1. What is Husky's strategy? Why has the company been so successful in the period prior to recent problems?
Husky's strategy is to offer a premium priced, premium quality product. Husky believed that attention to detail and high quality was extremely important in the outcome of their products. Husky believed they were putting out the best product in the industry, and this would help sustain their reputation, as the best in the industry, and steadily improve their sales and profits.
The early 90's was a great time for Husky. Revenue quadrupled from 1992 to 1995, and the company registered a return on equity approaching 40%. Some of this was cause by Husky focusing on PET. At this time, PET seemed like the best bet for injection molding. Husky was charging a premium for its products and still making more sales year to year. Also Husky's machines were able to make products with thinner walls, faster and cheaper than its competitors' machines. Overall, cheap inputs, high quality products, and good brand equity has helped Husky be so successful to this point.
2. What has caused Husky's current difficulties?
Since almost all of Husky's parts were outsourced, they relied heavily on the prices of materials. In early 1996 the price of resin soared. With this being the main ingredient for PET Husky was in a bad situation. Fortunately, this problem didn't just hurt Husky, it hit hard with its competitors as well. Another problem was Husky's competitors were now getting to the point where they could offered a product with comparable quality and price much less than Husky's price. It seems that Husky had relied to heavily on inputs from other companies. This alone makes everything so volatile. It the price of resin hadn't soared, it may have well been something else. It seems this system was set up for a down fall in the future.
3. How might Robert Schad, Husky's CEO, and the company respond? How should...