Q: What are the industry’s dominant features?

INDUSTRY’S DOMINANT FEATURES:

1. Market growth rate and sizeThe market growth rate was very high at its early maturity but now it is on it maturity stage so the growth is steady but the size of market is much expanded due to global competition.

2. Scope of competitive rivalryThere is big scope of competitive rivalry because the big companies in this industry has already doing business globally its mean they are already mature at their parent country so the competitions in this country will increase.

3. Number of rivalsThere is several numbers of rivals in this industry because there are lot of global regional and local companies is in this industry.

4. Learning and experience curveThe existing companies was available in the market from-1980’s so they are more experienced and skills as compare to new rivals. They improving their R & D and cost efficient through learning and experience curve.

5. Economies of scaleAll of the major home appliances manufactures were heavily engaged in renovating and building production facilities improve quality and reduced Labor and material cost to gain Economies of scale.

6. Pace of technological changePace of technological change was very high companies were competing through technology they introduce SMART products.

7. Product innovationU.S appliances manufactures were moving towards a stronger product-oriented market. They designed there product for customer satisfaction and as per the need of customer. They introduce energy saving appliances. Whirlpool, GE, Maytag and other company design their product as energy saving and efficient and uniquely differentiated. A survey of 500 residential found that roughly 25% of the population said that they would be willing to pay 15% to 25% above the standard price for higher energy saving appliance.

8. Production CapacityProduction capacity not effecting the prices and the profits because as they increased to produced energy saving products and cost efficient products, customers more attracts towards these attributes.

9. Buyers needs and RequirementsUS buyer’s needs sophisticated machinery which they can present in their small threats, they also need full kitchen solution which is filled by the Global companies.

10. Degree of Product Differentiation.As this Companies Focus on Differentiation, Then there technology became same and they lost their differentiation and the price competition increases.

11. Vertical Integration

AB Electrolux, Siemens, Whirlpool, form the B2B electronic market place for European Households Appliance maker, Distributor and retailers for the convenience of Dealers.

Q: what are the drivers of change? Please justify them.

Drivers of Change:

1. Product InnovationJustification:In 2002 U.S appliances manufactures were moving towards a stronger product-oriented market. They designed there product for customer satisfaction and as per the need of customer. They introduce energy saving appliances. Whirlpool, GE, Maytag and other company design their product as energy saving and efficient and uniquely differentiated. A survey of 500 residential found that roughly 25% of the population said that they would be willing to pay 15% to 25% above the standard price for higher energy saving appliance.

2. Technological change and manufacturing process innovation

Justification:In 2002 manufacturer were introducing “SMART” appliances with increasingly sophisticated electronic controls and self diagnostic features. ”Smart Appliances” were being connected to the internet. These appliances could call for service, download programs, contact security providers in case of gas leaks or fire, pay utility bills, and be programmed remotely to start and stop when needed.

3. Changes in cost and efficiencyJustification:The basis for effective competition had been producing the fewer basic components necessary in the most efficient plants. Although individual designs might vary, the components inside the appliances were becoming more universal and were being produced highly automated plants, using computer-integrated manufacturing process. Fewer parts mean simple manufacturing and less chance of break down. The result was lower manufacturing cost and higher product quality.

4. Regulatory influences and government policy changesJustification:With the dawn of 21st centaury, major home appliance manufacturers faced a new set of certification standards beyond the ISO 9000 series. It dealt with quality management system, ISO 14001 covered environmental management systems (EMS). Some international markets like European Union could require certification as a prerequisite for doing business.

5. GlobalizationJustification:The industry diversifies globally in 2002, the Korean and Japanese company were come in the industry they were broadly diversified and well established globally and U.S markets become globalize.

Q: industry competitive analysis of porter model?

Threat of New Entrants/ Entry BarriersFactor HUFA MUFA Neutral MFA HFA Comments

Economies of scale

Small 5 Large It’s difficult to any domestic company to compete with these global companies because they capture 90% of the market share and increase competition through cost efficiency.

Capital require red

Low 4 High Capital required is increase so its difficult to any new entrants to enter with a large capital in competition with these global companies

Access to distribution channels

Ample 4 Restricted It’s difficult for any new entrant to grab distribution channels because the market leaders have very strong impact on distributions channels.

Expected retaliation

Low 1 High Former companies retaliate through diversification and globalization so its difficult for new entrant to compete with these global players.

Differentiation Low 5 High It’s difficult for any new entrant to adopt technology pace and create differentiation in this highly competitive industry.

Brand loyalty Low 5 High All global companies have very good brand positioning in customers mind so its difficult for new entrants to create brand loyalty.

Experience curve Insignificant 5 Significant Any new entrant could not get experience curve he has to spend sometime in industry.

Govt. action Low 4 High Govt. launches new

certification in industry to regulate manufacturing and environment.

Total avg score 4 Entry barriers are strong that mean industry is attractive.

Exit BarriersFactors HUA MUA Neutral MA HA Comments

Specialized assets

High 5 Low There are no such specialized assets in this industry so it is easy to exit from the industry so it is easy to exit.

Fixed cost of exit

High 4 Low There is no such fixed cost associated to exit from the industry so new entrant can easily exit.

Strategic interrelationship

High 1 Low They have strong strategic interrelationship with suppliers and distributor so it’s difficult to exit.

Govt. barriers High 5 Low There are no govt. barriers so it’s not difficult for any company to get out of its business.

Total avg score 3.5 There is no such high cost related to exit so the exit barriers are too low industry is attractive.

Competitive RivalryFactors HUFA MUFA Neutral MFA HFA Comments

Composition of competitors

Equal size 1 Unequal size

The compositions of competitors are equal in size because the main rivals are belonging to global market.

Mkt, growth rate

Slow 3 High Growth rate is stable because the industry is in maturity.

Scope of competition

Global 1 Domestic It is global because the industry is competing with diversification strategy.

Fixed storage cost

High 3 Low Its neutral because these type of products don’t have expiry dates but they have a threat of getting old in terms of technology, model, design and other features.

Capacity increase

Large 3 Small We rate it neutral because in US home appliance industry competition is very high due to technology & product Innovation but at the same time they do more work on Quality And renovation to control Labor and

Material cost.Degree of differentiation

Commodity 5 Specialized It is high because the companies are competing in the industry with differentiation and all the company has their own degree of differentiations.

Strategic stake High 5 Low It has low rating because this is not a bread or butter for these companies because these companies are already well established globally.

Total avg score

3 Rivalry among the competitor is neutral so industry is mildly attractive.

Power of SupplierFactors HUF

AMUF

AN MFA HFA Comments

# of important Suppliers

Few 1 More They have very few suppliers that is why the application of new technology and product process is totally one way from the companies.

Switching cost

High 1 Low Switching cost is high because there is no more buyers and the companies make alliances with there suppliers.

Availability of substitutes

Low 1 High There is no such substitute of home appliances.

Threat of forward integration

High 5 Low There is less fair of forward integration because the major raw material is steel and its not commonly produce material.

Importance of Buyer industry to supplier’s profit

Small 3 Large We take it as neutral because the presence of powerful buyers reduce the profit of the industry overall.

Quantity purchased by the industry of supplier’s product

Low 4 High It is high because there are no such suppliers so the whole industry should rely on these few suppliers.

Suppliers product an important input to the buyer’s

Highly Important

1 Less Important

The supplier’s product is highly important in the manufacturing of the product and it designing also.

businessTotal avg score

2 The suppliers are unfavorable for the industry that mean power of supplier is high.

Power of BuyerFactors HUFA MUFA N MFA HFA Comments

Number of Important buyers

Few 3 Many We take it as neutral because there is no such buyers in the industry there are few important buyers in the industry.

Threat of Backward integration

High 3 Low It neutral because the major distribution channels of US home appliances are two contractual & retail. But most famous is contractual.

Product supplied

Commodity 5 Specialty The product supplied is Special.

Switching cost High 4 Low It is rated 4 because after the independent retail stores most of the companies switch over to it.

% of buyer’s cost

High 2 Low It is high because the market is very competitive in terms of distribution channels.

Profit earned by buyer

Low 4 High The sales were increasing through the channels of distribution diverse so the profitability is also increased.

Importance to final quality of buyers purchase.

High 1 low It is very high because the competition is very high so the quality of final product is also getting high and costumer expectation is also high.

Total avg score

3.14 Buyer power is neutral so industry has good position

Threat of Substitute ProductFactors HUFA MUFA N MFA HFA Comment

Threat of Obsolescence of Industry’s product

Hi 5 Low No thereat, There is no substitute product.

Aggressiveness of substitute products in promotion

Hi 5 Low No Aggressive Marketing because there is no substitute product available.

Switching Cost Low 1 Hi No switching cost because there is no other product.

Perceived price/ value

Hi 5 Low Perceived price is lower then hiring servants

Total avg score 4 Due to weak substitute in the market the industry is favorable.

Overall Industry attractivenessFactors Unfavorable Neutral FavorableEntry Barriers 4Exit Barriers 3.5Rivalry among existing firms

3

Power of buyers 2Power of suppliers 3.14Threat of substitute

4

Total score 3.27

Q: Identify Key Success Factors for the industry and develop Competitive profile matrix

Strategic Factor

Weight Company Whirlpool

Rating

Company Whirlpool Weighted

Score

Company GE rating

Company GE

Weighted Score

Technological Related

0.4 4 1.6 4 1.6

Manufacturing Related

0.2 3 0.6 3 0.6

Distribution Related

0.2 3 0.6 3 0.6

Product Innovation

0.1 4 0.4 3 0.3

Marketing Related

0.1 3 0.3 2 0.2

Total 1.00 3.5 3.3

Q: Plot Strategic groups within the industry.