Q: What are the industry’s dominant features?
INDUSTRY’S 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-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 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 Capacity
Production 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 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
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 Innovation
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
2. Technological change and manufacturing process
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 efficiency
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
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.
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 HUFA MUFA Neutra
MFA HFA Comments
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
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
Ample 4 Restricted It’s difficult for any new
entrant to grab distribution
channels because the market
leaders have very strong
impact on distributions
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
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
Govt. action Low 4 High Govt. launches new
certification in industry to
regulate manufacturing and
Total avg score 4 Entry barriers are strong that
mean industry is attractive.
Factors HUA MUA Neutra
MA HA Comments
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
High 4 Low There is no such fixed cost associated to
exit from the industry so new entrant can
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
Total avg score 3.5 There is no such high cost related to exit
so the exit barriers are too low industry is
Factors HUFA MUFA Neutra
MFA HFA Comments
Equal size 1 Unequal
The compositions of competitors
are equal in size because the
main rivals are belonging to global
Slow 3 High Growth rate is stable because the
industry is in maturity.
Global 1 Domestic It is global because the industry is
competing with diversification
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.
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
5 Specialized It is high because the companies
are competing in the industry with
differentiation and all the company
has their own degree of
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
3 Rivalry among the competitor is
neutral so industry is mildly
Power of Supplier
Factors HUFA MUFA N MFA HFA Comments
Few 1 More They have very few suppliers that is why
the application of new technology and
product process is totally one way from
High 1 Low Switching cost is high because there is
no more buyers and the companies make
alliances with there suppliers.
Low 1 High There is no such substitute of home
High 5 Low There is less fair of forward integration
because the major raw material is steel
and its not commonly produce material.
Small 3 Large We take it as neutral because the
presence of powerful buyers reduce the
profit of the industry overall.
Low 4 High It is high because there are no such
suppliers so the whole industry should
rely on these few suppliers.
The supplier’s product is highly important
in the manufacturing of the product and it
input to the
2 The suppliers are unfavorable for the
industry that mean power of supplier is
Power of Buyer
Factors HUFA MUFA N MFA HFA Comments
Few 3 Many We take it as neutral because there
is no such buyers in the industry
there are few important buyers in
High 3 Low It neutral because the major
distribution channels of US home
appliances are two contractual &
retail. But most famous is
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
High 2 Low It is high because the market is very
competitive in terms of distribution
Low 4 High The sales were increasing through
the channels of distribution diverse
so the profitability is also increased.
final quality of
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.
3.14 Buyer power is neutral so industry
has good position
Threat of Substitute Product
Factors HUFA MUFA N MFA HFA Comment
Hi 5 Low No thereat, There is no substitute
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
Hi 5 Low Perceived price is lower then hiring
Total avg score 4 Due to weak substitute in the market
the industry is favorable.
Overall Industry attractiveness
Factors Unfavorable Neutral Favorable
Entry Barriers 4
Exit Barriers 3.5
Power of buyers 2
Power of suppliers 3.14
Total score 3.27
Q: Identify Key Success Factors for the industry and develop Competitive profile
0.4 4 1.6 4 1.6
0.2 3 0.6 3 0.6
0.2 3 0.6 3 0.6
0.1 4 0.4 3 0.3
0.1 3 0.3 2 0.2
Total 1.00 3.5 3.3
Q: Plot Strategic groups within the industry.
Wide Product Line
Candi & Merloni,