomic environment and no major power outage events for the remainder

of 2014 across the U.S, its still good to maintain innovative ideas throughout a

market trend. .8/3

2. Emerging Markets: MAC comes from an industry of supplying heaters, and

Generac comes from an industry of supplying generators. When Generac

purchase MAC, this would be good due to similar resources shared in productions

and products of the two separate industries. Now that recently these two markets

have merged this gives great opportunity for both companies to increase profit

growth (Generac 2014).

3. United States leads in research and development. The U.S. federal government

funds most of the industries research for fuel-efficient motors and generators

(Motor 2014). Such grants and research outlays estimate to about 144.4billion

dollars (Motor 2014). Government funding feed projects at universities

throughout the U.S. and at many types of private corporations. Such research

involves advanced batteries, electronic patient health records, cancer research,

nanotechnology, robotics, biotechnology defense and renewable energy. The

United States was held accountable for 31.1% of total global research and

development in 2014 (Motor 2014). Government funding for research in Motor

and Generator industries gives great opportunity for innovative thinking and

keeping up with rapid pace of technology development.

Threats:

1. The federal Clean Air Act. Requires area source facilities to reduce the publics’

exposure to hazardous air pollutants (Area 2014). The National Emission

Standards of Hazardous Air Pollutants (NESHAP) doesn’t allow more then 10 to

25 tons of hazardous air pollutants per year due to public safety (Area 2014). The

motor industry is considered an area source when compared to major sources

because they produce less then 10 tons per hazardous air pollutants a year (Area

2014). This is a treat to the industry cause the government has a control of how

much product they can produce a year. In result of this, facilities must be spread

apart from each other across the U.S. to regulate the production output with the

waste output as well.

2. Solar energy being a substitute source of backup energy. Photovoltaic, which

is used to power satellites’ electrical systems since 1958, is used now in

practically all-new innovative technologies (Solar 2014). The sun’s rays give off

approximately 1,000 watts of energy per square meter of the planet’s surface, if it

was possible to simply collect all that energy into one container the entire U.S.

can be powered and then some (Solar 2014). The solar revolution has yet to come

but gets closer everyday to research and development. Solar powered panels

absorb the suns rays and powers a home or facility for about a week or two with a

days worth of clear sky’s and sunlight (Solar 2014). This is a threat to the Motor

and Generator Industry due to as a substitute of back-up power supply.

3. U.S. Steel industry has the largest output decline . Currently steel industries are

operating at capacity utilization levels of 50 percent (Steel 2014). In result, the

industry has made occupation cutbacks of 50,000 jobs since the year 2000 (Steel

2014). The steel industry is responsible of the displacement of over 500,000 jobs

in manufacturing and other sectors of the economy (Steel 2014). In addition,

China recently restored the export rebate program of 9% for many steel products,

creating a direct subsidy to its exports for the United States. This opposes to a

threat to the motor and generator industry because a major resource of

productions is steel so the price would affect the over all price of the finished

product.

Internal Factor Evaluation Matrix (IFE)

Generac Power System, as the leader of its industry, needs to be aware of its

weaknesses to reinforce the potential of its strengths, and to maintain its competitive

advantage. The strengths and weaknesses is to evaluate Generac Power System,

characterized by operational, marketing, managerial, and financial factors.

Internal Factor Evaluation Matrix (IFE)

Generac U.S.

KEY EXTERNAL

FACTORS WEIGHT RATING

WEIGHTED

SCORE

Strengths

1. Brand Recognition. .08 3 .24

2. Generac’s Network. .08 3 .24

3. Generac’s Management

Style. .09 2 .18

4. New Technology. .15 4 .60

Weaknesses

1. Higher Price then Competitors.

.10 2 .20

2. Ecology Concern. .15 3 .45

3. Production Output. .15 3 .45

4. Not Recognized Globally. .20 3 .60

TOTAL 1.00 2.96

Strengths:

1. Brand Strength: Frost & Sullivan recognizes Generac with the 2010 North

American Frost & Sullivan Award for Market Share Leadership of the year (Frost

2014). That year alone the company’s sales increased from $574.2 million in 2008

to $588.2 million in 2009 (Frost 2014). The sales maintain this rate increase in

2010. Generac was able to increase its market share in a highly competitive

market because of its offer of a complete portfolio of products and services that

are needed in time of natural disasters. Generac strives to provide quality-

manufactured products and focuses on the lifestyle of the consumer, whether it is

residential, commercial industrial, portable, or recreational vehicle (Frost 2014).

2. Generac’s Network: The larger Generac’s Network and firm base gets, the more

access to resources they have. Generac’s net worth is based on its network, for

example, a merge and acquisition was made with MAC heating supply co

(Generac 2014). This gives Generac more innovation in providing product needs

and services. Also, oil and gas is more accessible threw this merge cause of

similar resource needs. With the recent merge and acquisition with MAC heating

supply, they will definitely combine ideas and share innovative creations to grow

profit shares. MAC provides portable heaters for consumer lifestyles and with

Generac in the lead for manufacturing generators since 1959 are surely capable of

combining or manufacturing efficient and high quality products (Much 2014).

3. Generac’s Quality of Management: Aaron Jagdfeld has been the CEO for

Generac since 2002 (Much 2014). The market for generators was plummeting due

to the economy tanking on the heels of the housing slump that began in 2007

(Much 2014). Aaron Jagdfeld says he is a very detail-oriented person and come

from the angle of having to know all the details to help make decisions (Much

2014). With this fast paced style he was able to take the company and over come

drought of no sales, to reclaiming its spot as North America’s number one maker

of portable generators in 2012 (Much 2014). Sales of 2012 climbed 48.5%, which

is equivalent to 1.76 billion dollars, when was compared to 2011 sales, it turned

out to be a 34% increase in profit (Much 2014).

4. New Technology: At an International Builders’ show in Las Vegas 2014,

Generac lunches their first ever app that allows the smart device remote

monitoring of the Generac generator (News 2014). This app gives updates and

alerts on when maintenance should be schedule to avoid failure in the future. The

app is called Mobile Link and it currently works with iOS and Android smart

phones and tablets (News 2014). This new technology gives opportunities for

innovative products that satisfy customer’s needs for the future with pre-existing

and newly adopted product lines. This new technology also builds competitive

barriers against rivals.

Weaknesses:

1. Higher Price then competitors: Indeed the price of a backup generator is high

then a Siemen’s backup generator, but the quality in parts and functions are far

more superior then other backup storage devices in this industry. Despise the fact

there may be monetary reasons for not choosing Generac as your number one

choice of generators, more consumers prefer a long lasting quality generator and

are willing to pay a little bit extra to ensure this cause (Generac 2014).

2. Ecology Concern: Because there is a law against how much a facility can pollute.

According to the Federal Clean Air Act, the National Emission Standards of

Hazardous air pollutants per year. This amount cannot exceed more then 25 tons

per year (Area 2014). This is a government-controlled law that must be followed,

if not is sentience to shut down of productions or fines. This is a weakness

because of this act affecting the production output of the companies’ products.

This slow production rate creates a surplus in the market of backup generators.

3. Production Output. Due to Regulations for the amount of pollutant that could be

produce yearly causes a surplus in Generac’s supply in back up generators (area

2014). The fact that Generac doesn’t have enough facilities to meet the demands

of the consumers causes a threat to Generac’s potential consumers who result in

purchasing a substitute by their competitors (Generac 2014). If the expansion of

manufacturing facilities was to expand Generac would sees to have this weakness

occur. What saves Generac is the quality in their products that create loyal

consumers and referrals from previous consumers.

4. Not Recognized Globally. The fact that Generac doesn’t advertise in global

markets other then United States and Canada. Generac has no ties with over sea

countries at all, other then its stomping grounds in the United States and Canada

(Generac 2014). If Generac were to expand, they would be able to expand

manufacturing facilities oversea to different rural areas that would have fewer

regulations on production policies.

TOWS Matrix

Strengths – S Weaknesses - W

1. Brand Strength.

2. Generac’s Network.

3. Generac’s Quality of

Management.

4. New Technology.

1. Higher Price then

Competitors

2. Ecology Concern.

3. Production Output.

4. Not Recognized

Globally.

Opportunities - O SO Strategies WO Strategies

1. Extreme Environmental

Weather Conditions

Affecting America.

2. Emerging Markets.

3. United States Leads in

Research and

Development

(S: 1, 2, & 3. | O: 3)

Market Development

“Operation Search & Destroy”

(S: 1, 3, & 4. | O: 2)

Concentric Diversification

“Operation Power Conditioner”

(W: 1, 3. | O: 1)

Marketing Penetration

“Operation Red Cross”

(W: 2, 4. | O: 3)

Horizontal Diversification

“Operation Green Machines”

Threats – T ST – Strategies WT – Strategies

1. The Federal Clean Air

Act

2. Solar energy being a

Substitute source of

backup energy

3. U.S. Steel Industry has

the Largest Output

Decline.

(S: 4. | T: 2.)

Conglomerate Diversification

“Operation Smart Burn”

(W: 3. | T: 3.)

Product Development

“Operation Snail Speed to

Success”

Operation Search and Destroy.

Generac has the opportunity to develop and research new marketing channels of

distributing generators on a global scale, not only to increase profit but production as

well. With Generac’s strong brand strength, network and quality of management, I am

sure they can find or create a global distribution channel of backup generators to a market

that has yet to be discovered.

Best place to search is in rural areas of the world where due to weather conditions

creates power outages for long periods of time. The weather conditions must be server

and the demand for backup power supply needs to be in high demand. With Generac’s

Network, they would be able to communicate with other distribution channels to seek

what areas are in need of backup power products. Then once areas of needs are located,

establish a manufacturing facility to manufacture products on site. By completing this

task, would require strategy market development, due to the desire of introducing their

current product offerings into new geographic areas.

Operation Green Machines.

Generac can create the opportunity to sell new, unrelated products to existing

consumers such as less pollutant emitting machines that represent an eco-friendly

lifestyle to existing customers. Generac needs to take advantage of the current user base

to strengthen weaknesses. Such as, ecology concerns and them not being recognized

globally; if Generac can transform their existing consumer base to a green emitting

backup power supply, this would draw attention from other marketing channels that

would want to invest in such a eco-friendly lifestyle.

Operation Snail Speed to Success.

A weakness of Generac’s production output is because of pollutant regulations

that tie with Generac’s threat of the U.S. production of steel composes one of the largest

withdrawals of steel production. This can slow down the production of generators, but at

the same time gives the product development strategy enough time to increase sales of

existing products by modifying current ones to run more efficient. Product development

strategies also include any strategy where you heavily invest in research and development

in order to create new products.

Operation Power Conditioner.

Generac has the opportunity, due to emerging markets, to develop a new but

related product to their line of existing products. This strategy comes from concentric

diversification. My suggestion of a new product would be a backup generator that

functioned from an apartment window in compacted cities such as New York. The

concept came from the function of air conditioners, but instead producing cold air,

generating power during an outage like Hurricane Sandy had done for two weeks.

This would be safe for apartments because of the emissions that are released from

the generator would be half the portion of it out the window and the other half of it would

be in the apartment, emitting power to keep necessities on during a power storm. I

believe this could be done with the companies’ strengths of brand reputation, quality of

management, and new technology Generac has to offer.

Operation Red Cross.

Generac has an opportunity when extreme whether approaches the states to sell

more of their products. Even with this weakness of charging the highest price for

products when compared to competitors, Generac still profits off major storms due to

consumer precaution of backup power supply. With the intensive strategic plan of market

penetration, “Operation Red Cross” comes to the rescue when demand for generation

grows higher due to server whether condition approaching the states.

Operation Smart Burn.

Operation Smart burn is a defense strategy of potential threats such as alternative

backup power solutions, such as solar panels. Even though solar panels are pretty

powerful, but limited to there full potential due to the available square footage per solar

panel coverage allowed. With a Generac generator of any type, will take up a small

amount of space and could reach its full potential within that small space. Sun Tzu

mentions in his book “The Art of War”, “It is more important to out think your enemy

then out fight him”. When applied to this situation, Sun Tzu’s quote can be interpret as

using your mind to out think your competitors with strategic planning rather then actions.

With the strategy of Conglomerate Diversification, Generac can add new and

possibly completely unrelated products to their existing product line. For example of their

strength of new technology consist of a smart app that allows the consumer to controller

their Generac generator from their smart mobile device, simply for connivance purposes.

If Generac was to create a more soundless generator that still powered at full potential but

couldn’t be heard doing this. This would distract the consumer from thinking about solar

panels.

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