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Strategic Management

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The research you conducted in Phase 2 of the fiercely competitive U.S. PEPT industry has revealed two major participants, Smith & White Corporation (S&W), a very large and aggressive domestic manufacturer, and Makatume, a Japanese powerhouse.

Smith & White markets a full line of moderate quality professional and consumer tools. It also markets such products as lawn and garden, hobby tools, and kitchen appliances, all under the same brand name as its power tools. It is a multi-national conglomerate that has dominant shares in all the markets in which it operates. Its strength lies in a unified strategy across all its product lines, power tool and non-power tool, of building and maintaining brand equity through massive amounts of national media advertising. The leverage gained through strong brand equity compels retailers, particularly the Big Boxes, to stock many of the S&W's products because of high end-user demand.

This demand-pull marketing strategy also has the synergistic effects of obtaining relatively higher prices, advanced placement, co-op advertising, high profile self space, and cross promotion.

S&W does have some significant weaknesses. These include high costs due to old manufacturing plants located in high labor cost urban areas, market confusion between its professional and consumer tools, and negative feelings on the part of its distributors stemming from a perceived abuse of their dominant market position. It also doesn't have much of a presence in the fast growing cordless segment.

In addition, a major hidden weakness is S&W's huge size, which makes it unwieldy in reacting to market phenomena during periods of rapid change.

Makatume markets only professional tools, which are highly regarded by tradesmen for their quality, robustness, and durability. It controls over 50% of the Japanese market and has leveraged that position to become the second biggest player in the U.S. market. For the past several years their sales in the U.S. have been aided by favorable exchange rates, although many economists now forecast a reversal of this advantage over the next two years. Makatume has an extremely strong cost position due to its relatively new manufacturing plants in Japan.

Makatume's greatest product strength is in the fast growing cordless segment. It controls a dominant 70% market share of the professional cordless market. Makatume's early entry into this segment, is both a blessing and a curse. By entering the market early, Makatume has been able to obtain its dominant market share, but it is now locked in to lower voltages due to wide acceptance of its interchangeable battery system. As the technology of battery efficiency progresses, Makatume is faced with a dilemma: Does it introduce its own higher voltages, thus legitimizing that market for others to enter, or does it wait until it has to respond to being outflanked by its competitors if and when they introduce their higher voltages?

The rest of the market is made up of several domestic and foreign niche competitors, none of which has greater than a 5% share of the total market. A phenomenon to watch, however, is the growing strength of Far East imports from China, which are beginning to make their impact on consumer tools because of their low price and good value. The yuan is the relevant currency affecting Chinese imports.

We can often better see ourselves when reflected through the perspectives of others. In this exercise you are to take the vantage point of the industry leaders, S&W and Makatume. This has the advantage of helping to anticipate competitive positioning that may effect the successful execution of Able's strategy. Based on the narrative above, please answer the following questions from the perspective of being their Director of Strategic Planning and Analysis. (For real world situations always keep in mind that the status and plans of competitors can almost never be known except through an analysis of their actions, and even then almost never with certainty. Dealing with imperfect information is one of the essential aspects of the economic problem.)

* Perform a SWOT analysis on both Smith & White and Makatume. How would you, as a CEO minimize each company's weaknesses and threats?
* How would you maximize each organization's strengths and opportunities?
* If you were Makatume, what would you do about higher voltage batteries?

Using the Library, Internet and other phase resources to research this topic, please complete the task with in-text citations and references in APA format.

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The response addresses the queries posted in 1342 words with references.

//Before doing a SWOT analysis of the company, it will be better to understand the background and scope of the company. This will help in gaining knowledge about the functioning of the company and its market position in the global market. Therefore, the first discussion will incorporate the introduction of the company.//

Introduction: Smith & White Corporation (S&W)

It manufactures the consumer and professional tools of reasonable quality. In the same name of power tools, it promotes other products as kitchen devices, lawn equipments and hobby tools. This international corporation has leading shares in the market where it has its business. For all the product lines (power tool and non-power tool) it follows unified policy by developing brand equity through huge advertising nationally. Brand equity of the company focuses retailers to maintain the stocks of products as it is highly in demand. Strategy adopted by the Smith & White Corporation gave the numerous advantages. But it fails in investing in the manufacturing plants resulting in high cost. Another disadvantage to the company is plant location resulting in high cost of labor and there is confusion among the consumer and professional tools.

// with the help of above discussion, it would become easy for the reader to get a complete knowledge about the performance of the firm in the industry. Now we will move one step ahead, which includes internal and external analysis of the firm, for example: //

SWOT Analysis: Smith & White Corporation (S&W)

Opportunities

Growing demand for the products of the company.

Dominant share in the entire place of its business operation.

Threats

Low market share in Cordless segment.

Leading market share of the company is perceived in a negative manner in the market.

There is confusion in the professional and consumer tools in the market.

Strengths

It has significant advantage through adopting unified policy for all its product lines.

Weaknesses

High cost of manufacturing plants due to lack of investment and maintenance and huge size poses difficulty to manage ...

Solution Summary

1064 Words, APA Format

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