Briggs and Stratton

Briggs and Stratton Corporation

Introduction:

• During 1980’s threat from Japanese companies with strategic intent to capture U.S. Market.

• Broadened product line, reduced costs, improved quality and invested in new plants and processes.

• Strategy: Commit major resources to traditional mass market core business and to serve other market segments with limited resources p. 564

Company History:

• Started in 1908 in Milwaukee

• First product 6-cylinder, two-cycle engine

• Motor wheel, bikes and stationary items- washing machines, garden tractors and lawn mowers.

• 1908 mass produced at 120 units per hour.

• 1953, 40% reduction for both weight and price, new plant open p. 565

• 1990 revenues reached $1 billion

• Exhibit 2: Health care and postemployment benefit costs

• 1993-1994 huge increase in current assets p. 566 $181,600,00 million

Outdoor Power Equipment Industry:

• 1995, various-sized manufacturers of finished goods and components $7.5 billion dollar industry.

• Consumers demanded higher quality products with greater horsepower at a low price.

• Not vertically integrated, cost of components accounted for 47% of the value of all finished OPE shipments.

• Honda and Toro were the only power equipment manf that were vertically integrated backward into components.

• Exhibit 7 cost and profit margin for outdoor power equipment, components were 47.6%.

• Went from wholesalers to retailers from the 1980s to the 1990s

• Home Depot, Lowe’s, Wal-mart, Kmart, Sears, and Target. P. 570

Industry Regulation:

• Prior 1992 OPE were not regulated by Consumer Products Safety Commission, compliance was voluntary.

• Standards concerned with improved product performance and safety.

• 90% of industry in compliance with voluntary standards.

• 1982 standards- increased safety restrictions walk-behind mowers, shields, deflectors and etc. p. 572

• Magnuson-Moss Act 1975, EPA, and California Air Resources Board

Competition: Domestic

• Two broad strategic...