Hyflux: Strategy and Technology

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Technology Strategy of a Firm

Case Study: Hyflux

Company Profile
Founded in 1989 by CEO, Ms. Olivia Lum, Hyflux’s initial business activities revolved around providing water treatment through purchase of traditional membrane technology(MT) from other companies. However through intensive research and development (R&D), Hyflux moved to designing, manufacturing and selling its own membranes. Today Hyflux is considered a leading regional player in the water treatment industry and ranked by Forbes Global Magazine as the World’s 200 Best Small Company in 2002.

Hyflux Strategy
Hyflux’s vision is ‘to be a world leading water treatment company.’ [1] Hyflux developed a 3 pronged approach to achieve its mission. This overarching modus operandi is done through the means of differentiation through in-house development of superior MT, global expansion by venturing into different markets where profitable and through key alliances which buttress the overall strategy.

From this approach, they formulated a business strategy of Differentiation leadership for their products and an Incrementalist approach towards expansion policy. Technology strategy concurrently plays a key cornerstone role in the entire business strategy by providing its core strength of MT. Business Strategy

Differentiation Leadership
According to Mr. Freddy Soon, Senior Vice President of Hyflux, a strategy of differentiation is used to separate themselves from the ‘pretenders.’

First Mover Advantages
To differentiate, Hyflux quickly identified MT and purified water as a ‘sunrise’ industry as it is an important commodity for both industrial and public use. Locally, its early analysis gave Hyflux the first mover advantage in which it seized the opportunity and became the leader industry.

Quality and Customer savings
Hyflux aims to enhance the quality, features and the deliverability of its products to differentiate itself. By focusing on process applications, attention to precision, quality control and reducing production time Hyflux been awarded accolades like the ISO9001:2000 quality award apart from its competitors.

In-House Product & Process development
Product wise, Hyflux developed its own customized membranes, water treatment technology and manufacturing equipment in-house. By not using subcontractors to build its production equipment it retains better control of the raw materials, manufacturing costs, quality of the product as well as the turnaround time. This is juxtaposed with its local competitors that merely bought and assembled end products like pipes and membranes off the shelf.

Competitive pricing
With Hyflux’s competitive advantage of in-house development of cheaper components, Hyflux is able to successfully win its tenders at competitive rates.

Alliances
To further enhance its leadership, Hyflux relies on a network of alliances to develop, produce and market its products.

R&D alliances & Tech Alliances
Hyflux partners with other companies and organizations to acquire better technology to enhance its R&D efforts.

Marketing alliances
In regional expansions, Hyflux builds partnerships with local companies to promote its products. This provides it with contextual knowledge to gain a foothold in the local market.

Outsourcing alliances
To enhance efficiency and cost effectiveness in its production, Hyflux outsourced its production to capitalize their partners’ competitive advantage. An example is the outsourcing of its production of “Aquosus” which, according to financial analysts[2], will be an important future revenue source. Hyflux increased its current 500 units a month production capacity by outsourcing the manufacturing of component parts to Haier in China and the final assembly to Flextronics. This enabled it to concentrate on its core competency of membrane development while leaving production to companies which have the comparative advantage. Mr. Soon mentioned it is cheaper to outsource as the quality of...
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