1. The success of Miele comes to question when the company persistence in staying in German which known as high-cost country, while its competitors has outsourced to low-cost country. Moreover, Miele also producing its own producing machine, which result in bigger production cost and higher product price.
Aiming on customer loyalty, superior value must be delivered along with the superior performance. Narver and Slater (1990) said there are 5 components which composed those things, which are: * Customer orientation
* Competitor orientation
* Inter-functional coordination
* Organizational culture
* Long-term focus
In my opinion, those five components can be summarized on their resources. Customer orientation has been manifested through high quality product. On the other hand, competitor orientation has been manifested through plant and office location. The relationship between plant, head office and customer becomes the manifesto of inter-functional coordination. Organizational culture and long-term focus are explained as intangible asset.
In getting a better point of view, those things will be explained in a different way as mentioned below:
Miele has a unique combination of assets as its main reason for outstanding performance in appliance market. The combination of tangible and intangible assets becomes product strength which differentiate it from competitors, those assets are listed as below
Tangible asset in Miele consists of high quality product, plant and office location. Miele's high quality products have been known widely, as the proof of consistency in delivering superior benefit in fulfilling customer needs. Setting higher price than its competitor considered as a rational decision since superior benefit has been delivered.
Another tangible asset for Miele is the strategic plant location, whereas Miele's plants are located in Germany. Furthermore, some production machines and tools are self-produced to get better productivity. Even producing its own machines and tools is 50 percent of their manufacturing cost; it's still the best solution for a better productivity.
Its location is beneficiary for both research and development, and also the customers. Huge benefits in fast knowledge and rapid technology transfer from research and development department to the head quarter ensures a fast innovation product. Another benefit is a fast company response since its customer also located in Germany, and also ensures a right strategy in penetrating the market. Miele prefers keeping the plant and research development office nearby even though resulting in higher cost.
Intangible asset consists of technology, long-term focus, and company culture. In technology, Miele uses high-tech in producing the best product; and it is the result of intensive research and development. 12 percents of company’s revenue are allocated in research and development showing a serious intention in high technology oriented. Moreover, various machines have been used to replace human power and increase the productivity. Miele allocated €125M on capital investment to bring automation.
Company culture has been retained by the founder’s family for years. It is a belief which customers will stay loyal only if the company keeps customers’ trust. This belief is proven by a letter which saying an old lady who didn’t have much money but she was willing to pay more for Miele product, since she believe that its product would last for the rest of her life.
Long term focus is becomes another key success in Miele’s Business, to specific in product and customer focus. Such focuses drives company’s strategy and activity, and also differentiate Miele with competitors. In product strategy, Miele create premium product with the best quality and durability. In customer strategy, be as close as possible to the customer is the best strategy since company longevity...
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