Question
Ovens and Stoves Pty Ltd has decided to expand its repair service into dishwasher, refrigerator and freezer repairs. Joyce has been asked to analyse the
Ovens and Stoves Pty Ltd has decided to expand its repair service into dishwasher, refrigerator and freezer repairs. Joyce has been asked to analyse the competitive environment using Porter's five forces model. To enable her to conduct this analysis, Joyce first collects the following information relating to Ovens and Stoves and the current industry situation. Ovens and Stoves competes with three other repair operators and the percentage of oven and stove repair work allocated by the three major retailers: Great Guys Ling Dee Rorman Loss Ovens and Stoves Pty Ltd 50% 35% 25% The Repair Shop Pty Ltd 20% 30% 10% Appliance Fixers Pty Ltd 30% 30% 15% All Machine Service Pty Ltd 0% 5% 50% The other repair operators are currently also service dishwashers, fridges and freezers for the three major retailers and the percentages of work allocated are as follows: Great Guys Ling Dee Rorman Loss Ovens and Stoves Pty Ltd 0% 0% 0% The Repair Shop Pty Ltd 20% 30% 30% Appliance Fixers Pty Ltd 30% 30% 20% All Machine Service Pty Ltd 50% 40% 50% The technicians working for Ovens and Stoves all have strong capability to repair all appliances and many have had experience in dishwasher, fridge and freezer repair. Ovens and Stoves is also well known for the high quality of its work. The equipment required for dishwasher, fridge and freezer repair is very different that that required for ovens and stoves however, so this would require some significant investment on the part of Ovens and Stoves to be able to enter the market. In addition, the parts required for repair of fridges and freezers particularly are difficult to source locally and many have to be purchased from overseas suppliers making the cost prohibitive, however, Ovens and Stoves has a good relationship with one key overseas supplier and is hoping that this will be beneficial to the new strategy. REQUIRED (a) INDUSTRY ANALYSIS - use this new information to understand the impacts of the proposed expansion on the business and create a detailed Industry Analysis using Porter's five forces framework and apply this analysis to the current and proposed operations of Ovens and Stoves (20 marks). (b) BUSINESS REPORT - compile your Customer Profitability Analysis and your Industry Analysis to prepare an appropriately formatted, professional business document for presentation to management of Ovens and Stoves at the annual budget meeting next month to include the following: Advice to management regarding customer profitability referencing your Customer Profitability Analyses from Part A and any other relevant factors (20 marks) Recommendations to management about the proposed expansion strategy based on your Industry Analysis above (10 marks)
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