By: SHWETA GAUTAM SIDDHARTH SHUKLA SMITA SINGH SNEHA JOSHI SONAL SEWAK

The Portable Power Tool Industry

Consisted of portable and stationary tools powered by electricity, gasoline, or air. Wide range of sizes, prices and qualities. Price point segmented market Tools can be divided into professional(industrial) and consumer categories. Professional buyers of tools were a highly diverse group that include metalworkers, building contactors, carpenters, plumbers, electricians and farmers.

Contd..
Consumer buyers of tools mainly hobbyists and doit-yourselfers. They have 15 separate distribution channels. The significant ones are the industrial channels and consumer channels. There was constant development in the technology field. Huge amount of competitors in the industry like Sears and Black & Decker.

Industry Attractiveness
Medium industry attractiveness as
High number of competitors. Companies with technological capabilities may enter. Profitability for companies. Large market size. Stiff competition Growth potential

Changes in the portable tool industry

Changes in portable power tools industry

The industries has mainly consisted of two types of tools

Stationary tools e.g.. table saws, band saws, radial arm saws etc. Portable tools generally hand held and mostly powered by an electric motor

Contd
In 1979,the portable electric power tools accounted for the majority of industry volume Industry came in wide range of products. Principal products were
saws(circular,reciprocating) drills(corded or cordless,regular or hammer) sanders(disk,orbital,belt or combined sander)

Other products- routers,planes etc.

contd
Primarily use of portable electric power tools werewood working, metal working or automatic repair. At later power tools were divided into two categories professional / industrial category
heavy duty use longer useful life had higher horsepower superior in quality

Contd

Consumers category
More sophisticated Higher quality

Preference towards consumer tools.

Competitive strategy

Change in product improvement

Use of battery power- In 1960s cordless drill having nickel cadmium battories were used but did not become commercially successful in early 1970s - Due to improvement in battery technology the sales of cordless tools growing rapidly in late 1970s Availability of lighter material such as Mg,aluminium,plastic.

Competitive strategy of skil corp. in 1979

Strengths:
Innovation Considerable global market share Full product line

Weaknesses:
Heavy investment in R&D Metallic electric tools Advertising budget low

Competitive strategy of skil corp. in 1979

Threats:
Stiff competition

Opportunities:
Expansion in global market Customer loyalty

Low cost strategy Broad differentiation strategy

Evaluating relative position

GE Business Screen
Medium industry attractiveness
High number of competitors Large market size Growth potential

Medium competitive position

Technology Brand Loyalty Market Share

Earn selectively

Evaluating relative position :ANSOFF MODEL

PRODUCT PRESENT NEW

PRESENT

MARKET PENETRATION

PRDUCT DEVELOPMENT

Skil Corp

MARKET

NEW

MARKET DEVELOPMENT

DIVERSIFICATION

Strategic options for Skil Corporation

Analysis so far :
Growth of the market :Good
Professional buyers:8% per year Consumer or do-it yourself buyers:2% per year.

Medium Industry attractiveness

Competition: Intense
HITACHI, 8.30%, 12%
Bosch, 10.50%, 15% SKIL, 7.10%, 11% BLACK & DECKER, 31%, 46%

BLACK & DECKER Makita

Makita, 11.10%, 16%

MARKET SHARE

Market Target of Skil: Europe, United States, others (worldwide) Products :line and depth was considerably high . Channels :products sold through all the distribution channels Marketing:Poor

Skil Corporation:

6000 5000 4000 3000 2000 1000 0

1974 1976 1978

net income($'o oo)

Skil Corporations net income

selected

Strategic options for skil corp:

Skil
Corporation

Strategic options for skil corp:

Defensive Strategies .

Mergers and Acquisitions.

Diversification

Options for Skil

Divestment or Liquidation Differentiation Strategies/ Innovative Strategy

Figure 15.1

Differentiation Strategies
Skil Corporation already has been capitalizing on its differentiation strategy. Invested heavily ($2.7 million) in Research and engineering . Innovation Strategy is one of the differentiation strategies. New models and designs were developed focusing on best product performance . Maintained its position in the circular saw s(differentiated):Skil had 7 different U.S saws,2 European,2
Canadian,2 for exports, totalling 35 models using 12 motors .

Higher percentage of professional tools.

Defensive Strategies
Broaden product line to fill in gaps that competitors may go after. Keep prices low on products that match other competitors. Sign exclusive agreements with distributors. Offer free training Reduce delivery time Improve service Sign contracts with the best suppliers. Patent new innovations. Invest selectively. Milking strategy

Diversification Strategies
Add new markets and increase sales and profitability Add by expanding into new market segments within your industry Diversification may require new equipment, new facilities, new operating skills and new staff. Merger and/or acquisition of other businesses might be an attractive method of diversification you can buy the equipment, the facilities and acquire the staff and skills with the new firm. Partnerships and/or alliances with other businesses can be an alternative method of market diversification. A diversification strategy can be used as either an offensive or defensive strategy.

Divestment or Liquidation
Extreme Price Pressures Business Position is Weakened by stiff competition; Losing Money over R&D No Longer Part of Strategic Direction Predictions about the future decline in market surface.

RECOMMENDATIONS
Strategy we would like to recommend for Skil Corporation is that of Diversification. Since the present markets are saturated. Should go in for market development. Mergers and acquisitions help enable utilization of competencies of both the firms. Partnerships or alliances Marketing strategy needs to be more aggressive Could offer free training for the use of their products Offer distributors an incentive to increase sales .

Thank You