Fort Wayne Metals

¶ … company is Fort Wayne Metals, which produces medical wire. The company has a number of strengths that help it in the marketplace. These include a highly-knowledgeable sales staff, good relationships with its customers, strong internal and external communications, its marketing competency and its innovation capabilities. These are juxtaposed against a number of weaknesses. Among the key weaknesses are that there is inefficient process flow, which is causing the company to meet deadlines. That can make customers switch to a competitor.

There are high overhead and manufacturing costs, which reduce the ability of FWM to be cost-competitive. The ERP system is out of date, which is in part leading to the prior two issues, and furthermore results in a high level of inventory, which is another drag on profitability. Lastly, there is poor materials handling management. There are very few opportunities in this marketplace. These does appear to be, however, some opportunity for growth in the market in terms of customer demand.

Growth within the existing industry is the most viable opportunity. Another potential opportunity is to get more sales out of existing customers, by leveraging some of the competitive advantages that the company has. Lastly, there might be opportunity in foreign markets for some of our products -- this is an industry that FWM can compete in globally. With respect to threats, the medical wire industry is challenging. Competition is a major threat.

The biggest competitive threat, Farakawa, has a similar line to FWM but at a lower price, because it has lower production costs. Farakawa is therefore winning business from FWM and it will be difficult for FWM to win business back. Other competitors are competing on the basis of having better innovation, which has normally been one of FWM's historic strengths in the market. This means that the competition is closing in on FWM from two different directions, something that is a major challenge.

IF FWM is no longer the most innovative company and cannot compete on price either, it risks losing a lot of customers. There is also talk of consolidation within the industry, and many smaller competitors could join together to become bigger than FWM, further putting FWM at competitive disadvantage. Lastly, taxes are rising in the industry. While this affects all players, it might also make buyers more price sensitive, which would hurt FWM. In all honesty, this analysis points to internal responses to these challenges, not external.

I could recommend an external strategy, but FWM is going to need to be more competitive on an internal basis before it does anything external. That is what good strategy is - identifying what needs to be done, without artificial constraints placed on the solutions like mandating that they must be external. As CEO, I overrule the idea that an external solution is what is needed here. What is needed is an internal solution.

FWM needs to have a clear vision for how it wants to compete, and then orient its actions.