IRobot Company Strategic Management Report

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Updated: Mar 7th, 2024

Problems

The major problem iRobot is facing is the lack of stiff competition from rival firms.

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Industry Analysis

The robot industry was valued at $19 billion in 2008 (Hoffman, n.d.). Consequently, this industry highly relies on governments and corporations as its main target market. The main products that robot manufacturing companies sell to governments around the globe include ground and maritime unmanned vehicles that are mainly used in the military (Hoffman, n.d.). However, these companies have started to venture into the consumer market by manufacturing household products. For instance, iRobot has developed products that clean gutters, floors, and pools.

The success of the robot industry highly relies on the skills and expertise of the employees of a given firm. Like other firms in the robotic industry, iRobot strives to maintain the excellence of its employees through extensive research and development programs. It is here that employees work individually or in groups to develop new products and enhance existing ones to meet the needs and requirements of its target market. These advancements are protected by copyrights and patent rights. Despite presence of substitutes, the level of competition in this industry is quite low. Thus, firms do not face excessive pressure that would require them to use extensive strategies to gain a competitive edge. This is due to the stiff barriers that prevent other firms from entering into this market. It is due to this fact that robot manufacturing companies do not want to be tied by contracts with their suppliers. In conclusion, the low number of participants in the robotic industry ensures that these firms enjoy maximum profits. These firms also develop their products to meet the changing needs of their target market.

Business Strategy Analysis

The goal of iRobot is to make the lives of people easy and fun with the use of robots (Hoffman, n.d.). To reachthis goal, iRobot has developed an effective business strategy that focuses on two exclusive markets; the US government and the consumer market. iRobot has been supplying the US government with robots since 2001 when it released the PacBot that assisted in the search and rescue program after the September 11th attacks (Hoffman, n.d.). By 2010, the US government had thousands of iRobot products that assist in the maintenance of peace and security in the nation. On the other hand, iRobot released its first household robot, Roomba, in 2002.

Given its success, the company has now released many more domestic robots for various chores around the house. Given these facts, it is evident that iRobot has been operating in an effective and efficient manner. In 2005 for instance, the company had an IPO of $120 million when it joined the NASDAQ stock exchange (Hoffman, n.d.). Consequently, its revenue has doubled since 2009 from $140 million in 2005 to $299 in 2009 most of which came from the sale of its robots (Hoffman, n.d.). However, the economic crisis of 2008 has a negative impact on its domestic market, hence reducing its domestic sales. However, its international sales in 2009 increased to $30.9 million. This resulted in iRobot being the leading robot selling company in the world.

Strategic Evaluation

iRobot’s major strength in the course of its operations is its research and development program. Through this initiative, the firm has been able to use new technologies to come up with products that meet the needs and desires of its target market. This plays a critical role in creating a strong brand name and building of brand loyalty (Lenox, 2012). The firm also embraces the concept of teamwork hence building a strong organizational culture that improves the efficiency of its operations. However, its major weakness is its overreliance on third party companies to manufacture its products. This might reduce the effectiveness of its value chain process.

The major opportunity of iRobot is the presence of an expanding market. The firm can venture into the maritime, law enforcements, and healthcare industries. Consequently, limited competition will guarantee its overall profitability in the long run. However, its major threat is the rapid development in technology that might leave its advancement obsolete. The firm also relies on the US government as one of its main target market. However, this market is highly unstable since it can be affected by social and political changes such as change of regime. Consequently, the firm will face stiff competition once its copyrights and patent rights expire.

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Critical Issues and Recommendations

Despite the success that iRobot is enjoying, the company needs to come up with strategies that will ensure that it stands at a competitive edge over its rivals. Since the company is not experiencing stiff competition, it is reluctant to come up with strategic marketing strategies. Thus, iRobot needs to improve its marketing strategies through effective advertisement campaigns especially on its household products. Other than social media, it should use avenues such as the television, radio, print media, and billboards. The firm should also organize events, shows, and support local activities as part of corporate social responsibility. This will increase the level of its product awareness, brand name, and brand loyalty. As a result, the firm will have a strong market share, hence guaranteeing its sustainability in the short run and in the long run.

References

Hoffman, A. (n.d.). iRobot: Finding the Right Market Mix. Web.

Lenox, M. (2012). Foundations of Business Strategy. Web.

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IvyPanda. 2024. "IRobot Company Strategic Management." March 7, 2024. https://ivypanda.com/essays/irobot-company-strategic-management/.

1. IvyPanda. "IRobot Company Strategic Management." March 7, 2024. https://ivypanda.com/essays/irobot-company-strategic-management/.


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