Battery Industry

Case Preparation For Discussion (Gillette) 1. Central problem/ rise in case The main problem is that, since its acquisition, Duracell has become a enfeeble on the financial performance of Gillette. The board needs to decide what should be done to turn Duracell around and restore Gillette to a dependable financial performer. 2. How is the barrage labor (you can use five forces analysis to dissolver this question)? Has it been changing? If yes, how? Over every, the sedulousness is rattling attractive. New entrants give the potential of snagging a piece of a highly economic industry that produced $5. billion in revenue and $807 million operating margin. Threat of new-made entrants is secondary, as the with child(p) requirements and technology development needed to stay relevant in the commercialise proves to be a daunting barrier to entry. Also, in order to realize a significant profit, economies of scale must be realized to produce a massive amount of batteries while keep ing costs low. This would be harder for smaller entrants to achieve. Threat of substitute products is low, as no replacement strong has been introduced that may provide the consumer with the alike(p) benefits as using a bombing. This makes the industry attractive.However, if a company produced a good that could replace the need for a battery, this would detrimentally alter the battery industry, making threat of substitute products a major factor of the industry. The bargaining power of suppliers is low because there is pocket-sized differentiation between the inputs of the batteries, which can be acquired from many different suppliers. This low supplier power makes the industry attractive. The bargaining power of the acquireer is pretty high, as there is high buyer concentration with low transmutation costs, which makes the industry less attractive. The major, key factor is the rivalry among competitors.There are lead main competitors that comprise 85. 76% of the battery mark et, in which they are incessantly upgrading their technology, promoting their products with strong advertizement and marketing campaigns, and gaucherie prices of their goods. Yes, the battery industry has changed over time to create more businesslike, less costly batteries than it ever has out front however, it is becoming fairly stagnant. With the competitors simply making them slightly more efficient than the leading brand and coming up with the next best advertising campaign, there is little more for each of the battery manufacturers to do with their product.The battery industry could be considered a cash cow great profitability, fully grown market share, but little growth. In order to stay on top, Duracell has to expend significant amounts of money on R&D to quell to keep up to speed on the relevant technology. 3. What were the impacts of Duracells world of Ultra on the nature of competition in the battery industry? When Duracell introduced Ultra in May 1998, it bega n a long cycle of the battery industrys main competitors introducing new, higher-powered, longer lasting batteries.Originally, these batteries were change at a premium. Three months after the introduction of Ultra, Duracell was involved in some(prenominal) court battles, which were soon followed by Gillettes announcement that it was restructuring the company and cutting jobs. After all the commotion around the battery industry, Consumer Reports told consumers that all batteries were standard, worked the same, and to buy the cheapest one. When Energizer and Rayovac introduced their new, updated batteries, they were sold at a price cut or at the same price as the standard battery.For all trio main competitors, none of their baseline batteries were replaced, but rather simply updated and sold alongside the other on the shelf. Each introduction was accompanied by a pricey advertising campaign that was designed to win new customers and hopefully gain market share. 4. Why was Gillette unable to achieve the same success in batteries that it had been able to achieve in shaving products? Gillette is very good at using their knowledge and expertise in each of their segments to create related, diversified products to fit the needs of their consumers.They use what they already know, the resources and capabilities that they already have, to grow horizontally within each segment by creating a wider range of products and services for the consumer. For their personal grooming segment, they have expanded from simply razors to shaving cream and deodorants. They have been unable to find a charge to do the same within their portable power segment, in which Duracell is the totally company. In order to gain financially, they need to discover a delegacy to expand the capabilities of Duracell. 5. If you were James Kilt, what strategic actions would you take?I would look for ship canal to expand the portable power segment, which includes Duracell. Perhaps using Duracell in all o f Gillettes electronic products, such as the electric-powered toothbrushes, electronic razors, or coffee berry makers. Also, a possibility is to perhaps create an exporting agreement to electronic goods producers to use Duracell batteries in their products as they are sold. A nonher possibility is to spend money developing a battery that could be used in auto production, then creating a joint venture with an auto manufacturer.Gillette already has good global presence, so expanding more globally could help. 6. What do you mark off from this case? I learned that just because a company is profitable at a specific point in time, like Duracell, does not mean it will be profitable forever, even if it is teamed up with a strong, financially enduring company, like Gillette. In order to continue with child(p) financial performance, you must evaluate where the industry is going in the upcoming and look for ways to diversify and expand before it hits a downturn.