Elaborate on the Concept of ‘bundling’ Strategy. Moreover, Explain Why the Timken Company Adopted the Bundling Strategy?

Question # 1

Elaborate on the concept of ‘Bundling’ Strategy. Moreover, explain why The Timken Company adopted the Bundling Strategy?

The bundling strategy is a strategy for overcoming the competition smartely. As thr name shows it involves the diversification and innovation in the operations of thr company and in its core ptoducts. It not only gives the competitive edge but helps the companies to maintain their matket share.

This strategy is used by many well developed companies. Companies introduce new ptoducts,enhance their products, increase competency and efficirncy of their prducts and operations.

Timken has also used the bundling strategy. In 1990 it started giving prelubricated and preassembled products to the automobile buyers. This strayegy increased its revenues and the EPS. This effect started to shed when the international suppliers started giving these kinf of products in much efficient and simple form and at low prices. Timken has faced a downfall in profits and fears to loose its market share and its credit rating as well. After the downfall and the tough competition from the foreign suppliers/competitord Timken has onvr again decided to go for bundling strategy and this time the strategy is slightly diffetent from the previous one.

In 2002 Timken has decided to introduce new products to its product line. To achieve this aim Timken is very positive towards acquiring the Torigton. This would not only increase its matket sharee but once the ptoducts of timken woulf be bundled with those of Torington the porfolio of Timken would have more diversified products . This bundling strategy will help Timken to achieve the competitive edge and to survive in the increased competition induced by the foreign competitors in the market.

Compeyitive edge

Compare with competitors

Industrial condition

Foreign competition

Policies are favoring the steel industry.

Shipments have reduced since 2001 the reasons are economic recession, decreased automotive demand, and the terrorists attack of september 11 2001

Large debt

Decreasing eps and share price

Already done bundling in 1990

Should opt acquisition bcz it is necessary and good for achieving competitive edge. To get a good market share.make its mark in the world markets.

Reduce costs, 3rd largest in bearing industry

By acquiring