The VSM Group

Bhuvaneshwari.T
Gagan Krishnamurthy
Gangotri Bajpai
Gaurav Sinha
Harshil Kachhawa
Priyanka prasad G
 Overview of the Case
Emerging strategies of VSM group, 1997- 2003

Acquisition of major competitor

Issues of strategic change in global environment

Bases and direction of competitive strategy

Managing change at top level management

Strive to be the pioneer company

 History
First machine – 1872

Freja, an instant success – 1883

European Patent Rights for Sintered Steel- 1950s

OEM production of Sintered Metal, part of VSM

1996- Search for buyer of sewing machine business

Svante Runnquist replaced Jorgen Johansson

1997- Electrolux sold VSM AB to Industry Kapital

 Mission Statement
 Develop, produce, market and sell consumer sewing
machines

 Grow business by creating demand for more creative uses

of sewing machine

 Secure growth, profitability by providing superior

satisfaction to consumers, dealers

 Provide growth opportunities to the employees

 Become leading premium company in the world of

sewing
VSM – Strategic Capabilities and Competitive
Advantage
Resources Competences

Threshold Threshold Threshold

Capabilities Resources Competencies
•Tangible
•In Tangible

Capabilities for Unique Resources Core Competences

competitive *Tangible
advantage *Intangible
 VSM – Value Chain network

Firm Infrastructure
Suppo
rt HRM

Technological Development
Activi
ties Procurement
Inboun Outbou
Marketi
d Operati nd
ng and
Service
Logistic ons Logistic Sales s
s s

Primary Activities
 SWOT ANALYSIS
STRENGTHS:
 Customer oriented.
 European patents rights on sintered
metal Technology.
WEAKNESS :
 Very little information was collected on market share.

 VSM collected information on competition through

sales companies and retailers.
OPPURTUNITIES:
 Large market to be covered after integration of pfaff.

 Signs of lagging behind in product development from

Bernina.
THREATS:
 Demand for sewing machine declining in western
hemisphere in terms of unit sold.

 Relying heavily on retailers.

• Cooperation information!
• Sales Co. & Retailers Lack of
• Comparison with Competitors
Scenario : -
Competitive Strategies
 Global Scenario
JANOME: Largest Competitor by Volume

Main Activity Domestic Sewing M/c.

High Volume Producer (1.5 Million units in
2003)
Complete Range
Own R&D facilities (developing sewing
embroidery m/c)
Strategically Poised
  JUKI OPERATIONS

 Catered the markets of both industrial and Domestic.

Made entire range of Computer Controlled machines

for SINGER.

Models in USA had modest features.

Less aggressive in Product Development.

 Brother (USA Based Company)

 High Volume Producer (1.3 million in 2003)

Well known for Office machinery such as

typewriters, labelers, faxes etc.

Catered Domestic and Industrial Markets

Competitive Prices (undercut VSM by 20-30%)

 Local Competitor
Bernina Fritz Gegauf AG
Highly Reputed Company
Product Range resembled VSM
Top Model accepted embroidery files from
others including VSM
Quality Bench mark for VSM
Lagged Behind in Product Development
Which Strategy to follow?

Overall low-cost leadership strategy

Best cost provider strategy

Broad differentiation strategy

Focused low-cost strategy

 Managing Change
 Expansion of After-Market Services

Upgrades through Softwares

Introduction of Web-shop

Acquisition of ‘Pfaff’
 Acquisition of Pfaff
 Decline in the whole industry.

 Pfaff went bankrupt

 Singer was on the brink of bankruptcy.

 May 2000 - VSM acquired Pfaff.

 The brands were promoted on different dimensions

 Change of production plant from Germany to Sweden.

 Taking over Zetina plant.

 Lowering prices of Pfaff in home market.

 Looking back into the future
1999- Focus on “Dealer-Partner
Programme”

2004- Addition of Pfaff thus rethinking of
marketing strategy.

Expand U.S market- setting up ‘store-in-

stores’ in collaboration with Jo-Ann
Fabrics
 Strategic Drawbacks
Time wastage on integration of Pfaff and German
market.

Clash: cutting costs by co coordinating the

distributive and marketing activities.

Overdoing subsidiary functions like retailing support

and education

Indecisiveness on exclusive stores for Pfaff and

Husqvarna.
 Conclusion

Strategic leadership: charismatic leader

Enabling success- overall business
strategy vs. strategies in separate resource
areas
 ENABLING SUCCESS

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Strategy
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