With sales declining and credit hard to come by in 2009, iRobotics started eyeing other sectors to exploit. With the lack of competitive pressures in the consumer market, the challenge that iRobot faces is to keep producing innovative robots to satisfy customer needs while persuading them to spend their hard earned income in light of the economic recession. iRobot supply chain is also an issue for them as by only having only 2 manufacturers in China. The hope was that the manufacturing agreement with Jabil Circuit was going to take manufacturing pressures off of those plants in China. iRobot can also do a better job promoting the products, especially the Looj model.
By scanning the environment for opportunities and threats, iRobot will be much better prepared to handle the uncertainties of the marketplace. In creating strategic alliances with firms, the company is in much better position to keep creating innovations for an expanded marketplace. Competitive intelligence will be crucial to the firm so that competitors do not come out with a product that could potentially become substitute products for their own. The firm’s success depends on it.
iRobot environmental scanning:
Currently, iRobot (NASDAQ: IRBT) is manufactures home robotic appliances and robots for defense and military use. It is fighting on two fronts, the home appliance market and the more lucrative defense technology market. In 2010, the competition has intensified. Many entrants from around the globe have entered the market each bringing a specific threat to either the home appliance market share or to the industrial piece of pie(Example is the military market entrance of Forster-Miller, subsidiary of QinetiQ from the UK and the US-based Lockheed Martin Corp.) .There is a competitive environment and quite lucrative that keeping at bay the competition ,some in the same strategic group as iRobot, is a key concern of iRobot strategy going forward. Recently, the growth strategy of iRobot has shown slow down that puts the company at risk of loosing the ground it once occupied firmly. To understand better the external and internal environment, a brief Strength/Weakness and Opportunity/Threat analysis is illustrated.
On the strength side, iRobot has many aspects of strengths in the artificial intelligence market. Its innovation made it among the first to enter this new market of robotic intelligence being brought to daily human lives. Currently, its cost is relatively maintained making its pricing strategy easier to attract more buyers. iRobot has a market leadership status chased by competitors but it still hangs on to it. Things like branding equity (brand name “iRobot”) present a considerable strength and the financial side of the company is still healthy. iRobot has loyal customers and reputable partnership with the department of defense, one of its most esteemed customers. This industry has strong barrier to entry. It is by no means easy to get the proper funding needing to invest in the one of the most expensive Research and Development project needed to assemble high-tech industrial and home robotic appliances. R&D itself cost iRobot $45.5 millions to iRobot in 2009. This number is total yearly revenue for many companies!
Nevertheless, iRobot has some weaknesses that cannot go unnoticed. There still a growing sense that these appliances are still expensive, especially the one...