Synnex Case

I. Executive Summary: With the emergence of a booming information industry, Taiwan was declared the world’s market leader in numerous high-tech products and offered explosive growth and fertile grounds for businesses in the information industry. Eager to participate in Taiwan’s technology commons, many high-tech companies were attracted to the fertile region in an effort to benefit from the easy market entry and rapid growth opportunities, thus defining the role of distributors with vital importance. Many high-tech suppliers opted to use small, indigenous firms with weak capabilities to lead product distribution for multiple reasons. Due to the unfamiliarity of the local environment as well as the fragmented and dynamic state of the retail industry, it was important for suppliers to use previously established firms that already had their feet on the ground. Delegating product distribution to local firms allows the supplier quick and easy entry as well as minimization of costs in the short run. Synnex, an innovative, full-range channel management company took advantage of Taiwan’s distinctive technology clout, “Silicon Island”, in a seemingly unconventional manner. Although the “Synnex Way” faced strong initial resistance and cost disadvantages, Synnex’s proprietary conglomerate became a highly efficient and trusted distribution system. Executing with a high level of operational accuracy was Synnex’s unique core competency that may later be deemed problematic with overseas expansion. Synnex is now faced with the challenges of extending into new frontiers while managing the double-digit growth and insatiable capital demand.
II. Conventional Practices: 1. Catering to big clients: Chasing vast stores with sizeable volume and cherry picking these large, profitable clients gave distributors a cost advantage. Small clients were often ignored because the profits generated from these small clients were usually not large enough to offset the corresponding service