SWECO, Inc. Case Write-Up
SWECO is in the precision machinery industry, products include Process Equipments, such as separator(sold internationally to many industries), replacement parts and screens, grinding mills, finishing equipments, and centrifugal wastewater concentrator. SWECO’s success factors are: technology lead, dominating the fine-screen manufacturing market(other suppliers cannot provide with the same high quality); Good reputation, with many existing customers worldwide; follow-on businesses from replacement screens and spare parts, continuing making profit.
However, there are barriers to entering oil field services. The characteristic of oil service industry are: 1. Drilling cost varies with location, formation and depth. With the increasing depth of well, drilling costs are expected to increase; 2. High costs on consumables; 3. Business opportunity of drilling mud and solid control lies in sales personnel contacts and advance knowledge of oil companies, and reputation of suppliers. 4. Over 85% of revenue came from rental in order to meet requirements of different wells. 5. Solid control equipment differentiation is low; the level of services is crucial to company competitiveness. 5. Little motivation for contractors to use new kind of SCE(Solid Control Equipment). Hence, to succeed in this industry, firm must first develop better technology (and patented), establish good relationship with operators and increase visibility, also, most importantly, provide better service (ex. customization).
The most significant value provided by the Sand Separator by SWECO is the reduced mud cost; other contribution of SCE are reduced drilling time, reduced downtime from pipe sticking, improved drill-bit life, lower wear and tear on pumps. Barite are used in wells more than 1,000 feet deep ,costing 10~15% of drilling cost, with the Sand Separator, firm can save up to $7 worth of barite per minute, saving $100,000 per well. With the increasing number of...
Please join StudyMode to read the full document