External Analysis

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Problem:
not working properly acquisition.
"is it a problem of Gillette or Duracell?"
no real growth
no clear strategic direction " the company had gone nowhere for 4 years"

External analysis
Battery industry/alkaline battery industry

Technological segment: new development
General environment
Global segment: potential market for emerging market, sony and panasonic go into US

Entry barrier, paten is very important, we just have 3 players in American market suppliers: who are they? chemical, zinc, raw materials (low bargaining power, because there are only 3 firms) bargaining power of buyers: high, because they are able to do backward integration, 3 types of buyers, it is impulse purchase substitutes, other types of batteries (rechargeable battery can replace) (dont need 10 substitutes, if 1 can replace it perfectly, it will be enough) rivalry: 3 way competition war, action and reaction, marketing campaign, first movers, highly competitive

since 196 industry revenues have increased 7% but industry profit have decreased by 3%

conclusion: for the firm, it is not attractive because profit decrease, if they able to reduce marketing and rivalry, it will become attractive again.
For the firm who want to enter the industry, it is not attractive

rivalry is the only thing that can change

competitor analysis
energize, sony, panasonic
Capabilities, current strategy

capabilities: R&D, marketin, manufacture rechargeable batteries, global brand name, reputation, priority with discounters and supermaarekts

current strategy: differentiation, but they have cost leader contender (Eveready) Cost leadership Integrated

Duracell make the battery more competitive before the acquisition Gillette used to be the leader in the razor industry, 1-2 paragraph on competition

rynovac is the only company that is experiencing growth among the other firms, cost leadership, so custopmers are price sensitive

external analtisis
the development dirctions of the industry
convergence-divergence: high convergent and there are few dimensions for differentiation

highly concentrated in North America (oligopoly with three big players)

vertically fragmented and there is not potential gain from any vertical integration

strong japanese competitiors are entering the US market, US brands are not doing well in emerging markets

expansion-contraction" very slow grosth

The industry success factors

R&D is important, distribution channel, marketing, price Duracelll is good with everthing except the most important one (ability to provide price)

General conclusion
Opportunities: rechargeable batteries; emerging markets
Treats: customer sensitivity to price; global competitors, price war, competitive war

Internal Analysis (Gillette)

Tangible Resources:
Exhibit one
Intangible Recourses:
Few brand names like Braun, Gillette, Oral-B, and Duracell
Global recognition
Solid relationships with vendors around theworld especially drug stores and retailers

Capabilities
HR: generous departure terms for any Duracell employee whose job woudl be eliminated Distribution channels: very strong national and international distribution channels

management: good after acquisition transition

Marketing : they used to have good marketing capabilities but recntly budget for new products increases while sales decreases

R&D: ability to offer the up-to date technology in all lines and more specifically in the alkaline battery industry

Core competencies

distribution channels, management, R&D, brand name (may be)

not have core competencies, not have above average competitors

Value chain analysis (no outsourcing)

Corporate level strategy
using distribution network, share operation, so it is related constrained

Business level strategy
is differentiation for all divisions; Gillette made Duracell to follow its strategy of differentiation and concentrating on innovation...
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