Porter's Industry Analysis of Skil Corporation
Case study
“Skil Corporation”
Submitted to the faculty: Javed Ahmed
Submitted by: Bilqees Bano
Brief Introduction:
Skil Corporation is a portable power tools manufacturer that was acquired by Emerson Electric Company in 1979. When Skil was first acquired, it had mediocre financial performance. Its main competitors in the portable power tool industry were Black & Decker, Sears, and some Japanese manufacturers. In 1979, the electric power tools were making up the majority of the portable power tool industry. 1. What is the analysis of the structure of the portable electric power tool industry? Is it structurally attractive?
Analysis of the structure of the Portable Electric Tool Industry
Industry Structure Attractiveness: Moderate / Low ROE=10%, Profit margin=4% on average
This is primarily because of High rivalry between competitors. Despite of the low threats from other factors impacting industry structure, the industry is currently witnessing heavy rivalry because of slow industry growth and high number of existing competitors.
2. How is the industry structure changing? For the better or the worst?
Changes in Industry structure in 1979
Some changes are as follow:
The Rivalry between competitors was gradually focusing on price because of continually reducing product differentiation. Companies like Makita are leading the pricing based rivalry to gain a quick market share (sometimes 20% to 30% below market price). This might impact the already low industry profitability badly if other companies follow suit and start pricing aggressively. Companies are investing heavily on automation to increase production efficiencies and volumes. Black & Decker is investing heavily on automation and computerization of processes. This would help them in reducing the cost of production and at the same time increase the quality of their products. At the same time they would aggressively target bigger market shares to break even on their
“Skil Corporation”
Submitted to the faculty: Javed Ahmed
Submitted by: Bilqees Bano
Brief Introduction:
Skil Corporation is a portable power tools manufacturer that was acquired by Emerson Electric Company in 1979. When Skil was first acquired, it had mediocre financial performance. Its main competitors in the portable power tool industry were Black & Decker, Sears, and some Japanese manufacturers. In 1979, the electric power tools were making up the majority of the portable power tool industry. 1. What is the analysis of the structure of the portable electric power tool industry? Is it structurally attractive?
Analysis of the structure of the Portable Electric Tool Industry
Industry Structure Attractiveness: Moderate / Low ROE=10%, Profit margin=4% on average
This is primarily because of High rivalry between competitors. Despite of the low threats from other factors impacting industry structure, the industry is currently witnessing heavy rivalry because of slow industry growth and high number of existing competitors.
2. How is the industry structure changing? For the better or the worst?
Changes in Industry structure in 1979
Some changes are as follow:
The Rivalry between competitors was gradually focusing on price because of continually reducing product differentiation. Companies like Makita are leading the pricing based rivalry to gain a quick market share (sometimes 20% to 30% below market price). This might impact the already low industry profitability badly if other companies follow suit and start pricing aggressively. Companies are investing heavily on automation to increase production efficiencies and volumes. Black & Decker is investing heavily on automation and computerization of processes. This would help them in reducing the cost of production and at the same time increase the quality of their products. At the same time they would aggressively target bigger market shares to break even on their