Fisk Alloy Wire, Inc. and Percon
1
Fisk Alloy
INTRODUCTION
This case illustrates the importance of environmental awareness, the long-term
prospect of product development, and the resourceful use of an acquisition strategy to
achieve organizational objectives. It opens with an overview and history on the Fisk
brothers and Fisk Alloy Wire, Inc. The case then provides an in-depth explanation of the
wire production process and the difference between pure copper, copper alloy, and high
performance alloy materials. The development of Percon, the changing needs in major
commercial wire segments, the use of an acquisition strategy to satisfy production
requirements, and the introduction of new market opportunities are all featured in the
case, leading into a discussion of decisions facing the Fisks as the company moves
forward.
This case study is structured to emphasize the tools and value of external
environment analysis. It also effectively demonstrates strategic uses of acquisitions and
the successful employment of strategic entrepreneurship. The following steps can be used
to define Fisk Alloy Wire, Inc.’s industry status and then to evaluate the strategic
challenges of a company poised to take advantage of emerging environmental conditions
and market opportunities.
• Build a profile of the copper wire industry, and pinpoint Fisk Alloy Wire, Inc.’s
distinct position within the industry. What tools did the company use to shape its
strategic perspective?
• Describe the company’s acquisition of Strandflex and how it fits into Fisk Alloy
Wire, Inc.’s overall strategic plans.
• Given Fisk Alloy Wire, Inc.’s current market position, outline the market
opportunities available to the company, and explore their strategic potential.
• Identify the leading strategic priorities that are supported by the analysis. Explain
your recommendations, and conclude with a statement of the key strategic issues
facing the company.
ANALYSIS
• Build a profile of the copper wire industry, and pinpoint Fisk Alloy Wire, Inc.’s
distinct position within the industry. What tools did the company use to shape its
strategic perspective?
Fisk Alloy Wire, Inc. and Percon
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Fisk Alloy
umbrella, a small sliver (perhaps 1%) is specialized copper alloy, which incorporates
other elements to enhance the performance of the metal in different ways. The majority
of tonnage in the commercial copper alloy market is strip product. With its expanded
alloy development capability and integrated manufacturing operations, Fisk Alloy Wire,
Observing and interpreting forces in the external environment that have a
potential to impact one’s business can be challenging. However, the greater the
understanding of a firm’s general, industry, and competitor environments, the more likely
the firm can position itself for success. Fisk Alloy Wire, Inc. has demonstrated how the
tools of external environment analysis can successfully poise an organization to take
advantage of emerging opportunities. In particular, Fisk’s targeted awareness of long–
term trends in the general environment, where data can be incomplete and ambiguous and
• Describe the company’s acquisition of Strandflex and how it fits into Fisk Alloy
Wire, Inc.’s overall strategic plans.
Fisk Alloy Wire, Inc. and Percon
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Fisk Alloy
Consequently, this approach could be subsequently applied, as it was to integrate 50
ultrafine tubular stranders purchased from Houston’s Medallion Wire and Cable in 2008.
However, it did not provide Fisk Alloy Wire, Inc. with a platform or competency in
acquisitions that can shape its strategy or fuel growth. While highly beneficial to the firm,
the acquisition of Strandflex did not prepare Fisk management to merge organizational
cultures, resources, activities, or systems; and integrating an acquired firm with ongoing
operations is a critical element of an effective acquisition strategy.
to internally maintain its own product development skills (rather than depending on
acquisitions to boost this capability) and to have organizational flexibility to handle
changes associated with growth through acquisitions.
• Given Fisk Alloy Wire, Inc.’s current market position, outline the market
opportunities available to the company, and explore their strategic potential.
At the time of the case, Fisk Alloy Wire, Inc. is a $28 million firm with 3
divisions and 150 employees. The potential market for its cadmium-free high
performance Percon 24 is estimated to be $30 to $40 million. Although the size and
Fisk Alloy Wire, Inc. and Percon
volume of specialty alloys for electronic connectors and components and aligning
markets with the company’s core high performance alloy wire process and production
competencies. The company also needs to further develop its original specialty shaped
wire business (FAW) to maximize volume and performance at its Hawthorne operations.
While the case provides only limited information on Fisk Alloy Wire, Inc.’s internal
Commercial End-Use
Pros
Cons
Military
– NAVAIR Certified – qualified producer
– Need for highly engineered products, thus
copper alloys
– Exempt from RoHS directive
– DX order to fulfill contracts
before other orders
Aerospace
– Certainty of growth
– Increasing demand of eco-friendly material
– Pre-qualified through NAVAIR
– Large material usage per unit
– Service requirements of applications fit
with Fisk’s high performance quality
(conductivity, strength, heat dissipation,
vibration tolerance, etc.)
– Competitive market
Biomedical
– Miniaturization of components fits Fisk’s
high performance quality (conductivity,
strength, heat dissipation, vibration tolerance,
etc.)
– Electric blankets, electrodes, and sensor
cables require flexible copper alloy materials
– ‘Cannot–fail’ requirements can be met by
Fisk’s high performance alloy products
– Not yet certified
– Developing market and
applications, less defined
Automotive
– Increasingly electronic, especially in luxury
vehicles, with higher performance needs that
shift from copper alloy to high performance
alloys
– New electric vehicles with increased
material performance needs
– Already supplying major automotive
components with Percon, inroads made
– Competitive market
Electronics and
Computers
– Need for highly engineered products, thus
copper alloys
– Competitive market
Telecommunications
– Miniaturization of components fits Fisk
Alloy Wire Inc.’s high performance quality
(conductivity, strength, heat dissipation,
vibration tolerance, etc.)
– Decline in older applications
using Fisk’s original shaped
connector wire – product
changes and offshore
manufacturing
Fisk Alloy Wire, Inc. and Percon
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Fisk Alloy
Another factor that Fisk Alloy Wire, Inc. should consider in its strategic planning
process is the profit potential for each commercial segment. Below is a table that reviews
the company’s current volume, revenue, and revenue per pound based on the case data
provided in Exhibit 3.
End Use
Volume
(Lbs.)
Volume %
of Total
Dollar % of
Total
Revenue
per pound
Aerospace
696,695
66.69%
62.75%
$29.04
Electronics
193,912
18.56%
17.62%
$29.29
Medical
110,566
10.58%
12.64%
$36.84
Military
23,444
2.24%
3.56%
$48.98
Automotive
11,655
1.12%
2.16%
$59.70
Jewelry
7,527
0.72%
1.26%
$53.78
Misc.
874
0.08%
0.03%
$9.30
Total
1,044,673
100.00%
100.00%
$30.86
STRATEGY
• Identify the leading strategic priorities that are supported by the analysis. Explain
your recommendations, and conclude with a statement of the key strategic issues
facing the company.
Based on the preceding analysis, the table at the top of the next page has been
constructed to integrate the critical decision factors for Fisk Alloy Wire, Inc. The end use
sectors are sorted according to their revenue per pound profitability; and current volume,
Fisk Alloy Wire, Inc. and Percon
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Fisk Alloy
product offerings (FAC), and (3) increase volume in its original specialty shaped wire
business (FAW), a set of strategic priorities begins to materialize.
End-Use
C
Copper Alloy
(FAW)
HPA Specialty
(FAC)
Percon
24
Next
Gen.
Automotive
11,655 lbs.
$695,815
$59.70/lb.
—
Competitive
High Growth
Highly Profitable
Product Fit
**High Priority**
High Growth
Highly Profitable
Product Fit
**High Priority**
**
Military
23,444 lbs.
$1,148,182
$48.98/lb.
Certified
Product fit
Very profitable
*Target volume *
*Isolate from HP*
RoHS Exemption
**
Biomedical
110,566 lbs.
$4,073,513
$36.84/lb.
**Needed**
Strong Growth
Profitable
Product Fit
**High Priority**
Begin Certification
Growth Potential
Profitable
Product Fit
**High Priority**
Begin Certification
**
Electronics
696,695 lbs.
$20,228,851
$29.04/lb.
—
Product fit
Competitive
Product fit
**Monitor **
Aerospace
193,912 lbs.
$5,679,423
$29.29/lb.
Certified
Competitive
Growth
Volume
High Growth
Product Fit
**High Priority**
Integrating the analysis and priorities, a strategic plan can be devised for each of
Fisk Alloy Wire, Inc.’s strategic groups.
Percon 24 – The company’s proprietary cadmium-free high performance copper
alloy is clearly its most important strategic priority. Due to the high growth, high
profitability, and demand for an environmentally-friendly product, Fisk Wire
Alloy, Inc.’s market development strategy should begin with the automotive
sector, where it has already made some inroads. The biomedical sector may be a
Fisk Alloy Wire, Inc. and Percon
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Fisk Alloy
company should continue to monitor changes, new product categories, and new
regulations that would put Percon 24 at the forefront for component specification.
Copper Alloy – To satisfy its objective of increasing volume for FAW operations,
the company should target the military sector. The product fit and profitability for
certified copper alloy materials suitable for high tonnage contracts is an excellent
way to boost volume at Hawthorne. It is important, though, that this business be
isolated from strategically important or highly profitable automotive operations to
avoid the threat of having to sacrifice valuable commercial business to conform to
the executive DX order. Note that most of the sectors in this strategic group are
deemed less desirable due to their more competitive conditions.
monitoring new entrants and alternative products are also critical to dominating this
strategically important product market. Meanwhile, continuing to expand Fisk Alloy
Fisk Alloy Wire, Inc. and Percon
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Fisk Alloy