SAURER: THE CHINA CHALLENGE (A) Harvard Case Solution & Analysis

INTRODUCTION:

Saurer was founded in 1853 in Arbon in Eastern Switzerland. The company has specialized in manufacturing and selling embroidery machines. The top management of the company has focused on diversifying its products line at a wide spread scale since its inception in order to fuel up the overall growth of the company. In addition to this, the company has earned the confidence and satisfaction of its customers by facilitating its customers with excellent quality products as well exceptional customer care services.

In late 1980’s, the company faced a significant downfall in its overall business and was plunged into serious financial crises and gone through major restructuring. However, the company somehow managed to bounce back from the recession and refocused largely on the textile industry as well as it has made a number of acquisitions in order to expand the operations of the company at a wide spread scale efficiently and effectively.

The major acquisitions made by the company include acquisition of Hamel, Volkmann, Allma, Schlafhorst, Melco andZinser. In addition to this, the company has also acquired Bermag and Neumag which are well established leading global players in the industry and has specialized in manufacturing machines for producing and finishing chemical fibres. Thus, this has further increased the overall growth of the company as well as it has allowed the company to trail blaze the entire market by securing a leading position in the entire market.

Volkmann, a midsized enterprise,which is established in Germany,is specialized in manufacturing and selling twisted machines which are used for manufacturing of yarns. The management of Volkmann has made its back breaking efforts in order to expand the business of the company in various potential markets. Lately, the management of Volkmann realized that in order to pursue growth and attain sustainability, it should merge with Saurer as it would allow Volkmann to be a part of larger textile Machinery Company.

ISSUE ANALYSIS:

The entire textile market is shifting towards Asian countries (Specifically China). By looking at this trend, the top management of the company are considering various effective strategies in order to tap into the Chinese market efficiently and effectively.

In addition to this, there are a number of barriers in the Chinese market for the new entrants, which has made the management of the company concerned that what strategy should be adopted in order to capitalize a huge market share in the Chinese industry.

The company has launched its Compact twister in order to grab a significant market share in the entire Chinese industry;however the product was able to satisfy only the needs of upper end market and was unable to satisfy the needs of lower end market.

In addition to this, the management of the company is also unable to identify and understand the varying needs of the customers in the Chinese market, which has also limited the scope of the company to develop its products in accordance with the varying needs and requirements of the customers of the company.

The top management of the company is considering launching a new product which would be targeted to the lower end of the market as this would allow the company to capture a share in the lower end of the market. Thus, the management of the company is considering various strategies with respect to marketing, pricing, and positioning of the new product in order to launch the new product successfully efficiently and effectively. ................

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