Strategies Deployed During Economic Downturn To Maintain Competitiveness
Department of Mechanical and Manufacturing Engineering
The 2008 financial crisis has been an extremely challenging one for many businesses worldwide. Malaysia has not been spared from the difficulties posed by this economic disaster even though we were supposed to be somewhat isolated from being hit very hard. This paper examines the challenges faced by two companies in Malaysia, SATO Malaysia Manufacturing and Toshiba Electronics Malaysia. This paper will also try to understand the best practices in having sustainable competitive advantage. It is been noted that the sales for the manufacturing industry have seen a sharp decline especially between in the 2nd half of 2007 and 1st half of 2008. This is mainly attributed to the global economic condition which has also had an effect on Malaysia. Nevertheless, some companies have been harder hit than others and this is what we have tried to study. It is been found that while short-term strategies may have had some influence on the performance of this company, the long term strategies have a more profound influence over the performance of companies even during the more difficult times. Companies which have been steadfast in their long term strategies and have not been swayed by the different conditions have been less affected than those which have been chosen to adopt short term strategies which are not well coordinated. The paper will also share some possible lessons that can be learnt from other manufacturing company in trying to become competitive players in the Malaysian industry.
Manufacturers, Financial crisis, OEM
The economic crisis facing the world today may be attributed to the sub-prime lending in the USA. Quite simply put, subprime lending is when a financial institution lends out money to a borrower who does not have good credit rating, and charging higher interest rates due to higher risk of defaulting. Unfortunately when the prices of houses began to fall, home owners were forced to hold on to their loans which by 2008 had already reached the point where the interest payments had become exceedingly high. It was at this point that the number of defaulters drastically grew. The average American, especially sub-prime borrower, succumbed to their debts and could hold on no longer and finally the bubble burst. This marked the beginning of the global financial crisis in 2008. The economy in USA had contracted significantly and analysts predicted that it would be the worse than the one during the Great Depression of the 1930’s. Consumer spending suddenly crashed and imports to the USA almost came to a grinding halt. Many of America’s trading partners, such as Japan, Great Britain, Korea and even Malaysia saw exports shrinking. This resulted in a chain reaction and before long many countries which relied on exports to the USA to sustain the GDP growth would see a contraction in their GDP’s. Several countries which relied on the financial services sector such as Singapore, the United Kingdom and Switzerland were also badly hit due to exposures to the US sub-prime mortgages and securitizations. By the end of 2008, the global economy got from bad to worse. The manufacturing company is of great importance to a nation’s economy. Due to the industry’s comprehensive and highly complex eco-system, a nation’s economy benefits from a wide range of avenues. Among them is the job creation that it brings about. This comes from the manufacturers themselves as well as the extended network of suppliers, sales network, dealerships, after sales outfits and the list goes on. The current global manufacturing industry is in dire straits. Declining sales, contracting revenues, shrinking profits and rising inventories are common trend everywhere. Our first case study is SATO MALAYSIA MANUFACTURING. SATO Corporation is a public listed company in Japan,...
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