Vsm Group Strategy Essay

4776 Words Aug 22nd, 2008 20 Pages
I. Introduction
VSM Group manufactures markets and sells consumer sewing machines, holds a leading position in the medium to high-end segments of household sewing machines on the world market. After redirection, VSM had carried out a set of strategies to pull itself from inferior position into an enjoyable place. In this report, the strategic position of VSM in 1997 will be analyzed first, along with three divisions, the environment, strategic capability, expectations and purposes. Strategic options will be identified and evaluated based on business-level strategies and corporate-level strategies. Finally, some feasible strategies which will match VSM’s situation better will be recommended.

II. Strategic Position
The strategic
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Porter explains that there are five forces that determine industry attractiveness and long-run industry profitability: the degree of rivalry between existing competitors, the threat of entry of new entrants, the threat of substitutes, the bargaining power of buyers, and the bargaining power of suppliers. (Figure 2.1)
Figure 2.1 Porter’s Five Forces

Source: “Encyclopedia of Management”, Marilyn M. Helms
All five competitive forces jointly determine the intensity of industry competition and profitability, and may be more or less prominent depending on the particular circumstances. (Porter, 1992) Here, one of the Porter’s Five Forces- competitive rivalry, which was the main force determine competitiveness within the sewing machine manufacture industry will be particularly analyzed as follow.
In the sewing machine industry, there are four main rivals in the world market, three are from Japan and one is from Switzerland. The Japanese operators were all high-volume manufacturers and have the capabilities of developing sewing-embroidery machines. More importantly, their location gave them a competitive advantage of low-cost production faculties. Meanwhile, Bernina, an important quality benchmark for VSM, was the main competitor of VSM in Europe. These four operators have both superiorities and shortcoming compare to VSM. The detailed comparison has been shown below.
Table 2.1 Rivals
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