There are many products produce within our great nation and many of them have realized the benefits of exporting their products or even building a new facility in another region of the world to be able to produce and sell to more of the world at a competitive price. One of the biggest problems when trying to enter a new market is reducing cost in order to gain the competitive advantage. There are several steps one should take if someone is thinking about entering into a market or offering a product to a new region, one of the steps one should take is a SWOT analysis. SWOT analysis simple means Strengths, Weaknesses, Opportunities and Threats.
I choose to do a SWOT analysis on a product I am already somewhat familiar with. That is a tire line that I have worked on for the last five years known as the Ultra Project. The Ultra Project uses a new technology to build the largest production tire in the world with a load capacity of one hundred tons per tire. When a full set is placed on an earthmover truck when three hundred and twenty nine tons that truck has the capacity to carry a load of two hundred and seventy one tons at a time. Of course they can always carry more but that is not recommended by Sumitomo.
This tire line is in service and showing a lot of promise during its testing in the United States. Data shows that the new tire line compared to smaller tire lines currently used around the world is capable of handling at least sixty nine percent higher forces than any other product. It would only make sense to offer this product around the world rather than just offering a few tires around the United States, Right?
Let’s start by talking about some of the strengths the company and this product line hold. Sumitomo is leading the tire industry with twenty two billion dollars of turnover each year. Sumitomo holds the number one spot for tire manufacturers in North America and Latin America as well as the number two spot in Europe only beat my Michelin. The company already has global manufacturing projects with fifty four manufacturing facilities in twenty two different countries as well two innovation centers, one in Akron Ohio and the other in Luxemburg. The company has about seventy thousand employees worldwide, a very strong brand identity and also a very strong brand loyalty. Sumitomo is also the only tire manufacturer whose product is used and NASCAR races and has become the most successful tire supplier of Formula 1.
You may be wondering just how these can be considered strengths. Well in a company that shows twenty two billion dollars of turnover that means when managed correctly they should have quite a bit of working capital allowing them to expand to other markets. Not only that but all types of investors love to see numbers like that and are very willing to put up their own money to help a product expand if it is something that could benefit them in some way. Take mine sites for example; they were willing to invest millions into the startup of the Ultra tire line because they saw the cost savings potential of being able to care larger loads. Stock investors will pour money into a strong business giving them even more working capital.
Holding a high ranking overall among your competitors means innovators will be more likely to see Sumitomo as the right employer for them or the right company to pitch an idea too. The huge presence in NASCAR as well as Formula 1 gets the Sumitomo name out to people of all types, from heavy machinery operators to CEOs. Having innovation centers, manufacturing facilities and distribution centers all over the world means entry of a new tire line to many regions will be much less costly than having to construct all these facilities or contract with another company to enter the region. One strength that I failed to mention earlier is that there are very few companies competing in the Ultra tire market making our presence even larger.
Weaknesses, nobody likes talking about…