SKF is the world's leading ball and roller bearing company, with a market share of approxim 18%. This gives it a strong edge over its nearest competitor, the japanese company, NSK 1 roller bearings and seals business constituted 93% of group sales in 1994. Recession is qui( reflected in the resufts of bearings manufacturers, and the impact of the slump in deman 1990 - 93 is apparent from the losses faced by SKF (Exhibit CS 11.1., although by the end of I production was 30% higher than at the nadir in 1992 and had recovered further during 19 Restructuring of the global ball-bearings industry since the late I 980s has left a handful companies dominating the world market
The bearings industry serves two fundamentally different types of market
• The original equipment manufacturer (OEM) customer, to whom the bearji supplied are crucial components of their end products. Examples of OEM custom would be the car and truck industries, aerospace, general machinery and he industry. Exhibit CS 11.2 shows SKF's sales breakdown by application.
• The aftermarket, for whom bearings are no more than spare parts. Aftermarket sal to both industrial users and automotive repair services, tend to be made to deai and distributors, who sell the product to the end-user.
OEM customers are price-sensitive, since their costs of production are reflected in the final pri of their product, whereas aftermarket users are more concerned by product availability and t speed of delivery than price. Particularly in the industrial afterrnarket, customers are significan more concerned by the cost of machinery standing idle than by the price of a replacem€ bearing.
SKF bearings are manufactured and sold throughout the world. Eighty factories in 20 countri manufacture 25,000 different items, ranging from high volume standardized bearings to custo production of a single, highly specialized bearing. The company's reputation is bui[t on unrivalled global distribution network which allows it industry leadership in price setting. recent years SKF has concentrated on improving lead times, for example in reducing the tin between the order of the raw material and the delivery of finished spherical roller bearings, fro IlOdaysin l989to29daysin 1994.
An Asia Pacific strategy for the group was developed in the mid-I 980s and, in the five years 1994, sales in the region doubled to 12% of the group total. (The geographical breakdown SKF sales is shown in Exhibit CS 11.3.) The specific objective of SKF in the Asia Pacific regio stated in the 1994 annual report, is to enhance its direct presence by increasing the number' wholly owned sales companies, and thus to bring SKF closer to its end-customers, theret gaining greater insight into their needs as well as increasing the potential for offering thei technical and other services.
At present, SKF's Asian region produces approximately 40% of the bearings ft sells and is thL partly dependent on exports from Europe, which has excess production capacity, to meet sak demand. (The American region's self-sufficiency ratio is 80%.) A new state-of-the-art plant wer into operation in Malaysia in 1992 and now supplies OEM customers in Japan: among othE countries. SKF has also established joint venture production facilities in China (Shanghai) an Korea.
SKF AND THE WORLD BEARINGS INDUSTRY : SKF in Vietnam article from Business Management Catagory SKF AND THE WORLD BEARINGS INDUSTRY
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