Q: what are the drivers of change

Q: What are the industrys dominant features?

INDUSTRYS DOMINANT FEATURES:

1. Market growth rate and size

The 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 rivalry

There 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 rivals

There 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 curve

The existing companies was available in the market from-1980s 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 scale

All 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 change

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

7. Product innovation

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.

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 Requirements

US buyers 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 changes

Justification:

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. Globalization

Justification: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 Barriers

Factor

HUFAMUFANeutralMFAHFAComments

Economies of scaleSmall5LargeIts 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 redLow4HighCapital 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 channelsAmple4RestrictedIts difficult for any new entrant to grab distribution channels because the market leaders have very strong impact on distributions channels.

Expected retaliationLow1HighFormer companies retaliate through diversification and globalization so its difficult for new entrant to compete with these global players.

DifferentiationLow5HighIts difficult for any new entrant to adopt technology pace and create differentiation in this highly competitive industry.

Brand loyaltyLow5HighAll global companies have very good brand positioning in customers mind so its difficult for new entrants to create brand loyalty.

Experience curve Insignificant5SignificantAny new entrant could not get experience curve he has to spend sometime in industry.

Govt. actionLow4HighGovt. launches new certification in industry to regulate manufacturing and environment.

Total avg score4Entry barriers are strong that mean industry is attractive.

Exit Barriers

FactorsHUAMUANeutralMAHAComments

Specialized assetsHigh5LowThere 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 exitHigh4LowThere is no such fixed cost associated to exit from the industry so new entrant can easily exit.

Strategic interrelationshipHigh1LowThey have strong strategic interrelationship with suppliers and distributor so its difficult to exit.

Govt. barriersHigh5LowThere are no govt. barriers so its not difficult for any company to get out of its business.

Total avg score3.5There is no such high cost related to exit so the exit barriers are too low industry is attractive.

Competitive Rivalry

FactorsHUFAMUFANeutralMFAHFAComments

Composition of competitors Equal size1Unequal sizeThe compositions of competitors are equal in size because the main rivals are belonging to global market.

Mkt, growth rateSlow3HighGrowth rate is stable because the industry is in maturity.

Scope of competitionGlobal1DomesticIt is global because the industry is competing with diversification strategy.

Fixed storage costHigh3LowIts neutral because these type of products dont have expiry dates but they have a threat of getting old in terms of technology, model, design and other features.

Capacity increaseLarge3SmallWe 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 differentiationCommodity5SpecializedIt is high because the companies are competing in the industry with differentiation and all the company has their own degree of differentiations.

Strategic stakeHigh5LowIt has low rating because this is not a bread or butter for these companies because these companies are already well established globally.

Total avg score3Rivalry among the competitor is neutral so industry is mildly attractive.

Power of SupplierFactorsHUFAMUFANMFAHFAComments

# of important SuppliersFew1MoreThey have very few suppliers that is why the application of new technology and product process is totally one way from the companies.

Switching costHigh1LowSwitching cost is high because there is no more buyers and the companies make alliances with there suppliers.

Availability of substitutesLow1HighThere is no such substitute of home appliances.

Threat of forward integrationHigh5LowThere is less fair of forward integration because the major raw material is steel and its not commonly produce material.

Importance of Buyer industry to suppliers profitSmall3LargeWe take it as neutral because the presence of powerful buyers reduce the profit of the industry overall.

Quantity purchased by the industry of suppliers product Low4HighIt 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 buyers businessHighly Important1Less ImportantThe suppliers product is highly important in the manufacturing of the product and it designing also.

Total avg score2The suppliers are unfavorable for the industry that mean power of supplier is high.

Power of Buyer

FactorsHUFAMUFANMFAHFAComments

Number of Important buyersFew

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

Threat of Backward integrationHigh

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

Product suppliedCommodity

5SpecialtyThe product supplied is Special.

Switching costHigh

4LowIt is rated 4 because after the independent retail stores most of the companies switch over to it.

% of buyers costHigh

2LowIt is high because the market is very competitive in terms of distribution channels.

Profit earned by buyerLow4HighThe sales were increasing through the channels of distribution diverse so the profitability is also increased.

Importance to final quality of buyers purchase.High1lowIt 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 score3.14Buyer power is neutral so industry has good position

Threat of Substitute Product

FactorsHUFAMUFANMFAHFAComment

Threat of Obsolescence of Industrys productHi5LowNo thereat, There is no substitute product.

Aggressiveness of substitute products in promotionHi5LowNo Aggressive Marketing because there is no substitute product available.

Switching CostLow1HiNo switching cost because there is no other product.

Perceived price/ value Hi5LowPerceived price is lower then hiring servants

Total avg score4Due to weak substitute in the market the industry is favorable.

Overall Industry attractiveness

FactorsUnfavorableNeutralFavorable

Entry Barriers 4

Exit Barriers3.5

Rivalry among existing firms 3

Power of buyers 2

Power of suppliers3.14

Threat of substitute4

Total score3.27

Q: Identify Key Success Factors for the industry and develop Competitive profile matrixStrategic FactorWeightCompany Whirlpool RatingCompany Whirlpool Weighted ScoreCompany GE ratingCompany GE Weighted Score

Technological Related0.441.641.6

Manufacturing Related0.230.630.6

Distribution Related0.230.630.6

Product Innovation0.140.430.3

Marketing Related0.130.320.2

Total1.003.53.3

Q: Plot Strategic groups within the industry.

Local

Narrow Product Line

Wide Product Line

Global

Regional

Whirlpool, Ab Electronics, Haier,

Maytag

Matsushita, Sharp Toshiba, Hitachi, Candi & Merloni, Miele, Samsung &Daewoo

General Electric, LG, Siemens

Subzero, Guangdong, Maybe, Arclik, Multibras, Fisher & Paykel,

Territory

Product Line

Strategic Mapping