Vsm Group Strategy

Topics: Strategic management, Sewing machine, Porter five forces analysis Pages: 14 (4773 words) Published: August 6, 2008
I. Introduction
VSM Group manufactures markets and sells consumer sewing machines, holds a leading position in the medium to high-end segments of household sewing machines on the world market. After redirection, VSM had carried out a set of strategies to pull itself from inferior position into an enjoyable place. In this report, the strategic position of VSM in 1997 will be analyzed first, along with three divisions, the environment, strategic capability, expectations and purposes. Strategic options will be identified and evaluated based on business-level strategies and corporate-level strategies. Finally, some feasible strategies which will match VSM’s situation better will be recommended.

II. Strategic Position
The strategic position is concerned with the impact on strategy of the external environment, internal resources and competences, and the expectations and influence of stakeholders. (Gerry Johnson and Kevan Scholes, 2002) It acts as an important role in the strategic management that can indicate the present and foreseeable developments of the organization, and thus ensure the continuity of the organization by extrapolating the trends and by gearing them to the field in which the own organization operates. Therefore, to adopt the strategic management more appropriately, analyzing the strategic position of VSM Group before the new CEO was appointed and the organization had been redirected in 1997 is necessary and crucial for the further strategic planning. 2.1. The Environment of VSM Group

Environment is complex and changing by diversified environmental variables. Many of those variables will become the sources of competition, as well as give rise to opportunities and other will exert threats on the organization or both. The environment of VSM Group will be examined by PEST analysis and Porter’s Five Forces analysis.

2.1.1. PEST Analysis
PEST analysis, a useful approach of examining the Political-legal, Economic, Social-cultural, Technological factors of the environment of an organization, can be used to examine the various aspects and trend in one industry by understanding market growth or decline, and as such the position, potential and direction for a business. (David & Nigel, 2006) As there is no evident political-legal and social-cultural influence on the operation of VSM Group in this case study, the main items that impact the organization in economic, technological aspects will be presented as follow: Economic factor

a)Firstly, the demand for sewing machines in the western hemisphere had been declining for more than two decades. Industry profitability had deteriorated, particularly hard on manufacturers of industrial machines and low-price mechanical machines for domestic use. b)Second, the sharp drop in demand for industrial sewing machines has result much more fierce competition on the professional side in Europe and in the US. Technological factor

a)As the development of specialized software, the computer-controlled machines have become popular in the world market. Some world top manufacturers can make the entire range of computer-controlled machines. It makes the rivalship between VSM Group and other powerful manufacturers much more fierce and intensive. b)Moreover, the great e-business shakeout and the plethora of ‘dotcoms’ raised has made the internet become a viable medium for the distribution trades. It has brought sewing machine manufacturers great opportunities to create new powerful distribution system through using the web-shops. After scan the external environment of VSM Group, although the economic environment is not that great, a favorable circumstance can be seen in technological factor. If VSM can develop more creative products than its rivals and retain its customer, I believe it could gain survival and to success in this environment.

2.1.2. Porter’s Five Forces Analysis
After analyzing the external factors of sewing machine industry, it’s necessary to...
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