Pilkington Float Glass Case

2.96 – Pilkington Float Glass Case Study 1.) What were the core competencies of Pilkington Brothers? Pilkington Brothers is a company whose survival through the sudden increase in technological advancement aided it, rather than harmed it, in its pursuit of future claims on the glass industry. Capital was never a problem, as it only had to borrow money from external sources on four accounts (most of which were during the time it lost a lot of money while being behind on the latest processing techniques). This internal funding stemmed from a multi-generational foundation, upon which thrived a company that was not only influential within the UK glass market, but in the international market as well. The overseas investment was yet other reason to push forward in riding the wave of technological advancement. In doing so they created a company that could not only produce quality glass, but could also advance methods that gave them power over the direction of the future of a greater part of the glass market. 2.) What kind of the development process was employed? Upon the executive decision to be part of the effort to move forward in the development of glass processing, Pilkington Brothers built labs aside from their plants to centralize the effort with the appropriate machinery. By the time Alistair Pilkington came around with his float glass idea, the foundation for success was already set. However, they were careful as they went on not to be too confident or assured of groundbreaking innovation. The research built confidence with the board: funds were increased from success to success, thus assuring that each investment was pointing toward a certain beneficial result. This was aided by, if not made necessary by, the level of secrecy that surrounded each milestone of the overall research. These milestones were dictated by certain base requirements of cost efficiency and quality. While they saw the potential for the process long before it was completed, they made sure that the process was completely within their scope of success before even thinking about the implementation. 3.) Do you recommend to set up its float plants worldwide or to license its float process to competitors? Why? Support your recommendation with analysis showing financial impacts of your choices. The obvious short-term financial gain is in the sheer difference in production price that separates the float glass process. The report showed that production cost was closer to the cheaper, 1/8” sheet glass which sold for $9.35 per square foot, but would sell at the ¼” price, that being $59.58. The profit margin would be staggering. In the same way Pilkington Brothers was almost completely wiped out due to their recently recent investment in quickly obsolete plants in the early 1920s, the competition would not be

able to continue holding onto even a small percent of the market in the presence of the Pilkington Brothers’ price and ability to continue to produce for a quickly increasing demand. Of course, the point of the research lab in the first place was to continue to be part of the effort of developing production technology, not necessarily in taking over. Pilkington Brothers learned the benefits of licensing their previous development, not only in relations with competition but in the encouragement of the development of the market itself. The massive workforce of Pilkington Brothers may be able to continue to produce for an overwhelming demand, but there is no way to foresee what the consequences of such a quick takeover in regards to the future of their business and of their market as a whole. Licensing the technology would still ensure a profit from the requirements of their patent, though it would become much less as the new technique becomes more popular, but they would create a relationship that makes the competition not only indebted to them, but dependent on them, and such a dependency that would ensure the continued success of the company.