Operating Principles
ToolsCorp Corporation strategic initiative to break into the global marketplace will be guided by the following key operating principles to get things done. Similarly, the principles influence the culture as well as the values of the company. The principles create an organizational-wide awareness and focus of a long-term big picture objective. The principles will help the company create a unique version of the business strategy. The company employees are accountable for enhancing their potential each day. The goals can only be achieved if they are focused on their responsibilities and everyone should participate to achieve their potential. The company will strive to present solutions that are common and custom to the needs of the customers.
Planning activities, quality management efforts as well as the review processes focus on the key business processes and improvements for the feasibility of the implementation activity. They are also integrated and synchronized in the core business operations to ensure that the direction of the company is reflected in its operational action plans. They will also ensure that there is consistency and are equivalent in the projects of the company. The planning, quality, and review process are monitored regularly and evidence base. The company will engage in consultation to improve the quality, planning and review process. It will also focus on accountability and ensure that the efforts are consistently supported.
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Preliminary Market Analysis
ToolsCorp Corporation builds power tools, lawn mowers, lawn furniture, microwaves, and ranges. There are established companies that offer similar products in an effort to meet increased demand and realize growth in their market share and revenues. There is a substantial domestic and global market for the company’s products that attracts new companies. The market is of high value to the marketers providing them with an opportunity to offer their products. The products are targeted at the middle class and hind end customers who are willing to spend more on quality. The level of competition is high but there are few barriers to entry and exit.
The company will segment the market based on the income and level of education. Similarly, the market will be divided into regions including the domestic market, Europe, Asia Pacific, America, and others. The focus of the company is new homeowners, corporate and retail outlets like Walmart and target. It is expected that the domestic market will continue growing at an average growth rate of 11% in the next five years before reducing to 8.5% which is expected to prevail in the foreseeable future. Growth in the market will drive the revenues and profits of the company leading to high returns for the investors. The external market is expected to grow at 10% with emerging economies reporting higher growth. The different market segments have a high number of valued customers which will drive such growth.
The market need is driven by a growing middle class and wealthy customers who are willing to purchase quality products. The company will also avail spares and parts in the different markets. Similarly, it will strive to ensure that there is consistency in its operations and communication in the global environment. The company will focus on enhancing the customer experience to build loyalty and a strong brand that can overcome competition in the industry.
The level of competition is high but established companies are generalist and have not targeted their market appropriately. Similarly, some of the competitors lack an elaborate supply chain losing their connection with their customers and perform poorly in building loyal customers. Established companies have also invested heavily in old machinery and equipment which are expensive to operate and maintain. It is difficult for such companies to realize high profits given that they are incurring a high operational cost. Some of the products manufactured by competition are not fuel efficient and the customers will be willing to identify high performing products that are fuel efficient and less prone to defects. Some of the competitors do not offer after sales service which customers are looking for in some of the products like lawn and furniture mowers.
There are few barriers to entry into the industry. The major barriers are heavy capital investment and technological advancement. There are few legal and regulatory requirements for the company in the domestic market. However, some countries have restrictions that protect their companies from external completion. ToolCorp should, therefore, identify restrictions in the different markets and adhere to their legal frameworks. The company can easily access resources for its manufacturing activities. Similarly, it can establish proprietary networks with the distribution channels to ensure that its products reach the market and also information flows back from the consumers to the company. Similarly, the growing market and spending ability of the customers is an incentive for companies to produce and sell products. The company will require high investment for marketing activities and to create awareness for its products.
Asia/Pacific Region: Market Analysis
ToolsCorp is likely to acquire a considerable following in the Asia/Pacific region. A review of information assessing the market for power tools in this particular region presents ToolsCorp with a lucrative opportunity. Currently, the United States ranks as the leading manufacturer of power tools which accounts for about 24% of sales and an estimated 12% of output. Between 2013 and 2018 alone, the US was predicted to account for about one-sixth of global sales for power tools (World Power Tools, n.d.). The advantage is that the US is home to various industries which rely in power tools such as general manufacturing, construction, as well as production and repair of motor vehicles. Additionally, there is continued spread of do-it-yourself (DIY) activities thereby increasing the demand for power tools (World Power Tools, n.d.). However, relative to the US, China is markedly the second largest market for power tools as of 2013. The global demand stood at 10% with one-third of the global output. The projection for the market growth in China is that it will double the global average in 2018. While that is the case, India, albeit having a relatively smaller base, is likely to experience gains from the sale of power tools (The Freedonia Group, 2018). Unfortunately for China and India, the market for power tools is not as extensive as that of the US. Market penetration is impeded by the rather high price of initial purchase for power tools when one compares with non-powered hand tools (World Power Tools, n.d.). Furthermore, poverty alongside unreliable grids also plays a major role in determining the market demand for power tools. While India is a developing country, availability of cheap laborers who use hand tools also affects the demand for power tools.
Based on the review of the market for power tools it is clear that the United States dominates this particular sector. However, other players, China being one of them, are active in the market for power tools. According to the information given earlier, China is considered the second best after the US when it comes to the sale and production of power tools. With this information, one can notice that there is not much demand in China as is the case in the US for power tools. Therefore, ToolsCorp could manipulate this particular opportunity to expand its activities in the Asia/Pacific region. Another motivator involves continued adoption of the DIY attitude whereby individuals are preferring to mow their lawns, trim their flowers, tender to their gardens, cut wood, among other activities (The Freedonia Group, 2018). An important factor determining preference or lack thereof of power tools is the availability of cheap labor force who use hand tools. However, an activity such as farming is considered a leisure exercise in the Asia/Pacific region. In this regard, there is a growing preference for power tools over hand tools. The former tools provide speed and an advantage of scale.
ToolsCorp should manipulate the market gap for outdoor tools and other products as is evident in the information given above. The company can provide access to power tools which are inexpensive thereby attracting consumers in the Asia/Pacific region. Moreover, while it would be difficult to oust cheap labor completely, the company can manufacture products that these individuals can use hence completing work within a short time and effectively. Hence, based on the market analysis for the Asia/Pacific region, ToolsCorp has an opportunity to venture into this particular market and create awareness about the advantages of power tools. The company could leverage the liking towards farming that individuals in this region have. Power tools could be marketed in such a manner that they project an image of homeyness whereby their main focus is to make the homestead neat, clean and serene.
Additional Materials
ToolCorp Corporation efforts in the global strategic initiatives require a dynamic organization that is adaptive to the changes in the market. The company should consider resource requirements for its international operations including the employees, capital, and distribution of the products. The leadership must establish an organizational culture and structure that allows responsiveness, creativity, and teamwork. The strategic direction of the company should determine the influence of culture and how the company can optimize on the cultural differences. It is desirable that the global operations must consider the diversity of the customers and employees in its advertising to ensure that the content of such adverts is sensitive to the cultural differences. The company must be willing to change its operations depending on the response of the market.
References
The Freedonia Group. (2018). World Power Tools . Retrieved from https://www.freedoniagroup.com/brochure/32xx/3241smwe.pdf
World Power Tools. (n.d.). Retrieved from https://www.freedoniagroup.com/industry-study/world-power-tools-3241.htm
