Corporate Strategy - Research Paper Example

It is possible to assume that both companies have large cash reserves spent on research and development. These reserves also enable them to take risks in spending large sums for advertising and promotion. Both companies have good reputation among customers and created cost advantage from propriety know-how. S&W and Makatume take full advantage of the quality image their products have earned over time because of automated modern factories and use of modern management methods. Aggressive advertising is used by S&W as the main marketing tool that allows the company to reach wider target audience and expend internationally.

Also, cooperation and assistance of such retailers as Big Boxes, allows S&W to stock many of its products. The strength of Makatume is fast growing cordless segment and innovative production facilities in Japan. Makatume has substantial advantages over S&W, especially in its ability to achieve higher levels of quality and productivity and in the availability of low-cost labor and financing. Makatume takes full advantage of these benefits in effectively competing with American firms in U.S. markets.

The main weakness of S&W is market confusion between its professional and consumer power tools. In contrast to Makatume, S&W does not have a strong position in cordless market segment. Another weakness of S&W is negative attitude of its distributors caused by abuse of their market position. S&W cannot react effectively to changing market conditions because of its size and outdated product lines. S&W has a high cost structure (old technologies and high labor cost) which prevents it from rapid growth and change.

The weaknesses of Makatume include lower voltage product market and importance to invest in R&D and introduce new products, higher voltage segment. It is necessary to develop specific strategies to incorporate quality into product, promotion, pricing, and distribution areas (Johnson, Scholes 2003).Opportunities Favorable economic conditions and arrival of new technologies propose both companies opportunities to grow and increase their market share. Favorable exchange rate and stable economic situation in the region provide new opportunities for the product/market expansion grid and a framework for the marketers to consider the balance of product offerings.

Threats Increased competition is the main threat for both companies. The growing imports from Chine and low price products proposed by domestic and foreign competitors become a real threat for such giants as W&S and Makatume. The threat of new entrants is the main problem: new companies can reduce industry profits and specific market share for the existing products. In the case of PEPT market, the number of companies and their location are the first indicators of the intensity of competition.

This competition is further heightened by the presence of substitute products. Solutions and RecommendationIn order to minimize weakness and threats, S&W has to update its product lines and introduce new brand for consumer products. It will help to avoid confusion and create a unique image of its products. Restructuring and organizational change is another step to improve market and operations performance. Only in this case, S&W will be able to deal simultaneously with various day-to-day crises.

New technologies and methods of manufacturing will help S&W respond to market