J&J has a strong economy of scale. J&J’s cost efficient production facilities act as deterrents to new entrants looking to enter our consumer segment industry. New entrants are deterred by the amount of capital needed to build new factories capable of mass production. Confronted by J&J’s economy of scale, new entrants are relegated to seek niche market segments. Niche markets can allow for higher margins; however new entrants effectively position their product to a low volume high price model limiting their sales volume.
This would also help improve the company’s inventory turnover ratio from 4.7 to the industry average of 6.1. The firm’s debt ratio anticipation of 44.17% is better than the market average and will allow the company to pay down its debt quicker than competitors and have more cash on hand. The extra cash on hand provides more liquidity and is attractive to potential investors. However, these numbers are based on high projections. If such numbers are not reached the company is considered underperforming and makes an unattractive appeal to investors.
The company has identified the most profitable product to be the Model C210 Chisel. If the company plans to eliminate the less profitable product, they should cut the Model D400 out of production because of the higher contribution margin per unit the product generates.
Options 1: Harvest Professional-Tradesmen Channels; * In this strategy, B&D would focus on the Consumer and Professional-Industrials segment, focus on profitability even expense of market share * Option appears reasonable, but it could be damaging to the B&D Corp. * According to BCG approach, the decisions should be based on SBUs relationship to market growth rate and market share. * In the BCG matrix below, since Makita has 50% market share and B&D has 9%, relative market share for B&D is 0.18x * If B&D chooses to harvest the company, focus on profit rather than market share and wind up forcing the company to become a dog when it could have the potential of being a star. * One major factor the 1st option ignores is the high product ratings, which shows great deal of potential. 2: Get Behind Black & Decker Name with Sub-Branding * In this strategy, B&D can sub-brand current products in order to re-establish the brand. * Presents a way to tap the potential of high product ratings by rejuvenating the brand Issue –with brand currently: * negative view of the B&D brand * OTJ site, tools are status symbol * Thus by adding catchy names like ‘Piranha’, ‘Sawcat’, ’Super Sawcat’, B&D could theoretically raise its brand image…..
As a result, demand was spread over (6 of teams) leading to weak industry wide demand. MobAir’s has built a considerable production cost advantage over its competitors. However, this competitive advantage will not last indefinitely. Team OrangeTel, the nearest competitor to MobAir, has production costs very similar to ours. In addition, MobAir has significantly more production capacity.
Further increase in product line both in terms of high price and product variety, to attract a large range of customers, can affect their lean operating model increasing inventory costs. Increasing customization options could also affect its competitive pricing increasing operation costs. Even though outsourcing operations and services can help keep a better control but in times of high demand they can be compromised since they are not directly a part of the company. The quality of the service is dependent on the ability of the outsourcing company and not Blue Nile. Further, it set lower gross profit margins on high value sales (just to make the sale)
Mechanically how is your strategy different than your best strategies in 4a Strategy 6 : Inventory Management in Price Cutoffs = 10 could be improved with a small tweak on the preloaded strategy. The cutoff could be reduced from 10 to say 5-6. Why does the change in 5a work better? With the tweaked strategy 6, the reduced cut-off will ensure that the inventory be cut down quickly when the overnight volatility and order processing costs are relatively high. The bid-ask spread is also a cost to the dealer.
Buyer power tends to be higher if suppliers provide undifferentiated or standard products. 3. Porter's five forces model helps to determine both the nature of competition in an industry and the industry's profit potential. 4. If all of Porter's five competitive forces for an industry are weak (low), then established companies in the industry have the potential to raise prices and earn higher returns.
Also they must take into consideration the effects of the volume increase on their distributors. In addition, the present reality of the current shortage of sales and administrative staff needs to be considered. Finally, we must think about how this expansion will affect the company’s culture whether in a good or bad way. If Asahi chooses to expand there could be an upfront financial investment which could be burdensome. This is not the case here due to the fact they could
Issue Manzana’s commercial insurance is a product for which low price is important in order to compete, but serving customers (agents) is what produces loyalty. Agents want rapid request turnaround so that they, in turn, can impress their customers. The agents will also receive their commissions more quickly. Fruitvale’s performance has deteriorated, as has its competitive position. Average turnaround time (TAT) has grown from about three days in 1989 to more than five days in 1991 while its main competitor, Golden Gate, has achieved two-day TATs and is now promising one day.