Growing a business profitably in a stagnating market.
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Date
2003
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Abstract
The aim of this thesis is to identify and suggest strategies for Smiths Aftermarket to enable it to remain a viable business within a shrinking market, which is presented in a case study format. The thesis commences with a discussion of the literature and theoretical concepts relevant to the study, ranging from environmental analyses to the identification, evaluation and implementation of strategies. The theory section concludes with a discussion of the extended marketing mix. Smiths Aftermarket holds the major market share in both the aftermarket air-conditioning and replacement parts business and has many strengths on which it can draw. The evaluation of Smiths Aftermarket revealed that there are certain gaps which have to be closed; a declining gross margin and profitability, an over-reliance on Toyota as a customer, and a need to improve the service provision to the P&A outlets by Smiths Aftermarket and to the fitment centres via Pro-Fit. The evaluation showed that the aftermarket market is not declining as rapidly as expected. Based on the market share of Smiths Aftermarket and the growth rate and attractiveness of the aftermarket industry four possible strategies were identified, of which one was suitable and one was possible. The recommendations given at the end of this thesis are the culmination of the evaluation of Smiths Aftermarket, the identification of strategies and the evaluation of those strategies and are made from a short-term and a mid- to long-term perspective. The short-term recommendations are: Smiths Aftermarket re-evaluates whether or not it should purchase its competitor, Crispair; works closely with Pro-Fit to rectify existing problems; and focuses on its marketing mix to make it more coherent and to generate new business for growth. In the longer term Smiths Aftermarket will have to decide if it wants to remain in the aftermarket business or exit the aftermarket industry. What is clear from the study is that Smiths Aftermarket has to act now to stem the decline in profitability, which will deteriorate further if left unattended.
Description
Thesis (MBA)-University of Natal, Durban, 2003.
Keywords
Strategic management., Income--Management., Theses--Business administration.