Case Study Description of Sun Hydraulics Corp. (B)
Fifteen years later, the company has achieved widespread recognition in the industry for its innovative designs, its quality products, and its highly ethical standards for business dealings. This case describes the organization, the plant, and current concerns.
Swot Analysis of "Sun Hydraulics Corp. (B)" written by Louis B. Barnes, Colleen Kaftan includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Hydraulics Dealings facing as an external strategic factors. Some of the topics covered in Sun Hydraulics Corp. (B) case study are - Strategic Management Strategies, Downsizing, Ethics, Leading teams, Manufacturing, Motivating people, Organizational structure, Technology and Organizational Development.
Some of the macro environment factors that can be used to understand the Sun Hydraulics Corp. (B) casestudy better are - – increasing energy prices, customer relationship management is fast transforming because of increasing concerns over data privacy, talent flight as more people leaving formal jobs, increasing commodity prices, supply chains are disrupted by pandemic , challanges to central banks by blockchain based private currencies, wage bills are increasing,
central banks are concerned over increasing inflation, there is backlash against globalization, etc
Introduction to SWOT Analysis of Sun Hydraulics Corp. (B)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Sun Hydraulics Corp. (B) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Hydraulics Dealings, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Hydraulics Dealings operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Sun Hydraulics Corp. (B) can be done for the following purposes –
1. Strategic planning using facts provided in Sun Hydraulics Corp. (B) case study
2. Improving business portfolio management of Hydraulics Dealings
3. Assessing feasibility of the new initiative in Organizational Development field.
4. Making a Organizational Development topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Hydraulics Dealings
Strengths Sun Hydraulics Corp. (B) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Hydraulics Dealings in Sun Hydraulics Corp. (B) Harvard Business Review case study are -
Cross disciplinary teams
– Horizontal connected teams at the Hydraulics Dealings are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Diverse revenue streams
– Hydraulics Dealings is present in almost all the verticals within the industry. This has provided firm in Sun Hydraulics Corp. (B) case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Effective Research and Development (R&D)
– Hydraulics Dealings has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Sun Hydraulics Corp. (B) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Sustainable margins compare to other players in Organizational Development industry
– Sun Hydraulics Corp. (B) firm has clearly differentiated products in the market place. This has enabled Hydraulics Dealings to fetch slight price premium compare to the competitors in the Organizational Development industry. The sustainable margins have also helped Hydraulics Dealings to invest into research and development (R&D) and innovation.
High switching costs
– The high switching costs that Hydraulics Dealings has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Low bargaining power of suppliers
– Suppliers of Hydraulics Dealings in the sector have low bargaining power. Sun Hydraulics Corp. (B) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Hydraulics Dealings to manage not only supply disruptions but also source products at highly competitive prices.
Organizational Resilience of Hydraulics Dealings
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Hydraulics Dealings does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Learning organization
- Hydraulics Dealings is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Hydraulics Dealings is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Sun Hydraulics Corp. (B) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Innovation driven organization
– Hydraulics Dealings is one of the most innovative firm in sector. Manager in Sun Hydraulics Corp. (B) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Ability to lead change in Organizational Development field
– Hydraulics Dealings is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Hydraulics Dealings in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Strong track record of project management
– Hydraulics Dealings is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Highly skilled collaborators
– Hydraulics Dealings has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Sun Hydraulics Corp. (B) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Weaknesses Sun Hydraulics Corp. (B) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Sun Hydraulics Corp. (B) are -
Skills based hiring
– The stress on hiring functional specialists at Hydraulics Dealings has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Sun Hydraulics Corp. (B) HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Hydraulics Dealings has relatively successful track record of launching new products.
Interest costs
– Compare to the competition, Hydraulics Dealings has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Workers concerns about automation
– As automation is fast increasing in the segment, Hydraulics Dealings needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
High cash cycle compare to competitors
Hydraulics Dealings has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Capital Spending Reduction
– Even during the low interest decade, Hydraulics Dealings has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Hydraulics Dealings supply chain. Even after few cautionary changes mentioned in the HBR case study - Sun Hydraulics Corp. (B), it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Hydraulics Dealings vulnerable to further global disruptions in South East Asia.
Need for greater diversity
– Hydraulics Dealings has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Increasing silos among functional specialists
– The organizational structure of Hydraulics Dealings is dominated by functional specialists. It is not different from other players in the Organizational Development segment. Hydraulics Dealings needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Hydraulics Dealings to focus more on services rather than just following the product oriented approach.
No frontier risks strategy
– After analyzing the HBR case study Sun Hydraulics Corp. (B), it seems that company is thinking about the frontier risks that can impact Organizational Development strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Hydraulics Dealings is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Sun Hydraulics Corp. (B) can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Opportunities Sun Hydraulics Corp. (B) | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Sun Hydraulics Corp. (B) are -
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Organizational Development industry, but it has also influenced the consumer preferences. Hydraulics Dealings can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Hydraulics Dealings can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Hydraulics Dealings to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Developing new processes and practices
– Hydraulics Dealings can develop new processes and procedures in Organizational Development industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Low interest rates
– Even though inflation is raising its head in most developed economies, Hydraulics Dealings can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Building a culture of innovation
– managers at Hydraulics Dealings can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Organizational Development segment.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Hydraulics Dealings can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Sun Hydraulics Corp. (B), to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Hydraulics Dealings can use these opportunities to build new business models that can help the communities that Hydraulics Dealings operates in. Secondly it can use opportunities from government spending in Organizational Development sector.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Hydraulics Dealings in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Organizational Development segment, and it will provide faster access to the consumers.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Hydraulics Dealings to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Hydraulics Dealings to hire the very best people irrespective of their geographical location.
Manufacturing automation
– Hydraulics Dealings can use the latest technology developments to improve its manufacturing and designing process in Organizational Development segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Buying journey improvements
– Hydraulics Dealings can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Sun Hydraulics Corp. (B) suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Hydraulics Dealings in the consumer business. Now Hydraulics Dealings can target international markets with far fewer capital restrictions requirements than the existing system.
Threats Sun Hydraulics Corp. (B) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Sun Hydraulics Corp. (B) are -
Increasing wage structure of Hydraulics Dealings
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Hydraulics Dealings.
Consumer confidence and its impact on Hydraulics Dealings demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Stagnating economy with rate increase
– Hydraulics Dealings can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Technology acceleration in Forth Industrial Revolution
– Hydraulics Dealings has witnessed rapid integration of technology during Covid-19 in the Organizational Development industry. As one of the leading players in the industry, Hydraulics Dealings needs to keep up with the evolution of technology in the Organizational Development sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Hydraulics Dealings can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Sun Hydraulics Corp. (B) .
High dependence on third party suppliers
– Hydraulics Dealings high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Hydraulics Dealings in the Organizational Development sector and impact the bottomline of the organization.
Easy access to finance
– Easy access to finance in Organizational Development field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Hydraulics Dealings can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Shortening product life cycle
– it is one of the major threat that Hydraulics Dealings is facing in Organizational Development sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Hydraulics Dealings in the Organizational Development industry. The Organizational Development industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Environmental challenges
– Hydraulics Dealings needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Hydraulics Dealings can take advantage of this fund but it will also bring new competitors in the Organizational Development industry.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Sun Hydraulics Corp. (B), Hydraulics Dealings may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Organizational Development .
Weighted SWOT Analysis of Sun Hydraulics Corp. (B) Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Sun Hydraulics Corp. (B) needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Sun Hydraulics Corp. (B) is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Sun Hydraulics Corp. (B) is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Sun Hydraulics Corp. (B) is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Hydraulics Dealings needs to make to build a sustainable competitive advantage.