Automated Programs in the Metal Industry - Essay Example

Hurco Inc. specializes in providing customized automated programs to the metal industry. Their products cover interactive personal computer (PC) based control systems and software to aide their machine tools (“Investors – Corporate Profile”). On the other hand, like other market players, Hurco also offers sale and aftersale services. It is important to note that where other firms in the IT industry offer products compatible with the tools and machinery used by their customers, Hurco Inc. has a primary product line comprising machinery tools meant for the metal industry, and software as a peripheral product. Their products are meant to enhance productivity and efficiency in the operations of their customers by introducing user-friendly automation.

Their core competency comprises specialization in microprocessor technology and software meant for machines tools used in the metal industry. In addition, interactive programmable software patented by Hurco allows users of their programs to produce peripheral software that can be either made part of an actual program through blueprints or computer-aided design and ensure speedy production processes without interruption, with maximum efficiency in operations (“Investors – Corporate Profile”). It is important to note that their automated programs and related computer controls have open-ended technology which allows complete compatibility with a variety of personal computers and databases. Interactive conversational programming software combined with complete compatibility acts as a major strength of Hurco as compared to other competitors. Due to customization available according to customers’ needs, Hurco is able to cater to customers all around the globe. However, they have solely focused on the metal parts industry, which makes them a niche player.

Hurco’s strengths and weaknesses along with industry attractiveness can be analyzed with the help of Porter’s five forces analysis. It is important to note that Hurco’s product line comprises machine tools that are considered capital products or goods. The cyclic nature of the industry makes manufacturers in it highly vulnerable to market changes (Hurco Inc. 2). For supplies, Hurco relies on foreign suppliers and also their own subsidiary (Hurco Inc. 24). The presence of a fully-owned subsidiary makes them less susceptible to delays that can be caused by the failure of other suppliers to meet the deadline. On the other hand, buyer’s power leaves Hurco vulnerable. It is important to note that the metal tools industry is greatly dependent on the economic conditions prevailing in the industry. Therefore, limited buyers’ purchasing power also leaves Hurco to reduce its profit margins.

Hurco also faces tough competition in the industry of machine tools. There are quite a few major competitors in the United States and many in other countries that have better resources and a bigger capacity of utilizing economies of scale, which makes them capable of providing products that are cheaper than Hurco’s (Hurco Inc. 7). A threat of new entrants will always be faced by Hurco, as any other manufacturer. Although Hurco has patented its programs, there are a large number of IT firms that can provide automated solutions to companies using manually operated machines such as the ones provided by Hurco, without any major capital investment. Similarly, existing producers can form coalitions with IT firms that can help them produce automated machine tools without incurring any research and development expenditure. Since technological advancement is a never-ending phenomenon, Hurco’s products can also be replaced by better technology. In tough economic conditions, consumers may also opt for cheaper manual products.

Hurco operates in a niche that caters to the metal industry with stand-alone machines that can be used by a single operator. Hurco has a core competency of having patented control programs and computer software that are a peripheral component of their machinery. These programs are user-friendly and allow users to design their own instructions with the help of computer-aided design. Hurco’s main product line comprises economical automated machines; however, there are bigger market players with better resources, which allow them to produce more economical products. On the other hand, the buyer’s financial conditions and the supplier’s ability to provide are the factors that make it highly susceptible to losses in difficult conditions. Although manufacturing products such as Hurco’s requires major capital expenditure, which makes the threat of new entrants rather manageable, it cannot be eliminated completely.