Chain Saw Case Essay

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CHAINSAW 1974

1) Which five forces are important in the chain saw industry and why? The five forces that that are important for an industry and companies involved are a) Competition b) Buyers c) Substitutes d) Suppliers and e) Compliments. The Chainsaw industry is segmented by customer bases namely professionals, farmer and casual users. These customer segments are differentiated by the cubic-inch displacements. Pro users require 4.5 or greater, farmers require 2.7 – 4.5 inches and casual users require about 2.7 inches. The industry is also segment by the distribution channels that each company uses in this case servicing dealers, home centers, department stores, hardware stores and catalog sales. Servicing dealers carry a broad line of chainsaws and also offer servicing and repairs for their products. These complements to the chainsaw increase the value of the product to the customers they serve. These servicing dealers also align themselves with 1 or 2 manufacturers which gives them a higher buying power therefore increasing the value required to compete. Also cooperative advertising by the dealers and manufacturers offers a relational capability by the sharing of resources. In contrast retail channels like home centers do not offer servicing and also offered limited accessories and department stores didn’t carry high quality chainsaws because of the difficulty in selling them. Hardware stores use strategic buying groups to purchase from various manufacturers this strategy gives them a higher buyer power and the ability to dictate market prices. Catalog sales provide to the mass casual market and therefore they carry very limited lines of low priced chainsaws, they don’t provide any servicing and have limited accessories.

2) What are the important strategic groups in the chain saw industry? Strategic groups are groups that serve a distinct segment and typically have developed relatively similar value and cost drivers. In the chain saw...
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