Strategic Management and Marketing

Seminar Paper, 2009

26 Pages, Grade: 1,5


Table of contend

II. Table of drawing


1 External Analyse
1.1 Market and Branch
Market trends and forecast
1.2 Competitors
Stategic Groups
Competitive strength grid
1.3 Customer (Segmentation and Motivation)
1.4 Environment
Critical Success Factors

2 Internal Analyse
2.1 Vision/ Mission/ Strategy/ Policy/ Culture of Bosch Rexroth
2.2 Organisation Structure
2.3 Organisation Position (SWOT)
2.4 Core-Competence
2.5 BCG-Matrix
2.6 GAP-Analyses

3 Strategic choices and Strategic decision

4 Critical evaluation of strategic direction

III. Appendix

IV. Reference

II. Table of drawing

Drawing 1: Overview and Structure of the treated subjects at this work

Drawing 2: Poters-five-forces

Drawing 3: Hydraulic market 5 year forecast

Drawing 4: Share of the market of relevant competitors at the cartridge market

Drawing 5: Competitive strength grid at relevant competitors at the cartridge market

Drawing 6: Customer profiles at the hydraulic market

Drawing 7: PEST(EL)-Analyse of Bosch Rexroth

Drawing 8: sales figures of cartridge valves

Drawing 9: Matrix Organisation of Bosch Rexroth

Drawing 10: Development of the product portfolio of Bosch Rexroth

Drawing 11: Analys of possible combinations of product programs


Bosch Rexroth AG is an industrial enterprise in the area of the impulse and control technology. It was originated from a amalgamation of the Mannesmann Rexroth AG with the business section Automation technology of the Robert Bosch GmbH on the 1st May, 2001. Since then the Bosch Rexroth AG is a 100% daughter of the Robert Bosch GmbH. In 2007 the enterprise achieved a turnover of more than 5.3 bn. euros. Overall 32,900 employees are working at 18 locations in Germany, the top location is in “Lohr am Main”, Germany.

Since the Robert Bosch GmbH is a worldwide acting corporate group with a great number of independent business areas, in particular the business area of the hydraulics is considered and examined in this work.

illustration not visible in this excerpt

Drawing 1: Overview and Structure of the treated subjects at this work

Source: Carolin Sachse

In according to Keith Ward (1992) it is a dynamic process to define a business strategy which requires considering all relevant (external and internal) environmental issues, the definition about the actual position of the business and a clear understanding of the business objectives.

In this work the External Factors which influence the enterprise Bosch Rexroth are analyzed. This means that the demands of the hydraulics market, existing competition relations the customers and their expectations as well as the general enterprise environment will be described.

In the second step the internal relations within the enterprise are analyzed to be able to determine the current position of the enterprise as well as its capacities' and possible action needs. Then an enterprise strategy is developed and evaluated onto their suitability and negotiability.

1.1 Market and Branch


This model is an aid to analyse the enterprise environment and so to determine important general conditions for the development of an enterprise strategy. The basis of this theory is the knowledge, that the enterprise strategy must be adapted to the enterprise environment. The intensity of the competition is depending on the characteristic of these forces what also determines the attractively of the branches.

Target branch is the hydraulics market which records a technology change and/or a technology enlargement to the compact hydraulics in particular in the sector of cartridge valves.

illustration not visible in this excerpt

Drawing 2: Poters-five-forces



The quality and the shape of the purchased components and semiproducts are not extraordinary high and correspond to the state of the technique. Therefore there is a great number of suppliers in this branch. But it is usually to qualify suppliers, what is a certain expense to the enterprise and also brings out a barrier to change the supplier. Despite possible expense savings the enterprise pursuits a two supplier strategy, through which suppliers stand mutually continuously in competition and attain no excessively powerful position.


The customer profile within this branch is mixed and can be subdivided into major and small customers. Of course major customers have a special power position through their purchasing power.

This branch operates in a business to business market, which means that the customer is also a manufacturer of products. So the gaining of certain customers within the branch can imply a prestige profit. An example of that is the customer Caterpillar that has especially high requirement on quality.


The customers of this branch are also developing, manufacturing and testing hydraulic systems.

Therefore the exchanging or change of system components is always afflicted with risks and costs. So it exists a distinctive product loyalty. That means that it is difficult for substitute products to get acceptance within the branch.

Potential Entrants:

Existing enterprises have already established themselves and their products meet the requirements of the branch (differentiation).

New companies have increased costs for research and development as well as for canvassing (capital requirement). The products of the branch are series- and/or catalogue products, at which the production costs are sinking with the increase of the sales amount (economies of scale). Partially costs arise for the customer through the change of products (switching cost).

Industrial Competitors:

The number of the relevant competitors is manageable. However, increased alternation costs exist for customers. A complete sales structure for the customer support is necessary, which raises the fixed costs. Therefore it is produced at the capacity limit.

Cartridge valves were developed in the 40th and 50th in America. Pioneers of this new valve technique were Waterman Hydrauliks, Fluid Controls, Fluid Power Accessoirs and Racine Hydraulics. Most of these valve manufacturers were taken over later by the company Parker.

Market trends and forecast

The hydraulics market can be divided into two application sectors, industry and mobile. The industry sector contains all stationary hydraulic systems for example presses or machine tools, however this sector defines only ca.17% of the hydraulics market. Mobile applications cover the remaining 83 % of the hydraulics market. All movable machines with hydraulic mechanism or work hydraulics as for example tractors or wheel loaders belong to the mobile applications.

These two fields must be differentiated because there are different requirements to the products. These are described more detailed in this work during the customer analysis.

The product management is business area that collects all available data concerning sale amounts of hydraulic components. From these data a scenario is created how the development of the hydraulics market will look like in the next five years.

This forecast does not only distinguish between mobile and industry applications, but also regional between Europe, USA and Asia. The arrangement into regional markets is important since these offer a different sale potential and have different necessities and basic conditions.

illustration not visible in this excerpt

Drawing 3: Hydraulic market 5 year forecast

Source: Data base of the product management BRH/CO/SPO

Generally the hydraulics market is in a growth phase. For the enterprise Bosch Rexroth the European and the Asiatic Market is very interesting, since these have a stronger increase and there are no entry barriers in the European and only small entry barriers in the Asiatic market.

The US market increases only insignificantly, furthermore it is hard to get into this market since customers are here rather conservative and only change the suppliers for huge cost savings .

1.2 Competitors

Stategic Groups

There are a great number of manufacturers of hydraulic components. In the case of an analysis of the competitors it is advisable therefore to divide these into strategic.”Often it is simply not feasible to consider 30 competitors, to say nothing of hundreds. Reducing this set to a small number of strategic groups makes the analysis compact, feasible, and more usable.” (Aaker A. D. and McLoughlin D., 2007, pp. 61)

For the hydraulics market there are two interesting groups:

1. The Full-liner: These enterprises offer everything from one source. In case that the customer has problem and/or a wish, the enterprise is able to provide draft creations, dimensions of the necessary components up to the construction of the equipment, the maintenance of the equipment and the creation of documents. If necessary special items can be developed especially for the customers.

Hydra Force, Bosch Rexroth and Parker belong to these enterprises.

2. Low-Cost-Producer: These enterprises are characterized by cheap products.

These enterprises offer a restricted product selection. These products are standard components and are cheaply produced in one design in high quantities through which a small sale price is possible.

These enterprises are characterized by a slim company structure.

Oil Control, SUN, Hydac and CCC belong to these enterprises.

There is also a market analysis of the product management. For 2008 the following market distribution turned out. (See graphic below)

illustration not visible in this excerpt

Drawing 4: Share of the market of relevant competitors at the cartridge market

Source: Data base of the product management BRH/CO-SPO

Competitive strength grid

A further helpful analysis model for the competitor consideration is the „Competitive strength grid". At that following result turned out:

illustration not visible in this excerpt

Drawing 5: Competitive strength grid at relevant competitors at the cartridge market

Source: Competitor analyse of BRH/CO-SPO and Aaker A. D. and McLoughlin D., 2007, pp. 72

Parker is the biggest competitor and its strengths lies in a large and high-quality product selection. In addition Parker has an extremely good service structure through which the brand name already has established itself by the customers.

Bosch Rexroth is also a known brand name that stands for a high quality standard. Deficits exist in the product selection because not all valve functions are developed so far.

1.3 Customer (Segmentation and Motivation)

"Segmentation is often the key to developing a sustainable competitive advantage." (Aaker A.D., 2005, pp. 42) The first reasonable differentiation occurs in industry customers and mobile customers.

1.) The industry customer needs hydraulics components to build stationary machine tools. The order quantity is on the average between 500 to 5.000 pieces per annum. The components must show a high quality and are therefore upscale. The profit margin per product in the industry field is higher as in the mobile market. There are no special installation space requirements.

2.) The mobile customer needs hydraulics components to build mobile working machines. The order quantity is considerably higher in the comparison to the industry customers and is on the average 3.000 to 250.000 pieces per annum. The installation space in the working machines is strong restricted, which implies a high demand for a compact design. Exceptional quality requirements do not exist, however, there is a high pressure of costs, for which the profit margin per product is smaller in the mobile sector.

illustration not visible in this excerpt

Drawing 6: Customer profiles at the hydraulic market

Source: Sales analysis of BRH/CO-SPO

A further grouping of customers occurs within Bosch Rexroth according to the importance in three categories.

A-customers: Especially important customers because they have a high purchase potential and are very influential.

B-customers: Important customers with middle to high purchasing power.

C-customers: Relevant customers with small purchasing power, but with strategically importance, for example in order to get into new markets.

After the segmentation group-related purchase criteria can be determined. What motivates the customer to the purchase or to the nonpurchase.


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Strategic Management and Marketing
University of Bolton
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Carolin Sachse (Author), 2009, Strategic Management and Marketing, Munich, GRIN Verlag,


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