1. THE EUROPEAN POWER TOOL MARKET
End users : - Do It Yourself (DIY) : give importance to image, product quality and price
- Professional : give importance to quality, durability and after-sales service
Geography : - 47% of the worldwide industry
- France, Germany, Great-Britain an Italy account for 75% of the region’s sales
- Northern markets are more strutured and matured than the Southern ones
Distribution: - DIY : wholesalers, hardware and mass merchandisers
- Professional : wholesalers, hardware and direct sales

2. DYNAMICS Battery-powered tools : - advances in technology
- represent 20% of all power tool production
- evolution from the DIY segment to the professional segment
Globalization : - competitive advantages for big companies
- more flexibility
- economies of scale resulting from expansion
Eastern Europe and the Ussr : - opening up markets
- restructuration of Eastern firms
- investment risk

3. ISKRA’S POSITION
In Europe : - represented under the Perles brand name on the DIY and professional segments
- advantages : low labor costs & niche products which now are threatened
In Eastern Europe : - limited presence ( unstable environment, suppliers…)
- potential market
In Yugoslavia : - represents 50% of the market share
- the leader in the DIY and professional segments
- threat of newcomers

4. GENERALIST COMPETITORS
SEGMENTS
STRATEGIES
KSF
Black & Decker
DIY
Professional
Innovation
Globalization
Restructuring
Proper segmentation
Brand name
Makita
Competitive price
After sales & quality
Distribution
Bosch
- Expansion
Skil
Diversification
Price
Positionning

5. SPECIALIST COMPETITORS
Niche Players : Festo, ELU, Kango
Segments : DIY & professional
Strategies : - premium price
- focus on home market
KSF : - quality
- expertise

6. RECOMMENDATIONS ON ISKRA’S MARKET STRATEGY
Keep and protect its dominating position on the Yugoslavian market on the DIY and the professional segments.
Develop its position on the Western markets, under the Perles brand name on niche products.
In the long term, Iskra should consider entering the Ussr market as an OEM.

7. ISKRA’S MANUFACTURING CAPABILITIES ADVANTAGES
Price competitiveness
Expertise
Strong artistic talent which lacked the engineering of Western designers

8. ISKRA’S MANUFACTURING CAPABILITIES DISADVANTAGES
Quality and productivity :
- overemployment
out of dated equipment
Stock management :
- building structure
- high inventories
- lack of process coordination
Relationship with suppliers :
- local suppliers
- foreign suppliers

9. NICHE MANUFACTURER IN FRANCE AND ITALY UNDER THE PERLES BRAND NAME
PROS
Perles brand recognition
Less mature so less quality oriented markets
France represents 20% of the European market
In Italy power tools imports account for 70%
Clearance agreement with Italy
Cheap source of raw material
Geographical proximity
CONS
Competition from Black &
Decker, Bosch and local players
Distribution shortcomings
High quality standards

10. SERVING AS AN OEM
PROS
Opportunities to go international and exploit economies of scale
Low labor cost
Underprice competition
Technical expertise
CONS
Necessity for investments in production facilities
Failed co-operation with ELU, Bosch and Ryobi
Limited ressources
Limited range of products

11. EXPANSION ON EASTERN EUROPEAN MARKETS
PROS
New emerging markets
Low labor cost
Possibility of acquisition of local manufacturers
Becoming the link between the East and the West of Europe
Western investment
CONS
Unstable environment
Currency restrictions
Efficiency and quality shortcomings
Failed collaboration with Czechoslovakian, Polish and Ussr producers

12. RECOMMENDATIONS ON ISKRA’S MANUFACTURING STATEGY
Process and Organisation :
- Adopt the JIT policy
- Increase collaboration with Wester European suppliers
- Restructure manufacturing lines
Productivity and Quality :
- Reduce the number of employees and clarify their functions
- Reward on quality
- Invest in equipment