AB Sandvik Saws & Tools Business Unit has developed a world-class competence in ergonomic hand-tools design and manufacture. The company's strategy was to use this competence as the 'Ergo strategy' to establish a global position in the professional hand-tool business. However, the initial sales of the Ergo tools, already introduced, were not as strong as hoped, especially in the North American market. After assessing the situation of Sandvik's Saws and Tools Business Unit and arguing that one competency is not enough to break into a new market this paper provides a solid recommendation for the future strategy for Sandvik's Ergo tools business. The main point of the recommendation is to invest in another important element for the success - a new distribution strategy, namely a Web based B2B Portal – an online platform that would help in providing the balance between the core competencies and the customer value.
The paper is build according to a specific requirements format and its main report consists of five sections. First section, introduces the situation at Sandvik Saws and Tools, by articulating what Gezelius (the president of Saws and Tools Business Unit) is trying to accomplish with the hand-tools business and where the Ergo-tools and the Ergo strategy fit in. Second section, examines the Hand Tools industry and articulates its global aspects. Third section examines how unique the competency of Sandvik Saw and Tools products and how valuable it is. The fourth section, analyses the benefits of the ergonomic-design, the added value it creates for the buyers/customers and whether these benefits exceed the cost. Finally, the fifth section provides a recommendation on the strategic direction Gezelius's Business Unit should pursue in this situation.
Table of Contents
Introducing the Situation
The Hand-Tools Industry
Saw and Tools Competency
The Ergonomic Design
Introducing the Situation
Brian Dumaine, international editor of Fortune magazine, wrote in the early nineties an article where he provides an argument that design would be the key for corporations to winning customers in the nineties 1:
After a decade of restructuring, many corporations have improved operations to the point where they can match each other on price, quality, and technology. How, then, to differentiate yourself? Design. Says Robert Hayes, a professor at the Harvard business school, which is teaching case studies of industrial design this year for the first time in its history: Fifteen years ago companies competed on price. Today it's quality. Tomorrow it's design.
But, taking design seriously is one thing, using it right is quite another.
In 1993 AB Sandvik Saws and Tools decided to have a specific ergonomic strategy to reach a worldwide leading position in professional hand tools. Part of the strategy was an 11 step ergonomics product design approach, developed by their business partner group, the Ergonomi Design Groupen (EDG).
EDG was one of the best mid-sized independent industrial design firms. Sandvik's relationships with EDG were very close and EDG agreed to make hand tool design only for Saw and Tools. Hand tools developed in this way were introduced on the market as Ergo-tools. Göran Gezelius, the president of Saws and Tools Business Unit, hoped that by introducing new, user-centered products, created by an ergonomic product design will help the company to reach competitive advantage in the global market. The main hopes were that the 'Ergo strategy' will help to expand the company market position and will lead to increased sales.
The Ergo Project Group was formed within Sandvik Saws and Tools Business Unit in mid-1993. The group was responsible for the conversion process of existing tools to the new ergonomic standard (see...
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