Barriers to Entry and Husky

Topics: Barriers to entry, Economics, Fixed cost Pages: 3 (1056 words) Published: March 18, 2007
The Success of husky is due to its core strategy aimed at maintaining its competitive advantage in differentiation. Husky has positioned itself in the market through differentiation in its quality and variety of products as well as the level of services. Being among the first movers in the molding machine industry, the company has created a long reputation of providing systems, which are ‘known for their speed, ruggedness, resin utilization and durability'. Husky's systems provide processors with better quality, thinner wall products at a faster pace and also the sole supplier of integrated systems consisting of machines, molds, hot runners and robots. And finally, Husky provides ‘factory solutions for the plastics industry' along with training, integrated production systems. Another unique product is its turnkey factory.

Success of Husky's strategy
Michael Porter's five forces analysis could be used to analyse the market and the environment in which Husky operated. Positioning of the firm in the right niche market, PET perform molding systems at the right time helped husky to become a dominant player in the market. The industry was determined to be competitive with a fair amount of rivalry based on barriers to exit, market growth, strategic costs and high fixed costs. (Exhibit 1). Husky's raw materials were obtained at mostly competitive prices, while some specialized materials were provided by only a few companies and it ‘relied almost entirely on outside vendors for most of its components. This would suggest that Husky's suppliers might have had some significant bargaining power. Husky's main customers were processors, who had the option of choosing products from fifteen different suppliers. While molds can be considered to be a commodity, the medium sized machines, customized machines and the thin wall molds were Husky's specialty. Husky's customers have relatively low bargaining power. Substitutes are non-existent in this case as no...
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