Founded in 1906, Rayovac had become, over the course of the twentieth century, one of the...

Founded in 1906, Rayovac had become, over the course of the twentieth century, one of the best-known battery producers in the U.S. However in 1996, with its market share steadily eroding due to fierce competition from Duracell, Energizer, and Panasonic, it was purchased by the private equity firm Thomas H. Lee and Partners (THL). Over the next decade the firm embarked upon an ambitious acquisitions program which saw it grow from a $400 million annual revenue business in 1996 to an over $2.8 billion annual revenue business by 2005.

In 2003, the global battery market was worth about $24 billion in sales with the U.S. accounting for about one third of global consumption. About 73% of Rayovac’s revenues came from North America. Though the U.S. market was growing at an annual rate of 7.4%, fierce competition in the U.S. led to considerable price discounting and required significant advertising and promotional expenditures. Rayovac, as the number three player in market share behind Duracell (a division of Gillette) and Energizer, competed as a value brand rather than as a premium brand. It sold a high-quality product but at prices 10-15% below its main competitors. With the proliferation of personal electronic devices, Rayovac expected strong growth to continue, especially in emerging markets around the world as income grew there.

Q1: Do a SWOT analysis for Rayovac.

Strengths:

Weakness:

Opportunities:

Threats:

Expert Solution

Strengths:

(1) Rayovac developed itself as a value brand rather than a premium brand and thus even after great competition from other top companies it stood as a third largest market share holder.

Weakness:

(1) Even after being a century old company Rayovac was unable to spread its market share in other parts of the world (27%), as most of its revenue (73%) came form North America.

Opportunities:

(1) In the deacde after 1996 Rayovac cashed on the opportunities by focusing on ambitious accquistions and within a period of 9 years its market value increased from $400 million to $2.8 billion.

Threats:

(1) The biggest threat to Rayovac was as most of its revenue (73%) was genertaed in North America. So if in future the comapny is unable to overcome some unavoidable consequences such as change in government policies, new prodcuts by rival companies, change in customers needs, etc. it will lead to a great loss to the company.

Rahul Sunny answered 2 years ago

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