Business Analysis - Case Study Example

?First Last Case Study, Business case analysis Executive Summary Tennant Company was founded in 1870 by George H. Tennant and initially produced wood products and flooring solutions. Tennant now produces floor-cleaning equipment and technologies, and prides itself on “creating a cleaner, safer, healthier world.” Tennant differentiates themselves from competitors by offering cleaner, safer and healthier products to their customers as well as through direct customer interaction. The Company drew popularity in the 1940s as a cleaning company that offered its services to the defense forces of nations especially those involved in war. The Tennant brand is strong and so is its positioning within the market. They currently hold approximately fifteen percent of the global market share, with sales growing faster than many of their competitors. Tennant’s focus was rare as they chose to deliver a sustainable value to their customers without compromising on price or performance. This strength is not imitable with new companies as it something that is built over time although many existing companies have built the same brand strength with their products. This strength has proved to be a sustainable competitive advantage for Tennant. They have exploited this strength and achieved organization. Key Issues 1) Tennant needs a strategic plan that will assure them future growth in the wake of competition and uncertainty in the market. 2) The market diversification plans at Tennant are intense. Tennant should focus on making their current product lines stronger. 3) Tennant is constantly facing new competition, much of which is offering discounted products making it difficult for Tennant and other companies in the industry to compete. Criteria and Evaluation of Alternatives by Criteria SWOT Analysis Strengths Tennant has strength in their discovery and early adoption of new technologies. It has allowed them to build relationships with various suppliers and service providers and has helped further build their brand name and recognition within the industry. This strength will be critical if Tennant chooses to venture in to new market segments or further expand their product line as they will always be a step ahead of their competition. This strength has proved to be a key competitive advantage for Tennant. They have exploited this strength and achieved organization. Weaknesses This industry is mostly affected by the growing consumer demands that surpass production capability of any company. Due to this identified demand, the industry has experienced substantial growth, emanating from the expansion of market by competitors. Opportunities also arise as a result of growth. This is reflected by the current state of intense competition in the industry. Political factors fuel this demand especially due to policies regulating health standards and application of such efforts to ensure cleanliness. Opportunities The primary identified opportunity of the industry is that of providing chemical-free cleaning product alternatives as supplements to their already established product line. This is significant because it allows companies to take advantage of their brand strength while catering to the shifting demand of consumers by providing alternatives. This also allows companies to continue revenue generation with their established products lines, while developing and releasing new product lines for additional potential profits. Threats Competitive pricing strategy acts as a threat for participants in the industry. This is a result of accessible technologies for firms, generally low switching costs and shifting consumer demands. Because there are so many competitors, companies will be forced to adapt to new technologies whilst producing in a cost-effective manner. Another identified threat in the industry is that of efficacy. If producers are unable to develop and release cleaning products that are at par efficacy as their established product line, consumers will be disappointed, and may switch brands. Porter's Five Forces & PEST Analysis Porter's Five Forces In regards to 'Threats of New Competition', the industry experiences low barriers to entry for emerging competitors. This is because industry emergent experience low start-up costs, moderate switching costs. In regards to 'Threat of Substitute Products', the industry experiences a high threat of substitution products due to low-to-moderate product differentiation, even in the emerging human and environmentally conscious product differentiation stance. In regards to 'Bargaining Power of Buyers', consumers were found to have high price sensitivity, moderate-to-high buyer awareness and the industry also reflects a high availability of substitutes. In regards to 'Bargaining Power of Suppliers', the industry reflects low switching costs and raw material availability, attributable to manufacturer's demands. In regards to 'Intensity of Rivalry', the intensity is identified as high, attributable to many established brands already in existence in the industry. PEST Analysis Political; there are existing policies place regarding cleaning products. For example, a hospital will have regulation standards in terms of cleaning products. This is an important factor to consider for companies in this said industry whom pursue corporate accounts that are affected by this policy. Economic; this industry has experienced substantial growth over the years, recently gaining momentum. Because of this, there is a great presence of competitors. Societal; There are emerging societal demands in this industry as consumers adopt greater interest in human and environmental affect of cleaning products. Society has increased their standards for ingredients in cleaning products. Technological; Developments in safe cleaning compounds have been created as per demand. Technology is available to aid in production; as well there are continuing improvements/developments. Greatest factors of concern are the changing societal demands resulting in substantial economic growth of the industry creating and influx of emerging competitors. Recommendation and its Implementation Tennant Company must employ a number of strategies to ensure that they keep their market edge among competitors. The company must employ the eight common strategies to gain competitive advantage. These include; locking in customers, increasing barriers to market entrants, differentiating its products and services, reducing cost of products and services, minimising operational costs, developing new products and services and most importantly, marketing of its products and services. In order to implement all these strategies, an employee evaluation exercise must be done. All personnel must be reviewed for possible slashing of the employee number to minimise operational costs. Most importantly, employees that do not meet management requirements for public relations capability and maintaining company image must be retrenched. The new policies must then be spelt out to the staff who will implement them adequately. Limitations and Critique of Recommendation However, possible challenges may impede the implementation of the stated recommendations. Increasing barriers to market entrants is quite challenging. The industry experiences low barriers to entry for emerging competitors. In regards to 'Threat of Substitute Products', the industry experiences a high threat of substitution products due to low-to-moderate product differentiation, even in the emerging human and environmentally conscious product differentiation stance. In regards to 'Bargaining Power of Buyers', consumers were found to have high price sensitivity, moderate-to-high buyer awareness and the industry also reflects a high availability of substitutes. Locking in of customers also becomes an uphill task owing to the fact that the industry experiences a high number of substitutes coupled by a heightened sense of consumer awareness. This means that switching costs could not easily be mentioned by Tennant. Suppliers’ bargaining power poses a threat to the operational costs of the industry owing to the fact that competition is great thus presenting option for suppliers to market their raw materials. Read More