Singer Flashcards
Overview
first successful US multinational manufacturer
By 1914:
90% of all sewing machines sold in the world
7th largest firm in the world
one out of every 4 households in the world owned a Singer machine
History
1850: rising real incomes, world’s first commercially-successful sewing machine
1851: patent
to raise funds: partnership with lawyer Edward Clark
Patent Pool
- many sewing machine companies in the market place at the time
- technical and legal obstacles
- Elias Howe “patent war”
- most manufacturers: selling territorial rights to selling agents
- Clark: innovated by establishing his own branches
- 1856: 4 companies holding patents to 10 basic components: patent pool, which created cartel
- with licensing fees providing a steady income: Singer introduced first sewing machine designed for home use
- Clark pioneered installment buying plan (enabled everyone to buy machine)
International Expansion- licensing
1855: french patent (failed)
International Expansion- own factory in Scotland
- 1867: first foreign factory in Glasgow
- very unusual move (domestic market in US boomed following end on Civil War)
- began by assembling parts imported from US. Over time, manufactured the heavy stands of the machines, and assembled them with imported machine heads. Finally, it began to manufacture entire machines and supply them worldwide.
- 1885: new factory near Glasgow (largest sewing machine factory in the world )
International Expansion
- factories in Canada, Austria, Germany
- 1901: Russian factory
- Singer used its own sales offices to market sewing machines
- marketing strategy of intensive marketing: individual canvassers
- by 1890: machines sold virtually worldwide and almost entirely by its own employees
- markets in North America and Western Europe saturated= Russia
- Singer agents (weekly salary + commission) responsible for selling machines, collecting installment payments, and even doing minor service on machines
How much of a hold does a company need on its domestic market before going abroad?
- strong installment system
- membership of a patent cartel
- establishment of a brand
- effective organization
Pros of building factory in Glasgow
- drawbacks with exporting and licensing
- competitor might take this step if Singer doesn’t (patents are void in most international markets, firm had to judge whether its brand is strong enough to prevent competitiors taking its business
- combination of cheaper labor in Britain with advanced US technology
Why not go somewhere really cheap, India or China
low income country but Singer wants a market for expensive consumer
Cons?
- cost of foreignness (which is why Singer begins with English-speaking Scotland rather than for example France)
- multiple risks: changes in law, tax, unions
- figure out how to control assets which are located far
How can Singer take 90% world market by 1914?
- never a technological leader
- Global strategy: distribution system, FDI (Singer’s dominance began with Glasgow factory)
- Organization: Singer builds a hierarchical managerial structure. One of the first in the world, and become characteristic of american factories
- Marketing: effective marketing organization that is adjusted to different environments
- instalment plans (but high default rate)
- canvassers and collectors
- In russia, local manager Flohr modifies the system as that country is so large and rural
- marketing system expensive. However, sewing machines were a big purchase that lasted a long time. Singer’s before and after sales support service made consumers feel more secure
How do you attack a company in such a strong position
Singer bought its largest US competitors (Wheeler and Wilson, in 1905) because it had a very strong cash reserve
A number of German companies developed technically-good machines, but their distribution was no match for Singer’s
