The machine tool industry, even though it is tiny, is often considered strategic because of its role as supplier of technology to all metalworking industry. In recent years, the machine tool industry in Western countries has had to face major new challenges, especially in the form of new technologies and intensified international competition. The object of the present paper is to examine the basic forces at work in the industry and study the choice of strategy of machine tool firms in response to these challenges. Utilizing the analytical framework developed by Porter, the study is based on in-depth interviews with a dozen machine tool firms in the United States and Sweden.
Firm strategies technological challenges global competition