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Le Petit Chef Case Analysis

Inventory Management

Submitted To: Submitted By:
Ms. Habiba Abbasi Hitesh Kumar Sharma

Case Summary:-
This case mainly talks about microwave industry how it was grown, the technology concept,
industry overview, and strategy implementation to overcome Irom competitive pressures. The
microwave market is global. Three main regions (USA, Europe and Japan) are served by major
players and some local, smaller suppliers which tend to target the 'less price sensitive high-end
market. The European market is quite Iragmented due primarily to heterogeneous Iood
preIerence and cooking habits, allowing regional players like which Le Petit CheI to oIIer
tailored value propositions.
Innovation in microwave industry comes Irom:-
O Core technology : better wave distribution, combi-oven,
O The development oI accessories,
O The improvement oI the user interIace.
Le Petit CheI microwave ovens account Ior 85 oI the company sales. Le Petit CheI Products
'commanded premium prices Ior their perceived innovation and high quality perIormance.
Thus, Innovation is paramount. Le Petit CheI enjoyed high margins until the position attracts
both larger European players and Japanese competitors
35 oI manuIacturing costs oI a basic unit was Ior Most oI the microwave oven manuIactures
buy magnetron and high voltage power supply unit, two oI the main components Irom the same
suppliers like Sharp and Samsung. Le Petit CheI enjoyed the similar economics oI scale on these
components as its competitors.
Because the competition, the price oI microwave oven also dropped by 10 each year Irom 1996
to 2000 that Iurther reduce company`s revenue. Other reason was the over extent their
capabilities in the introductions oI new products. With very limited R&D resources, Le Petit
CheI had expanded its products Irom around 7 in 1995 to almost 30 diIIerent products in 1999.
There were 7 ongoing projects in the pipeline and 5 proposed R&D projects.
With company Iounder`s objectives on cooking appliances that the technology strategy oI the
company was a 'technology pull based on the needs and wants Irom the customers
Le Petit CheI Iaces a usual challenge: how to keep on growing on a mature market when
diIIerentiation though innovation is more and more expensive and proIit tends to drop because oI
increased competition. Microwave oven has been a disruptive technology. For a mature
technology, it is more a matter oI optimizing the innovation triangle and implementing the right
processes to align R&D, Operations and Marketing. Le Petit CheI needs to use synchronous
innovation, to make sure their strategic positioning matches their processes and thereIore their
cost structure. They also might want to push Ior a disruptive technology like introducing Iuzzy
logic to sustain their competitive advantage.
I have the Iollowing recommendation Ior company:
1. Should Iocus on more advanced R&D research.
2. Company should develop a strategy plan to have an edge over competitors.
3. Company can use new technologic advances to diIIerentiate the products Irom rivals.
4. By reducing the overall supply chain cost can provide the products at lower cost as
compare to other manuIactures.