Hyflux Limited and Water Sustainability – Treading Blue Oceans Harvard Case Solution & Analysis

Porter Five Forces Model

Medium Bargaining Power of Customer

Sale Procedure

However, the wastewater treatment plant is sold through a tendering process where each producer of plant who wants to participate in the bidding submit its tender and then the customer decide who should be awarded the tender depending on the level of prices being tendered by each participating company. Therefore, this tendering process enables the customer to choose the supplier of his choice and would increase the bargaining power of the customers.

Large Number of Water Treatment Companies

Since water treatment companies are in large number that freely trade at a local and global level, hence the customers have a number of different choices to select their provider of water treatment equipment or treated water in pet bottles, hence, the availability of a large number of suppliers increases the bargaining power of the customers.

Lower Price Elasticity

Prices are not the key driver of demand in the water treatment, because fresh water is a basic need of the customers that would not be affected by the changes in prices. Hence, the producers of water treatment plant are in high bargaining power because if the producers increase the prices it will not affect the demand in the same proportion. Hence the producers enjoy the high level of bargaining power.

Customized Products

Meanwhile, the customized products are also sold for the water treatment at a lower magnitude which is customized as per the requirements of the customer and in this case the bargaining power of supplier is high because they have the ability to provide the customized products with full efficiency.

Level of Expertise

Since the level of expertise varies at each producer of water treatment Company, which means that companies with high level of expertise would have the higher bargaining power. Meanwhile, in case of Hyflux, its staff is well skilled and its research and development team consists of several highly qualified technicians that enable the Hyflux to enjoy higher bargaining power.

Low Bargaining Power of Supplier

Industrial Consumers

However, the major customers of the water treatment plants are large industries and sometimes the government is the customer of water treatment plant producers and in both the cases the bargaining power of the customer would be high because they are lower in number and a bit larger in size, hence, the producers have to sell the plants to a limited number of large sized customers that potentially undermines their bargaining power.

Low Threat of New Entrants

Highly Skilled Technicians

The production of water treatment plants requires a high level of skills and expertise to handle the complex production process and the handling of huge production plants which requires highly skilled technicians that are difficult to recruit in a short period of time. Meanwhile, the changing technology required the continuous improvement in water treatment technology, hence, highly skilled and qualified engineers would be required to conduct the research and development work. Additionally, the development of the research team is quite a long and expensive process which discourages the new entry into the water treatment plant industry.

Capital Requirements

Establishment of a new water treatment would require a high level of capital investment in the plant and equipment, meanwhile, the development of technology also requires huge investment before the launch of technology, meanwhile, the substantial investment in the acquisition of resource would be needed to be made. Therefore, higher level of capital requirements makes the entry of new supplier difficult.

Economies of Scale Disadvantage

Hyflux has developed its operations and has expanded into different countries, hence, it produces the plant in high volume, which gives Hyflux the economies of scale advantage, consequently, Hyflux offers the plants at comparatively low prices, and the new entry would not be able to produce the plants at that level of cost which, further, discourages the new entry of the suppliers.

Market Recognition

Long established water treatment plant producers have developed their good will and market image that the potential consumer considers before he opts to purchase a particular plant, but in case of a new entry, the newly established producer will have no recognition in the market which would cause difficulties in the acquisition of new customers.

Government Grants and Support

However, the government is interested in the development of water treatment plant industry and encourages the plant producers through grants or incentives and support the research and development of water treatment technology through contributing into the research and development cost. Therefore, the government support increases the bargaining power of new entrants................................

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