Strategy for Smith & White and Makatume - Essay Example

RUNNING HEAD: Major Competitors Major Competitors: Strategy for Smith & White and Makatume BY YOU YOUR ACADEMIC ORGANIZATION HERE YOUR HERE HERE Abstract Both Smith & White and Makatume, two manufacturers of consumer and professional tools, have many strengths in terms of efficient business models. A few deficiencies also exist in both companies. This project explores the current conditions of both companies and explores, using the SWOT Analysis, opportunities for improvements. Major Competitors: Smith & White and Makatume Introduction Smith & White has a very strong presence in the consumer and professional tools market. This company’s competition, Makatume, also has superior dominance, however in different market environments and customers. This report identifies what makes these companies succeed and what needs improvement. SWOT Analysis – Smith & White Smith & White maintains several strengths as a multi-national company. First, the business has a well-diversified product line including professional and consumer products which provide for higher sales revenue from multiple, international consumers. The company’s brand strategy is also a significant strength due to the unified brand messages which gives S&W dominant market share globally. The company further has already established brand equity, which means that customers recognize the company brand names and many prefer them. This gives the company powerful marketing edge. S&W products also have a quality reputation in the retail sales environment as Big Box retailers stock its products which give them more selling exposure. Weaknesses at S&W include financial issues such as costs associated with high labor in areas where old manufacturing plants are still being utilized. There is also market confusion regarding consumer and professional products, meaning that the two categories of products are not being distinguished or differentiated properly. Distributors also create weaknesses because the ones which S&W uses have a dominant position in the supply chain and take advantage of this position. The company’s sheer size, also, creates weaknesses for the company as it is not able to respond quickly enough or efficiently enough when rapid changes are occurring in the market. The cordless market is also growing quickly, however S&W does not have a very big market presence in the cordless product area, making this another weakness at the company. There are many opportunities for S&W, the first of which is to begin focusing areas of the business on the development of cordless professional and consumer products to gain a larger presence and earn higher revenues there. Secondly, S&W maintains opportunities to develop an appropriate rapid change training and development seminar to allow staff members to realize the importance of being flexible and adjustable. Training is crucial at the strategic level (This can create a more efficient team dedicated to complying with change in the event of a sudden need to change business direction. There is also opportunity to change the brand strategy for the professional and consumer products, creating two distinct marketing messages which clearly identify the two product varieties to eliminate market confusion. Further, Smith & White has the opportunity to make capital improvements in the business by closing down the old plants and rebuilding new factories (which are modernized and cost-efficient) to reduce labor costs and constant maintenance fees. There are also many threats to S&W, including allowing Makatume to continue to create positive brand equity in the cordless market, making it difficult for strong market entry. The business is also threatened by sudden, potential changes in consumer and professional buying behaviors both domestically and in foreign regions. A threat might also be that Big Box retailers, long-term, might find more value by carrying another brand’s products, giving S&W less competitive edge. Another threat involves potential, escalated market confusion between the two product categories as well as individual business entities which can negatively impact S&W supply chain needs and costs. There is market confusion regarding professional and consumer tools. The recommended strategy is to develop a marketing positioning plan which clearly distinguishes and differentiates the product varieties. This includes learning about consumer perceptions (Harrison, 2001), creating a lifestyle connection with the consumer and creating a product/quality focused marketing scheme for professionals. Since both types of products already have brand equity and a strong consumer following, changes to the current marketing staff and budget would be required. Unlike other business solutions which require long-term expenditures such as developing new plants or restructuring manufacturing, taking a new marketing approach to end market confusion (and boost sales) is a low-cost, value-added addition to the company. Existing marketing talent (or new as required) can be given a project direction for developing a new marketing strategy which will create less of a unified brand image between product categories so that there are two, specific marketing messages being communicated. Once this new marketing philosophy has been fully developed and analyzed for its brand appeal, a low-cost promotional activity should accompany the release of the new focus on differentiated product categories to build consumer excitement (Siegel, 2006) and, hopefully, improve market share. SWOT Analysis - Makatume Makatume’s strengths include a large market share in the cordless market as it was an early entrant. Another strength is that the business only has to focus on a single product variety: The professional tool. This allows them to respond to product-specific issues quickly and efficiently. It also has very strong growth in Japan and in the United States. It is also working with a business infrastructure which is modern and cost-efficient. Makatume’s weaknesses include lower voltages issues. The company also has not, it appears, kept up with advancing battery technology at the correct pace. Indecision is another weakness at Makatume as it appears slow to respond to important issues such as the high voltages problem. Lack of strategic focus is another weakness at Makatume as it does not recognize the growing strength of its small competitors who are gaining ground for pricing issues related to currency exchanges in China. The business is also highly leveraged which does not give it much flexibility in changing operations in the event of sudden changes in market conditions. Opportunities at Makatume include entering new market territories without much competition and with quality exchange rates for higher profitability. The company also could introduce the high voltages technology despite that other competition can enter. Makatume can also enter new products into the market such as professional tools or something more diverse to give the product a wider product line and make it favorable to buyers. Strengthening economies leading to unfavorable exchange rates is a threat to Makatume. The company also maintains the threat of increased competition in countries like China and Japan which would erode market share. Threats also include any potential changes in buyer behavior as well as changing economic conditions for the professional market which provide less funds to buy Makatume products. Makatume also has threats from more focused strategic leadership, like that at S&W, which recognizes its deficiencies and works to improve them, giving competition the competitive edge in human capital. Top-level strategic leadership must be both dynamic and continuously future-thinking regarding the long-term position of the business (Cothran and Clouser, 2008). Makatume is being warned by economists that business conditions, which are currently favorable, are changing, however Makatume does not appear to respond by changing business focus. Additionally, the company is delaying the development of higher voltages for fear of allowing for new market entry from competition. This is another deficiency of strategic leadership as it would be most beneficial, both short- and long-term, to develop the necessary higher voltages simply to remain competitive. If other competitors are able to develop this technology, they are going to enter the market regardless, however the method of entry would be unpredictable. Makatume leadership also shows signs of indecision by assessing currently-small competitors as being little threat to the business. It would be a quality recommendation as the Director of Strategic Planning to ask the governing bodies to either replace the current Chief Executive Officer or assist them in developing sound strategic policy. The leader’s various deficiencies such as lack of timely response to important market issues and failure to create contingency represent risk to the long-term stability of the company, therefore new leadership is required to bring Makatume greater opportunity. Assuming that all of these indecisive behaviors stem from the CEO, this is where the labor overhaul should begin to create strategic and competitive advantage. Conclusion This report identified the various opportunities for improvement at both S&W and Makatume. A slight change in marketing philosophy toward product differentiation was proposed for S&W with a more radical change in senior-level personnel as the most viable solution. Both companies clearly require improvements as well as acknowledgement of their strengths. References Cothran, H. and Clouser, R. (2008). “Strategic Planning for Communities, Non-profit Organizations and Public Agencies”. University of Florida. Accessed 5 Dec 2008 from http://edis.ifas.ufl.edu/FE648 Harrison, T. (2001). “Positioning as a strategic marketing decision”. A handbook of advertising techniques. Retrieved 5 Dec 2008 from http://www.themanager.org/Marketing/Positioning.htm Siegel, Carolyn F. (2006). Internet Marketing: Foundations and Applications, 2nd ed. Houghton Mifflin Company, New York. Read More