Skil Corporation

ANKIT BHARGAVAANUJ THAKURGIRISH MEENA

NAWANG SHERPANEHA HAJELAPARAMVEER

SUMEET AGRAWAL

GROUP 11 SECTION F

Skil corp!!!

• Slow growth of Industry• Mainly two types of customers are present :

• Professional customers• Consumer ones

• Difference is not remarkable to gauge,what required is• Price differentiation• Heavy Investments• Need for automation

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Understanding Skil corp in terms of:- ProductMarketingManufacturingChannels

Product• Professional and consumer segments are covered• 355 in number ,in various categories• Circular saw is the strongest product • Heavy emphasis on research and development

Marketing •Sponsored sales promotions and media advertising campaigns are occasionally done•Relies more on product publicity than advertising

Manufacturing • Not followed Industry trend• Not opted for automation• Manufactures products through 13 plants

Channels• Extensive network of service centers throughout US -76 company owned service centers -427 authorized service centers• Focuses on all distribution channels, i.e. consumers as well as professional/industrial

Financial Statement

1976 1977 1978 Industry avgNet sales 100.00% 100.00% 100.00% 100%Gross Profit 35.61% 34.55% 35.38% 49.0%Operating Income 6.83% 6.65% 8.03% 20.00%Net Profit 1.31% 2.32% 2.72% 2.60%

Common-size Income Statement of Skil vs Industry

Implications:-Industry Average Gross profits are high and Skil corp has very low value of the same , indicating that the costs incurred for the product are comparatively higher.

Competitors AnalysisAspect Skil Corp. Black & Decker Milwaukee Rockwell Sears, Roebuck

No. of products 355 280 280 130 50

R&D Expense 2.7mn 15mn - - -

Total Sales 195(1978 data) 1205 1056.4 54 2598

Focus on channelProfessional and

ConsumerProfessional and Consumer(strong

position)Professional Mostly Professional Consumer

Advertisement Spending

1.3mn(1978) $47.3mn $.321mn $4.25mn

Issues • High cost of sales because of low gross margins.• Lesser Advertisement,which leads to lack of

communication to customers• Case suggests that the operations from the foreign

subsidiaries are not that efficient as compared to the operations in the US.

• Number of models disproportionate as compared with other companies, with respect to the sales.

Strategy???• Concentrate on

hardware stores, with clear distinction for consumers and professionals

• Communicate quality of product to consumers by increasing ad budget

• Drop down few of the product variants that have low demand from consumers

• Focus on quality

• Reduction of cost by opting for Automation

• Form JV in other countries

• Scrap loss making units

Channels Advertisement

Productproduction

Observations • Very less differences between the consumer and professional

segment is a point to be carefully taken care off- the professionals must not get a wrong image about the products of the company if he buys customer quality products instead of professional

• Skil Corp requires some time to get par with other competitors, then it can leverage on its competencies to boost sales.

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