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Overview of the CaseOverview 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


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HistoryHistoryy First machine 1872

y Freja, an instant success 1883

y

European Patent Rights for Sintered Steel- 1950s

y OEM production of Sintered Metal, part of VSM

y 1996- Search for buyer of sewing machine business

y Svante Runnquist replaced Jorgen Johansson

y 1997- Electrolux sold VSM AB to Industry Kapital


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Mission StatementMission Statement

y Develop, produce, market and sell consumer sewingmachines

y Grow business by creating demand for more creative

uses of sewing machine

y Secure growth, profitability by providing superior

satisfaction to consumers, dealers

y Provide growth opportunities to the employees

y Become leading premium company in the world ofsewing


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VSMVSM Strategic Capabilities and CompetitiveStrategic Capabilities and CompetitiveAdvantageAdvantage

Resources Competences

ThresholdCapabilities

ThresholdResources

TangibleIn Tangible

ThresholdCompetencies

Capabilities forcompetitive

advantage

Unique Resources*Tangible

*Intangible

Core Competences


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VSMVSM Value Chain networkValue Chain network

Inboun

d

Logistics

Operat

ions

Outbo

und

Logistics

Market

ing andSales

Servic

es

Supp

ort

Activi

ties

Primary Activities


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SWOT ANALYSISSWOT ANALYSISSTRENGTHS:

Customer oriented.

European patents rights on sinteredmetal Technology.


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WEAKNESS :

y Very little information was collected on market share.

y

VSM collected information on competition throughsales companies and retailers.


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OPPURTUNITIES:

y Large market to be covered after integration of pfaff.

y Signs of lagging behind in product development fromBernina.


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THREATS:

y Demand for sewing machine declining in westernhemisphere in terms of unit sold.

y Relying heavily on retailers.


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Competitive Strategies


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Global ScenarioGlobal Scenario

yJANOME: Largest Competitor by Volume

Main Activity Domestic Sewing M/c.

High Volume Producer (1.5 Million units in2003)

Complete Range

Own R&D facilities (developing sewingembroidery m/c)

Strategically Poised


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yJUKI OPERATIONS

Catered the markets of both industrial andDomestic.

Made entire range of Computer Controlled

machines for SINGER.

Models in USA had modest features.

Less aggressive in Product Development.


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y 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%)


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Local CompetitorLocal Competitor

y Bernina Fritz Gegauf AG

Highly Reputed Company

Product Range resembled VSM

Top Model accepted embroidery files fromothers including VSM

Quality Bench mark for VSM

Lagged Behind in Product Development


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Which Strategy to follow?Which Strategy to follow?

Overall low-cost leadership strategy

Best cost provider strategy

Broad differentiation strategy

Focused low-cost strategy


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ManagingManaging ChangeChange

Expansion of After-Market Services

Upgrades through Softwares

Introduction of Web-shop

Acquisition of Pfaff


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Acquisition of PfaffAcquisition 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.


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Looking back into the futureLooking back into the future

y 1999- Focus on Dealer-Partner

Programme

y

y 2004- Addition of Pfaff thus rethinking of

marketing strategy.

y Expand U.S market- setting up store-in-

stores in collaboration with Jo-Ann

Fabrics


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Strategic DrawbacksStrategic Drawbacks

y Time wastage on integration of Pfaff andGerman market.

y Clash: cutting costs by co coordinating thedistributive and marketing activities.

y Overdoing subsidiary functions like retailingsupport and education

y Indecisiveness on exclusive stores for Pfaffand Husqvarna.


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ConclusionConclusion

y Strategic leadership: charismatic leader

y Enabling success- overall business strategyvs. strategies in separate resource areas


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ENABLING SUCCESSENABLING SUCCESS

People Finance

Technology Information

BusinessStrategy


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vsm – value chain network

Documents