Task Solutions Of Case Study of Wishy Washy Tech Limited:MG3652

Task Solutions Of Case Study of Wishy Washy Tech Limited:MG3652

Running head: STRATEGIC MANAGEMENT OF WISHY-WASHY TECH LIMITED
Strategic Management of Wishy-Washy Tech Limited
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Running head: STRATEGIC MANAGEMENT OF WISHY-WASHY TECH LIMITED
Strategic Management of Wishy-Washy Tech Limited
Name of Student:
Name of University:
Author note:
1 STRATEGIC MANAGEMENT OF WISHY-WASHY TECH LIMITED
Executive Summary
Wishy-Washy Tech Limited company is a leading washing machine company in
South America and this organization sells and manufactures washing machines. But the
internationalization has made several challenges for this organization. This organization has
made avision for its future growth strategy and the company has named it “Going Global ”.
This company has limited competitors in South America and most of the international
companies have decreased their business operations in this region. It has created a great
opportunity for Wishy-Washy Tech Limited company to increase its profit rate and sales.
This paper will focus more on PESTLE analysis, Porter’s five forces analysis, and
demographic and psychographic trends of Wishy-Washy Tech Limited as achosen company.
The washing machine market condition of South America and the competitiveness of this
industry will also be discussed in the following paper.
2 STRATEGIC MANAGEMENT OF WISHY-WASHY TECH LIMITED
Table of Contents
Introduction ……………………………………………………………………………………………………………….. 3
Discussion …………………………………………………………………………………………………………………. 3
PESTLE analysis of the market in which the organization operates ………………………………. 3
Demographic and Psychographic trends and technological advances …………………………….. 5
Environmental factors ……………………………………………………………………………………………… 6
Porter ’sFive forces analysis …………………………………………………………………………………….. 7
Relevancy of different forces ……………………………………………………………………………………. 8
Real washing machine market in South America ………………………………………………………… 9
Competitiveness of the industry ………………………………………………………………………………… 9
Reason for such intense competition ………………………………………………………………………… 10
The gaps need to be exploited …………………………………………………………………………………. 10
Conclusion ……………………………………………………………………………………………………………….. 11
References ……………………………………………………………………………………………………………….. 12
3 STRATEGIC MANAGEMENT OF WISHY-WASHY TECH LIMITED
Introduction
The economy of the South America is made of almost four hundred and thirty million
people who are living in three territories and twelve nations. It also helps to encompass 6% of
the total population of this world. According to areport introduced in the year 2008, the GDP
growth rate of South Africa is 5.5% per capita and the unemployment rate of this country is
10.36%. (Valencia Caicedo 2019 )From 1930 to 1980, the South American countries utilized
an economic policy, Import Substitution that help to replace imports as well as foreign
business with the domestic production (Heringer iet al. 2021). This policy was actually made
for improving domestic manufacturing. This paper will focus on PESTLE analysis, porter’s
five forces, and technological advancement of aSouth American Washing machine company,
Wishy-Washy Tech Limited as achosen organization.
According to the insights of Fortune business, the global washing machine market
size is 52.80 billion USD and itis also expected to reach 80.24 billion USD by 2028. Wishy-
Washy Tech Limited successfully manufactures and sells washing machines in different
places of South America. The shareholders of this washing machine company have set a
vision for this organization ’sgrowth strategy in the future and they have named it “Going
Global ”.
Discussion
PESTLE analysis of the market in which the organization operates
Political Factors: There are different types of political issues in some countries and these
problems have decreased the growth of the markets in the recent years. The power struggle
and threat of the nationalization of different private sectors are preventing direct investment
and also limiting the growth opportunity of local companies. Thus, such political problems in
4 STRATEGIC MANAGEMENT OF WISHY-WASHY TECH LIMITED
South American market can make several negative impacts on the performance of the
company.
Technological Factors: The cost of the raw materials is low in this region because of its huge
amount of natural resources. The logistic cost has also remained high for the last 5years due
to trade barriers and several corruptions.
Economic factors: Recently, the volume of the South Asian washing machine market is 924
million euros and there are only 4 major competitors of Wishy-Washy Tech Limited in the
South American market. The competitors are adopting several new strategies and
technologies for increasing their sales and revenues. Wishy-Washy Tech Ltd. Sales each of
its product units at aprice of 475 euros. It is also expected that in the next twelve months, the
unemployment rate if this region will be decreased and the price of the raw material will also
be increased (Montero 2017 ).
Environmental Factors: The development project of South America results in land
degradation, water scarcity, deterioration of environmental ecosystem, and the loss of
biodiversity (Miranda et al. 2020 ). The main environmental problem in South America is
deforestation. These environmental problems may affect the business of Wishy-Washy Tech
Limited in several ways such as loss of necessary resources, storms, inflation, increased
operational cost, and others.
Social Factors: During the past few years, the bureaucratic obstacles or challenges have
deterred the foreign organizations from investments and the government has also shown
positive signs that they are interested to decrease all entry barriers for the international
companies. The wages are relatively low and for this, the workers are also not satisfied but
several negotiations have been conducted by the company representatives and union for
increasing the wage of the employees.
5 STRATEGIC MANAGEMENT OF WISHY-WASHY TECH LIMITED
Legal Factors: South American countries have a law that maintains equal wages for the
female and male workers and these countries also encourage FDI or Foreign Direct
Investment. The government has taken several initiatives for improving the sustainable
performance of different private sectors.
Demographic and Psychographic trends and technological advances
Trends Description
Demographic trends Demographic trends can be determined as
measurable changes in characteristics of the
population over time (Sleeter et al. 22017 ).
The middle-class family is recently growing
in Argentina and Brazil and they are
expected to drive ahuge demand for various
household appliances. When the costs of the
products remain the most important
consideration, several factors such as noise
and size are gaining so important because
many new clients live in different small
apartments in a large city. Wishy-Washy
Tech Limited can target all of these
customers but the consumers need to keep
trust in this brand or washing machine
company and the products for investing.
Psychographic trends The washing machine market is
continuously growing and recently, the
6 STRATEGIC MANAGEMENT OF WISHY-WASHY TECH LIMITED
products have noticed a significant growth
in the recent years and many customers
have become inclined toward the automated
household product (Sarkum 2019 ). The
ability of the product to save time, decrease
drying time and eliminate the physical
efforts has helped to generate a high
preference rate of the customers.
Technological advances Internationalization can be defined as the
practice of designing several products or
services and the internal operations for
facilitating expansion into the international
market (Karabag 2019 ). Different smart
technologies gave emerged that help to
connect household appliances with the Wi-
Fi network. These smart technologies can
also help to decrease the cost of the products
and survive in acompetitive market.
Environmental factors
Yes, several environmental factors must be addressed by Wishy-Washy Tech Limited
because these factors can help to limit the necessary resources required for the business and
increase the operational cost of this washing machine company.
7 STRATEGIC MANAGEMENT OF WISHY-WASHY TECH LIMITED
Porter ’sFive forces analysis
The main five forces of Porter ’smodel are the bargaining power of the suppliers,
bargaining power of the customers, threats of the new entrants, substitute products, and
competitive rivalry (Bruijl 2018 ).
Bargaining power of the customers: Wishy-Washy Tech Limited has four major competitors
in South America and all of these companies are improving their technologies for attracting
more customers. The switching cost of the customers is low because the international
competitors have also decreased their business operations in South America. For this reason,
the bargaining power of the customers for this specific industry is high. This company can
take ameasure to decrease buyer’s power like the implementation of loyalty programs and
others (Berisha Qehaja, Kutllovci and Shiroka Pula 2017 ). The bargaining power of the
clients is high because they have many alternatives.
Bargaining power of the suppliers: This washing machine company buys raw materials from
various suppliers and the suppliers can make agreat impact on the performance of Wishy-
Washy Tech Limited company. The bargaining power of the suppliers is low because in that
region, only five major washing machine companies are there and the number of suppliers is
also high. So, suppliers always want to negotiate with the organization for maintaining a
balanced price of unique resources. Sometimes, the powerful supplier in the household
products sector uses the negotiation process for extracting a higher price from the
organization (Gans and Ryall 2017 ).
The threat of the substitute products: When the new products or services meet the similar
consumer needs in various ways then the profitability of the industry suffers (Pervan, Curak
and Pavic Kramaric 2017 ). As an example, Google Drive and Dropbox are substitutes to the
8 STRATEGIC MANAGEMENT OF WISHY-WASHY TECH LIMITED
storage hardware drive. But for this specific industry, the threat of the substitute products is
low for Wishy-Washy Tech Limited company.
Rivalry among existing competitors: If the rivalry among existing competitors in this industry
is intense then it will help to decrease the overall profit rate of the organization and drive
down the prices (Aithal 2017 ). Wishy-Washy Tech Limited company operates its business in
acompetitive household appliances market. This type of competition influences the overall
long-term profit rate of the company. For this washing machine company, the rivalry among
the existing organizations is low because there is alimited number of organizations in this
market but Wishy-Washy Tech Limited company may face an intense rivalry among all
existing organizations if these market players target the same markets and are more
strategically diverse.
Threats of new entrants: The threat of the new entrants to this organization is low because the
for entering into a new industry, efficient resource management, and substantial capital
investment is required. The new entrants have to put more effort to access alarge distribution
network or channel and develop alarge customer base.
Relevancy of different forces
All of the above five forces are relevant to this industry because this model or
framework helps to analyze the attractiveness of the industry and the pinpoint areas such as
suppliers, new entrants, clients, and competitors in which Wishy-Washy Tech Limited
company can adjust its strategy for improving profitability. The main three factors of Porter’s
five forces are competitors, customers, and suppliers and Porter’s five forces analysis
provides deep insight into which entities hold less power and more power (Bashir and Verma
2017 ). With the help of this information, Wishy-Washy Tech Limited company can make
better strategies for handling these factors efficiently.
9 STRATEGIC MANAGEMENT OF WISHY-WASHY TECH LIMITED
Real washing machine market in South America
South America is known as apopular continent in Western Hemisphere and Southern
Hemisphere mostly with a small portion in Northern Hemisphere. South America includes
thirteen states such as Bolivia, Uruguay, Peru, Venezuela, Chile, Brazil, Argentina, French
Guiana, Colombia, Ecuador, and Suriname. The drying and washing machine market of
Argentina rose rapidly and in the year 2016, almost 1.2 million washing machines were sold.
The household appliances market of South America is rising and the washing machines in the
low-end and mid-segment are also growing in the markets. The home appliances market in
South America is mainly segmented by different products such as washing machines,
Freezers, Irons, grills, and others. Brazil generally accounts for almost half of the total
appliances market in Latin America (statista.com 2022 ). Argentina is another huge market for
home appliances. The economic condition of Brazil increased moderately in the year 2019
and the declining inflation rate among with the low credit rate is driving the improvement of
washing machine markets in Brazil.
Competitiveness of the industry
Some major players in the home appliances market in South America are Electrolux,
Haier, Mabe, Whirlpool, and LG. All of these organizations lead alarge sales in the South
American markets. Electrolux and Whirlpool have more leads over Mabe and Mabe is the
biggest local manufacturer and 3rdranked producer. Electrolux has approximately 29% of the
market share in Brazil. Argentina and Chile as per the report introduced in 2021
(electroluxgroup.com 2022 ). The South American countries are investing in brand building
and innovations for achieving astrong market position and sharp product offering. On the
other hand, ongoing investment in automation, digitalization, and modularization decreases
complexities and also drives cost efficiencies. The local manufacturing process is one of the
main competitive advantages of South American markets because some main markets like
10 STRATEGIC MANAGEMENT OF WISHY-WASHY TECH LIMITED
Argentina and Brazil are protected by the customs tariff. Sales are mainly driven by different
well-established companies or brands including Mademsa and Fensa in Chile, Gafa and
Electrolux in Argentina, and Continental and Electrolux in Brazil.
Reason for such intense competition
The middle-class population in South America is growing and itis the main reason for
the competition in the home appliances sector. The growth of the middle-class people in
South America brings several opportunities for the home appliances industry. South
American countries noticed the growth of the middle-class population with almost 32.5% in
Argentina (from 15% in 2001 to 32.5% in 2011), 32.8% in Uruguay, 13.4% in Ecuador, and
33.8% in Chile. Half of the total household products belong to middle-class people in
Argentina (worldbank.org 2022 ). For this reason, the competition within the home appliances
industry is high.
The gaps need to be exploited
In South America, the clients are more anxious and aware of sustainability and
climate change. Price has become the most challenging factor to the sustainable production of
the household products such as washing machines, refrigerators, and others. The products
that have sustainable attributes carry additional charges that are generally passed on to
customers. Recently, the pandemic situation has accentuated the needs for safety and
immediacy, which resulted in greater demand for sustainable products. Air pollution has
covered most parts of South America and the use of household products can be determined as
one of the major contributors of air pollution (Rosado and Sánchez 2017 ). So, the washing
machine manufacturing organizations should improve the sustainable performance of their
products or services.
11 STRATEGIC MANAGEMENT OF WISHY-WASHY TECH LIMITED
Conclusion
From the above paper, it can be concluded that the external environment of South
America can make several impacts on the performance of business organizations such as
Wishy-Washy Tech Limited company. The company can improve its profit rate by expanding
its business in other regions or countries. The shareholders of the organization will get
several benefits for such an initiative because entering into the new markets can help to
increase ROI or return on investment. But itis recommended for Wishy-Washy Tech Limited
company to focus more on the cultural dimensions of the new country to better realize the
behaviors and attitudes of the customers. It will also help the company to better realize the
actual needs of the customers. The organization has to improve its innovations, strengthen
and build customer loyalty, employ a talented and dedicated workforce and deploy an
effective pricing strategy for attracting more customers. International expansion can be
defined as one of the easiest ways to protect the bottom line from the market shock and
diversify their asset. Having multiple location can help Wishy-Washy Tech Limited company
to survive in acompetitive market.
12 STRATEGIC MANAGEMENT OF WISHY-WASHY TECH LIMITED
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