iRobot is the leading home robot company with over 60% of the global market share. However, its market share is decreasing and it faces threats from expiring patents, low visibility, and competition. Its proposed strategy is to pursue focused differentiation by improving customer value through enhanced marketing, R&D, services, and new product lines to maintain its competitive advantage. Its strategic objectives are to increase revenue to $3 billion by 2022 while maintaining over 60% of the global market share through defensive actions and an emphasis on its role as a pioneer in the smart home ecosystem.
7. Value proposition
Who: Niche Target Market who has income of %50,000+, home owner, married career women, Single
Business Men, Ages from 30-60.
What: Home Cleaning Robot
How: improve safety world-wide, improve quality of life, create early stage of innovation lifecycle.
9. pestel
Factor Trend Evaluation
(Threat = T;
Opportunity = O)
Impact
(1 = low;
5 = high)
Rank in term
of
importance.
Political 1.Trade war between China
and US - current manufacturer
located in China. Trade barriers
with potential trade partners like
China would harm iRobot by
preventing potential exports.
2.Tariff will be raised on
Chinese Goods to 30% will
demotivate iRobot from
maximizing their profits.
3. The risk of military invasion
by hostile countries may cause
divestment from venture
4. Laws related to data privacy
are continually changing and
evolving in unpredictable ways.
O
T
T
T
5
3
1
4
1
4
2
3
10. Economical 1.Business Cycle Stage (e.g. prosperity,
recession, recovery)
2.Inflation/Employment/Foreign
exchange/interest rate & stability of host
country currency.
3. Labor Market condition.
4. Global expansion strategies of iRobot
Corporation are influenced by the financial
market efficiency as operating in highly
efficient financial market leads towards
improved liquidity position and strengthened
ability to enter new markets.
5. Education level in the economy
O
O
O
O
T
5
3
3
5
5
1
4
5
3
2
11. Social 1. Demographics and skill
level of the population
2. Culture (gender roles,
social conventions, etc.)
3. Leisure interests
O
O
O
4
3
5
2
3
1
12. Technological 1. New technology leaves old technology obsolete.
2. Social media marketing
3. Technological innovation and development level.
4. R&D on technology and impact on cost
structure/value chain.
5. By using third party for manufacturing, there is
no guarantee that iRobot will prevail on other
patent infringement claims against third parties.
Third parties may also design around iRobot
proprietary rights, which may render iRobot
protected product less valuable.
6. Cannot assure that iRobot product do not
infringe patents held by others or that they will not
in the future.
T
O
T
O
O
T
5
5
3
3
5
2
1
5
4
2
3
6
13. Environment 1. Current business depends solely on
consumer robot sales.
2. Weather and climatic conditions
3. Attitude towards eco-friendly
products.
4. Recycling and waste management
5. Renewable Technologies
O
O
O
O
O
3
3
5
4
4
5
4
1
2
3
14. Legal 1. Inadequate means of protection
in proprietary rights which
competitors may independently
develop technology that is similar
to iRobot.
2. Legal protections afford only
limited protection for iRobot
Technology. Laws in many of Asia
countries do not protect iRobot’s
proprietary rights to as great an
extent as do the laws in United
States.
3. Some of iRobot competitors
seek to compete primarily through
aggressive pricing and low-costs
while infringing on iRobot’s
intellectual property.
4. Data protection,
5. Consumer protection laws.
6. Employee protection laws
(discrimination, health and safe)
T
T
T
T
T
T
2
5
2
1
3
2
3
1
5
6
2
4
15.
16. swot Strengths
â—Ź Distribution and Reach
â—Ź Dealer Community
â—Ź Financial Position
â—Ź First mover
â—Ź Set company apart through value-added
features
â—Ź Corporate Alliances
Opportunities
â—Ź Social media
â—Ź Increase in average household income
â—Ź User Interest in Technology
â—Ź Capture new opportunities in the smart
home ecosystem
â—Ź Educating marketing program
â—Ź Technology stair climbing
Weaknesses
â—Ź High day sales inventory
â—Ź Low current ratio
â—Ź Expiring Patents
â—Ź Low Visibility & Scalability
â—Ź Low Competition.
â—Ź Lack of strategic planning
Threats
â—Ź Fuel price rises
â—Ź More substitution products
â—Ź Technology development of rivals
â—Ź Piracy
â—Ź Government Policies changing
â—Ź Volatility of Supply Chain.
17. PORTER’s FIVE FORCES
Threat of Potential New Entrants
- The economics of scale (weak force)
- The product differentiation (weak force)
- The capital requirements (weak force)
- The access to distribution networks (strong
force)
- The government policies (weak force)
Bargaining Power of Suppliers
- The number of suppliers (weak force)
- The product that these suppliers provide
(weak force)
- The suppliers do not contend with other
products within this industry (strong force)
- The suppliers do not provide a credible threat
for forward integration into the industry in which
iRobot Corporation operates (weak force)
- The industry in which iRobot Corporation
operates is an important customer for its suppliers
(weak force)
Bargaining Power of Buyers
- The number of suppliers (weak force)
- The product differentiation (weak force)
- The income of the buyers (weak force)
- The quality of the products is important (weak
force)
Threat of Substitute Products or Services from Other
Industries
- There are very few substitutes available for the
products that are produced in the industry in which
iRobot Corporation operates (weak force)
- The very few substitutes available are of high
quality but are way more expensive (weak force)
Rivalry Among Existing Firms
- The very few competitors have a large market share
(strong force)
- The industry in which iRobot Corporation is growing
every year and is expected to continue to do this for a few
years ahead (weak force)
- The fixed costs (strong force)
- The production of products (strong force)
- The exit barriers (strong force)
- The strategies of the firms (strong force)
18. Strategy is this well-suited in 2018?
2. Intensive Growth Strategies (Ansoff)
- Product development
- Market penetration
- Market development
1. Generic Competitive Strategies (Porter)
- Focused differentiation
3. Strategic Actions/ Enhancements
- Offensive actions
- Defensive actions: 1000 patents
- Timing: First mover
- Scope: M&A
23. Strategic issues
- Decrease in market share
- Piracy
- Expiring patents
- Low visibility & branding
- If rest on its laurels following this trend losing 20-30% within 3 years
24.
25. Proposed directions
Proposed directions in the upcoming years:
- Piracy => Commitment to protect campaigns stress on privacy right
- Decrease in market share => Solve Competitive price threats from rivals
- Expiring patents => Defend patents
- Low visibility and branding => Improve marketing activities
- Be known for the pioneer of Smart home ecosystem
26. Proposed performance target
Financial Objectives Strategic Objectives
Short-term Long-term Short-term Long-term
By the end of year
2020, revenue of irobot
is expected to be $1.5-
2 billion
By the end of year
2022, revenue of irobot
is expected to be $3
billion
By the end of year
2020, Customer self-
service rate of irobot is
expected to be 97%
By the end of year
2022, Customer self-
service rate of irobot is
expected to be 99%
By the end of year
2020, gross profit of
irobot is expected to be
$1 billion
By the end of year
2022, gross profit of
irobot is expected to be
$ 1.77 billion
By the end of year
2020, global retail
market share of irobot
is expected to be 59%
By the end of year
2022, global retail
market share of irobot
is expected to be 63%
32. DIFFERENTIATION ADVANTAGE ( USING VALUE CHAIN)
Step 1. Identify the customers’ value creating activities.
Step 2. Evaluate the differentiation strategies for improving customer value.
Step 3. Identify the best sustainable differentiation.
33. â—Ź Marketing and sales:
â—‹ Celebrity endorsement
â—‹ Support wholesale by discount/ PR events
â—‹ SEO, viral contents on Internet
â—‹ Marketing ads to promote the message of keeping data safe(improve
convertible rate) / about functionality & superior performance
â—‹ More technical videos
â—‹ Build a good sales team
â—Ź R&D:
â—‹ Improve old features like UV sterilization, wifi connect, map
â—‹ Come up with new ones
â—Ź Services:
â—‹ Have discount/ gift for defects
â—‹ Answer and support quickly to call/messages
â—‹ iRobot HOME app
34. Products and services development
(Sell new products to existing customers)
=> Add variations to current products like size, colors, technical
features, design
=> Focus on improved functionality and superior performance
=> High quality inputs
=> Cloud services, Smart Home Ecosystem Service,
35. - Timing: First mover
- Defensive:
+ continue to defend its expiring patents
+ introduce new product lines Braava Mops, Terra Mows, Root
Educates
+ challenge quality of competitors’ products
- Scope:
+ Horizontal integration: acquisition of companies in China
:Proscenic, Haier
+ Acquisition of foreign distributors like SODC and Robopolis
Strategic actions
36. Question and answer
Before we get started:
- Keep the question short
- 30’
- It is recommended that everyone asks 1 question
- Priority goes to those haven’t asked in lesson 4
37. References
Williamson, D. (2018, Dec 5). iRobot Corporation SWOT Analysis. Retrieved from: https://www.essay48.com/term-paper/2909-iRobo
Corporation-Swot-Analysis
iRobot. Overview. (2016, Aug 4). iRobot Roomba 900 Series [Video file]. Retrieved from: https://www.youtube.com/watch?v=XIPzSm
Turnipseed, D. & Gamble, J. (2018). iRobot in 2018: Can the company keep the magic?. America: University of South Alabama
Kohorst, A. (2012, Nov 8). iRobot. Retrieved from: https://prezi.com/swxgfa_fra6h/irobot/
Murphy, E. (2018, Nov 20). iRobot Corporation Porter Five Forces Analysis. Retrieved from: https://www.essay48.com/term-paper/29
iRobot-Corporation-Porter-Five-Forces?fbclid=IwAR32NVBkcm1TWNWdPTSFzEhjlSq31upwd_AAqD2SzaFHvmwwfMlcclqYmHY
Stephens, R. (2019, Jan 8). Why iRobot Has High Growth Prospects. Retrieved from: https://finance.yahoo.com/news/why-irobot-hig
prospects-203448263.html
Internal Environment
Corporate structure
Irobot has strong corporate structue, with members from prestigious schools and companies accross the United States.
Founded at MIT, iRobot is a technology developer with a modern corporate structure.
CEO - Colin Angle, MIT Grad and Co-Founder has won a multitude of awards for his work
What is the current situation of the business?
Analyse and evaluate the current business model, value chain, vision mission, objectives, strategies and economic costs advantage or disadvantage (economies of scale, scope, degree of forward/backward integration, etc.) – compare with some of the competitors – in conjunction with its strategic and financial performance.
Primary
Inbound log: retrieving raw material, storing the inputs and internally distributing the raw material and components to start production.
Operations:machining, packing, assembling and testing. Equipment repair and maintenance also falls into this category.
Operations
iRobot mainly operates as design firm
From the start of the company until 2010, iRobot used only two third party manyfacturers.
In 2010, Irobot signed a long term contract with US based Jabil Circuit Inc., a manufacturer, tester and supplier of robotic components.
Outbound log: material handling, warehousing, scheduling, order processing, transporting and delivering to the destination.
Mark and sales: sales force, advertising, promotional activities, pricing, channel selection, quoting and building relations with channel members. Ads like Spring is in the air and on the floor
Marketing
iRobot’s promotion strategies varied between product markets
Home care products required a large percent of the marketing budget.
iRobot also participated in education based programs like SPARK and National Robotics Week.
Service:The pre-sale and post-sale services. Irobot support, customer service from 9am to 9pm
Secondary:
Firm infrast:quality management, legal matters handling, accounting, financing, planning and strategic management
HRM: recruiting, selecting, training, rewarding, performance management and other personnel management activities. Recruit through steps with recruiter evaluation, hiring manager review, then personal interview with team members, STEM career fair, people are encouraged to fail.
Human Resources
iRobot employs 1032 full time employees who are some of the most distinguished robotics professionals in the world.
Continued success relies on innovative and intellectual employees.
Tech development automation software, technology-supported customer service, product design research and data analytics, research and development
Human Resources
iRobot employs 1032 full time employees who are some of the most distinguished robotics professionals in the world.
Continued success relies on innovative and intellectual employees.
Procurement: equipment, machinery, raw material, supplies, raw material and other items necessary for producing the finished product.
R&D
Research and Development at iRobot was a critical part of the company’s success. iRobot believes that thay can stay ahead of customer needs by bringing new, innovative products to the market.
iRobot’s core technology were in collaborative systems, semi-autonomous operations, advanced platforms and human-robot interaction.
R&D teams meet at different locations across the US to ensure that the product is tailored to each market they are a part of. Teams use in-field testing to allow iRobot to quickly improve its technology and design so it can successfully fulfill the needs of the end-users.
As of 2017 the company held 368 US patents and 550 international patents
https://expandedramblings.com/index.php/irobot-statistics-facts/
Reference:
https://www.irobot.com/about-irobot/careers/how-we-hire?_ga=2.224067353.323708048.1566854906-134363350.1566384787
https://www.instagram.com/irobotcareers/
https://homesupport.irobot.com/app/answers/detail/a_id/200?_ga=2.262854158.323708048.1566854906-134363350.1566384787
https://thefantastical.com/iRobot
https://www.forbes.com/sites/daveevans/2019/05/30/teardown-irobot-a-simple-robot-that-cleans-up/#7ddf0f046ca4
https://www.essay48.com/term-paper/2909-iRobot-Corporation-Swot-Analysis
Williamson, D. 2018
https://prezi.com/swxgfa_fra6h/irobot/
https://www.essay48.com/term-paper/2909-iRobot-Corporation-Porter-Five-Forces?fbclid=IwAR32NVBkcm1TWNWdPTSFzEhjlSq31upwd_AAqD2SzaFHvmwwfMlcclqYmHY
Threat of Potential New Entrants
- The economics of scale (weak force)
- The product differentiation is strong (weak force)
- The capital requirements within the industry are high (weak force)
- The access to distribution networks is easy for new entrants (strong force)
- The government policies within the industry require strict licensing and legal requirements (weak force)
Bargaining Power of Suppliers
- The number of suppliers (weak force)
- The product that these suppliers provide are fairly standardised, less differentiated and have low switching costs (weak force)
- The suppliers do not contend with other products within this industry (strong force)
- The suppliers do not provide a credible threat for forward integration into the industry in which iRobot Corporation operates (weak force)
- The industry in which iRobot Corporation operates is an important customer for its suppliers (weak force)
Bargaining Power of Buyers
- The number of suppliers in the industry in which iRobot Corporation operates is a lot more than the number of firms producing the products (weak force)
- The product differentiation within the industry is high (weak force)
- The income of the buyers within the industry is low (weak force)
- The quality of the products is important to the buyers, and these buyers make frequent purchases (weak force)
- There is no significant threat to the buyers to integrate backwards (weak force)
Threat of Substitute Products or Services from Other Industries
- There are very few substitutes available for the products that are produced in the industry in which iRobot Corporation operates (weak force)
- The very few substitutes available are of high quality but are way more expensive (weak force)
Rivalry Among Existing Firms
- The number of competitors in the industry in which iRobot Corporation operates are very few (weak force)
- The very few competitors have a large market share (strong force)
- The industry in which iRobot Corporation is growing every year and is expected to continue to do this for a few years ahead (weak force)
- The fixed costs are high within the industry in which iRobot Corporation operates (strong force)
- The products produced within the industry in which iRobot Corporation operates are highly differentiated (weak force)
- The production of products within the industry requires an increase in capacity by large increments (strong force)
- The exit barriers within the industry are particularly high due to high investment required in capital and assets to operate (strong force)
- The strategies of the firms within the industry are diverse, which means they are unique to each other in terms of strategy (strong force)
Long-term Strategy: Our long-term strategy is to increase the penetration of our products in existing markets, expand current products into new markets, and develop and launch new products into current and new markets.
2019 Strategy: maintain Roomba’s leadership in the robotic vacuum cleaner segment while positioning the Company as a strategic player in the emerging smart home
Ref:
https://finance.yahoo.com/news/why-irobot-high-growth-prospects-203448263.html
https://investor.irobot.com/static-files/afe34f92-c23f-4b64-b377-fb37788c0648