Case Study-Inventec Technology

Topics: Profit, Competition, Economics Pages: 2 (464 words) Published: September 13, 2010
The essential reason regarding Inventec’s profitability was lower than expectation is due to the high competition between the many ODMS. Therefore, though the field of ODM was once high profitable, with the intensive new entrants entered in this industry, supply for quality goods are rapidly increasing, the profit margin that each competitor could share is simultaneously shrinking. In other words, despite the fact that Inventec has done quite well in expansion and decision making, strategic direction as well as determination of sustainability in the past, the unavoidable occurrence of competitive environment for it ultimately led it to the result of a shrinking profitability figure. On the other hand, with the more competitive environment for electronic products, such as computers, PDAs, corporations which ask for outsource have to survive by constantly remain competitive by squeezing cost which in turn, squeezing the ODMs. Thus, from both the direct pressure coming from client and competitors, Inventec could not realize substantial abnormal profit.

Normally speaking, the drivers of the average profitability of the Original Design and Manufacturing industry would be as follows: * The efficiency of the product and software design
* The efficiency of the manufacturing process
* The effectiveness of the manufacturing process
* The availability of the skills required by the design procedure * The availability of the funds
* The progress or upgrading of the skills

Key factors for companies like Inventec to earn abnormal return should be as follows: * Remain competitive
* Being able to differentiate either by quality or lowering cost * Remain open minded with new opportunity
* Be active in acquiring the cutting-edge skills
* Be curious in getting new information regarding the market * Be active in gaining new client and potential client out there * Be ready to cut cost and keep the balance of cost and...
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