Tennant Company Harvard Case Solution & Analysis

Issue Statement

The newly appointed CEO of the company, Chris Killingstad was wondering how to continue the growth of the company by differentiating it from the rest of the industry by developing sustainable cleaning technologies in service of a safer, cleaner and healthier world. He should design such a strategy that could not only address the Green and Eco niche but could also help the company to achieve profitable growth in the future.

Situation Analysis – External Contextual Factors

General Business Conditions

Tennant Company was founded by George H. Tennant in 1870. It had started its operations in Minneapolis, Minnesota as a one-man wood-working shop, which was later developed into a relatively large business that produced wood products and flooring for other businesses in the locality. Soon after its inception, it entered into the business of the manufacturing of floor-cleaning equipments by developing its first motorized floor-cleaning machine. After experiencing a number of development phases, it had expanded its operations to the international markets by establishing a manufacturing facility in the Netherlands. At the same time, it had also invested huge amounts over the establishment of a competent sales force and developed its service business. The company was operating in such a market which demanded high sense of innovation because customers would love to have such products that could increase their comfort and value in terms of high functionality. The company had shifted its focus towards quality control and trained its front line employees to conduct extensive product inspections that had increased its customer base and ability to innovate, which had efficiently driven down the cost of the company.

Industry Conditions

In 1999, the company had changed its CEO and the newly appointed CEO had observed a number of changes in the floor-cleaning industry. He noticed a significant change in the preferences of the customers that instead of buying products on their value and functionality, they started to make their choices for such products that could create certain value and positive impact over the environment. By noticing this opportunity, lots of companies had broadened their scope of value creation from narrowly defined products to more holistic solutions that planted environmental and social value in their culture, these included: Gojo Industries Inc., Clarke Company, Fairmount Minerals, and DuPont Company. But a major problem with the failure of these companies in maintaining a sustainable strategy was that they were unable to offer a long-term value to their shareholders by offering such products. Whereas, organizations that succeeded in creating value through this strategy had found a number of ways to leverage all their resources and capabilities in developing such solutions and products that could address bigger problems and expectations of customers than they had ever addressed before. Therefore, most of the companies had changed their approach towards value creation and the overall industry’s norms and responsibilities were defined at a broader level.

PEST Analysis

In order to understand the implication of the changing demands and other external factors upon the sustainability and growth opportunities in the industry, we will perform PEST Analysis.

Political: - A number of policies were established by the regulating authorities regarding the designing and development of cleaning products because these products had a direct impact over the environment and the health of users. For example, a number of hospitals and educational institutes had established their own regulations addressing that what sort of a cleaning product could be used in these places. Therefore, it was one of the most important factors that should be considered by companies in such industry because it would have a huge impact over the sustainability of their corporate accounts and brand image.

Economic: - In the past few years, the industry of cleaning products had attained a sustainable growth and stability in the market, which would provide a great opportunity for the existing as well as prospective players in terms of gaining economies of large scale production and enhancing their profitability. Variation in the purchasing power of the customers could directly affect the performance of a company and expose its sustainability to a number of risks.

Social: - With the passage of time, the preferences and demands of customers were also changed and they had started to shift towards more environmentally efficient and sustainable products. Due to the increasing concerns about health and environmental conditions, customers had increased their interest in the quality and ingredients of the cleaning products.

Technological: - With the help of rapid development in the technological sector, most of the companies had shifted their product portfolios to highly technologically advanced products. Just like other industries, companies in the cleaning industry had also developed a number of new technologically advanced products, i.e. EC-H20, Orbio 5000-Sc machine, and ion-based tap water, etc.…

Customer Landscape

The company was offering a number of products to a wide range of customers including: hospitals, schools, colleges, restaurants, government, municipality bodies, and offices, etc.… based on the interaction with customers, the company found that most of the customers were .............................

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Tennant, a leading manufacturer of floor cleaning, must determine how to create, finance, structure, staff, manage, measure, and manage the new venture to develop a fundamentally new product line. In 2005, Tennant Company has developed innovative, environmentally friendly cleaning technology with the potential to revolutionize the treatment. Historically, Tennant was the producer of floor and carpet washing machines for industrial and commercial markets. Over time, it became clear that the technology was far beyond the applications markets Tennant core. In mid 2009, the company has created a new company to develop the promise of technology. In 2010, this company was a wholly owned and operated manager Tennant Tennant. The case examines the General Director and the new head of the company must make the best structure and the position of the company to success. "Hide
by Toby Stuart, Lynda M. Applegate, James Weber Source: Harvard Business School 27 pages. Publication Date: 08 February 2010. Prod. #: 810040-PDF-ENG

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