You have been appointed Geschaftsfuhrer of KAVAG GmbH outside of Frankfurt, Germany, by the Vice President International of a large US engineering/manufacturing corporation. KAVAG has been struggling for years, mainly due to the neglect by the parent company. Morale is poor. The demand for oil and natural gas is expanding, there are tighter air pollution control laws, and manufacturing companies in Eastern Europe and the Central Asia countries (newly formed after breaking with the Soviet Union) are looking for business.
See the description of KAVAG’s Product lines for applications, competition, customers, sales and gross margins. A brief summary is as follows:
• Catalytic & thermal incinerators. Most of the fabrication is done in the KAVAG shop.
• Wet scrubbers. The application engineering (chemical) is the key to the business and KAVAG has three chemical engineers. Most of the work is sub-contracted to specialty shops, with final assembly and testing at in a warehouse at corporate headquarters.
• Bag filters. Competition is intense with the bigger fabricating shops having a distinct advantage. Fabrication is at KAVAG.
• Pulse Jet filters. The application engineering is key with this specialty equipment (US patent expired 3 years ago) that is used in food processing, veneer and furniture operations, mineral processing, metal fabrication and textiles. Strong competition in most Common Market countries. The fabrication is basically cutting, fitting and welding of steel, painting, assembly of blowers and motors at KAVAG. The gross margins are 10% less than in the parent company, but there is a lot of potential due to the strong US position/reputation..
• Dry Gas Scrubbers & Gas Separators. These are pressure vessels which have layers of cyclones inside a heavy steel chamber. Application engineering is key. The pressure vessels are sub-contracted to heavy industry companies (80% of COGS), while the cyclones and accessory equipment is handled by KAVAG (20% of COGS), but can done in a steel fabrication shop. KAVAG Dry Gas Scrubbers have been installed at every compressor station on the Orenburg Gas Pipeline running from central Russia to Western Europe. Almost every drilling platform in the North Sea has a Gas Separator from KAVAG.
You are required to do market analysis in Germany (2 pages)
Market Analysis for 2001-2002
Future Market Needs
Projected Market Growth
Where that market might be(potentials for demand)
Industry Dynamics
SWOT
Porter 5 forces
Distribution Patterns
Future Industry Participants
Strategy and Implementation Summary