Strategic management concepts and applications

Tolapp Corporation: Market Analysis

As a manufacturer of all manner of appliances, from yard maintenance tools to household microwaves and ranges, the Tennessee-based Tolapp Corporation faces rather intense market competition due to the availability of many manufacturers and distributors. A market analysis is necessary if Tolapp's strategy is to be developed in an effective and profitable direction, so as to ensure appropriate levels of competitive preparation and expectations. The following paragraphs present a brief market analysis first in terms of manufacturing and wholesaling, and then an analysis of the retail market should Tolapp decide to pursue this area.

According to industry reports, the appliance manufacturing sector in the United States conducted approximately seventeen billion dollars worth of business in 2011 and is composed of more than one-hundred and twenty companies (IbisWorld, 2012). The number of companies operating in the industry demonstrates the relatively low threats to new entry that exist, and indeed it is the fact that these threats are low that enables Tolapp to consider substantial growth strategies in the current era (QuickMBA, 2012). This also means that the threat of substitutes and buyer power are highly increased in this market, and all of these things contribute to greater rivalry and competition in the framework of Porter's Five Forces (QuickMBA, 2012). The industry has also been slowly losing revenue over the past five years, and this will likely increase competition still further while creating opportunities for a well-positioned and well-prepared company (IbisWorld, 2012; QuickMBA, 2012). All in all, the manufacturing/wholesale market appears to be highly competitive.

If the wholesaling market is competitive, the retail market could best be described as an all-out shark fest. There are many well-established large-scale retail stores that sell all varieties of appliances, including everything that the Tolapp Corporation manufactures: Home Depot, Sears, Lowe's, and numerous other similar chains as well as independent retailers exist throughout the country and in the Tennessee area, especially in major cities but with retail stores available in truly all communities of substantial enough size to support them (Google Maps, 2012). Not only do these physical retailers represent the same level of competitive increase as the plethora of manufacturers with whom Tolapp is competing, but there are also online retailers and distributors that have very low overhead costs and even larger selections of appliances and competing products, meaning consumers have many different choices available to them other than the Tolapp Corporation not only when it comes to selecting an appliance manufacturer, but even more so in the retail market (QuickMBA, 2012). Though Tolapp might be able to derive some competitive advantage as a manufacturer and retailer, competition for consumer attention will be extreme.