CASE STUDY 2
1. Despite its growth and size, why is Inventec not very profitable? Inventec Corporation is not very profitable in its growth and size because * The Threats of new entrants are very high in Taiwan. Because legal barriers in Taiwan is very less rather than China. (Less government Restrictions). * Though it is very large industry, but it could not get benefit from economics of scales.(under utilization of the whole plant in China) * It moved to Taiwan for manufacturing only single product line. (Note book PC only). * As the demand of ODM is growing, then all the players try to set lower price for their products. So IC( INVENTEC CORPORATION) faces huge price competition in its growth.
2. What are the drivers of the average profitability of the Original Design and manufacturing industry? The drivers are:
* Cost related with product manufacturing.
* Product design and design resources.
* ODM’s location.
* The kind of technology.
* Supply chain/procurement and logistics.
* Quality assurance and service and support.
3. What are key factors that a company like Inventec needs to manage to earn above –average profits in this industry? The key factors are:
* Satisfy the client company’s product design standard. * Lower operating cost and comparatively low price than competitors. * Enlist specialised skill people in different section in the industry. * Obtain the competitive advantage by cost leadership or differentiation. * Bargaining power of the Suppliers should be low.
4. Why is the Indian software industry, on average, so much more profitable than the Chinese ODM industry? Indian’s software industry is more profitable than China because it has world- class technological education and huge number of highly-skilled engineers. Moreover, extensive English skills in education furnish more benefit than China in ODM industry. Furthermore, its skilled...
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