•BYD has rapidly grown to become the world’s second largest manufacturer of rechargeable batteries. •BYD has become the largest Chinese supplier (fourth largest global) of lithium ion batteries to cell phone manufacturers. •BYD has a strong base of workers of 17,000 workers with a daily output of over 2 million units. •BYD has developed deep capabilities in process engineering enabling it to enjoy a significant cost advantage over global competitors. BYD has significantly lower annual capital expenditure versus typical Japanese firms (as much as 10 times less). •BYD has continuously invested in both product and process R&D (roughly 2% of revenues) which enabled it to have a better competitive advantage versus other Chinese competitors. •Availability of Cash after raising capital through an IPO on the Hong Kong stock exchange. Weaknesses:
•BYD suffers from a high turnover rate of about 10% to 20% in its manufacturing workforce. This is due to the fact that 95% of the workers were young women coming from smaller inland villages throughout china and returning back to their home villages after few years. •Adopting a labor intensive approach introduces some variability in the production performance. Opportunities:
•Increasing its capabilities in component manufacturing, BYD can strengthen its position to integrate further into the process of phone assembly. The addition of assembly services would allow BYD to offer a “one stop” solution to OEM’s for the outsourced manufacturing of their products. •BYD can also explore new vertical opportunities by owning rather than contracting for assets putting more control under its whole supply chain. BYD can start expanding vertically to have a vertical integration of the whole supply chain. 95% of the work is done internally (e.g. design of tooling and molds) putting more processes under its control and allowing getting benefits in both cost and quality. •Acquiring Qinchuan Auto:
–The assets of...