1, pay attention to classify 13gas saw companies

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The Strategic Groups in The Chain Saw Industry

The strategic mapping of the Chain Saw industry provides a clear insight into the competition level that exists between the rival groups in the industry. By considering the geographical coverage and breadth of company products, a clear picture of strategic alignment in the chain saw industry is drawn. The strategic alignment of several firms in the industry is dependent on the existing competitive pressure and a need to experience profitability.

The increased demand for the chainsaw in both Europe and America saw a rapid increase in the number of companies entering into the market. The existent of the distinction between the market for the gasoline based and electric powered chain saw was insignificant in reducing the level of competitiveness in the industry. Although some companies choose to deal with the production of gasoline saws, they still faced competition from others that chose to combine the different products. Due to the high number of play and stiff competition positioning itself strategically was essential to ensure its survival and a guaranteed market share. From the reading, a detailed analysis of the chain saw industry reveal that the players utilize multiple strategies to overcome direct competition from their peers in the market. The high demand for the chain saw was critical in leveraging the performance of individual companies in the industry. The entry of some foreign company into the United States market, especially from Europe, expressed their technological leadership in the production of chain saw. Some of the foreign companies that had intensified their operation in the United States came from countries such as Germany, Sweden Japan, and Canada.

First, the company geographical distribution and marketing pattern reveal a deliberate strategy geared toward overcoming highly competitive pressure. Depending on the geographical operation of the individual's companies some relied on dealers to achieve competitive advantage in penetrating some market segments. For instance, some of those companies in Europe that did not possess a manufacturing license to operate in the United States resulted in relying on private dwellers as a strategy to penetrate the North American market. The critical aspect of some company positioning themselves in the United States was because the United States demand for Saw Chain almost equal to the rest of the world. On the other hand, some manufacturer restrained their operations in the local markets. As a strategy to maintain control over the supply, the wholesale distribution was exclusively operated by the companies or their affiliated private dealers in the various market segment.

Secondly, the breadth of product offered by each player provided a strategic differentiation in the industry. The ability of the chain saw to be designed into different dimensions based on length, horsepower and quality provided the players with the different option of designing their models. Further, the ability to segment the market into different categories based on the use of the Chain not only provided an opportunity for specializing in satisfying the need of each group. The market segment had a different need for the chain saw ranging from, learning land by farmers, commercial logging, and clearing storm damages. The wide variety of needs provided broad options for the companies to choose their target group in their distribution.

A diagram illustrating strategic groups in the saw chain industry

Based on the two variables; the geographical coverage and product breadth three different strategic groups are identified in the industry with each strategic group characters displaying distinct character as discussed below:

Group 1

The strategic group involves those companies that limit the operation in the local market. Considering their relatively small market size, they offer their products at a competitively low price in the local market. The companies geographical limitation is evident considering that they had no subsidiary in united states and their export was relatively small. Additionally, their product breadth was quite narrow with the model produced having some striking similarity based on size and appearance (p.15). The chain saw dealers in this category comprised of Solo, partner, and Desa industries also know as Remington.

Group 2

Companies in this particular strategic group provide moderately wide product variety with not so well developed distribution and marketing network abroad. Their products are of a standard quality that fetches medium prices in the market. For instance, Beaird-Poulan products just meet standard quality and are sold at a low price (p. 11). Their minimal operation in market abroad is balanced by cooperating with affiliated dealers that distribute they're their products in selected regions. Companies in this strategic group category include Skil, Beaird-Poulan, and Roper.

Group 3

The third group is compromised of the companies that combine both wide geographical coverage in their distribution and marketing accompanied by a wide variety of product model. Moreover, they occupy they occupy the largest market share in United States markets with McCulloch and Homelite occupying a 28% and 27% of the market share respectively. The first in this group sought a strategy of operating various subsidiaries in foreign countries as well as their local country market. Members in this particular strategic group attempted to ease the competitive pressure from other players in the industry by offering a product of premium quality which fetches high prices in the market. For instance, Stihl and Husqvarna offered high-quality saw chains targeting specific market segments; pro and farmer (p. 12). Moreover, Stihl like the majority of the players in this group exclusively distributes its products through its affiliated dealers. Other competitors in this category include Pioneer, Jonsered Husqvarna, and Echo. Member in this strategic category had manufacturing unit and market and distribution subsidiaries spread in various countries. For instance, Stihl operated manufacturing centers in three different locations; Germany, Brazil and the United States. Although they incurred the high cost of production to produce premium quality products, the highly compensated the expense and more, enjoy a comparative advantage in distributing and marketing their products abroad. For instance, McCulloch had more than 8,000 dealers with manufacturing division spread across the united states in regions such as Los Angeles, California and Arizona.

Reflecting on the above strategic map, the three strategic groups identify the challenges that an emerging company is expected to face in the industry. For instance, Group three members demonstrate to dominate a large market share and comparative advantage of producing a wide range of products that fetch a premium price in the market. Therefore, the emerging company is left with an alternative to concentrating more on local sales adopting a low-price mechanism that aligns to its less focus on product quality. The large size of international companies enjoy the economy of scale and hence are to concentrate and manufacture products that are tailored to meet their customers need.

Bibliography

The chain saw the industry in 1974. (1985).Harvard Business School.