[SOLVED] the Managing Director of Wishy-Washy Tech Ltd

Assignment Brief:
You are the Managing Director of Wishy-Washy Tech Ltd. The company successfully produces and sells
washing machines in South America. However, the effects of globalisaƟon are strongly affecƟng the
washing machine industry. This trend of increasing internaƟonalisaƟon poses big, new challenges for
the company. You are responsible for the strategic realignment of the company. The W ishy-Washy
Tech Ltd shareholders have formulated a clear vision for the company’s future growth strategy that
they have named: “Going Global.”
You are not compeƟng alone in the South American Market, but against several other washing
machine manufacturers who are also breaking into new markets. There are manufacturers coming
from the other 5 global economic regions (North America, Europe, Africa, Middle East/South Asia, East
Asia/Pacific) that are also striving for internaƟonalisaƟon in the future so you can expect their
expansion to your home region.
Your shareholders are requesƟng you to undertake a strategic analysis on the current company
situaƟon. Write a report (no more than 2,000 words) plus appendices (not included in the word count)
including any relevant exhibits data and methods for review by the shareholders. The emphasis is on
succinct, compelling, and clearly argued informaƟon which has a logical flow. The shareholders wish to
use the report to determine how to compete with the firms in the industry under consideraƟon of
possible new entrants.
South American Economy in the past five years (these are ficƟƟous informaƟon for this assignment)
General:
PoliƟcal problems in major countries have slowed the region’s growth in these recent years. Threats of
naƟonalizaƟon of private economic sectors and power struggles have prevenƟng direct investments
and limited the growth opportuniƟes of local enterprises.
Demand:
In the recent years, many internaƟonal compeƟtors have reduced their operaƟons in South America
because of the uncertainty surrounding government intervenƟon in the private sector. This has leŌ the
home appliances market with only a few players. The fact that actual growth remained below potenƟal
economic growth also shows that the demand for home appliances rose sluggishly.
Costs:
Raw material prices in the region are relaƟvely cheap due to its large natural resources. LogisƟc costs
have remained relaƟvely high over the past years due to corrupƟon and trade barriers. In comparison
to North America, one of the largest export markets, labour costs are sƟll considered low. ProducƟon
employee producƟvity is comparaƟvely high.
Expert Tips:
In the past, it has been relaƟvely difficult for companies to successfully grow their own sales force in
South America. Companies have mainly found noƟceable success with sustainable investments in the
region through sales projects. Companies that are more risk averse should also consider a cooperaƟon
when entering this market. In South America, Asian manufacturers have an especially posiƟve image
among consumers due to their tradiƟonally good value.The (ficƟonal) South American Washing Machine Market:
Current Market Volume: Equivalent to €924m
Local CompeƟtors: 4
Average price per Washing Machine: €475.00
Customers:
Governments promote further growth in the market for household appliances. Experts see the middle
class as the main growth potenƟal. Company image and classic adverƟsing have relaƟvely liƩle effect
on consumers, who place a lot of importance on good value for money. Many households increasingly
see value in technologically and ecologically high-quality products, however they remain very price
sensiƟve.
ProducƟon LocaƟon:
The region boasts plenty of raw materials and reliable suppliers, able to deliver large quanƟƟes at
reasonable purchasing condiƟons. The manufacturing industry is well established in South America,
which means that experienced, producƟve employees are not too difficult to find.
South American General Economic News for the next 12 months (these are ficƟƟous informaƟon for
this assignment)
Annual Indicators:
GDP Growth: +0.3%
Unemployment Rate: -0.1%
Market Growth in the washing machine industry: +2.4%
Raw Material Prices: +1.5%
Salaries/Wages: +3.0%
Signs Point to ConƟnued Growth:
Economic experts expect growth to slow following the rapid expansion of recent years. Despite this
there is no quesƟon that the recovery will conƟnue. Some experts suggest that the region could
become one of the driving forces in the global economy. Increasing awareness of the effecƟveness of
sub-regional trade agreements, such as Mercosur, has led to discussions about expanding the
agreement. Industry leaders have reacted cauƟously but posiƟvely to the news, emphasising the
potenƟal gains for everyone through lower tariff barriers and cheaper transport costs.
Buyer Power ConƟnues to Rise:
The growing middle class, especially in Brazil and ArgenƟna, is expected to conƟnue driving demand
for household appliances. While price remains an important consideraƟon, factors such as size and
noise are gaining importance as many new customers live in small apartments in large ciƟes.
Customers need to trust the brand and the product in order to invest.Markets Open:
In the past, large bureaucraƟc obstacles have persistently deterred foreign firms from invesƟng. Over
the past year many governments have shown small but posiƟve signs that they are willing to reduce
entry barriers for foreign companies, parƟcularly those also willing to invest in the region. Large
mulƟnaƟonals are expected to take advantage of the new condiƟons, parƟcularly as the region offers
many other advantages. Readily available raw materials ensure favourable purchasing terms for
manufacturing companies. Wages are also relaƟvely low, although aŌer tough negoƟaƟons by union
and company representaƟves this year long overdue wage increases will be implemented throughout
the region.
NOTE:
Your shareholders are experts in strategic management, they know what PESTLE, 5 Forces,
Benchmarking, compeƟƟve analysis, and SWOT involve. Thus, their requirement is on informaƟon
specific to the company. Do not spend Ɵme and words to explain those methods. Just use them. In
short, get to the point!
Key consideraƟons when preparing your report:
(A) Consider the macro-environment within which the company operates. What are the key
trends within the industry? What is the demographic, psychographic and technology advances
impacƟng the environment within which the company operates? Are there societal or
environmental factors to consider?
(B) Consider the effect of each of the five compeƟƟve forces in the washing machine industry.
Decide which factors are most relevant to the industry, explain why they’re most relevant, and
focus on those. How have these factors influenced any or all the five compeƟƟve forces you
analyse?
(C) Since the above-menƟoned informaƟon – and your consideraƟons regarding (A) and (B) – are
based upon a ficƟonal market, focus now on the real washing machine market in South
America. IdenƟfy and briefly describe the industry. How compeƟƟve is the sector? What are the
reasons for such compeƟƟon? Are there gaps to be exploited?
Conclude your report with a short summary or recommendaƟons outlining the consideraƟons a
company like Wishy-Washy Tech Ltd. take in the event the shareholders decide to enter new regions.
Please refrain from copying and pasƟng content from the informaƟon above or from the web, but
instead summarise informaƟon effecƟvely.