!MAYTAG CASE 19 PPT
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The document discusses the home appliance industry in the United States. It covers the industry's dominant features such as numerous competitors vying for market share and a focus on product innovation through energy efficiency. It then analyzes the industry using Porter's Five Forces model, finding moderate threat of new entry, neutral competitive rivalry, weak substitute threats, and mixed buyer and supplier power. Overall the industry is found to be mildly attractive. Key success factors identified are contract sales, retail sales, commercial markets, research and development.
!MAYTAG CASE 19 PPT
- 2. PART 1 - INDUSTRY’S DOMINANT FEATURES Number of Rivals Numerous rivals are existing in industry due to global expansion. Regional and domestic companies competing with each others. This competition is fierce in the United States. Whirlpool, GE, Maytag, Electrolux, and the European Bosch- Siemens are forming the major home appliance market in the U.S.
- 3. PART 1 - INDUSTRY’S DOMINANT FEATURES Product innovation Product innovation was increasing and manufacturer trying to give better customer satisfaction as desire. Environmental care and energy saving products are major development. Whirlpool, GE, Maytag and other company design their product as energy saving and efficient and uniquely differentiated. Differentiation strategy was attracting customers and they were ready to pay extra cost than normal features product.
- 4. PART 1 - INDUSTRY’S DOMINANT FEATURES Market Size and Market Growth Overall growth rate was high and becoming more competitive due to global extension. Competition became stronger during the five-year period from 1996 to 2001 b/w. Whirlpool, Maytag, and Electrolux. Whirlpool had increased its market share by almost 5 points, from 34.9% five years earlier, in 1996. Maytag had been steadily increasing its market share upto 16.5% and also purchased Amana’s home appliances which raised their overall market share 21.6% till 2001.
- 5. PART 2 – PORTER’S FIVE FORCES 1. Threat of New Entry Bosch-Siemens was a newcomer to the Americas, but was a strong in the European market share, and also a very aggressive competitor. 2. Rivalry among existing firms Whirlpool has a 39.2% market share, G.E. has a 23.2% market share, and Samsung only hold a mere 1% market share. This shows that Maytag needs to get in gear because Whirlpool is taking over the market and G.E. isn’t too far behind.
- 6. PART 2 – PORTER’S FIVE FORCES 3. Substitute Products None 4. Bargaining power of Buyers Because of the competition of the major home appliance brands, prices are continuing to be lowered to compete with other brands. However, quality remains to increase to keep existing customers as long as attract new customers. Independent retailers do not have the necessary financial resources to compete with larger and more powerful superstores.
- 7. PART 2 – PORTER’S FIVE FORCES 5. Bargaining power of Suppliers Strategic alliances between appliance makers and their suppliers was one way to speed up the application of new technology to new products and processes. Maytag’s strategic partnership with its supplier, allowed Honeywell to generate their new IntelliSense dishwasher. This dishwasher selects its own wash cycle based on different factors, such as the amount of dirt that is on the dishes.
- 8. PART 2 – PORTER’S FIVE FORCES Factor HUFA MUFA Neutral MFA HFA Comments Economies of scale Small 5 Large It’s difficult to any domestic company to compete with these global companies because they capture 90% of the market share and increase competition through cost efficiency. Capital require red Low 4 High Capital required is increase so its difficult to any new entrants to enter with a large capital in competition with these global companies Access to distribution channels Ample 4 Restricted It’s difficult for any new entrant to grab distribution channels because the market leaders have very strong impact on distributions channels. Expected retaliation Low 1 High Former companies retaliate through diversification and globalization so its difficult for new entrant to compete with these global players. Differentiation Low 5 High It’s difficult for any new entrant to adopt technology pace and create differentiation in this highly competitive industry. Brand loyalty Low 5 High All global companies have very good brand positioning in customers mind so its difficult for new entrants to create brand loyalty. Experience curve Insignificant 5 Significant Any new entrant could not get experience curve he has to spend sometime in industry. Govt. action Low 4 High Govt. launches new certification in industry to regulate manufacturing and environment. Total avg score 4 Entry barriers are strong that mean industry is attractive. Threat of New Entrants/ Entry Barriers
- 9. PART 2 – PORTER’S FIVE FORCES Factor HUFA MUFA Neutral MFA HFA Comments Specialized assets High 5 Low There are no such specialized assets in this industry so it is easy to exit from the industry so it is easy to exit. Fixed cost of exit High 4 Low There is no such fixed cost associated to exit from the industry so new entrant can easily exit. Strategic interrelationshi p High 1 Low They have strong strategic interrelationship with suppliers and distributor so it’s difficult to exit. Govt. barriers High 5 Low There are no govt. barriers so it’s not difficult for any company to get out of its business. Total avg score 3.5 There is no such high cost related to exit so the exit barriers are too low industry is attractive. Exit Barriers
- 10. PART 2 – PORTER’S FIVE FORCES Factor HUFA MUFA Neutral MFA HFA Comments Composition of competitors Equal size 1 Unequal size The compositions of competitors are equal in size because the main rivals are belonging to global market. Mkt, growth rateSlow 3 High Growth rate is stable because the industry is in maturity. Scope of competition Global 1 Domestic It is global because the industry is competing with diversification strategy. Fixed storage cost High 3 Low Its neutral because these type of products don’t have expiry dates but they have a threat of getting old in terms of technology, model, design and other features. Capacity increase Large 3 Small We rate it neutral because in US home appliance industry competition is very high due to technology & product Innovation but at the same time they do more work on Quality And renovation to control Labor and Material cost. Degree of differentiation Commodit y 5 Specializ ed It is high because the companies are competing in the industry with differentiation and all the company has their own degree of differentiations. Strategic stake High 5 Low It has low rating because this is not a bread or butter for these companies because these companies are already well established globally. Total avg score 3 Rivalry among the competitor is neutral so industry is mildly attractive. Competitive Rivalry
- 11. PART 2 – PORTER’S FIVE FORCES Threat of Substitute Products Factors HUFA MUFA N MFA HFA Comment Threat of Obsolescence of Industry’s product Hi 5 Low No thereat, There is no substitute product. Aggressivenes s of substitute products in promotion Hi 5 Low No Aggressive Marketing because there is no substitute product available. Switching Cost Low 1 Hi No switching cost because there is no other product. Perceived price/ value Hi 5 Low Perceived price is lower then hiring servants Total avg score 4 Due to weak substitute in the market the industry is favorable.
- 12. PART 2 – PORTER’S FIVE FORCES Overall Industry Attractiveness Factors Unfavorable Neutral Favorable Entry Barriers 4 Exit Barriers 3.5 Rivalry among existing firms 3 Power of buyers 2 Threat of substitute 4 Total score 2.75
- 13. PART 3 – DRIVERS OF CHANGE 1. Product Differentiation Justification: In 2002 U.S appliances business was moving towards a stronger product- oriented market. Major innovation like energy saving and efficient product according to customers need and satisfaction designed by main market player like Whirlpool, Maytag & GE.. Customers were willing to pay which changing industry aspects toward development and new innovation.
- 14. PART 3 – DRIVERS OF CHANGE 2. Technological change and manufacturing process innovation Conclusion: An impressive development been done by manufacturer in 2002, “SMART” appliances introduced with highly sophisticated electronic controls and self diagnostic features. ”Smart Appliances” were being connected to the internet. These appliances could call for service, download programs, contact security providers in case of gas leaks or fire, pay utility bills, and be programmed remotely to start and stop when needed.
- 15. PART 3 – DRIVERS OF CHANGE 3. Regulatory influences and government policy changes Conclusion: Global changes forced major home appliance manufacturers to set certification standards beyond the ISO 9000 series. Quality management system, ISO 14001 covered environmental management systems (EMS). Some international markets like European Union could require certification as a prerequisite for doing business.
- 16. PART 4 – STRATEGIC GROUPS WITHIN THE INDUSTRY Strategic Group Map of Appliance Industry This graph shows that the company Maytag has tremendous product quality while also charging higher prices for their products. Whirlpool on the other hand offers a medium style durable product while charging an above average price. G.E. seems like their route is a good one since their product is one of the best quality while their prices remain low. Samsung is trying everything it can do but when the quality isn’t there its tough to charge a high price so its focus is on low price.
- 17. PART 4 – STRATEGIC GROUPS WITHIN THE INDUSTRY Whirlpool G.E. Samsung Maytag P r i c e Product Quality L o w H i g h Low High
- 18. PART 5 – KEY SUCCESS FACTORS IN THE INDUSTRY Key Success Factors in the industry: Contract sales of home builders, other appliances manufacturers, local builder suppliers. Retail sales Commercial markets (Hotels/Hospitals & etc.) Continuous research and product development
- 19. Strategic Factor Weight Company Whirlpool Rating Company Whirlpool Weighted Score Company GE rating Company GE Weighted Score Technological Related 0.4 4 1.6 4 1.6 Manufacturing Related 0.2 3 0.6 3 0.6 Distribution Related 0.2 3 0.6 3 0.6 Product Innovation 0.1 4 0.4 3 0.3 Marketing Related 0.1 3 0.3 2 0.2 Total 1 3.5 3.3
- 20. THE END