Abstract
VSM group has been developing, manufacturing and selling household sewing machines for more than 130 years after its first sewing machine was launched in 1872. It became an independent company after it was divested from Electrolux and acquired by the investment fund, Industri Kapital in 1997. With the arrival of the new CEO, Mr. Jorgen Johansson, the company carried out a series of polices to survive and develop in the new circumstances.
However, after a lot of strategic choices and changes, things are not so optimistic for the VSM Group, as a matter of fact the sewing machine market has kept declining in the past 20 years and the VSM group has encountered sharp competition from Asian manufacturers as well. In addition, the conflict between the VSM group and its two brands emerged.
The Porter's five forces framework helps to identify the sources of competition in an industry or sector. It has similarities with the PESTEL framework, but tends to focus on strategic business units rather than the whole organization. The Five forces framework looks at five key areas namely the threat of entry, buyers' power, suppliers' power, threat of substitutes, and competitive rivalry. It helps to understand both the competitive forces in the industry and the attractiveness of a new industry. The more powerful these forces are in an industry, the lower its attractiveness will become.
There are three main competitors which are all from Asia. Janome is the largest competitor by volume, and is specialised in domestic sewing machines and obtains several important industrial innovations. The second competitor is Brother, which is famous for office machinery, but it is also active in the sewing industry. Its innovative products' prices are lower than those of VSM as much as 20-30 percent. The third competitor is Juki which manufactures both domestic and industrial machines as well as computer-controlled machines, but it does less for products development.
