S.W.O.T.

Analysis

Group Members:
Lacey Hall
Michelle Liscom
Rex Riches

Salt Lake Community College

Professor Larry Friis
Management Essentials 1600-002
March 30, 2015

Kyden Machine Inc. is a small steel manufacturing company located in West Jordan,
Utah. It was established in 1973 and currently employs 17 people. Although the company is
small, it is very successful and is able to provide many services to its customers including:
Drafting, design or redesign for customers, fabrication (cutting, welding, metal forming),
machining (milling, lathe work, precision machining), drilling, etc.
Like all companies, Kyden has its own unique strengths, weaknesses, opportunities and
threats. We interviewed the president and owner of Kyden, Vaughn Bowcutt. With the
information gathered from this interview and facility tour we were able to prepare the following
situational analysis for the company.
Strengths
Kydens biggest strength is their extremely tight quality control and organization.
Competitors often rely on personnel inspection instead of an actual step-by-step method that
requires a certain level of perfection. Essentially Kyden strictly takes on industrial work and
doesnt participate in government contracts; however, their standards of quality are equally as
strict as government guidelines. They scrutinize every product before it leaves their facility and
would much rather take the heat for a late product than a faulty one.
In addition to impeccable quality control, Kyden is often commended on being time
efficient, innovative, cost effective, and willing to work with their customers based off of the
customer need. These factors have made Kyden a big player in the steel industry and because of
this reputation they have become Kennecotts go-to steel company bringing in millions of dollars
annually.

Currently Kydens assets include $750,000 in machinery, $1,500,000 in facilities,

vehicles, and land. As well as being 100% debt free. Due to not owing any outside institutions or
peoples any funds, when the economy crash hit they were able to keep their doors open unlike
many others in the industry during that time. Their financial choices, abilities, and success has
proved to be vastly beneficial, allowing the hard times to come and go without causing the
business to close, as it did for many others in the industry. They have more than adequate cash
flow to sustain themselves and a high return profit level currently. This has put them in a prime
position financially and has set them up for further future success.
As well as high standard quality, customer satisfaction, and being financially sound,
Kyden has an experienced and talented staff. They have everything from welders, machine
operators, fitter welders, mechanics, helpers, drivers, painters, delivery officials, office staff, and
a CAD (Computer Assisted Design) department that majority of which have been with Kyden for
10+ years and some of which have been employed there for over 35 years. The entire manual
labor portion of the staff is certified and many of which are journeymen in their craft. This
allows for an experienced staff and minimal to no turnover, thus saving the company additional
training funds. A way they keep their employees happy is dispersing bonuses evenly. Last year
they made significantly more than their projected goals and ended up dispersing the additional
take home of $182,000 evenly between 17 employees as a bonus.
Furthermore, they have the unique resource of a CAD inventor system. This essentially
allows for innovation in creating new products and designs to be more beneficial to the
consumer. With this system they were able to restructure over 90% of Kennecotts blueprints to
make Kennecotts machinery work more efficiently with easier to replace parts, in doing this
they have become the number one supplier for Kennecotts machinery. With this they are now

under contract with Kennecott for 5 years, and this is the second time that they have had an
extended contract with them and according to Kennecott they plan to continue to renew in the
future.
Their personal edge has also proved to be beneficial in the workplace. Not only do they
create customized products for their consumers, but they also keep in good standings with the
officials of Kennecott. They often visit the location and have created friendships with the people
they are in business with, bringing them donuts and offering low rates on analyzing issues they
are experiencing. As Vaughn Bowcutt states, Its amazing what you can buy with a donut.
Weaknesses
Although Kyden has many advantages over its competition, it also has internal
weaknesses that, if addressed, could make the company even more successful. Some minor
weaknesses that the company has are: refusal to take on government work, lack of formal
education and training in the office staff, and they must rely on outside companies for powder
blasting.
Having a large market share is valuable to a company. In our interview, we learned that
Kyden Inc. refuses to take government jobs. The bureaucracy associated with carrying out these
jobs was too bothersome to deal with. An example given to us was that of a job that was
performed for Hill Air Force Base. The job was to work on a pin for an F14 fighter plane.
Because of the extreme requests that were demanded, Kyden had to go to a third party that
ensured them that their work would be up to government standards. Unfortunately, the third party
had exaggerated their abilities to meet the high government standards, and Kyden was on the line
for it. Understandably, Kyden has been reluctant to work for the government since then, but it

does decrease their market share, which as in all businesses, bigger is better. Kydens rivals
might have a competitive edge in this area.
Most of Kydens employees have excellent training, education, and work experience.
Kyden does have some employees that, although valuable to the company, do not have the
formal education that would give the company the best use of intellectual capital. There are two
women on the office staff that perform their jobs acceptably. Kyden has given them both the
opportunity (by offering to pay) to attend college to gain a formal education that would better
themselves and the company. Neither have accepted this offer. There is an employee that,
although she is new, is attending college. When her education is complete, she will be promoted
over the employees that have chosen not to attend college.
Some of the items made by Kyden are powder blasted. This is a process where colored
powder is blasted and then baked onto a metal object giving it a paint-like finish. Kyden does not
do this process, and must depend on outside sources if it is required. Relying on an outside
company for completing certain aspects of jobs that your company has taken can have very
serious, negative consequences if that company fails to perform to your companys standards.
Kyden also has some major weaknesses that should be addressed to gain a sustainable
competitive edge. Kyden has only one main customer that it relies on for the future of the
company. The land where the company is located is suitable for current needs, but is not large
enough to handle any more growth. Due to a sophomoric attempt at having their website
designed, the company has no web presence.
In 1990, the decision-making duty for Kyden Inc. shifted and is now the responsibility of
the vice president of the company, Brad Bowcutt. According to Vaughn Bowcutt, the president of
Kyden, Brad has chosen to focus the efforts of the company on their main customer, Kennecott
Copper Mine. Kennecott provides many jobs for Kyden and, in general, takes up most of its
producing power. Kyden has other customers like Frito-Lay and Great Salt Lake Minerals, but

they still place a huge percentage of attention on taking care of Kennecott. Although it is
currently very profitable to work with Kennecott, it is a weakness for any company to rely on
just one customer for the future of the business. For the foreseeable future, Kyden can rely on
Kennecott because it is currently under a 5-year contract and this is the second time Kennecott
has renewed their contract with Kyden. It is likely that Kennecott will keep renewing, but a lot
can change in 5 years. It might be a wise strategy to use the time and income now to expand the
business so it has the capability of taking on more customers and widening its customer base in
case Kennecott does decide to take its business elsewhere.
Another major weakness that Kyden faces is the inability to expand due to lack of space.
When the land was originally purchased back in the 70s, Vaughn Bowcutt did not plan for how
large and successful the company would become and how much more potential it still has.
Because of limited space in their current location, to do any more expanding at all Kyden would
have to move to an entirely new location. Without room for more expansion, Kyden cannot hope
to increase its customer base beyond who they currently supply, namely Kennecott.
Lastly, one of the major weaknesses that Kyden faces has the easiest fix. Kydens web
presence is virtually nonexistent. An attempt at a website proved to be disadvantageous because
of whom was hired to create the website. One of Vaughn Bowcutts grandsons, who is attending
college for web design, created the website for Kyden. After reviewing the website, Vaughn
Bowcutt disapproved saying that the website was sophomoric and unprofessional. He had the
website suspended and if visited, it simply says that it is under construction. Not having a web
presence does not necessarily create problems for the business, but it does prevent potential
customers from finding Kyden.
Opportunities

Kyden unfortunately doesnt have very many opportunities at this time. With little to no
competition, the need for innovation past what they have reached and achieved is not a pressing
one and without any substantial changes happening within the industry, there is currently no
outside influences or pressures offering new opportunities. However, the biggest reoccurring
tendency for Kyden is the re-signing of contracts with Kennecott, thus allowing continual
opportunity for profit.
One opportunity in which Kyden has is to further expand. At this point in time they are
turning away work. If they were to expand their facilities and staff they would potentially
purchase another location and could probably bring in an additional million net profit annually.
Also in doing this, they would have the ability to provide even more services to their consumers.
Another place of opportunity for Kyden would only be possible if they were to expand.
However, if they were to fulfill the first opportunity, they could enlarge their consumer
demographic. At this time, Kennecott is Kydens primary source of work. If expansion became a
reality they could create contracts and produce more products with other companies and facilities
thus allowing them to have less reliance on Kennecotts business and possibly create for
themselves a well-rounded customer base instead of relying on a sole means of primary funding
and income.

Threats
The biggest threat of Kyden and many other machine shops is the government
department of Occupational Safety and Health Administration also known as O.S.H.A. They

have the capability to shut machine shops down for any small infraction thats found. This
would cause them to miss deadlines, which in turn causes them to lose business. The government
also has started to make it harder on organizations like Kyden because of the governments
constant attempts to cut down on pollution. This means that they tighten the grip on businesses
that produce high amounts of pollutants.
As far as competitors that could come in right now theres no one in their market that is
better equipped or trained to come in and take their business. However, there is a constant threat
and possibility that a new company enters the industry or an already existing company updates
its systems and contacts, thus taking away from Kydens business.
Another threat is another company taking away their contract with Kennecott Copper,
which is the main source of their business. It may take an extended period of time for a
competitor to obtain Kennecotts business, just as it took Kyden to get a contract set up with
them, but it is always possible. If that were to ever occur, it would severely cripple Kyden due to
their overdependence with Kennecott at this time.
Kyden does run the threat of some of losing their intellectual property such as the
blueprints they have drawn up for projects with and specifically for Kennecott Copper. However,
Kennecott has access to several of these blueprints and this potentially puts Kyden at risk for
intellectual property theft; majority of their blueprints are secured in-house at this time, although
not all of them.
It is also concerning that at times certain raw materials, especially exotic materials can be
difficult to obtain. Many of these materials are required for them to successfully operate. They
have on one occasion experienced a shortage of stainless steel, where they had to acquire a

shipment all the way from Europe, unfortunately at a very high cost. Part of the shortage was a
result of government regulations, the same regulations that cause difficulty in the steel industry
in regards to pollution. Geneva Steel Mill is an example of a business that didnt meet
government regulations and was forced into permanent closure as a result.
Like most companies they still run the very real threat of being sued by someone even if
its not a business related problem. An example of that was when the owner was driving a
company truck on his personal time and got in an accident. This led to the driver of the other car
to sue the company and it turned out to be a several year court battle and in the end it concluded
with the other driver being paid a small settlement. However, due to issues such as these, Kyden
has employed a strong law firm to back them up in potential future lawsuits.
Overall we as a group have determined that Kyden Machine Inc. is moving forward in a
mostly positive direction. They have been wildly successful in their past endeavors and hopefully
will continue to do so in the future. We would recommend that they continue in their forward
trend by taking advantages of the opportunities in which they have before them though;
expansion being the first and foremost priority. However, they are unlikely to do so at this time
and have placed a good portion of faith into their contract with Kennecott. We wish Kyden
Machine Inc. the best and appreciate their willingness to assist us in the completion of our
SWOT analysis of their company.