Abstract
As the EFE Matrix in this document shows, the most important external factors in order to be successful in the industry are technological advancements and the fact that only 10% of the hearing affected people actually possess the hearing aid. Local health policies like in France, for example, social securities partially reimburse the costs related to the purchase. Socio-demographic changes have resulted in a higher acceptance rate of the equipment and an aging population has enlarged the potential market size. High entry barriers reduce the competitive landscape for Sonova which helps maintain its leading position. The company responds effectively to the technological advancements and high entry barriers factor through its core strategy: continuous innovation.
The fact that Sonova has owned a successful cycling team even though many doping issues have arisen has helped increase the visibility of the firm and its products, nevertheless, poor marketing efforts should be tackled. The most important factor that Sonova has to tackle is the lowering of psychological factors, attitudes and beliefs regarding the hearing aid. Exchange rate fluctuations that have rendered the Swiss franc much stronger vis-a-vis other currencies have had tremendous impact on revenues. (53M CHF loss in revenue). Product innovation and competitor acquisition in order to gain market share are the two main pillars of the firm's business strategy, hence Sonova is tackling threats such as competition and rapid technological evolutions very effectively. Court decisions, on the other hand, constitute a threat to Sonova's expansion strategy. The company is handling threats such as globalization and technical regulations quite effectively by placing some of its production facilities in China and hence reducing production costs and by acquiring the European and American standard and health approvals.
Extract
[...] Marketing strategy 0,2 10. Highly concentrated geographic expansion (USA, Europe) 0,06 1 3 Sonova's competitive advantage and value proposition is based on technological leadership (know-how, innovation and the ability to transfer this into products). It heavily invests into R&D of sales in the first semester of 2011/2012) on a continuous basis - 80% of total sales were the result of new products launched within the two last years (water resistant hearing devices, nano technologies). Through its competitive advantage and acquisition strategies it has gained market leader position in the hearing instrument market with an above the market growth rate of 3-4%. [...]
[...] Well established brand name (founded in 1947) 06 4. Swiss/German image (reliability, quality) 06 5. R&D investments and results 36 6. Owning distribution channels (owned retail + sales through website) 06 7. Largest product portfolio in the industry 2 8. Brand reputation building activities (charities, "hear the world" campaign) 06 9. CSR 02 10. Low debt rate 09 11. Positive Cash Flow & Expanding Operating Margin 24 12. [...]
[...] Strategic thinking for managers 1. Key External Factors Weight Rating Weighted Score Opportunities 1. Demographic changes (aging of baby boomers generation) 0,12 2. Technological advancements (mobile and nano devices) 0,4 3. Higher acceptance rate towards the hearing aids 0,12 4. Low market penetration (only 10% of affected have it) 0,2 5. Local health policies (partial reimbursement of the hearing aid) 0,05 6. High entry barriers 0,18 7. Unexploited markets 0,08 8. [...]
[...] Product Design 2 13. Customer Service 09 14. Market leader position 08 Weaknesses 1. Change in Top Management (loss of talent) 06 2. Major acquisition failure 08 3. High product prices 1 4. Affected reputation 0,08 5. Low penetration into the high-end market 0,08 6. Declining Liquidity Ratios 0,15 7. [...]
[...] Competitive Analysis: Rivalry among competing firms - HIGH even though Sonova holds a leading position due to its main competitive advantage: Technological leadership as well as their acquisition policies Potential development of substitute products - LOW no other similar product exists or is under development Potential entry of new competitors - LOW requires heavy investments and regulatory policies, need to gain know-how, lack of experience Bargaining power of consumers - LOW due to the unique product features that Sonova offers through continuous innovation Bargaining power of suppliers - RELATIVELY HIGH as quality and reliability are crucial 2. Key Internal Factors Weight Rating Weighted Score Strengths 1. Technological leadership and know-how 36 2. Acquisition strategy (market share and economies of scale) 24 3. [...]
