The paper "Project Financial Analysis of Salton Inc" is a good example of a business assignment. The power of suppliers comprises of all the forces which are essential for the suppliers to have either high or low bargaining power. In the case of Salton Inc. , the bargaining power is high. This has resulted due to high switching cost from the company’ s product to other competitor’ s product in the market. In addition, the products offered by Salton Inc. have low substitutes in the market. Bargaining Power of Customers This is very sensitive because it determines the company’ s performances in terms of sales volume.
Salton Inc. is in a position to sustain its unusually high profits and return on equity in this industry because the customers who are targeted do not price sensitive. In fact, the customers can clearly differentiate the products from those offered by competitors in the market. The threat of New Entrants Due to the constant and consistent introduction of new features in the products provided by Salton Inc. new entrants has found it more difficult to enter into the market. The company has a large share of the market and has won the loyalty of customers.
This strategy of improving the quality of products enabled Salton Inc. to sustain its unusually high profits and return on equity in this industry (Pederson, p. 79) Threat of Substitutes This competitive force does not exist in the Salton company because the company has close customer relationship and high switching cost which customers faced in case they decide to switch. For comparison purposes, the online exhibits for the case give a ratio analysis from eVal for four of Salton, s competitors: Applica, Maytag, Sunbeam and Whirlpool.
Based on the Dupont analysis, how has Salton generated such a large return on equity relative to these other firms? Do you see any noteworthy changes or trends in Salton’ s ratios over time? Salton Inc. has been able to perform well in the market despite high competition from companies such as Applica, Maytag, Sunbeam and Whirlpool.
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