Husky Injection Molding System

Topics: Microeconomics, Price, Value Pages: 5 (1677 words) Published: February 24, 2013
Background Information on Husky
By the late 1950s, Husky had established a reputation as a high-quality maker of plastic molds, especially "thinwall" molds used to make vending cups and other containers. As demand for the injection-molding machinery rose around the globe, Husky expanded to Europe in the mid-1960s and established a joint venture in Japan in 1971. A new line of molding systems, tailored for the production of PET bottle preforms, pulled Husky out of its crisis by the end of the 1970s. Profits from this area allowed the company to expand into other product lines and additional countries during the 1980s and early 1990s. Competitive Advantage: Firm Characteristics

At the firm level, performance is determined by value and cost position relative to competitors. Value Position
Husky, as the leading firm in the preform niche, has a strong value position in comparison to its competitors as it differentiates itself from competitors by offering series of product innovations such as molds, hot runners, robotics, and value-added services. This strategy implies that Husky focuses on increasing the perceived value created for customers, which allows it to charge a premium price. Similarly, since Husky has 60% (estimated) of the world's preform manufactured on Husky system, their significant market share allows them increase the barrier of entry and continue to set a high price and earn supernormal profits as an oligopoly firm. Cost Position

On the other hand, its relative cost position is weaker as they offers specialized machines, molds, hot runners, and robots and not purely standardized machines like Cincinnati Milacron. Hence, it reduces Husky's ability to compete solely on price. Business Strategy: Focused Differentiation Strategy

Husky follows a differentiation strategy. The goal of a generic differentiation strategy is to add unique features that will increase the perceived value of goods and services in the minds of the consumers so they are willing to pay a higher price while keeping cost at the same or similar levels. Moreover, Husky has a focused differentiation strategy since it focuses on a narrow and niche products, which include medium-tonnage machines, PET, preform molds and hot runners (as shown in Exhibit 2). In this case, Husky seeks to create higher value for customers than the value that competitors create, through the three value drivers. Product Features: Husky's employs the latest tools and technology and their systems are known for their speed, ruggedness, resin utilization, and durability. For instance, Husky preform system might make a set of PET preforms for soda bottles with a cycle time 10-15% shorter than a competitor's system. Thus, Husky's customers have a higher willingness to pay a premium price for this higher quality product. Sales and service: Husky sold exclusively via its internal sales force and gave general managers in each region responsibility for both the local sales force and the local service technicians. Furthermore, Husky invested heavily in building Technical Centers in key location to provide local technical support and training. In addition, Husky had deployed a system designed to ship spare parts to any location quickly. Since a machine breakdown could halt a processor's operations, customers cared a great deal for speedy services. Husky's global approach to sales and services, strong record on after-sales service and maintenance and decentralized decision-making will therefore increase the perceived value of Husky's product or service offerings by focusing on customer service and value added services. Thus, Husky's customers will have a higher willingness to pay a premium price with the higher valued service. Customization: Husky's sales were in the medium-tonnage machines, most dedicated to the PET preform and thinwall. They provided a comprehensive and integrated product line for the end uses it served and made specialized machines, molds, hot runners, and...
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