Session 9 Positioning Applied Differentiator

Case: Husky Injection Molding Systems, 9-799-157

1. What is Huskys strategy? Why has the company been so successful in the period
prior to the recent problems?
The primary reason for Huskys success, since the end of the 1970s until 1995, is the polyethylene
terephthalate (PET) industry niche to which the company focused itself at that time. The focus on the
PET technology was accompanied with a shift of the soft drink makers to the plastic bottles usage.
Husky positions itself as a company providing its plastic industry customers with the complete and
comprehensive manufacturing solutions. This strategy is implemented by producing machines based
upon technological innovation, durability, reliability and efficiency on one hand and by providing its
customers with a professional, reliable and quick service, based on highly trained technician on the
other hand.
The delivery of high technologic machines with both characters of speed and efficiency positioned
Husky as the leader of this niche. This was actually achieved by placing high obstacle for competitors
to get into this niche with compatible products and by eliminating the bargaining ability of the
customers, due to the top performance of its products relatively to the competitive ones and the
worldwide professional service.
2. Are Husky injection molding systems worth the premium price the company
charges? Be precise (i.e., crunch numbers).
-

For industrial products, can often do a WTP analysis like smart buyers!
Sometimes hard to get WTP for intangibles e.g., reducing carbon emissions
How important is their energy efficiency in warranting a premium price?

According to the information in this case (Exhibit #6), Husky charges for its product 200,000$ higher
relatively to competitors product. For answering this question, whether the premium above is justified
from the customers point of view, the following calculation will be made:
Part 1: Calculating the amount of days it will take to product the same amount of products with the
competitors machine:

Cycle-Time [sec]
Work per day [hours]
Products per day

Huskys Machine
10.4
22.3
231.92

Competitors Machine
11.8
18.9
223.02

Part 2: Calculating the amount of days for producing the same amount of products that produced by
Huskys machine in a year:
Part 3: Calculating the cost for producing the same amount of products that is produced in a year 365
days by Huskys machine and within 488 days in the competitors machine, for producing the same
amount of products. The information in the case provides very limited data regarding both the
constant and the variable expenses of the production process. As a result, the next calculation
assumes the constant expenses are low relatively to the variable expenses. Thus, the saves costs can
be done while using the two values above (365 and 488), namely the usage of Huskys machine saves
relatively to the usage of the competitors machine. Huskys machine costs, less than the competitors
machine. Thus, Husky injection molding systems do worth the premium price the company charges.
3. What has caused Huskys current difficulties?
-

Resin shortage & high prices (temporary)

Lower-cost competitors targeting Huskys segments (serious?)

There are two main reasons for the difficulties Husky were facing:
1.

The first one might be related to the failure of Husky to regard the economics of scope, namely
to adopt a wide view of the plastic industry. The shortage of resin needed for the PET resin
makers, caught Husky by a surprise. This shortage severely damaged the processor sector of
the industry and thus, it heavily effected the equipment manufacturing companies. The
implication of the crisis above was highly severe for Husky, since the PET production accounts
for the highest contribution for Huskys profitability. Adopting a wider scope of the industry
might lead Husky to take actions for preventing this shortage by warning the industry in
advance.

2.

The second reason for the difficulties Husky was facing was the entry of competitors to the PET
business that launched substitute products with significant lower cost. Those new products
increased the bargaining abilities of the customers or, in other words, decreased the
willingness of the customers to pay for the more expensive Huskys product.

4. How might Robert Schad, Huskys CEO, and the company respond? How should they
respond?
-

Cut prices? Generally, or selectively?

Enter competitors segments (counter-attack)?

Cut costs? Risk values/culture?

Raise/lower spending on service, AMC, technology, etc.?

Focus on communicating advantages to customers?

Build inputs instead of buying them?

Other changes?

The short-term actions Husky should take for improving her business status are as follows:
1.

Offering the products for lower cost: This action will improve the status of Huskys products
relatively to the substitute products. In addition, this action might pose greater obstacle for
other competitors to enter the PET business. The financial compensation for this action might
be achieved by limiting the extensive worldwide support for the lower-priced product that
might still be better relatively to the substitute products. Moreover, this action might be time
limited until Husky will assure the its market dominance and thus the financial damage of such
an action might be limited.

2.

Performing extensive ROI process of potential and current customers: This action might prove
official proof the profitability of purchasing the higher technical machines of Husky, despite its
higher cost, while providing the extensive scope of the products efficiency, performance and
reliability. This action may be also directed to the potential customers of the substitute
products for directly damaging the entry extend of the substitute products into the PET
business.

3.

Tougher attitude of Huskys sales people: The text refers the actual Husky marketing stuff as
totally unprepared for this defensive status the company is facing. Thus, entering a fresh blood
into this highly important company group seems to be needed. This can be easily achieved by
recruiting professional marketing people. In addition, Husky might consider the following longterm actions that will improve its position in the long run:

4. Extending its grip in other businesses of the plastic injection molding system: The technology
the company possesses might be useful in producing machines for similar businesses, like the

Yogurt cups and the bottle caps. Producing lower cost machines: Successfully confronting the
substitute products might be the production of similar products with lower technology, but the
same highly professional service that played a key factor on Huskys success so far.