Issues that might affect the success and survival of SKF - Essay Example

The bearings are used to reduce friction between moving parts of a motor, engine or a wheel. SKF operates across the globe in 70 countries with 110 manufacturing sites. It deals with a wide range of industries such as pulp and paper machinery, steel industry, construction equipment, medical instruments, food and home appliances and many others (Kashani & DuBrule, 2009). SKF majorly deals with the business to business markets which mean that the bearings produced by the company are used as a raw material in other businesses.

These kinds of markets are generally more price sensitive as the prices of the raw material producer affect the prices of the end products that the consumers are going to use. The competitive edge of SKF had always been the superior quality products which meant producing bearings that were durable and reliable. With high quality meant high prices to be paid; premiums for premium products. SKF produced highly engineered bearings as they knew that the bearings were being used in critical applications such as jet engines and gas turbines, where a small mistake or malfunctioning could lead to disastrous failures.

Service, whether they are post sale or presale are of utmost importance. This helps and ensures the building of goodwill of any organisation. (Vartanian, 2010). SKF worked with the trained and authorized distributors as rapid fulfillment of orders, delivery and receivables from customers and their collection should be smooth for SKF to work efficiently. Pricing for the aftermarket services was decided in synchronization with distributors who were supplying products from other brands as well.

All the post purchase services were provided through SKF’s 1200 distributors which reached out to 50 thousand end users. SKF’s business is divided into three divisions: Industrial, Automotive and Service, each serving different set of customer groups. Industrial served 30 different industries including machine tools’ oil and gas and mining accounted for 30 percent of the sales. Automobile served home appliance manufacturers and OEMs of cars and trucks and served the vehicle repair and maintenance aftermarket and accounted for 35 percent of the companies sales.

Service division gave SKF one-third of its sales providing end users, mostly factories, with replacement bearings. It served the industry both directly (20 percent) and with the help of it distribution channels (80 percent) (Kashani & DuBrule, 2009). Developing a full awareness of your situation can help with both strategic planning and decision-making (Bhushan, N & RAI 2004).So doing a SWOT analysis of SKF could help understand the company and the environment it is operating in, better. A SWOT analysis guides you to identify the strengths, weaknesses, threats and opportunities of an organisation.

The value of a company doesn’t only lie in the hands of the assets a company own but the perspective of its customers are of utmost importance (Law 2010). .The strength of the company is that the SKF is a well established company which has developed to be a brand communicating high quality premium products. It has large customer base serving 2 million customers and it has a variety that no customer could match. The company is in the business for more than a hundred years now and has a global market share of 20 percent with net sales