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

Question1: Apply the appropriate frameworks to appraise the external environment Hyflux Limited operates in.

Answer1:

PESTEL Analysis

Political

Hyflux Limited has entered into a contract with General Desalination Company (GDC) which is a state owned company, hence, Hyflux will be exposed to the political risk because the GDC will be managed by the Libyan government and interact with the GDC will be subject to bureaucratic and Hyflux would have to go through stringent official rules and other formalities which would lead to the destruction in operations management and will consume great amount of management time. Further, the Libyan unrest could also lead to the government change and in case the current management is changed, then contracts with Hyflux would be subjected to high uncertainty and the old contracts with GDC will solely be at the discretion of the new government.However, since Hyflux has expanded into different countries which are politically stable such as India and Middle East, hence, the risk of political instability in Libya has been mitigated to some extent.

Meanwhile, the Singapore government is very much interested in the development of new embrace water treatment technology, since Hyflux had been already very much involved in the development of new membrane water treatment technology, Hyflux can get the government grant to support its research and development work on the embrace technology. Furthermore, the government of China has planned to increase the water treatment rate at least 70% and in order to achieve the water treatment objectives,the Chinese government has allocated budgets of RMB 330 billion that it will be used to encourage the wastewater treatment facilities. However, this budget allocation by the Chinese government will also benefit the Hyflux and it can expand further into China with the help of Chinese government.

Economical

Global recession of the year 2008 had badly affected the economic activities of different industries which led to a decline in industrial usage and waste produced by these industries,which ultimately affected the revenues of Hyflux from membrane sales to the various industries that were largely affected by the 2008 global recession.

However, the municipal water treatment requirement remained unaffected during the 2008 recession period and Hyflux was able to generate 80% of its revenue from municipal water treatment services. In addition to this the government support for the wastewater treatment also enabled Hyflux to generate a major part of the profits from wastewater treatment and Hyflux business was not very much affected by the economic factors led by the 2008 recession period.

Social

Furthermore, the research and development team consist of individuals from different culture and societies and when they work together, thereare more chances they would not accept the culture of each other while interacting with each other during the normal course of action. Meanwhile, the geographical spread of Hyflux means that at different regions the lower level staff is hired from the local community and they will be governed and managed by a member of Hyflux’s top agent from its Singapore head office, therefore, there will be a huge difference in local staff and top management which would cause problems in dealing with the local staff.

Technological

Since membrane technology is a key driver of Hyflux global growth and this technology has also been developed by the competitors to some extent. However, because Hyflux’s competitors are aware of the importance of membrane technology in the provision of wastewater treatment services, therefore, the competitors such as GE Water, Canada’s VU Pure, are very much interested in the development of membrane technology so that they can provide the most efficient membrane technology for the wastewater treatment.

Meanwhile, the growing interest of competitors in membrane technology can lead to the rapid change in membrane technology, hence, Hyflux would be required to heavily invest in research and development of membrane technology in order maintains its competitive position in the global market.However, the competitors in the water treatment industry are far behind the level of technology that is currently being provided by the Hyflux, hence, it would enable Hyflux to take the largest slice of market share in the absence of latest technology with its competitors.

Environmental

Hyflux’s basic product is a water treatment plant that is provided to the society so that scarcity of water can be controlled, and fresh water is made available to the public using the technologically advanced products...................

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In 2009, Hyflux Ltd (Hyflux) was one of Asia's leading environmental water companies with operations in Singapore, China, the Middle East, North Africa and India. Specializing in membrane technologies, Hyflux provided integrated solutions for municipal wastewater treatment, as well as for industrial production processes, including the disposal of waste oils and solvents. Began in 1989 in Singapore entrepreneur Olivia Lum, Hyflux was the first engine in the emerging Chinese market of industrial water treatment in 1993, serving numerous factories there. In 1998, to expand market base Hyflux and growth, Lum moved to the municipal water treatment market in Singapore. In this case, Hyflux sales revenue increased from S $ 17,7 million in 2000 (nine months) to S $ 554 million in 2008, and despite the 2008 global economic downturn during which its municipal business remained strong, the company has made large-scale projects of high value in North Africa. As a beginner, Hyflux loans for innovative water treatment technologies and entrepreneurial drive more business. However, by 2009, as a player in the global business of water treatment, Hyflux was to prove that he can do from scratch municipal projects in remote continents and compete with other global water companies in these new markets. To meet these challenges, Hyflux was growing rapidly its human capital and organizational skills to meet aggressive business strategy of market penetration. "Hide
by Wee Beng Geok, All Kroll, Ivy Buche, Timothy Chua Source: CCP in Nanyang Tech University 26 pages. Publication Date: November 13, 2009. Prod. #: NTU007-PDF-ENG

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