Business Strategy of the Able Corporation - Essay Example

Business Strategy - Able Corporation The Company Able Corporation has been in the business of providing a whole range of power tools like circular saws, drills, routers, reciprocating saws, planes and hammer drills. Its clientele included professional as well as individual consumers, selling the tool through industrial as well as consumer channels. Company has often led the industry with innovative technologies in the power tools. Recently Able Corporation launched the cordless range of portable tools, which were very much appreciated by the consumers. The industry immediately lapped up the new range and competitors also came out with their own version of the equipment. Mission Statement Able Corporation provides user friendly 'portable electric power tools' for individuals and professionals for their plumbing, electricity and other furniture fitting requirements. We strive to make life easier for carpenters, electricians, wood-workers and plumbers by providing them with user-friendly tools. Company's value proposition must include its long association with customers in the field of power tools, its ability to take lead and come out with innovative ideas, its ability to retain a good market share despite increasing cost of production owing to some internal problems and of course its urge to grab more market space in near future. SWOT Analysis Strengths The company has been holding a leading position in the industry for many years. It is an old and venerable US manufacturer of Portable Electrical Power Tools (PEPT) Company offers full range of power tools for professionals as well as individual requirements Company has been active in R&D activities as well. Recently the company came out with it cordless range of tools. Weaknesses Company is not having an effective marketing strategy at the moment. For this reason company's market share is fast being grabbed by competitors. Two of its plants are in problem due to problems in industrial relations. The cost of production is towards the higher end. As of now Able Corporation is not able to convince the supermarket retailers to take products from the company. Lack of inter-departmental co-ordination amongst different departments within the company. Lack of co-operation amongst some managers at the senior management level. Opportunities Able Corp has been at the leading end in providing innovative equipments for PEPT solutions. Matched by a sound marketing strategy this can bring in windfall of an opportunity for the company. Stabilization in the decline of market for industrial channel. Industry forecast say the market is to remain stabilized for the next five years. Phenomenal growth in the consumer channel of about 5% per annum. This market is forecasted to grow at this rate for the next 5 years as well. Interest shown by Walden International Inc. for acquiring the company. Backed by an MNC the company can put on track its production facilities at the two big plants. Walden International believes in short-term quarterly financial considerations, which will help Able Corp in taking short-term reviews of its operations and corrective actions can be taken accordingly. Threats Main threat comes from within. The friction amongst managers is bound to leave a bad impression amongst the staff as well, which will discourage them from putting their best efforts. Non-cooperation amongst the managers is preventing the company from coming out with effective marketing strategy. The growing share of its competitors in the market. Marginalization by the supermarket/ hypermarket retail chains like Wal-Mart, Home Depot, and Lowe's. Marketing Plan for the Products of Able Corp Planning forms an integral part of management. Fleischner (2007) states that, marketing plan is a way of developing a marketing program and achieving something within the available resources and time limits. Such a plan basically involves, setting objectives and selecting strategies accordingly. Able Corporation has the potential of being an industry leader, provided the company identifies some of its shortcomings and takes effective steps for overcoming them, particularly towards copyright protection, marketing, interpersonal relations etc. Of all the changes in distribution during the last century, those taking place in retailing have been the most dramatic. Totally new institutions have appeared in an industry that a hundred years ago consisted mostly of small general and specialty stores. Retailing promotes brand awareness ("Retail", 2007). Therefore Able Corporation would have to take due cognizance of this reality and must be ready with strategy to attract the big retailers. Kotler (1974) stated that traditional marketing mix concept, first proposed by McCarthy in 1960, consisted of Product, Price, Place and Promotion (known as 4Ps). Each particular marketing mix adds up to a certain amount of effort the company makes for generating sales. Any plan to develop a competitive advantage must therefore be based on a sound analysis of the market dynamics and company's competitors. Communication forms a crucial part of managerial activities. Marketing communication in turn helps a company in building a brand, creating brand loyalties, increase in sales, cutting costs, etc. Able Corporation will have to take care of this necessity as well. The strategy of first in, abandon and move on could be a good strategy for a company whose sole aim is philanthropy, but if a company is doing it for the sake of business then it must be able to make fullest use of copyright laws, as well as convincing the retailers about the advantages of taking the product from Able Corp. For the next one year, the company needs to focus on; i. Putting its house in order. That could mean taking some unpleasant steps like showing the door to some employees and managers who do not fall in line. The managers and workers need to be told in no uncertain terms that their future with the company can only prosper when the company consolidates its position and shows signs of good recovery. ii. Gaining the confidence of its customers and retailers. This could means investing a good amount in promotional campaigns, marketing communication. But this investment will not go waste. The results may not be there to match with the investments immediately, but this will pay in the long run. iii. Since Able Corp. is more of a family owned business, the required professional approach will be available to it once it is acquired by Walden International Inc. if all goes as per the existing plans. Walden will also implement the short-term quarterly financial considerations, which will help Able Corp in bringing more competitive business strategy. iv. Able Corp needs to study and analyze the marketing strategy of its competitors and be more aggressive in its approach to regain the lost market space. As of now competitors are doing brisk business by using a superior marketing power for the cordless segment, which was essentially an innovation of Able Corporation. v. Preparing and effective and consistent marketing strategy, equally matched by a marketing communication strategy for its range of products. vi. Preparing financial statements and other reports as per the standards prevalent in the international market. For the next Five Years the company needs to focus on; i. Investing good amount of money towards modernizing the two ailing plants and improving the working conditions in these two plants, by taking into confidence the workforce and the unions. Now a days the Unions too are aware about the competitive environment in the international arena and what they need is being taken into confidence before making some major policy changes. ii. Putting in fresh investments in the R&D activities together with improving the quality of its products. Now a days quality is being increasingly used to differentiate the products. And a quality product can get the company a premium price as well. iii. Strengthening the cordless range, as it is the emerging and promising market for power tools. iv. Recruiting and developing able workforce, and managers with leadership skills who can work in close co-ordination with each other. v. Studying the market dynamics thoroughly. Since there is much fragmentation even in the industrial distribution channel, therefore Able Corporation needs to concentrate more on establishing the brand equity. For the next ten years Able Corporation needs to focus on; i. Diversifying into more product range. ii. Further strengthening its hold on the domestic market. In addition the company needs to explore the offshore markets as well. References: 1. Philip Kotler, (1974), Marketing Management, 2nd Ed., New York, Prentice Hall. 2. 'Retail Marketing defined', Retrieved January 10, 2007 from Onpoint Marketing & Promotions website: http://www.onpoint-marketing.com/retail-marketing.htm 3. Michael Fleischner, '10 Key Components of a Marketing Plan'. Retrieved January 10, 2007 from Business Know-How website: http://www.businessknowhow.com/marketing/marketing-plan.htm Read More