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China & You

In: Business and Management

Submitted By worldalvaro
Words 847
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Stanadyne Corporation
Stanadyne Corporation is a private company incorporated in 1989 with sales of $250M and operations in the US, Europe and Asia with a total of 2,000 employees worldwide. Stanadyne designs, manufactures and distributes fuel injection systems around the world serving both on-highway and off-highway markets.
The origins of Stanadyne Corporation can be traced back to the the XIX century when it manufactured horse nails as the Capewell Horse Nail Co. It later became famous for the automatic machines for screw production changing its name to Hartford Machine Screw Company as it kept growing through the industrialization of America.
In the 1950’s Stanadyne acquired the company Moen and invented the single-handle faucet commonly used today. By the 1970’s Stanadyne was a Fortune 500 company before private equity firms started selling its divisions. In the 1950’s Stanadyne also began to develop an innovative fuel distribution pump that today powers many of the world's diesel engines. As the market grew for diesel pumps, other innovative products were developed to serve the needs of the additional elements of the diesel fuel system. Today, filters, injectors, fuel management systems, support product and additives complete the product offering for fuel systems.
Strengths & Weaknesses of Stanadyne
Stanadyne is involved in multiple fronts from designing new technological advanced products with long development cycles to manufacturing high precision mechanical components in different areas of the world and managing long supply chains that span most of the world’s time zones. As such it’s subject to a wide variety of factors. Currently and from a strategic stand point the company’s main strengths and weaknesses are:

Enter China
China recently became the largest car manufacturer surpassing the United States and Japan. China no longer needs introduction about how big a role it plays in the industrialized world today. While it may be difficult to navigate the bureaucracy and intrinsic cultural barriers in that region it’s undeniable that this almost incommensurable spur of industrial development presents a tremendous opportunity for many companies around the world, hungry for – or in need of - growth. The timing is also one where demand and industrial activity in the “western world” have greatly suffered from the financial crisis in 2008 and countries like China present a unique opportunity for some companies to maintain or increase sales.

Stanadyne in China
Stanadyne recently inaugurated a manufacturing plant in Changzhou, on the outskirts of Shanghai and currently supplies to a number of customers in China. It’s also in the process of assembling a local sales team as it lays out the execution of its strategy in that market. Stanadyne benefited from an existing customer base in China that allowed immediate demand for the plant from day one. The opening of this facility suffered multiple delays due to unpredictability of the timing related to obtaining permits and other official requirements. The immediate challenges for the time being are related to finding and retaining talent as the job market is incredibly active.

Opportunities and Threats for Stanadyne in China
The expansion of Stanadyne to China was accelerated by the move of some of its main customers who need their components supplied by local manufacturers. This presented the company with the opportunity to benefit from all the well-known advantages of operating in China but was also faced with the inherent challenges of operating in a new market. So far these have been identified as the main opportunities and threats:

The big picture
China was until recently the inescapable place to go for manufacturing at lower cost. In the process it has added to its prosperous – debt free - middle class the equivalent of the US population in just a few years. Along with this change a rise in consumerism is inevitable and the once the factory of the world is also becoming the mall of the world as the populations’ habits change.
One aspect that is often omitted is the eminent mechanization of agriculture, purposely left lagging the rest of the world for political reasons as a government tool to control demographics. Once China decides to move in that direction the demand for off-highway equipment such as tractors, combines and others will likely create a significant boom in that industry for companies like John Deere, CNH and AgCo. Stanadyne, being a supplier to all those companies needs to position itself to fully enjoy that transformative process.
China has forever changed the landscape of the industrial world, shaking it to its core. This change drove unemployment up in the US and Europe that are in the process of reinventing themselves looking for new ways of growth but also made China pay a heavy toll with catastrophic environmental disasters and its overall deterioration.
Ultimately everyone will have to adapt. The world is too connected and interdependent to think or act otherwise. As far as Stanadyne, China has been a source of growth for the company and it made Stanadyne a better and more robust company but at the expense of a profound company restructuring with a profound social impact. What changes are made of…

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