Home Appliance Case Study

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Q1. What are the Industry’s Dominant Economic Traits?

Industry’s Dominant Economic Traits|
Features| Questions to answer |
Market Size & Growth Rate| U.S is the largest producer of Home appliances in the world. U.S Home appliances industry is in the phase of Maturity. There are four major firms in Home appliances industry in United States. in 2002 there are 74.5 million units. Dollar volume had been growing at an annual average rate of 1.9 percent since.

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Scope of Competitive Rivalry|
As major home appliance industry became increasingly global it became difficult for global and domestic major home appliance companies to survive independently in the competitive environment.| Number Of Rivals| Major rivals who shared 99% of the market share were Whirlpool, General Electric, and Maytag, AB Electrolux. Others who shared 1% of the market share were Bosch-Siemens, Haier, Emerson Electric, Sub-zero, Viking and Wolf.| Buyer Needs & Requirements| Many consumers were demanding appliances that are attractive, convenient and easy to clean for that consumers are willing to pay top prices for top of the fine appliances that enhances their décor's and save precious time. The manufactures have responded to the consumer demands, by manufacture smart appliances with sophisticated electronic controls and self diagnostic features. | Pace of Technological Change| New technologies and designed were being introduced into major home appliances. Due to governmental pressure, appliance manufactures were introducing energy efficient versions of Home appliances| Degree of Product Differentiation| In US major home appliances industry firms differentiated themselves on the basis of quality and cost.

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Product Innovation| As a result of high competition and rivalry companies were always in search of innovation.  Huge amounts were being spent on R&D in order to replace current technologies with more efficient one. For example use of microwave energy in clothes dryers so that clothes could be dried faster, at low temperature. This technology was not marketed as it needed further improvement. Another example of innovation is that silent, vibration-free refrigerator instead of the noisy, energy-consuming compressors. The cooling apparatus consisted of wheel containing gadolinium powder moving through a high powdered, rare earth magnet.| Economies of Scale| All the major home appliance manufacturers were trying to gain economies of scale by renovating and building production facilities in order to improve quality and reduce material costs.

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Q2. What kinds of competitive Force are industry members facing? (Please make sure you follow my slides for Porter’s analysis. You have to explain the reasons for your evaluation. Threat of New Entrants/ Entry Barriers|

Factors|  | HUFA| MUFA| Neutral| MFA| HFA|  | Comment| Economies of scale| Small| | | | 4| | Large| 99% of market shares capture by big four firms.| Capital require red| Low| | | | | 5| High| The high amount of capital required for the new entrance in this industry | Access to distribution channels| Ample| | 2| | | | Restricted| There are three mass distribution channel. Which distribute appliances to mass.| Differentiation| Low |  | 2|  |  |  | High| There is no such differentiation in products features. Focusing on price reduction that drove the surviving firms to increased efficiency and a strong concern for customer satisfaction | Brand Loyalty| Low |  |  |  |  | 5| High| A significant fraction of the consumers of high-end appliances were very knowledgeable about the brands and were also particular about the brands they used.| Experience Curve| Insignificant|  |  |  | 4|  | Significant| They have more than 50 years of experience in appliance industry that was the main source of their success.| Govt. Action| | | | | 4| | | Govt has put strong regulations on...
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