How should household appliances enterprises develop entry and exit strategies?

BBK's entry into the small home appliance market eventually ended in failure. Prior to this, BBK’s new product entry strategy has been successful. No matter whether it is DVDs, educational products, or communication products, it has achieved outstanding performance. Why does BBK's marketing model fail? The diversification of Chunlan began in 1994, and many home appliance companies began to enter different categories of home appliances. There are not only such successful companies as the United States, but also disappointments such as Chunlan, Konka, and Amoi. Then how should home appliance companies formulate entry and exit strategies? ?

How to formulate entry strategy

First of all, identify industry development opportunities Backgammon has always been committed to finding blue oceans in the home appliance industry. In fact, the small home appliances market is not ideal for its growth space, growth trend, profitability, and industry barriers. It is an ideal large-scale market in China. Small household appliances market sales in 2007 to 2010 were: 97.19 billion yuan, 110.2 billion yuan, 117.5 billion yuan, 150 billion yuan, the compound annual growth rate of 16%, comparable to the developed countries for every 100 households have small household appliances 30 - 40 units, China's possession of only 1/10 of foreign countries, while the short life of small appliances, with the increase in income and advance upgrading, the market growth will continue to increase. With rapid sales growth, the profits of the small household appliances industry are also very impressive. The average profit margin is about 30%, and the profit margin is 2-4 times that of the black and white industries. Not only that, small household appliances have relatively low barriers to entry. Small household appliances require less technical research and development capabilities than black and white electricity. Small household appliances do not require core components, and they have strong bargaining power for upstream suppliers. It is subject to the core parts supplier.

Of course, such an attractive market will, of course, be entered as early as possible. As the representative of Baidian, Midea took away the poorly-operated small household appliance business from the listed company in June 2005 and set up a small household electrical appliance group separately. At that time, the concentration of small household appliances was relatively low, and the industry had not yet formed a leader. It was precisely because of this layout that Midea’s small home appliance sales exceeded 30 billion yuan in 2010, becoming the largest domestic small appliance group, apparently backgammon in 2009. It was too late to formally introduce the first small home appliances.

Second, the key factors of the industry and the matching of core capabilities The key elements of the industry are divided into two levels. The first level is to control the core links of the industrial chain, and the second level is to build the key success capabilities of the industry.

From the first level, the core links of the industrial chain of home appliance companies are divided into three types. The core links of black power are basically controlled by foreign companies. For example, the panels of LCD TVs are controlled by Japanese and Korean companies, and Chinese companies generally At the bottom of the industrial chain, the profit rate is very low, and some of China's outstanding companies have been able to control the core of white power. The small household appliances industry generally does not have a core link. Companies need to measure the technical barriers that they may encounter after entering different industries and analyze whether they can solve these industry barriers. These capabilities will determine the position of enterprises in the industry. Midea and Galanz basically have these capabilities in their main products. In the air-conditioning industry, Galanz has mastered the magnetron technology in the microwave oven industry and has mastered these core links. Only then did they each become leaders in the industry.

The second level is mainly the key factor of the industry. The key elements of the household appliance industry's industry focus on R&D, quality, integrity of the industry chain, capital, scale, brand, marketing capabilities, channel building capabilities, and management support systems. Although small home appliances do not need to control the core links, Backgammon is lagging behind its main competitors in terms of product development speed, product line fullness, industrial chain integrity, capital, and scale. It is these shortages of capabilities that have caused the failure of Backgammon. Chunlan’s diversification started in 1994 was also the same issue. TVs, washing machines, refrigerators, computers, and other home appliances were launched. They even entered trucks, motorcycles, new energy, and batteries. However, Chunlan forgot that he did not have the same business at the same time. The ability to carry out these businesses and the lack of key elements of the industry led to the failure of Chunlan's diversification strategy.

Once again, obedience to corporate vision and mid- and long-term development plans have identified industry development opportunities, and when they have the appropriate capabilities, companies need to formulate their own mid- and long-term development plans and business plans, and gradually implement various businesses under the guidance of this plan. Enter the strategy.

The United States will continue to implement the "professionalization, industrialization, globalization," the development strategy, strengthen independent innovation, and actively promote structural adjustment, mainly highlighting the two major categories of white goods and small appliances. Haier, on the other hand, is home appliance products entering the market. One of the key points is the transformation from manufacturing to service industry. Not only selling products but selling solutions. The second transformation is the transformation from traditional economy to internet economy. A real front end has R & D, mid-end has a very good manufacturing, the back end has a very good business platform, sales platform, and ultimately become a provider of a better home life. Both Midea and Haier have clear and accurate strategic plans. Based on this, they enter various new business areas. The reason why BBK enters small household appliances is mainly to replace BBK DVD business. Substitution is the driving force, not the development planning of the company. Under the guidance of targeted entry, it is difficult to form industrial synergy and complement each other in all businesses.

Fourth, the selection of new businesses cannot enter all business areas at the same time, and all businesses and products that may be entered need to be sorted. This sorting requires a comprehensive and objective evaluation, so that the selection and sorting of related businesses can be made to facilitate the company's overall planning. Resources. We can use some professional tools to help companies make choices, such as evaluating each possible new business on an item-by-item basis. The dimensions of the assessment are mainly divided into two categories: The attractiveness of the business market can range from market size, business growth, profitability, competition, etc. In terms of evaluation, the strategic matching analysis can be evaluated from aspects such as familiarity with the business, talent pool, consistency with the company's strategic goals, and the degree of support of the company's resources. The selection and assessment can be combined with the current status of the industry and the actual situation. Selectively set appraisal indicators, and then set weights for each indicator. Through comprehensive assessment, it can be concluded that companies enter new services.



Finally, accurate competition positioning.

Based on the status quo of the industry competition and the company's core competence, combined with positioning theory and methods, determine the positioning of each type of business to enter the market segment, and carry out marketing work based on this positioning, and give the corresponding organizational security system matching resources and design.

Of course, not every home appliance company can succeed in entering a new market every time, and there are also many varieties of home appliances. When more companies implement the entire product line, the exit of home appliance companies will occur from time to time. How do household appliance companies decide to withdraw?

Companies need to consider exit strategies in the following situations

Scenario 1: Intrinsic changes in industry attractiveness The industrial attractiveness mainly includes the decline of the average profit of the industry, the declining growth of the industry, the substitution of major substitutes for existing industries, the continuous improvement of industry barriers, and the intensified competition.

Backgammon ignored the research on the impact of alternatives on the DVD industry. When the Internet rose and developed rapidly, computer viewing has gradually become mainstream. The national DVD market has dropped from 18 million units in 2007 to 10 million in 2010, DVD. Is entering a recession.

Changhong’s main business is television. Since the core link TV panels are controlled by Korean and Japanese companies and the industry’s profit margin is extremely low, Changhong has always been obsessed with TV, and shouted out a strategy slogan that does not make TV without boards. It costs 20 Billion US dollars gambling plasma panels, and flat panel TVs can be used as a substitute for plasma, especially in the small size range has a very strong alternative, driven by other major TV manufacturers in order to obtain greater benefits, plasma is gradually being The replacement of liquid crystals has not yet officially started production of Changhong's plasma panels. Tremendous barriers to investment and exit barriers are also a dilemma.

Scenario 2: Changes in industry factors lead to incompatibility with the company's core competencies One is the impact of changes in technology standards on the company. At the time, there were two standards for DVDs, one was Toshiba’s HD-DVD technology standard, the other was Sony’s dominant Blu-ray technology standard, and China also had CH-DVD, while China’s CH-DVD relied on Toshiba’s technical standards. Because Toshiba’s technical standards have a lower cost of change in operating and production and a competitive advantage in product prices, BBK’s product standards are also mainly based on Toshiba’s technical standards. Due to the selection of Blu-ray technology standards by upstream content providers, especially Hollywood content providers in the United States, the Blu-ray technology standard has become an international technical standard. The changes in standards have caused BBK's readjustment to face high costs and competitive disadvantages. Therefore, it gradually exits. Became the first glare is the core of the industry is controlled. Liquid crystal panels in LCD TVs account for 75% of the cost. In the cost of LCD panels, the material cost accounts for as high as 75%. Glass substrates, backlight modules, polarizers, and color filters account for 80% of the cost of materials. These key links are controlled by American and Japanese companies. It takes a long time and cost for Chinese companies to break through. This is why home appliance companies have entered other home appliance markets.

The third is to blindly believe in oneself and ignore the reality that the ability does not match. When TCL acquired Thomson, TCL had spent tens of millions of euros to hire Morgan Stanley as an investment advisor and Boston Consulting Co., Ltd. as a consultant, but the two companies were based on issues that may arise after the merger and acquisition and TCL capabilities. The assessments are basically disapproval. After repeatedly weighing up, Li Dongsheng finally replaced the desire for bigger ones. Its main basis is that it can reduce costs by acquiring intangible assets, but in fact things have not developed as expected. Later in the acquisition of Alcatel, Li Dongsheng may be thinking that rather than asking a consulting company that does not support his strategic company plan, it would be better to save millions of euros in consulting fees, so he designed the acquisition plan himself. It is precisely because of the neglect of the reality that the capabilities do not match that TCL lost at least 2 billion yuan on the road to internationalization.

Possibility #3: The competitive landscape leads to few opportunities for competition Industry competitors are too strong and the industry concentration is getting higher and higher, which is unfavorable to newcomers entering the market. If the original product fails to open up the competition in such a market, it will exit. It must be considered.

Backgammon has been doing business in the small home appliance market for almost two years. The market situation has not been opened. We can find out from the top ten of its four major products that only the top four products of BBK Small Home Appliances have entered the top ten in the industry, and none Enter the top five.



At the same time, the concentration of small household appliances industry continues to increase, and each product has a giant product. Induction Cooker Products: In 2010, Midea occupied 45%, Nine Yang exceeded 10%, and two companies exceeded 50%. Soymilk products: 90% in 2010, 90% in Midea, 24% in Midea, and 90% in both. Electric pressure cooker products: In 2010, the United States occupied 73%, Supor occupied 14%, two accounted for more than 80%; electric kettle products: the United States in 2010 accounted for 45.7%, Philips was 9%, two more than 50%. The market share of the main Induction Cooker and Soymilk products of BBK has not exceeded 1%, and other products are even lower.

In recent years, due to the fierce competition from the black and white enterprises, the black and white enterprises have continuously entered the white electricity industry. The competition in the home appliance industry has long been heated. As the household electrical appliance enterprises have not entered the small household electrical appliance industry, they are black and white enterprises at the same time. Many well-known brands such as Gree, Haier, Gree, and Changhong have entered, and international brands have begun to enter. It can be foreseen that the competition in the small household appliance industry will continue to be fierce. It is also a wise move to withdraw from small household appliances.

Exit notice

The first is the impact on the business of the company. When exiting the main business, the company must be very careful. Once you exit, it means that the foundation of the company will no longer exist. This is the reason why Changhong has been struggling. It is also that backgammon dares to give up DVD and small household appliances. The second reason is to avoid harming the corporate brand. After exiting the business, it is necessary to maintain the relationship between consumers, distributors and suppliers, and in particular to maintain the relationship between consumers and do a good job in related public relations work. Follow-up after-sales service work, to maintain consumer loyalty to the company's brand, step by step in the statement exit, do not forget to tell consumers, your after-sales service is guaranteed, and do not forget to take out 70 million yuan to make up for dealer losses , maintain the brand value of BBK. The third is to recover the loss to the greatest extent possible. When the company withdraws, it may consider the acquisition. For example, when Little Swan was merged by Midea, only 24.01% of the shares gained 1.68 billion yuan, while Rongshida suffered a loss of 180 million yuan in 2003. In May of May, it acquired 50.5% of shares for US$12.5 million, acquired 24.5% of shares for US$6.5 million in June 2006, and finally acquired the last 25% of shares with RMB68.16 million in December 2008. In 2007, Rongshida received approximately RMB230 million in total. Mergers and acquisitions, to minimize business losses.

Enlightenment

The entry and exit strategies of enterprises belong to the content of the company's strategy. The entry and exit strategies of home appliance companies are often subordinated to the company's strategy. At the same time, they are a major measure for the implementation of the company's strategy and are the path for the company's strategy implementation. Companies in the formulation of entry and exit strategies are often easy to make mistakes in two places, the first is in the company's strategic planning development phase, this phase of the error is often inadequate market research and judgment is not allowed. The second is the stage where the company's strategic plan is implemented through new services. The mistake in this stage is the implementation path problem.

The reason why Chunlan implemented a diversification strategy is to take into account the lower profitability of home appliance companies and the poor growth of air conditioners in the future. In this context, the company has formulated its development strategy, and diversification is the core of its strategic development. Automobiles, motorcycles, white goods and other products have proven to be wrong in Chunlan's judgment. Gree, which specializes in air-conditioning, has higher profit margins than its own branded auto and motorcycle industries. Air-conditioning sales have not only declined but have continued to grow.

The strategy of the company is correct. If the implementation is not good or the implementation path is incorrect, it will also bring great harm to the company. BBK realized that it needed a new business to replace the DVD business, and also found that the small household appliances market was attractive enough, but only relying on the copy marketing model to enter, ignoring the development of a marketing strategy with strategic management as the guiding ideology, and ultimately because The same is true for the lack of research in the competitive landscape and the lack of matching of core capabilities and the withdrawal of Chang Henghong from small home appliances. Knowing that not only “board” but TV only has no prospects, and it cannot gain the human heart and technology like Hisense’s firm independent research and development. The core link, but want to obtain this shortcut through mergers and acquisitions, the final acquisition of South Korea OriqgQ7 (kPon company and investment in plasma production line, but make Changhong into a greater dilemma and dilemma.

The enterprises that have been successful in China's household electrical appliance companies are Haier and Midea. Haier and Midea have not only a clear and correct corporate development strategy, but also a clear path to implementation. Both Midea and Haier are vigorously implementing the research and development of their own brands, and have achieved breakthroughs in the core technologies of many products, such as the breakthrough of compressor core technologies such as Midea's inverter air conditioners. Secondly, they are creating a standardized management system and continuously innovating management mechanisms and systems according to market needs, such as Haier's "one-man-one-in-one" and "pull-management" models. In the end, the industry is highly capable of building core competitiveness. Midea has acquired large brands such as Little Swan and Rongshida to enter other areas of white power and small household appliance markets. While strengthening research and development and quality, it has quickly gained market share while relying on its ability to innovate in marketing and Haier. It is the ability to strengthen the back-end services of the industry chain. When R&D and quality cannot ensure the positioning of industry leaders, relying on service marketing innovation to enhance consumer stickiness, and rely on the "one-to-one" and "win-win" model to enhance Service value, to create a real front-end R & D, mid-end has a very good manufacturing, the back end has a very good business platform, sales platform, to become a provider of a better home life, Haier brand has become a representative of Chinese manufacturing.

The entry and exit strategy of enterprises is the undertaking of corporate strategy and the initial driving force of marketing strategy. Backgammon only regards the entry strategy as the work undertaken by the marketing system, and it leaves the company with a short strategic capability at the beginning of its entry. board. If the home appliance industry can't view the industry's competition from a strategic perspective, then such withdrawal will continue to be performed. The Motorola myth in the mobile phone market has been shattered, and Nokia is also declining due to the neglect of the operating system. Now it is cited as Hao's business, who can certainly not exit in the future.