Husky Injection Molding Systems

Miguel Alberto Christa Healy Ross Miller Lauren Schneider BA Capstone 4196: Global Polices Summer Section: 014 8 June 2011

Introduction Husky Injection Molding Systems was started by a German by the name of, Robert Schad. Through previous, inexperienced mistakes, Husky started off rough but then made a name for it. Husky Injection Molding Systems was a company which built machines and mold for plastic items. Schad bred the company slowly through time by offering new products and expanding the company. From the brink of bankruptcy, Schad pulled the company out into the green and then exponentially grew. Husky started off offering a very thin product line by currently offers a vast selection of top quality product and services in the Plastics industry.

SWOT Analysis Strengths Husky Injection Molding Systems had much strength. They offered a wide variety of products with each having top quality. Husky always had the most up-to-date technology running in the company which attributed to the quality and speed put into their machines and mold. Their aim was listed as, a supplier of complete factory solutions for the plastic industry. In order to do this they needed to have amazing customer service and great management. In order to have these incredible products, they needed incredible research and development which they did. To have all these value working in perfect conditions, Husky had a stern and strong corporate culture which drove employees to work to the best of their abilities. Encompassing all these strengths, this is the reason that Husky Injection Molding Systems has had such strong brand image to customers and even companies in the industries. Weakness With great quality comes a price, Husky had to charge a pretty hefty premium for their products and services. The premium becomes more apparent when you compare to their competitors. For seemingly the same product, Husky would charge $400,000 as opposed to their competitors' $350,000. This is hard for the company to express their higher premiums. Although big in many of the different sectors and types of machines in the plastic making industry, they still fall short in the remaining sectors, such as the small tonnage machine area. Husky falls short in the international markets compared to other competitors. Opportunities As stated above, there are a couple of sectors of the market that Husky falls short of. An opportunity arises from these weaknesses. Husky could start to allocate more of their resources into expanding into the small tonnage machine market which handle jobs less than 150 tons. This can be good to start to sell towards smaller businesses. More opportunities come from the international market. Husky could hope for a joint-venture or a buyout with the Austrian company, Engel. Engel already has a presence in their home country so that would take care of all the international risks dealing with foreign distributors and supply chains. Threats Due to being the high-end producer, low cost competitors could be a huge threat to Husky. The possibility of an economic recession could make customers lose sight of Husky's high quality and drive them to start to look at lower priced machinery for a short-term gain.

Strength/Opportunity Strategy: International Expansion Since Husky has such a strong brand image, they could potentially do a joint-venture with an international company who has equally brand equity and tackle the international market. They offering would be to show their highly rated quality and speed of both their product and services. Strength/Threat Strategy: Promotion of Value-added Service Husky needs to emphasize their reason for charging such a premium. They could make their brand known to target customers that don't know about their quality. Husky could explicitly show why their product is superior and that what customers are buying is top quality. Weakness/Opportunity Strategy: Expand Product Line One weakness Husky has is that they do not have any products at all in the small tonnage machine sector. They could easily allocate more their resources and time towards R and D to small tonnage machinery and dominate that part of the market. Weakness/Threat Strategy: Market Research In order to combat external factors such as low cost competitors swooping to take market share or even an economic crisis, Husky should always be on their toes and keep up their research on the market.

Questions 1. Define their strategy. Husky has entered into the plastic industry as the leading firm in this preform niche. They had perfected vertical integration by assembling and designing the molds and machines, but they relied on outside vendors for the products to build their products. Husky enjoyed technical challenges and had high research and development expenditures. They had high quality products and could charge premium prices. Customers were willing to pay because of their excellent customer service, technological knowledge and maintenance. In addition, Huskys corporate culture was superb. Unique to other businesses, not just in their industry but nationwide, they were concerned with the environment and paid close attention to their ingredients of their products. 2/3. Given their competitive advantages and competencies, is this an appropriate strategy? Given the industry characteristics, is this an appropriate strategy? An equipment vendors reputation and its history with a particular customer played significant roles in the purchase decision, as did the vendors record on after-sales service and maintenance. (pg292) Business in this preformed niche is dependent on reputation, longevity, and customer service. These qualities were Huskys competitive advantage, core competencies, and lead them to be the industry leader. Their strategy was the reason for their success and their ability to compete in the market up until 1995. However, external environments turned the tables. Resin prices drastically rose as a result of a shortage, placing Husky on the brim of bankruptcy. Also, their niche market was invaded by multiple (cheaper) competing companies. 4. Recommend changes to the strategy to enhance, maintain, or turnaround its performance. Even though their current strategy has allowed them to be the market leader, some changes need to take place to defend and hold their market share. First and foremost, they need to try and predict

uncontrollable factors. We know that it is hard, but they should develop a team of forecasters who can use tools to better predict the unexpected. Secondly, Husky never patented their machines and molds. They need to do this before competitors start using their ideas. We also feel they should start developing single-stage machines. This will allow them to compete with smaller companies and grab more market share by acquiring smaller clients. Due to the extension of this new product line, they should create and expand their sales force. With an internal, larger sales force, they should be trained to perform technical assistance. By training the sales associates for technical work, they will gain better knowledge of the products and how they work. In return, they could sell them better and giver customers better technological assistance. Lastly, we also feel an internet presence would be beneficial. Customer service would increase and people could learn more about Husky and their products.

Porters Five Forces

Suppliers
- Forward Integration by suppliers - Customer fragmentation - High switching costs Competitors
- The Mannesmann Group - Cincinnati Milacron - Engel - Electra Form - R&D Tool & Engineering

Threat of New Entry

- Economies of Scale - Lack of product patents - Brand loyalty issues

Buyer Power
- Pricing issues - Product differentiation - Increased Competition (possible substitution)

Substitutes
- Lower cost alternatives - More machines available (Husky's limited production) - Less Specialized companies