PRPG was a state-owned enterprise and was developed form an old piano factory in Guangzhou of China. The piano factory is located Pearl River, so that the brand of piano is called Pearl River. Since the adoption of an open-door policy, Chinaexploited a range of new opportunities provided by a market-oriented economy for expanding production, employments, and profits through free trade markets. As a result, PRPG face a chance due to import technology and export products, and then they were expended to become Pearl River piano Industrial Corporation. Their business become more successful ，
after they merger with several small company. In2000, PRPG had more than 130 strategic alliance through-outs the country, in addition to 208 sales units.
Drawing on industry- resource- and institution-based views, explain how PRPG,from its humble roots, managed to become China’s largest and the world’s second largest piano producer.
1.1 Industry-based view
Rivalry among established firms may prompt certain moves. PRPG face somechallenges, since piano is traditional European musical instrument, European pianoshas a long history, and they always target upper market, such as Steinway. PRPG will face a strong challenge when they target upper market. For example, althoughYAMAHA is the largest piano producers, they focus on medium and low-end market;however, Tong would like their PRPG become best brand, next only to Steinway. Inaddition, PRPG not only import technology of piano making, but also learn andintroduce western culture to them.Higher the entry barriers, PRPG face the difficult entre in US market; the US peopledo not believe PRPG can make low price high quality products. PRPG cannot easily target foreign people. US people stay loyal to their local product.The bargaining power of buyers may lead to certain foreign market entries. In USmarket, there are many competitors, such as Steinway. Steinway product always target upper market. Buyers may buy Steinway product, rather than PRPG.
1.2 Resource-based view
in 1960-1980, the factory had very low productivities, lowcompetitive ability, even less than 100 labors and produce only 13 pianos per year.The industry introduced total quality of management in 1988, and they also promoteISO 9000 in 1998. Moreover, they built business partnership with YAMAHA via joint venture. As a result, PRPG learned higher technology skill via business activities.PRPG not only import technology of piano making, but also learn and introducewestern culture to them.Tong pay attention to communicate with their employees in order to build good“GUANXI”. Tong also established close relationship with some famous world well-know piano players, and recommended they play their Pearl River piano in their concerts. This is ‘celebrity's appeal’ strategy in order to target people.Innovation included the importation of new technology in production and quality measurement and production innovation. Production innovation can be concluded developing a wide range of pianos to meet the upper-, medium- and low-end marketin order to target different consumers’ group.
1.3 Institution-based view
Regulatory risksThese risks are associated with unfavorable government policies. Since the adoptionof an open-door policy, PRPG is allowed import high technology and export their products. As a WTO member, the government’s has been encouraging local industries to learn from their foreign partners.Currency risk China is becoming an export powerhouse, which caused the friction with other countries, United States in particular. The U.S. senators urging the Whitehouse toexert pressure to China for RMB revaluation most recently and President Obama gavean official statement to point out RMB should be appreciated. China’s direct responseto RMB rate issue can be found in Premier Wen JiaBao’s answer in the pressconference just after the NPC&CPCC* this month in Beijing. Premier Wen claimedRMB is not...
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