Husky presentation
Transcript: What to do with your life? Global Plastic is: 1,000,000,000,000 business! But, What does Husky do? Is this industry good or bad Industry is not attractive Key industry characteristics: Sophisticated and informed customer base, focused on cost effectiveness Marginal improvements of product make significant difference (R&D can be a differentiating factor) High upfront costs, high CAPEX Cyclicality which correlates with the price of inputs (resin) 40% ROE 20% price premium $650M revenues (1995) Revenues CAGR of 25% Who buys this stuff? What does Husky do? How do they do it? So what went wrong? KEY SUCCESS FACTORS What’s going wrong (1996): A. Resin shortage B. Competition WHAT SHOULD HUSKY DO? Price Cut prices? Cost Cut discretionary spending (health club, child care, etc.) Cut back on spending on service, technical centers and the AMC Build components instead of purchasing them WTP 135M preforms per year, compared to 101M. A customer would need to buy 1.34 rival’s machines for each Husky machine in order to make the same amount of preform. Saves $5,000/year (assuming resin costs are $1.30/kilo) Saves $36,000/year (assuming $0.08/KwH) Saves $8,000/year (assuming space costs of $60/sqf) Assumptions: Machine's useful life 10 years Cost of Capital 10% Husky's machine Price: $1.2M Competitor's Machine price: $1M Additional costs: $0.34M + $49,000 X 10years NPV of Savings: $440,000 Actual WTP is $1.64M ! What did Husky do… ? New PET Packaging Closures Containers Automotive Technical Increasing market share in current segments Find new markets that can fit with Husky’s capabilities Take advantage of new industry trends WTP for Husky’s Machines Robert Schad What do we remember about Husky? Industry Equipment Makers Expansion Strategies Husky’s machine uses less floor space: Suppliers have low power (commodities) High barrier to entry Substitutes are low PROs Players: ? WTP Husky’s machine produces more: Old Increase R&D Communicating product superiority more effectively Emphasize the environmental benefits of Husky’s product Appropiate incentive system Husky in numbers: Most Attractive Husky’s machine uses less electricity: Company Increase WTP? Key differences: Faster Use less resin Use less electricity Require less floor space CONs Do you like the industry? Do you like Husky? Did Schad do a good job? HUSKY - Case Analysis Product excellence Innovation Sales and Service Portfolios of Products Customer Loyalty Reputation Implementing Strategy Spring 2010 Professor Sonia Marciano WTP Husky’s machine uses less resin: ? Bryan St. John Conor Grennan Gianna Shepard Itay Banayan Orit Vaknin Patricia Kenlon Customers Cost Cutting? High rivalry (price war) Sophisticated and informed customers, focused on cost effectiveness Cyclicality Excess capacity PET Packaging Closures Containers Automotive Technical Operations Sales and Service R&D Procurement Incentives Resin <-> Equipment <-> Processors
Prezi Present
Prezi Video
Prezi Design
