Group Assignment SKF Bearing Series: Restructuring the Before and After market

Situation Analysis

SKF, the worlds largest bearing company, has envisioned a need for restructuring to improve profitability and return on

assets. The companys long term goal is to change strategic orientation from the production line to the market.

Limitations: 1. Production already rationalized & fully automated 2. Cannot pull back on R&D expenditure

Proposed Solution: Split the company into 3 areas:

1. Bearing Industries 2. Bearing Services 3. Specialty Bearings

Market Analysis

Aftermarket: The true cash-cow of SKF

The aftermarket can be divided into

1. Industrial Aftermarket (66% SKF aftermarket sales in Skr)

2. Vehicle Aftermarket (34% SKF aftermarket sales in Skr)

Recommendations for Industrial Aftermarket

At the Org level: 1. Enforce culture shift 2.Modify financial outlook 3. Build strong Marketing workforce

27%

32%

27%

14%

By Target Segment

Aftermarket-Automotive

OEM -Automotive

60% 20%

5% 15%

By Geography

Europe

North America

Sweden

Others

Product

Focus on production of speciality bearings for steel & paper mills, mines, railways and other industries

Knowledge management: On-site training & support

Price

Increase budget for marketing and charge significant premium to balance these costs

Charge nominal rates for support. Good handling and use of product will increase its life & premium is justified

Place

Marketing no more a cost center - build strong marketing workforce

Increase sales force and provide autonomy to handle factory and plant personnel

Incentivise distributors to "push" for SKF products

Promotion

Engage sales force in direct promotion model

Increase visibility among factory personnel, mechanics and engineers