Danfoss Motion Controls and Holip(A)
1. What are the key competitive advantages of Danfoss?
Danfoss’ competitive advantages lies in the long history of its reputable brand. The brand of “Danfoss” was established way back in 1933, and 30 plus years later became No. 4 globally and No. 3 in Europe. This signifies the growth and expansion of the company, and reputation of its product in terms of overall quality. Danfoss developed a strong business strategy in entering new market. Initially export to a new market through distributors, then followed by setting their own subsidiary office. When a specific market is developed and volumes are up, Danfoss would invest by setting up production facility, often time by acquiring current existent manufacturer in that specific market. Therefore, through series of acquisitions around the globe, Danfoss secured itself as worldwide market share. Danfoss also has stront R&D and initiatives for new product activities. Danfoss products are considered high in quality and received numerous awards for product innovation and design. 2. What are the key competitive advantage of Holip?
First and foremost, Holip’s “good enough” market position in China itself is a strong external competitive advantage, considering China market for converter is expanding and “good enough” market is growing 3 times as fast as “premium” segment. Holip’s internal competitive advantage is from the founder’s entrepreneur approach to gain market share. Holip understands the China customers need by offering payterm of 90 days, and quick customer response. Holip stocked required level of inventory to ensure quick delivery time, plus after-sale customer service is immediately provided as well. Furthermore, Holip was willing to accept customer’s requests of product customization, together with lean control on production cost, provided a price advantage product to China customers. 3. Does the proposed acquisition of Holip by Danfoss make strategic sense?...
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