After reviewing the competition for the in the Power Tool Industry, we have identified 4 main competitors; Black and Decker, Makita, Bosch, and Porter Cable. In order to help us better understand the Power tool market, we will look at the different strategies that these four companies use.
Black and Decker owns many subsidiary’s, which includes their Black and Decker line, DeWalt, Porter-Cable, Delta Machinery, Kwitset, Bladwin, Weiser Lock, Price Pfister, Emhart, Teknologies. This would make Black and Decker a multiple-business organization. This makes Black and Decker a powerhouse for the corporate growth strategies, using the Global approach strategy. Diversification Strategy refers to related and unrelated products, which Black and Decker not only focus’s their company on power tools but many other market areas. They include; Power Tools, Laser and Sensors, Outdoor, Cleaning, Appliances and House wares, Painting and Crafts, and Storage. Their main focus is an integrated low-cost differentiation strategy. Black and Decker’s competitive advantage is being a household name that most people are familiar with. Black and Decker use’s the prospector strategy by which they continually find and exploit new products and new market opportunities. You cannot only find Black and Decker’s power tools and many other items they sell in the USA, but in many other countries around the world.
Porter-Cable
Porter-Cable is a subsidiary of Black and Decker. Their primary focus is on the Commercial and Industrial Applications. They have a strategic alliance with Delta-Machinery, which is, another subsidiary of Black and Decker and is known for its mass assortment of wood working tools. They also have a strategic alliance with the New Yankee Workshop, which is a TV program that teachers different home projects. Porter-Cable sells strictly to the USA and Canada. As a corporate strategy, their focus is on the concentration strategy, producing high end, and high quality tools. One of the ways that Porter-Cable differentiates itself from its competitors is Porter-Cable makes machines to make tools. Another niche that Porter-Cable exploits is that it has portable stores that it goes around to factories and sends reps into the factories to sell its products, an innovative marketing technique that no other company does.
Makita
Makita best know for its high standards in doing research and development, they are considered to deal in professional products. Their research and development strategies use a product development, first mover strategy. This gives than an advantage for being innovative and an industry leader. This gives Makita an opportunity to begin building customer relationships and customer loyalty. This is known as the prospector strategy which defines Makita as continually being innovative by finding and exploiting new product and market opportunities. Their focus is doing trade shows and having in store demonstrations to market their products to the professionals. Using a corporate growth strategy, their focus is in producing advanced cordless technology with being the industry leader in battery and charger technology. With Makita’s headquarters located in Japan, this company is considered to be a multi-national company using the global approach strategy. They use a Japanese Strategy in marketing to drive out its competition by making low profits similar to that of TV and VCR sales in the late 80’s.
Bosch
Bosch, like Black and Decker has many subsidiaries’ which includes an automotive, industrial, consumer goods and building technology. Their automotive group includes; Gasoline and diesel systems, chassis systems control, chassis brake systems, car multimedia, energy and body systems, automotive electronics, automotive aftermarket, and ZF steering systems. Bosch Rexroth AG, a subsidiary with its headquarters in Lohr am Main, is one of the world’s leading suppliers of drive, control and motion solutions. In over 80 countries the Drive & Control Company develops, produces and sells components and systems for industrial and factory automation as well as for mobile applications. Bosch also has packaging technology, thermotechnology, household appliances, security systems and power tools. Using this Diversification Strategy we can say that Bosch is into a little of everything having related and unrelated product lines. As a corporate strategy, Bosch focuses on a concentration strategy being high end products. They seem to use the reactor strategy which is a lack of a coherent strategic plan. In their power tool division, they focus on selling to the professional and getting them to pay a higher price for higher quality products. Bosch is known for its warranty and guarantees of their products and people are willing to pay a higher price for this. Bosch uses a global approach strategy to sell its products worldwide.
Forecasting
In order to better understand the potential markets. I have divided up our four main competitors by what types of consumers purchase their products listed in the chart below.
Black and Decker – Consumer Do it yourselfer
Makita – Professional / Commerical
Bosch – Professional / Commerical
Porter – Cable – Commercial and Industrial
Considering that forecasting services and other information agencies often differ in their predication of the future state of the power tool industry and vital economic indicators, how would you go about putting a forecast together given these disparities? We first must understand why we have these disparities. The power tool industry is considered to be seasonal, which sales being higher during the summer months due to new construction, remodeling and home improvement. Sales for power tools also tends to be higher during the holiday season (Christmas) because they are purchased as gifts for many consumer / do it yourselfer and professionals. By doing an analysis of these external factors, you can be considered to be a proactive manager. You can plan and anticipate changes in the market and plan according to adapt to these changes. A challenge that you may face is that the environment might be changing more rapidly than you can keep up with. By keeping track of the trends you can prepare the company and adjust your forecast accordingly.
Therefore when preparing a forecast, we will have to consider who our target market is, be aware of vital economic indicators such as interest rates on the rise or decline, technology advances and the selling seasons.
References
Coulter M.K., (2005) Strategic Management – In Action, Third Edition, Upper Saddle River, NJ: Pearson Education, Inc., Pearson Pretense Hall.
McEachran, Mark, July 22, 2006, General Motors Engineer, Interview about Power Tools and what they use at GM.
All Company Background information obtained from the internet on July 23, 2006 from the prospective corporate websites.
http://www.blackanddecker.com
http://www.bdk.com Corporate Website
http://www.porter-cable.com/
http://www.deltamachinery.com/index.asp
http://www.makita.com/co_why_best.htm
http://www.makita.co.jp/global/ Corporate Website
http://www.bosch.com/content/language2/html/3293.htm
http://www.boschtools.com/product-services/
