Battery Industry Essay

932 WordsNov 4, 20124 Pages
Case Preparation For Discussion (Gillette) 1. Central problem/issue in case: The main problem is that, since its acquisition, Duracell has become a drain 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 battery industry (you can use five forces analysis to answer this question)? Has it been changing? If yes, how? Overall, the industry is very attractive. New entrants realize the potential of snagging a piece of a highly profitable industry that produced $5.2 billion in revenue and $807 million operating margin. Threat of new entrants is low, as the capital requirements and technology…show more content…
Yes, the battery industry has changed over time to create more efficient, less costly batteries than it ever has before; 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, large market share, but little growth. In order to stay on top, Duracell has to spend significant amounts of money on R&D to continue to keep up to speed on the relevant technology. 3. What were the impacts of Duracell’s introduction of Ultra on the nature of competition in the battery industry? When Duracell introduced Ultra in May 1998, it began a long cycle of the battery industry’s main competitors introducing new, higher-powered, longer lasting batteries. Originally, these batteries were sold at a premium. Three months after the introduction of Ultra, Duracell was involved in several court battles, which were soon followed by Gillette’s 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

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