Smith & White and Macatume, Essay Example

This work presents an attempt to put myself in the shoes of the Director of Strategic Planning and Analysis for (1) Smith & White and (2) Makatume – the chief rivals on the highly competitive PEPT market – and make SWOT analysis for each of the company. The experience is expected to give Able invaluable insight in the operation of the two successful companies and to find its own advantageous place in the market.

Smith & White has already succeeded in creating a brand for electric devices of professional and consumer usage. It means that the name Smith & White speaks for itself; extensive advertising campaign have succeeded in making everyone familiar with its production so that Smith & White is likely to be the first association of a potential client who wants to purchase a kitchen machine or electric lawn-mower. Successful advertising and creating a brand image is surely the strength of Smith & White which should be played at. Since the production is not too cheap and the quality is not first-class, the company cannot overlook the importance of advertising. It is also essential that Smith & White employ well-trained consultants and sales attendants who can support the brand image with sympathetic approach to clients and perfect knowledge of the assortment presented by the company.

Smith & White relies mainly on high demand resulting from effective advertising and extensive representation in retail units nationwide, which in its turn provides opportunities for cross promotion in cooperation with the retail units. The great opportunity which the company takes advantage of is the fact that Makatume, the company’s main competitor on the market, offers professional tools only, thus leaving the huge gap of consumer tools to be filled by Smith & White. This opportunity allows Smith & White to charge comparatively high prices for its production and control a large portion of the market.

Part of financial and other benefits obtained thus from the popularity of the company should be devoted to address the company’s weaknesses and threats. The greatest weakness, in my opinion, lies in reliance on often outdated manufacturing plants which results in the imperfect quality of the production and high costs made even higher by the location of the plants within the city area. A solution may be in relocating part of the plants and transferring the production to the suburban area where the rent is much lower and there is a chance to hire employees who will not have to commute to work. Moreover, the company can accommodate part of its production in outside the United States and benefit from lower cost of labor there without losing in quality. It is also widely felt that the company should invest more in engineering and designing ergonomic and reliable products which would remain competitive in spite of the attacks of other companies like, for example, those importing consumer tools from China and offering an arguably better value for money. Building up production capability and quality will require fundamental investment and in order to pay off should cover the promising market sectors. In this respects, it seems reasonable to pay special attention to cordless technology, the more so since Makamute is developing it intensively and Smith & White risk being left too far behind.

Another weakness of Smith & White is its inflexibility resulting from the big size of the company. The solution may be found in the process of reforming the production in pursuit of higher quality and less expenditure if this process suggests automation and downsizing through the elimination of outdated plants. However, this weakness should also be addressed on the administrative level through more effective management of the company and involving more analytical research in the rapidly changing economy. For example, the administration of each particular plant may be given greater freedom in decision-making with less centralized control because local administration has better knowledge of the current situation on the local market.

Makatume relies on high quality of production as its main strength and much of advertising is therefore performed by word of mouth. Still, a greater accent on advertising would allow the company to benefit from its quality production even more. Moreover, Makatume production is comparatively cheap given to the brand new manufacturing technologies housed in Japan. An increasingly large part of the production is occupied by the perspective cordless segment, which allows Makatume to hold a unique position on the market. I do not think that Makatume should be afraid to introduce higher voltage batteries because by doing that Makatume would have the benefit of being a pioneer on the market and enjoy its monopolistic position. After that, however, Makatume will have to demonstrate great flexibility and remain competitive when other companies will try to enter the market with dumping costs. Being the first on the market will also give the advantage of creating a strong association with higher voltage batteries and the name of Makatume.

A possible threat to Makatume is presented by exchange rates turning unfavorable for the next couple of years. It might be useful under the circumstances to transfer a part of the production to the United States and build several manufacturing plants here, which is unlikely to completely eliminate the threat though since the production is inseparable from the Japanese basis. Another weakness lies in the low flexibility of the company resulting from high demand for the existing lower voltage battery systems. The solution is investing in the research into and the production of higher voltage batteries which is sure to bring economic benefit after some time without downsizing the production of lower voltage batteries.

References

Bloodgood, J.M. (2002). Competitive Analysis: Do Managers Accurately Compare Their Firms to Competitors? Journal of Managerial Issues, 14 (4), 428-440.

Bierly, P.E., Daly, P.S. (2007). Alternative Knowledge Strategies, Competitive Environment and Organizational Performance in Small Manufacturing Firms. Entrepreneurship: Theory and Practice, 31(4), 493-516.