Managing Innovation at Nypro Inc. (A) Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Porter Five Forces Model

The porter five forces model examines the market conditions with respect to the ease of doing business. It examines the extent to which different market forces are capable of driving demand and controlling profit terms for companies in a market. It also determines the extent to which external forces may affect the performance of companies in the respective market.

Threat of new entrants is Medium

The overall threat of new possible participants in the molding industry is medium. This is because in order to enter this market, a company needs relatively significant amount of initial capital for investment in technology and certain necessary facilities like processing, assembling, and transportation and meeting quality standards. New entrants will face slight difficulties in installing plants since they need a huge amount of capital. Furthermore, new entrants may also need a lot of expertise in implementing the new and updated technology like NovaPlast. So entering in this market without excellent and latest technological skills is of no use.

Bargaining power of buyers is low

Due to less competition from the local companies and global companies, it can be assumed that this industry possesses a low bargaining power from the buyers’ end. As in such industries companies go for the strategic alliances; therefore, they avoid unnecessary switching (Turban, 2009).

Bargaining power of suppliers is medium

The bargaining power of suppliers is medium. The reason for the medium bargaining power is that these suppliers and companies both actually go for strategic alliances. Since, the supplier is an important aspect to attain overall success, so a company always tries its level best not to lose that supplier so that the quality standards can be consistent. Similarly, a supplier always tries its level best that its strategic alliance with a certain company should remain aligned and run smoothly without any hurdle because when a supplier loses a contract so he will for sure face some serious loss, which will damage his market reputation.

Degree of competitive rivalry is medium

The competitive rivalry in the industry is medium. The industry comprises of large and medium domestic competitors. These competitors compete head to head on the national as well as international markets. The main competing aspects for such an industry are price, variety and quality differentiation (Kramer, 2006).

Threat of substitution is low

The threat of substitution is low because there is approximately no other alternatives to the products in which molding and high profile technical expertise is required (McGahan, 1997). Companies usually consider no option as the replace of such products; therefore, it can be said that the industry possesses a low threat of substitute.

Introduction

Nypro offers a variety of range in the plastic production processes and works as a supplier to the leading companies across the globe. Being a vertically integrated company; they have positioned themselves as the leader in the plastic manufacturing industry. They mainly deal in precision custom injection and molded plastic parts. Their main target market comprises of healthcare and packaging industry and they try to capture some additional markets through their strategic companies. Mr. Gordon Lankton owns a majority of shares and currently working as the President of the Nypro. While having a factory visit, he came across a molding machine prototype, which changes the mold in a minute with the help of technicians as compared to the Nestal machine; however, Nypro’s conventional machines took hours for such conversion. Mr. Gordon realized that this machine can help them in building the future for Nypro.

NovaPlast can play a revolutionary role for the Nypro’s long term vision as it can easily mold an extensive mix of relatively low degree precision parts without incurring a huge cost. He started thinking that how the implementation of the NovaPlast should take place in the 21 plant present across the world. Nypro’s three major sales divisions were healthcare that generates 46.7% sales, consumer/industrial, which possesses 32.2% of sales; followed by communications/electronics, which gives a sales figure of 21%. They have been found quiet established from financial perspectives and in the year 1994 they had revenue of $165,983,000, which gave them a profit figure of around $10,826,000. These exceptional statistics resulted in the 9^th record consecutive performance for Nypro. Mr. Gordon joined the company back in 1962 as the general manager and kept his focus on following a strategy of introducing the new technology, which would help them in building the sustainable competitive advantage. One of the secrets for Nypro’s success is their aggressive growth strategies, which also encourages the internal competition within the organization. Nypro kept itself busy in introducing the new technology and continued to stick to their aggressive growth strategy.

How does the internal market for innovation at Nypro function?

To enhance the growth strategy and to introduce the empowerment in the innovation process, they employed an aggressive internal rivalry within ..............

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