Perhaps the most serious weakness with Smith and White is that fact that its large size makes it less responsive to the caprices of the market. This is particularly troubling because having such a large amount of stock on the market makes the inability to respond riskier, and losses would be much greater as a result. To combat this problem, it would be necessary to institute proper supply chain management (Cohen & Roussel, 2005). The installation of sensitive software that enables the company (as the suppliers) to link into the inventory system of the retailers in order to have a more direct connection with the demand at retail level.
This would enable Smith and White to lower the amount of stock they have on the market at any given time (2005).However, this low-stock policy would necessitate a very efficient supply system so that the retailers’ shelves would never be empty of Smith and White products once demand still exists. This strategy would also necessitate close co-operation on the part of the retailers, and that would mean taking steps to improve the relationship with them. However, reduction in inventory might be a step in the right direction as far as retailer-relationship is concerned. It would also be necessary to initiate the creation software that could properly channel the volume and variety of information necessary for the efficient running of such a system (Cohen & Roussel, 2005).The problem with the outdated manufacturing plants must be addressed as well. Since Smith and White plans to stay in the tool business indefinitely, upgrading the factories can be considered an investment.
It would be to our advantage to begin this process in conjunction with an effort at entering the cordless tool market. It would not be wise (or feasible) to begin changing all the factories at once, but changing them one at a time would be beneficial. It would also be beneficial to reduce the employees at some of those in high-waged urban centers and compensate by building more rural or sub-urban factories in order to reduce the overall cost to the company. At the same time, attempts would be made to make the new factories as versatile as possible in order to improve our ability to react to changing market conditions.In marketing only professional tools, Makatume is neglecting a large part of the market which caters to amateur handymen who perhaps like to fix things around the house. Since the company controls a large share of the United States market, cautionary expansion into the consumer-tool area might be a good move to make.
The reputation of Makatume as a maker of high quality tools would likely have a positive effect on the marketing of consumer tools. However, though caution would be taken in expansion, it would be important to begin this expansion immediately in light of the unfavorable change in exchange rates forecasted. This is because it would be important to have a wider array (and larger number) of products on the market in order to boost sales in case profits should fall as a result of changing exchange rates.The dilemma with the voltage level of Makatume tools is a complicated one primarily because of the lack of information at the current time. Because the market is currently responding favorably to the low-voltage tools, it is not known what will occur if another company should begin offering tools with a higher voltage. Since we also have imperfect information concerning the desire and capabilities of other firms to expand in this direction, the necessity of action becomes suspended. Makatume is a leading provider of cordless tools, so it might be wise to continue being the leader and initiate the thrust toward placing higher voltage tools on the market (Irwin, 1995).
However, the company might be able to continue running and earning optimal revenue for a significant portion of time without making that costly investment. Still, creativity is important in strategic advancement (1995), and could include investment in capabilities that allow newer tools to run on higher- as well as the lower-voltage batteries. In that way, older tools and batteries would not become totally obsolete, but consumers would be introduced to a newer type of tool in a way that would induce them to upgrade. The important thing is not to be caught trying to catch up with the competition when circumstances and hard work have already granted us the advantage.According to researchers, a major reason for low success of strategy implementation is “falling behind competitors” in research and development (David, 2005, p. 282). If I were the strategic manager for Makatume, I would expand into the increased voltage market as soon as possible.
It would be worth it to do it before the competition, as it seems almost inevitable that improved battery technology will make this kind of expansion necessary. Though it is not certain that consumers will gravitate toward those tools enough to make it profitable, it is highly likely that they will. Furthermore, in the initial stages it will be acceptable to charge elevated prices that should be enough to counter-balance any unfavorable circumstances that could lead to losses.As Makatume’s strategic manager, I would consider it unacceptable to allow the advantage that the company currently has in the market to slip. The company should continue being the leader, because from that position it is easier to direct the market in areas that are more profitable to Makatume.
The dominant market share that Makatume now possesses has been achieved because of early entrance into the market. Taking the initiative in such areas does have its risks, but the benefits generally outweigh them. This should be Makatume’s position as it regards higher-voltage tools—especially since the company strives to provide the highest professional quality. Power is an important aspect of all such tools, and offering its consumers increased power is highly likely to boost the company’s advantage.