ABC Electric Company
ABC Electric has been in business since 1970. The company makes hand-held arc welders its primary customers are construction firms, shipbuilders, auto-repair shops, and "self-help" amateurs. The company has 30% of the current market share along with four other competitors it has an annual sales of $800 million. The company has a satisfied customer-base. Although, their products are priced above the competitors, customers prefer ABC's welders due to their superior finish, reliability, and durability. Recently, demand for hand-held welders in the U.S. was steadily growing at a rate of 7% rate annually but has currently dropped. However, demands are growing in the West European market, which is currently value at $1 billion. Recently, ABC Electric found its market share and profitability decreasing. Because the company has made some gain in its customer base by improving product, quality and service while maintaining price. Moreover, a component supplier of ABC has raised its price by almost 10%. In addition, industry wide competition has generated excessive price reduction, which help in the fluctuation of the company profitability. Strategic Issues Facing ABC Electric ABC Electric is facing several issues that need to be address in order to stabilize their competitor's growth as well as increasing their market share and profitability. These issues are closely related to their external competitive strategy, which seems to be non-existence on a whole. Base on my brief discussion above, I believe that ABC Electric has in-voluntarily allows, one of its competitors to make advancement by improving its quality and service of their product without increasing price. Due to the fact that, ABC perceived its customers to be immune to price thereby remain ...