Nypro is a plastics injection molding company. This essay analyzes how Nypro, Inc. , differentiated itself from competitors and grew as a result of this differentiation. It outlines some of the strategies used, and the success factors which lead it to become a force to be reckoned with. Nypro’s Competitive Edge Since years, the plastics injection molding industry had been full of low value added molders, working with less sophisticated machinery and very little investment.
Nypro differentiated itself by investing in high value, technologically advanced methods of production. This was made feasible by concentrating on large scale molding jobs for technologically advanced customers. In this way, the number of Nypro customers dropped from about 700 in 1980 to about 50 large multinational companies. At the same time, its revenues jumped from $40, 000 to $4 million. Apart from this, Lankton also followed an effective strategy to keep people motivated and innovative.
The main problem he saw was that once a company reaches a peak and plateaus, there is little room for more innovation and people with true entrepreneurship sentiments will leave the organization to start off something innovative of their own. To overcome this problem, Nypro adopted a stock option strategy. To enter into this stock program, an employee would be selected on the basis of years of service, pay level, and performance ratings. The performance ratings were weighted the heaviest. Four hundred employees were considered for the stock ownership each year, out of which only six to eight were selected.
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This was a very good way to keep people motivated. One of the major driving forces behind Nypro’s success was its internal rivalry, which was fostered by such a program. We see that Nypro used the strategic planning process rather than the de facto strategy. A good and applicable strategic plan is one which is long term, but one which governs the everyday activities of the firm. (Goodstein, 1993) This is the kind of planning that Nypro did. This means that it made long term plans, with a vision in mind for the future, rather than concentrating on maintaining the status quo.
These plans, moreover, were made for the day to day activities of the company. In other words, it worked on continuous improvement in every avenue, and grew substantially as a result. Nypro’s Manufacturing Strategy Nypro’s manufacturing strategy was that its plants were located close to the customers. Plants were designed in such a way that economies of scale were maximized. Also, they were designed to suit the needs of the market and the companies it served. They operated where their customers were, and delivered exactly what they wanted, when and how they wanted it.
Therefore, Nypro was following a decentralized location strategy, where all processes were localized according to the needs of the customer. To maintain discipline and profitable sales, although the manufacturing was decentralized, the sales department was not. The Vice President of sales sat in the headquarters, and approved every new customer into the system. All the regional sales officers were responsible directly to the Vice President. This way, there was a check to ensure that Nypro’s strategy and competitive edge was maintained and only quality customers were allowed into the system.
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