 |
 |
 |
 |
|
 |
 |
the sensitivity of the technology, they were not generally encouraged to push for export
business other than defence interests. Then there were the large engineering companies
with substantial marine interests.
Electronics and aerospace contractors had, for example, found that their technology could
be transferred to undersea operations. The percentage of this business from marine
operations tended to be small, but because these companies had a high level of technical
sophistication and good financial resources they were becoming an increasingly important
force in the market. Typically, these companies were capitalised at over €1 billion. It was
usually for these companies that Burke engineering would subcontract, producing the hull
or shell to be filled with the higher added value electronics or hydraulics by the lead
company. Finally, there were marine specialists, like Burke, that had specialised in
particular areas of marine engineering.
Research and development, especially in materials technology, was becoming more and
more important to stay ahead of the market. The large companies spent around 8 per cent
of their turnover to develop new lighter but stronger materials that would be more resistant
to corrosion. Burke had carried out a straw poll of its customers and had found the
company status to be slipping in an area which had historically been so important to the
company. The results are in Appendix A, Table 3. It would apparently become more and
more difficult for the company to establish and further develop a competitive edge in this
particular market.
Competitive Environment - the Valve Sector
The valve market, was by contrast far more segmented. Though large multinationals had
subsidiaries that produced valves, their overall share of the market was small, and valve
manufacture had remained the preserve of small to medium sized specialists throughout
the world. Over the last 5 years, Scandinavian and German companies had tended to
steadily gain market share and had recently won a number of orders that Burke would
have been certain of winning in the past.
The reasons for this change in market share were:
a) far greater attention to the customers requirements. German and Scandinavian firms
tended to employ a much more highly skilled technical sales force than their competitors.
b) More sophisticated designs and more flexible products. The equipment installed in
German and Scandinavian factories was capable of far greater range of materials and
designs. They were always first in the market to offer new materials and concepts.
c) Much greater attention to delivery schedules and timing of contracts.
d) Greater support in installation and maintenance.
Pricing was not considered to be an important factor. General trade opinion was that the
valve market was not particularly price sensitive and that other product benefits were far
more important. Because Burke Engineering had failed to meet the new competitive
standards it had experienced significant problems in establishing an international presence
in the valve industry, even though the quality of its work was considered to be superior to
that of the competition, as Table 4 in Appendix A demonstrates.
Promotion in the valve market concentrated on direct contact with potential buyers, but
also involved substantial expenditure in international exhibitions and the relevant technical
magazines. Companies, comparable in size to Burke in Europe, were spending anything
between € 300,000 to € 500,000 on such promotional activity. In the current year, Burke
 |