Case Study - Besa1
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Transcript of Case Study - Besa1
BESA CASE STUDY
By:SHWETA GAUTAMSIDDHARTH SHUKLASMITA SINGHSNEHA JOSHISONAL SEWAK
The Portable Power Tool Industry
• Consisted of portable and stationary tools powered by electricity, gasoline, or air.
• Wide range of sizes, prices and qualities.• Price point segmented market• Tools can be divided into professional(industrial) and
consumer categories.• Professional buyers of tools were a highly diverse
group that include metalworkers, building contactors, carpenters, plumbers, electricians and farmers.
Contd…..
• Consumer buyers of tools mainly hobbyists and do-it-yourselfers.
• They have 15 separate distribution channels. • The significant ones are the industrial channels and
consumer channels.• There was constant development in the technology
field.• Huge amount of competitors in the industry like
Sears and Black & Decker.
Industry Attractiveness
• Medium industry attractiveness as – High number of competitors.– Companies with technological capabilities may enter.– Profitability for companies.– Large market size.– Stiff competition– Growth potential
Changes in the portable tool industry
Changes in portable power tools industry
• The industries has mainly consisted of two types of tools– Stationary tools
e.g.. table saws, band saws, radial arm saws etc. – Portable tools
generally hand held and mostly powered by an electric motor
Contd…• In 1979,the portable electric power tools accounted for
the majority of industry volume • Industry came in wide range of products.• Principal products were
– saws(circular,reciprocating)– drills(corded or cordless,regular or hammer)– sanders(disk,orbital,belt or combined sander)
• Other products- routers,planes etc.
contd• Primarily use of portable electric power tools were-
wood working, metal working or automatic repair.• At later power tools were divided into two categories-
– professional / industrial category • heavy duty use• longer useful life• had higher horsepower• superior in quality
Contd…– Consumers category
• More sophisticated• Higher quality
• Preference towards consumer tools.
Competitive strategy
Change in product improvement
• Use of battery power-
- In 1960s cordless drill having nickel cadmium battories were used but did not become commercially successful in early 1970s
- Due to improvement in battery technology the sales of cordless tools growing rapidly in late 1970s
• Availability of lighter material
such as Mg,aluminium,plastic.
Competitive strategy of skil corp. in 1979
• Strengths:– Innovation– Considerable global market share– Full product line
• Weaknesses:– Heavy investment in R&D– Metallic electric tools– Advertising budget low
Competitive strategy of skil corp. in 1979
• Threats:– Stiff competition
• Opportunities:– Expansion in global market– Customer loyalty
• Low cost strategy• Broad differentiation strategy
Evaluating relative position• GE Business Screen
– Medium industry attractiveness• High number of competitors• Large market size• Growth potential
– Medium competitive position• Technology• Brand Loyalty• Market Share
• Earn selectively
Evaluating relative position :ANSOFF MODEL
•
NEW
MARKET PENETRATI
ON
PRDUCT DEVELOPM
ENT
MARKET DEVELOPM
ENT
DIVERSIFICATION
PRESENT
PRESENT
NEW
MA
RK
ET
PRODUCT
Skil Corp
Strategic options for Skil Corporation
Analysis so far :
• Growth of the market :Good• Professional buyers:8%
per year• Consumer or do-it yourself
buyers:2% per year.
• Competition: Intense
• Medium Industry attractiveness
Market Target of Skil: Europe, United States, others (worldwide)
Products :line and depth was considerably high .
Channels :products sold through all the distribution channels
Marketing:Poor
BLACK & DECKER; 0.311; 46%
Makita; 0.111; 16%
Bosch; 0.105; 15%
HITACHI; 0.083; 12%
SKIL; 0.071; 10%
MARKET SHARE
BLACK & DECKERMakitaBosch
Skil Corporation:
Skil Corporations net income 1974
1975
1976
1977
1978
1979
0
1000
2000
3000
4000
5000
6000
net in-come($'ooo)
selected
Strategic options for skil corp:
Skil Corporation
Defensive Strategies.
Defensive Strategies.
Diversification Diversification
Mergers and Acquisitions.Mergers and Acquisitions.
Divestment or LiquidationDivestment or Liquidation
Differentiation Strategies/ Innovative Strategy
Differentiation Strategies/ Innovative Strategy
Figure 15.1
Options for Skil
Options for Skil
Strategic options for skil corp:
Differentiation Strategies• Skil Corporation already has been capitalizing
on its differentiation strategy.• Invested heavily ($2.7 million) in Research and
engineering .• Innovation Strategy is one of the differentiation
strategies. • New models and designs were developed
focusing on best product performance .• Maintained its position in the circular saw
s(differentiated):Skil had 7 different U.S saws,2 European,2 Canadian,2 for exports, totalling 35 models using 12 motors .
• Higher percentage of professional tools.
Defensive Strategies• Broaden product line to fill in gaps that competitors
may go after.• Keep prices low on products that match other
competitors.• Sign exclusive agreements with distributors.• Offer free training• Reduce delivery time• Improve service• Sign contracts with the best suppliers.• Patent new innovations.• Invest selectively.• Milking strategy
Diversification Strategies• Add new markets and increase sales and profitability • Add by expanding into new market segments within your industry• Diversification may require new equipment, new facilities, new
operating skills and new staff.• Merger and/or acquisition of other businesses might be an
attractive method of diversification – you can buy the equipment, the facilities and acquire the staff and skills with the new firm.
• Partnerships and/or alliances with other businesses can be an alternative method of market diversification.
• “A diversification strategy can be used as either an offensive or defensive strategy.”
Divestment or Liquidation• Extreme Price Pressures• Business Position is Weakened by stiff competition;
Losing Money over R&D• No Longer Part of Strategic Direction• Predictions about the future decline in market surface.
RECOMMENDATIONS • Strategy we would like to recommend for Skil
Corporation is that of Diversification.• Since the present markets are saturated.• Should go in for market development.• Mergers and acquisitions help enable
utilization of competencies of both the firms.• Partnerships or alliances• Marketing strategy needs to be more
aggressive • Could offer free training for the use of their
products• Offer distributors an incentive to increase
sales .
Thank You