Strategic Management Group Project

1. Analysis of
macro- and micro-
external environment of
Maxim Dimura
Elvira Grinberg
Dimtry Kovalenko
Nadezhda Sheynina
Ilya Varvaluk
Maxim Voratinets

2. About the company

3. PESTEL-DG
Political
• 1. Possible changes in foreign trade regulations since stainless
steel is imported from China
• 2. Taxation policy
• 3. Entrance to WTO
Economical
• 1. US Dollar rate
• 2. Disposable income of customers (more people are moving to
private houses)

4. PESTEL-DG
Sociocultural
• Seasonal repairing of heating system (May-October)
• Russian habit to postpone till the last moment
Technological
• Development of alternative technologies for heating water

5. PESTEL-DG
Environmental
• Dirty water, allergies
• Energy consumption
Legal
• Prohibition of gas water heaters in old houses, which might take
place, would lower the competition and might help to increase
the market share

6. PESTEL-DG
Demographic
• More newborn babies – more necessity in warm baths
Global
• 1
• 2

7. Five Forces Analysis
Threat of Entry
• Possible entrants:
• Barriers: huge initial costs, limited access to distribution channels
occupied by strong players, strong competitors (Thermex,
Ariston), high differentiation
Threat of Substitutes
• Substitutes:
Product for product substitution:
central water heating (new blocks of flats and private houses have
no central water heating)
gas water heaters
running water heaters
solar water heaters
Generic substitution: doing without hot water

8. Five Forces Analysis
Bargaining Power of Buyers
• Buyers: final customers, retail chains (Leroy Merlin, OBI,
Castorama)
• Water heaters are a high percentage of cost to the final
customers, which leads to “shopping around”
• Retailers bargain big discounts
Bargaining Power of Suppliers
• Suppliers: suppliers of raw material (stainless steel, etc.),
suppliers of heating elements
There are a lot of suppliers and switching costs are low, so
manufacturers may avoid dependence

9. Five Forces Analysis
Competitive Rivalry
• Competitors: Thermex (45%), Ariston (35%), Real (5%), other
(Polaris, Atlantic, Oasis, Gorenje, Drazice) - 15%
• Slow market growth
• High fixed costs
Complementary goods
• Electricity

10. Competitive Strategies
‘no frills’
Low cost
Hybrid
Differentiation
Focused
Differentiation
‘no frills’
• Cut all costs
• No investments in
research
Low cost
• Use the advantage of own
distribution chain for
lowering prices
• Stop production in China
Hybrid
• Work on range
• Make prices lower
Differentiation
• Diverse range
• high margin thanks to the
own distribution chain
Focused Differentiation
• Choose one price
segment

11. The Best Strategy