AB Sandvik Saws & Tools: The Ergo Strategy
The Saws and Tools division of Sandvik AB has developed a competence in ergonomic hand tools. Arguably, they are the world leader in this area. The division president hopes the Ergo strategy, coupled with selective acquisitions, will enable Sandvik to dominate the global market for professional hand tools. But after investing in this strategy for several years, it has produced, to date, mixed results. Many customers, particularly those in North America, appear unwilling to pay a premium for ergonomic hand tools. The president must decide whether to continue to invest in the Ergo hand tool strategy. Two issues are central to this case: (1) understanding that a successful strategy represents a balance between core competencies and customer value, and (2) one competency is hardly enough to break into a new market. Success of the Ergo strategy in Europe was not solely attributable to a competence in the manufacture of ergonomic hand tools; other elements like distribution also played a key role.
This case can be used in the capabilities component of a basic strategy course, or in an international marketing strategy course.
Sweden, Large, 1996
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