SWOT Analysis and Strategic Planning of Smith and White and Makatume - Assignment Example

SWOT Analysis: Strategic Planning Smith and White Strengths: One of Smith and White's greatest strengths is its brand recognition. Coupled with a dominant position in the marketplace, it keeps their advertising budget lowered and are able to communicate with the market efficiently. This has placed them into a period of stable sales and reliable markets. For Now! Weaknesses: Though Smith and White has a mass market, their profits are eroded by the cost of manufacturing. They are further hindered by the low presence in the cordless market and the high product cost makes it difficult to enter this arena. They are also weakened by the poor relationship they have developed with their distributors. Their size has left them vulnerable to more flexible competition that can produce at a lower cost. Opportunities: They have an ideal opportunity to substantially expand their market share in the cordless market. Though the distributor network is currently a weak spot, Smith and White has an opportunity to restructure their distribution to their benefit. Their large size and brand recognition would give them the opportunity to form channel partnerships or enter direct marketing outlets such as through a web site. Threats: Their largest competitor, Makatume, can compete on price. Makatume has older battery technology, but has the cost structure to develop new technology, enter that market, and pre-empt Smith and White. Smith and White would be forced into a follower position on technology and price. Also, Able is on the horizon with a strong cordless product. They have been seeking a buyout or merger, which could reinvigorate them as a major threat. There are also several smaller companies that have no barriers to expanding and innovating. Strategic Plan Smith and White needs to take 3 aggressive actions: Reduce costs, enter the battery market, and differentiate the professional line. This would be accomplished by making the professional and consumer lines separate business units. Relocate the manufacturing of the professional line to a lower cost environment. Develop a superior cordless line for the professional products to compete directly with Makatume and re-brand it with a similar but more robust image. The rebranding would have the required fundamental changes to the product to create a positive market acceptance (DeYoung 2006). The brand recognition and battery technology would differentiate the product. This would hold off the need to compete on price (Day & Reibstein 1997 p.36). Smith and White would be in a superior position with newer technology and higher voltages. Smith and White should then use the battery technology and transfer it to their consumer brands and take market share from Able Co. These products could be sold through distributor partners. Resources would need to be dedicated to rebuilding the distributor relationship, but this will be vital. The long-range plans would include renovation or relocation of the consumer business to a lower cost area. SWOT Analysis: Strategic Planning Makatume Strengths: Makatume's dominant place in Japan's market gives them a great force for entry into the US market. They can easily increase their revenue by capturing shares of the US market. They would not be in a position to need to spend resources protecting an existing position. They also have the advantage of their new plants and their low cost structure. Their dedication to the professional market has simplified development and marketing. Weaknesses: Though their dedication to the professional line can be a strength, it is also a limitation. It limits the market and restricts the outlets. Their current battery design is old and needs redeveloped. This will drain resources in the near term. They also suffer from low brand recognition in the US. Threats: The most immediate threat is the exchange rate fluctuation. It may make it difficult to borrow or finance any expansion. They are also threatened by the several competitors that have a small market share. Makatume has no particular advantage over them. Any one could market a better cordless product and have equal brand equity. Opportunities: They have the opportunity to exploit Smith and White's poor distributor relationship to enter new outlets. They also are in an ideal position to take advantage of the vacuum in the cordless segment. Able can not compete on price and Smith and White has no product. They are in a position to compete on price, if the current cost structure holds. They also have an opportunity to enter the consumer market and compete with Smith and White in the Big Box stores on price. Strategic Plan Makatume should develop a new cordless system rather that wait for the competition. Waiting will put them in the poor position of rushing to market and becoming a price follower. It will also mean a shorter development time, higher costs, lower quality, and lower profits. (Gibson 1997). Waiting would only be beneficial if they were trying to optimize the product life cycle, which has already run its course. They should consider buying Abel Co. Abel is not attractive to many other companies but Makatume could benefit from their cordless technology. This would also give them an immediate entry into the consumer market with a recognizable brand. This would give Makatume an opportunity to compete with Smith and White for the Big Box market. Makatume could close Abel's high cost plants and relocate to their current low cost locations. Makatume also needs to devote resources to advertising. This would force their biggest competitor, Smith and White, to become more aggressive. Though Smith and White probably have deep pockets, they have grown to the point of inefficiency and it will probably cost them dearly to counter the attack. Inevitably, they will be slow to respond and their actions will be clumsy and result in a poor quality product or tarnished image. Advertising would also give Makatume an advantage over the smaller competitors that they would be unable to match. Mamatuke also needs to form a consulting team to analyze and make recommendations to leverage against fluctuations in the currency markets and exchange rates. References Day, G. S., & Reibstein, D. J. (Eds.). (1997). Wharton on dynamic competitive strategy. New York: John Wiley Inc. DeYoung, G. (2006, October 24). Why rebranding often fails. Retrieved February 11, 2007, from http://www.marketingprofs.com/6/deyoung1.asp Gibson, R. (1997). Rethinking the future: Rethinking business, principles, competition, control & complexity, leadership, markets and the world. 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