Home Appliance Industry in 2002

Topics: Electrolux, Washing machine, Barriers to entry Pages: 9 (2314 words) Published: December 8, 2012
Industry Dominant Traits of US Major Home Appliances

Market size & Growth rate
73.3 million Home appliances market and 2.6 million commercial major appliance makes up market size and this industry is expected to grow at about 1.9 % annually.

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.

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.

Buyer needs and requirements
National chain stores and mass merchandisers – they only sold the most well-known and private brands. Department stores, furniture stores, and discount stores – pressure on manufacturers to sell in large quantity and at low price. Builders – they were cost conscious, they liked to buy at the middle to low end of well known appliance brand. The basic requirements thus were cost savings, product improvement, environmentally safe products, and SMART appliances with increasing sophisticated electronic control and diagnostics features.

Degree of product differentiation
In US major home appliances industry firms differentiated themselves on the basis of quality and cost.

Product & Process Design (Innovation)
Due to highly competitive environment and rivalry, companies were in continuous search of some type of innovation in order to gain an edge. Huge amounts were being spent on research & development to replace current technologies and design for increase efficiency and effectiveness, with customer-oriented features. For example use of microwave energy in clothes dryers so that clothes could be dried faster, at low temperature and less energy use than the conventional dryers. 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.

Supply/Demand Conditions
Since the market is at maturity so demand for the product is not much whereas on the supply side products besides being available in the outlets companies used their own websites to market their products and provide consumer-related information. Companies like Maytag introduced online appliance shopping to enable consumers to purchase online from dealers. Bosch-Siemens Hausgerate, AB Electrolux and Whirlpool formed a business-to-business (B2B) electronics market place. 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.

Competitive Forces of Industry

(Porter's Five Forces)

Threat of New Entrants / Entry Barriers
Economies of ScaleHigh----All the major players were heavily engaged in renovating and building production facilities to gain economies of scale, So it would be a high barrier for the new entrant. Capital RequiredHigh----Due to the requirement of huge capital investment as startup money and also as it is a continuous process of technological improvements to make the products more unique, efficient, durable and reliable etc. it is a high barrier to enter the home appliance market. Distribution ChannelsHigh----As we know that there are only few buyers’ sources in this industry and they only prefer to the well established brands, High barrier for new entrant. Threat of New Entrants / Entry Barriers

Expected RetaliationHigh----New entrant cannot easily enter the industry because existing sellers are...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Us Major Home Appliance Industry in 2002 Essay
  • Essay on Home Appliance Industry External Analysis
  • U.S. Major Home Appliance Industry in 2002 Essay
  • Essay on Home Appliance Case Study
  • Home Appliances Industry in Turkey Essay
  • General Electric – Home Appliances Essay
  • Home Appliances Company Growth Strategy Essay
  • Home Appliances Market Essay

Become a StudyMode Member

Sign Up - It's Free