Over Tennant Company’s (Tennant) 141 year history, they have consistently remained a producer of floor-cleaning equipment and technologies focusing their efforts in producing products for non-residential use. Since the new CEO Chris Killingstad has come to the company however, he has been dramatically changing Tennant’s value proposition with a broader emphasis encompassing “chemical-free cleaning and other technologies.” This case shows Tennant’s move beyond traditional green efforts to centralizing environmentally-friendly performance at the heart of the company’s focus, and whether this new focus provides enough benefit as a competitive advantage. The challenge now for Killingstad and Tennant is how to move forward into 2013 in terms of company focus and direction; mainly the extent to which they should diversify. Should Tennant move into residential markets with smaller units for consumers to use in-home? Should they continue to focus on the commercial side, investing instead in the market potential of their ec-H20 and irreversible electroporation technologies? Or should they enter emerging markets with low-cost alternatives to truly increase their global exposure and propagate their vision of chemical-free cleaning? Situation Analysis
In this section I will use case information and provide an analysis of the commercial cleaning industry. I am choosing to ignore the residential cleaning industry at this time as they have only begun thinking about the consumer market at the time the case was written. Also, given the push by the majority of cleaning companies to “go green" it is important to look at the entire cleaning industry rather than just the ecologically-friendly niche in order to assess the level of Tennant’s competitive advantage relative to the industry as a whole. As aforementioned, there has been a general trend towards green alternatives in the 21st century, across a large array of industries. More specifically in the commercial cleaning industry it was revealed that consumers desired more environmentally-friendly solutions, as long as there was no sacrifice to price and performance. This ties in with the industry opportunities in the Tennant SWOT analysis (appendix 2) as the innovative products from Tennant give them the advantage over chemical-only cleaning companies. Before I analyze Porter’s five forces with respect to Tennant, we must understand what life cycle stage the commercial cleaning industry is currently at. Since profits for Tennant have been rising, and the industry as a whole is said to have risen to 5 billion, I can conclude the industry is still in the growth stage. Now it is important to look at how the development of new technology has impacted Porter’s five forces, most specifically the bargaining power of buyers and the threat of substitute products. Since the introduction of their disruptive technologies they have greatly reduced the risk of these two forces specifically; as these types of products are not easily available elsewhere. It is through these technologies they have created a new, unique selling proposition that has become a competitive advantage for Tennant. Internal Analysis
Moving away from the external environment in the cleaning industry, I will now shift attention to Tennant’s key strengths (and their underlying causes) as well as an analysis of financial information to assess their profitability and efficiency. The main source of Tennant’s relative strength in the industry comes from their innovative and patented technologies (see Appendix 2). Firm-specific strengths are resources that can become core competencies; in the case of Tennant they have already become a primary strategic advantage. Now as technological strengths are quite often a by-product of well-structured R&D within a firm, it is therefore crucial to look at in this case. Most of their initial innovative success can be...