ABC Electric Company

1298 Words3 Pages
bulb-icon

Recommended: Competitive strategy and competitive advantage

ABC Electric Company

Introduction

ABC Electric has been in business since 1970. The company makes hand-held arc welders its primary customers are construction firms, shipbuilders, auto-repair shops, and “self-help” amateurs. The company has 30% of the current market share along with four other competitors it has an annual sales of $800 million.

The company has a satisfied customer-base. Although, their products are priced above the competitors, customers prefer ABC’s welders due to their superior finish, reliability, and durability. Recently, demand for hand-held welders in the U.S. was steadily growing at a rate of 7% rate annually but has currently drop. However, demands are growing in the West European market, which is currently value at $1 billion.

Recently, ABC Electric found its market share and profitability decreasing. Due to the fact that the company has made some gain in its customer base by improving product quality and service while maintaining price. Moreover, a component supplier of ABC has raised its price by almost 10%. In addition, industry wide competition has generated excessive price reduction, which help in the fluctuation of the company profitability.

Strategic Issues Facing ABC Electric

ABC Electric is facing several issues that needs to be address in order to stabilize their competitors growth as well as increasing their market share and profitability. These issues are closely related to their external competitive strategy, which seems to be non-existence on a whole. Base on my brief discussion above, I believe that ABC Electric has in-voluntarily allows, one of its competitors to make advancement by improving its quality and service of their product without increasing price. Due to the fact that, ABC perceived its customers to be immune to price thereby remaining loyal to its product because of the quality and reliability that comes with the product image. As a result, this perceived brand loyalty created a threat to the company. The second issue facing the company is, a supplier of whom ABC purchases its electric motors from for its welder has raised the price by almost 10%. In looking at this, the bargaining power of the supplier is very strong because the switching cost might be very high. Moreover, it will become damaging to the company based on the current reduction in price within the industry if the problem is not solved.

Show More
Related

  • Slade Company Plating Department

    1858 Words  | 4 Pages

    In addition, the bargaining power of the sources of inputs is high. The switching costs from one supplier to another are high because there are not many substitutes for the particular input for metal products. Besides, the number of suppliers who produce raw metals is small. The threat of substitute is high. There are many different kinds of substitutes for metal product company. These companies may also produce a large variety of product like Slade Company. Therefore, the substitute is low for this market. Only companies that produce high quality are able to not be substituted by the others.

    Read More

  • Lincoln Electric Case Study Essay

    727 Words  | 2 Pages

    Lincoln Electric Company has a very distinguished culture, after my readings over the case study it is clear that the strong culture they have prominently reflects their success.

    Read More

  • Andrews Case Study

    2332 Words  | 5 Pages

    Andrews is a sensor manufacturer in the market. While the company has been unable to develop a straightforward competitive advantage over the course of the past three years, the competitive landscape of the market has become a significant source of concern for the company’s leadership. There are other companies out there who produce better products, or are able to compete strictly based on price cuts. It came to the CEO’s attention that there is an opportunity for Andrews to shift a large portion of its production to an offshore location. This decision will not only allow Andrews to reduce its labour and material costs, but will also allow for improved distribution practices.

    Read More

  • Analysis Of A Couple Of Squares

    864 Words  | 2 Pages

    A couple of Squares has a limited capacity for which to produce their products and smaller companies tend to have larger fixed costs than bigger companies. Therefore, A Couple of Squares must maximize profits in order to ensure that they will stay in business. A profit-oriented pricing objective is also useful because of A Couple of Squares’ increased sales goals. A Couple of Squares increased their sales goals due to recent financial troubles. Maximizing profits is the easiest way to meet these sales goals due to the fact that A Couple of Squares has limited production capacity. The last key consideration favors a profit-oriented pricing objective because A Couple of Squares offers a specialty product. A specialty product often has limited competition, therefore can be priced on customer value. Pricing at customer value will maximize profits as well as customer satisfaction. A Couple of Squares’ lack of production capacity, increased sales goals, and specialty product favor a profit-oriented pricing

    Read More

  • Black & Decker

    1054 Words  | 3 Pages

    Black & Decker (B&D) is a global manufacturer and the world’s largest producer of power tools, power tool accessories, electric lawn and garden tools, and residential security hardware. The company was a pioneer in innovation and development of power tools and has used that position to build strong brand names that enjoy worldwide recognition. Key Causes for Poor Performance in the Professional-Tradesmen Segment The reason B&D has performed poorly in the professional-tradesmen segment is due to the positioning of the B&D brand in this segment. Poor positioning of the brand has resulted in customer confusion and negatively impacted customer perception of the brand in terms of being a quality product. B&D Performance in the Power Tool Industry Overall Any adjustments to B&D’s strategy in the professional-tradesmen segment must not have an adverse impact on their success in the consumer or professional-industrial segments. Therefore, a thorough understanding of the needs of each segment will be important in building a viable strategy to challenge Makita in the professional-tradesmen segment, while continuing to maintain share in the other two segments. _Consumer _Segment Professional-Tradesmen Segment This category consists of professionals who are buying a product for their own use on a job site. Their livelihood depends on the quality and performance, as well as the reflection on their skills that using a particular tool brings from others on the job site. Since they are purchasing their own tools, this segment needs this high quality performance at a reasonable price. However, since Makita and Milwaukee are both priced higher than B&D and are seeing greater success in this category, tradesmen are clearly willing to pay more for a product they perceive will be more effective for their use. Key needs for this market segment include: Performance and quality - {text:change} does the job needed to be done, doesn’t break down, produces high-quality results and more efficiently gets the job done. Reliability and durability - does the job every time and can be used for an extended period of heavy continual use. Safety Support from the Manufacturer – if the product breaks or performs poorly, access to replacement parts and service will be key in maximizing performance up-time.

    Read More

  • Fastenal Company Case Analysis

    1122 Words  | 3 Pages

    The industrial supply industry generates about 73 billion dollars in revenue and has a growth rate of 4.4% a year and employees about 95,000 people according to IBIS World. The interesting part of this industry is the fact there is no company with a dominant market share. Even though some revenue numbers might be higher for some companies, each company

    Read More

  • Philips versus Matsushita

    1784 Words  | 4 Pages

    Philips made a strong push to developing new technologies starting in the 1950s and 1960s. Upon doing so, the company also wanted to translate these technologies into products while adapting, producing, and selling these products within individual national markets. During this time period, most of the companies in the electrical products market were bring formed and racing to diversify. However, Philips decided to stick with what they knew best. They made only light-bulbs. In doing so, their strong focus enabled the company to create significant innovations. Continuing on, Philips also became a leader in industrial research by creating physics and chemistry labs to address both production and scientific problems. The labs developed a tungsten metal filament bulb that brought great commercial success. Philips simple structure and significant innovations gave them the financial support they needed to compete in a time period where competitors were seeking major growth.

    Read More

  • Lincoln Electric Company

    1203 Words  | 3 Pages

    orter’s five forces In determining the competitive intensity and attractiveness of the market, Porter’s five forces is a framework that would help analyze the manufacturing industry of Lincoln Electric and observe the external and internal environmental factors that influence business strategy development for companies within the industry. The five forces are assumed to determine competitive power in a business situation in which these five forces are Supplier Power, Bargaining Power, Competitive Rivalry, Threat of Substitution, and Threat of New Entry. These industries possess characteristics that protect the high profitability of firms, with that said, the threat of entrants within this market is relatively low. This makes entering the market difficult for new startup companies due to the high levels of entry barriers.

    Read More

  • Swot Analysis And SWOT Analysis Of Starbucks And Apple

    1316 Words  | 3 Pages

    Therefore, the organization should take a strategic growth-oriented and reverse type combine. On the one hand, the use of outsourcing and vendor competition to reduce costs in order to compensate for management and manufacturing inefficiencies, pay attention to controlling costs; On the other hand, combined with the advantages of their own technology, innovation, branding and marketing and other aspects of the product 's high school three grades are low pile of competitive products, consumer electronics growth to seize the opportunity to obtain efficient growth performance, and further expand market

    Read More

  • Whirlpool Corporation Case Study

    783 Words  | 2 Pages

    In order to build a strong relationship between companies there must be a trust. So trust played a big role in this case. A good example in this case was that inland steel “concern that a single-sourcing policy might cause it to lose touch with the market”. On the other hand, whirlpool “concerned about the technological risks of relying on only one supplier”. However, building a trust relationship between them was the best solution by the belief that both companies will be a low-cost

    Read More

  • Lincoln Electric Company: Harvard Case Study

    1029 Words  | 3 Pages

    Sharplin, Arthur. (1989). Lincoln Electric Company Harvard Case Study. McNeese State University. Retrieved from http://my.uopeople.org/pluginfile.php/59756/mod_book/chapter/39460/Lincoln_Electric.pdf

    Read More

  • General Electric Corporation: Case Analysis: General Electric Corporation

    1501 Words  | 4 Pages

    General Electric Corporation is a multi-billion dollar conglomerate founded in 1892. The company was founded in Schenectady, New York to capitalize on the patents of Thomas Edison and the use of electric power through generation and distribution. Now a blue chip publicly traded company that has branched out beyond its core into arenas such as aircraft engineering, television, and home appliances to name a few. Over the years the corporation has been through different management models that have brought innovation in many forms that have allowed them to be envied by companies around the world. Despite great success since its conception, like many companies who can withstand the test of times, it’s natural for them to become self-absorbed, which can have a negative impact on the company structure as a whole. Coming across someone like Jack Welch who can think out of the box and in a manner that doesn’t strain the resources of the company but expands the thinking of the company as a collective unit is needed to continue the legacy of innovation in all aspects of business.

    Read More

  • History of Welding: Manual Welding Vs. Robotic Welding

    1049 Words  | 3 Pages

    "Purchasing Your First Robotic Welding System | Lincoln Electric."Lincolnelectric. N.p., n.d. Web. 08 May 2014.

    Read More

  • Why Black and Decker Loses in the Tradesmen' Market

    557 Words  | 2 Pages

    First, even though Black & Decker has a good brand perception in general, are considered to be among the powerful brand names in the world and considered to have the highest quality product in the industry, they were perceived badly by the tradesmen segment. Some trade people viewed all Black & Decker as for use at home rather than on the job. The tradesmen considers Makita to have a good baseline options in all majors categories, hence being their firs option and others brands as having particular product strengths. Thus, the customers in this segments were not identifying themselves to the products that Black & Decker proposes to them.

    Read More

  • Peak Sealing Technology: Case Analysis: Peak Sealing Technologies

    734 Words  | 2 Pages

    Difficult to regain trust of existing loyal customers who expected high quality and performance when in competition with other firms in upper trade market.

    Read More

More about ABC Electric Company

Open Document