Abc Electric Company Essays - Strategic Management, Management

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 ABCs 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 switc hing 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. The company will not be able to compete with their competitors price. As a result, they will incur further loss in market share and profitability. Finally, there is an industry wide competition for welders which leads to frequent price reductions. As a result, ABCs cost structure has been affected. In looking at this issue, ABC has relied heavily on its strategy of product differentiation and maintaining its traditional core competency, which is welding machine with limited or no diversification over the years. Now it is force to restructure its competitive strategy by lowering the cost of its product while maintaining quality or force to conglomerately diversify, which means selling new product to new market whereby creating a market niche, such as, the auto industry. The recommendations of the strategic planning committee can help solve these problems in various ways. For instance, the recommendation that was made by the committee to backward integrate to make electric motors would be an excellent move because of the fact that the company will have control over the quality as well as the price of the motor. In addition, by making its own motors the company will be able to reduce the component cost, thereby, increasing the profit it makes on its welders. Not having a supplier can reduce the time and effort of maintaining a steady external relationship. In order to implement this strategy, one must consider appropriate structural mechanisms, which needs to be established as to ensure coordination of activities between welder and motor operations. Moreover, the uses of control mechanisms are important to increase the success rate. By implementing this strategy ABC Electric will be able to compete effectively with its competitors within the industry base on price thereby improving its profitability and market share. Start making welders for the auto industry should be the first strategy ABC implemented. The base of my argument lies in the advantage they would have to be the first mover with

Colgate Hinterland Marketing in India Essays

Colgate Hinterland Marketing in India Essays Colgate Hinterland Marketing in India Essay Colgate Hinterland Marketing in India Essay Oral hygiene in the hinterlands Colgate Colgate. The world’s most recognizable oral care brand, it belongs to the Colgate-Palmolive Company. Colgate was the first toothpaste in a collapsible tube, introduced in 1896. It is a worldwide household name and synonymous with the product itself in various regions. Colgate-Palmolive has its presence in about 200 countries. Colgate in India Present in India since the 1930s, Colgate is almost synonymous with toothpaste in the Indian market. It is accepted well both in the rural and urban areas. It has been ranked as the 17th most trusted brand in India by The Brand Trust Report.Brand and Market Share Colgate is the market leader in oral care business in India, and by some distance. Colgate leads the sector with a whopping 53% market share. HUL, who sell under the brand name Pepsodent’, is a distant second with 22%. The other major player in the market is Dabur. Going to the hinterlands The rural market Having taken the urban market, the rural market was the next logical destination for Colgate. Yet, it was not just logical but a potentially rewarding one too. Over 70% of India lived in villages and oral dental care products were yet to reach there.If there ever was a latent market, this was it. As with every reward, the rural market posed its challenges too. * Many people in India still used traditional products like neem twig, salt, ash, tobacco and herbal products. * The red and black toothpowder still accounted for 35% of the tooth powder market. * The rural audience was heavily scattered. India’s diversity resided in its villages: Innumerable cultures, subcultures, languages, dialects, etc. * The awareness on oral health products was very low. * Most of rural India was media-dark. Traditional media did not reach many of India’s villages. StrategyColgate’s rural promotional and advertising program was launched under the name of Sampark’ meaning Communication’. Sampark had three main objectives: 1. Explore presence of media at different levels: It focused on identifying and making use of pre-existing media and promotional machinery that was prevalent in localized rural parts of India, viz. , Weekly bazaars, Haats, Jatras, Festivals, etc. 2. Assess characteristics of the rural market by collecting region-specific consumer profiles Analyze the different consumer profiles that existed in rural markets pertaining to age, social status, financial capability, beliefs and preferences.Example: a) Older Generation: Misri user (traditional ground tobacco) b) Middle Aged: Tooth powder user c) Younger generation: Toothpaste user 3. To design, communicate, motivate the audience to buy the product Sampark had limited budget at its disposal. Going in for mass media would not prove to be costly but the reach would be limited as, still only very few people owned possessed a TV or a radio. i) Door to door selling: Sampark wanted something that had far wide reach. Hence, Colgate chose door to door selling. ii) Right people for the right job: Sampark hired people locally who knew the local language, jargons idioms.This not only helped Colgate communicate easily with the consumer but was also effective in sending the right message across to the rural consumer. These people would move about in the villages telling people about the pros of using advanced oral care products the cons involved in using traditional oral care products. This was quite difficult as rural people felt that natural products were the best. iii) Training the Salesmen: Colgate trained salesmen to convince the rural population and make them try samples that Colgate was distributing free. v) AV vans: The next best option that Sampark choose after door to door selling was publicity vans, also called A/V vans. Seventy promotional vans did the rounds of the country educated rural folks on oral hygiene products such as toothpaste, toothpowder toothbrushes. These vans used to travel from village to village depending upon the day of the weekly market in that specific village. These vans also did a number of other activities at a time such as spot selling, sampling and retailing. The vans used to be parked in strategic locations. They were highly decorated so as to get more eyes turned in the process educate the rural folk.The roving Colgate vans, after screening a 22 minute film on oral hygiene that explained how to use the product, offered sampling at stalls setup near the van. 60% of the towns were covered by Colgate with their own distribution channels. The remaining 40 percent was covered by other distributors. v) Puppet shows: There were puppet shows done in the villages educating the villagers about the plus points of using modern oral hygiene products. vi) Educational films: Educational films were also shown in between movies in theatres. These were usually 10-40 seconds long.They feature either actors, local lenders or a farmer that was like one of them. Later on, after the movie ended free samples were distributed to the audience. These tactics were also used in Haats Melas throughout the length breadth of the country. vii) Teacher training programmes: It was an integral part of the School Dental Health Program, conducted regularly across the country to promote preventive dental health care. viii) Oral health educational programme: The Colgate Rural Initiative was targeted at rural areas of population between thirty and hundred thousand.The dental checkup camps were supervised by dentists. The organizers interacted with over 1 lakh people teaching them the benefits of oral hygiene. Conclusion: Post the saturation of its urban market, Colgate had to find new markets. Rural market was the logical next step. Finding that usual promotional and distributional channels shall not work in rural India, Colgate explored niche rural channels to raise awareness on both oral hygiene and the product. Colgate’s ultimate success bears testimony to their strategy which stands as a guiding lesson in approaching newer markets.

Effects of 2008 Global Crisis on Gulf Region Research Paper

Effects of 2008 Global Crisis on Gulf Region - Research Paper Example A real decline in the demand for bank credit contraction and goods was also triggered by the financial crisis. The prices for raw materials have drastically fell, especially oil prices that within a few months had lost more than two-thirds of their initial value. As an aftermath to the oil prices speculation, in the last three months of the year 2008, the rates decreased to less than 40 dollars a barrel, after having risen at the beginning of the year from 90 dollars to 148 dollars a barrel (Claessens, Kose, Laeven & Valencia, 2013).The Golf real estate market has heavily been impacted by the global economic crisis causing considerable decline in real estate rents and capital value. The price of average residential sales, in Dubai fell by 42 percent since the last quarter of 2008, while rental residential rates dropped on an average of 20-40 percent. The impact of the crisis in Abu Dhabi was less acute as the decline in residential real estate value was estimated to be around 20 perc ent. Rentals for new constructed office space in Qatar decreased by 10-15 percent during the 2008 first quarter. Due to the greater uncertainty over the future and lack of funding residential real estate, sales have collapsed (Hvidt, 2013).It will therefore be hard for many countries in the area to continue with their initial planned or initiated ambitious development programs that were planned in the last five years of prosperity. In order to avoid current account deficits or budget deficits, most governments in the region.