Sturm Ruger And Co And The US Firearms Industry Case Solution

1. Problem Statement

Sturm, Ruger & Co has been facing a volatile business environment with regards to its future business strategy. Although the company has managed to do tremendous business during 2016, however, the uncertain scenario created by the upcoming elections resulted in issues for the progress of the business. Potential terrorist threats and law & order issues forced a number of people to purchase firearms for their safety. Nonetheless, the debate on firearms regulation created pressure on the business of Sturm, Ruger & Co. It was found out that the Democratic Party is emphasizing increasing regulations, while its Republic counterpart was focusing more on allowing a free-market environment in the firearm industry. Therefore, the company remains skeptical about whether it will get the required return on the investment that it is making in its business processes.

2. Evaluation and Analysis

i. Business-Level Strategy

The business Strategy of the Company was focused towards coming up with new products at a fast rate, at the same time ensuring that high-quality products are marketed at a relatively lower cost in order to survive in a competitive industry. It also relied a lot on providing safety education to its customers in order to make them responsible citizens. Therefore, it can be stated that it had a cost-leadership form of the business strategy. However, there are certain risks that this strategy poses. It often is not able to develop branded firearms that can help them differentiate their brand identity. This can create problems in the future, as with rising regulations, its customer base can narrow down, and the lower cost strategy might not work. 

ii. External Environment

The external environment demonstrates different opinions pertaining to guns. The gun industry is liable to various state and federal laws. The manufacturers and dealers are required to go through a stringent process of regulatory procedure in order to get a license. The media has also played an important role in highlighting violence related to the use of guns by general people. Legal stipulations have also brought the industry into a greater regulatory environment. Some important examples of legislation are the Assault Weapon Ban (AWB), Protection of Lawful Commerce in Arms Act (PLCAA), and others. Rising regulation can prove inappropriate for Ruger & Co, as it might not be able to maintain its revenue base, and its low-cost strategy might not succeed in such a volatile external environment.

iii. Opportunities and Threats for Ruger & Co

The strength of the company is its highly diverse product portfolio, and it is an interesting thing to note that arms manufactured by the company do not cannibalize the sales of its other products; this has facilitated it to develop a robust and profitable customer base. Apart from this, it has also managed to float its product to the distributive framework of the industry in an effective manner, primarily due to its large size and low-cost offerings. However, there is a threat faced by the company related to the regulatory framework, which can make its sales stagnant and allow limited opportunity to grow.