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Jason and David, the general and the vice managers of Carve Electronics’ Co., Ltd. branch in Zhoukou City, Henan Province, have been considering the ways to revise the company’s strategy due to the fact that the enterprise needs to regain its competitive advantage. The two managers have been working together for many years and have been driving the company to successful performance for a long time. In general, the Carve Electronics branch in Zhoukou City was established in 2009. It has over 1800 employees, and its registered capital equals 50 million RMB (Zhoukou Carve Electronics, n.d.). Please, refer to Tables 1 and 2 for more details (Appendix).
The Chinese enterprise has been one of the leaders in electronics productions throughout the years; however, for the past couple of years, it has experienced a particular decrease in sales. This has emerged due to the lack of innovation and ineffective approaches, which has resulted in the gap between the leadership and the staff (Bolman & Deal, 2008). Therefore, Jason and David are deeply concerned about the ways to boost company performance, increase the efficiency of the employees by stressing their core competencies and promoting a stronger collaboration, and, in general, to ensure Carve Electronics branch in Henan Province can attain its competitive edge again (personal communication, February 6, 2017).
In addition, it is assumed that innovative approaches to leadership and enhanced collaboration with the employees and among units would enable the enterprise to gain a greater market share. According to Bolman and Deal (2008), efficient leadership is possible if managers “understand the deepest values and most pressing concerns” of stakeholders (p. 370). Therefore, one of the aims of the company leadership is to build a stronger relationship and interaction at two levels – the management and the staff.
It should be emphasized that hyper-competition and the need for powerful corporate branding have also pushed Carve’s leadership to reconsider its approach towards the workforce. Moreover, the company needs to change its activities significantly by placing customers at the central position and strengthening long-term relations with them. As discussed earlier, the intense rivalry within the industry is also one of the factors that have been raised by Jason and David (personal communication, February 6, 2017). Thus, to withstand the competitive forces, it is necessary to elaborate a strategy, which will keep the enterprise from the effects of competitive forces.
The company has many years of experience in the Chinese and global markets. In particular, Carve Electronics has almost 10 years of experience in the mass production of a variety of electronic products including computers, networking, and telecommunications cables, and so on. In addition, the company has rich expertise in R&D. The team responsible for the successful operation of this department consists of more than 25 people (Zhoukou Carve Electronics, n.d.). It is crucial that some of them have doctoral degrees, which allows the company to develop and use sophisticated technology. According to David, as a rule, 15% of all the profits from sales go to supporting the operation of this department (personal communication, February 8, 2017). Previously, the company has been able to produce at least 70 new products every year. Moreover, the company has practiced close working with the clients. To be more precise, any customer could come to the company with his or her idea of the product, and Carve Electronics would implement it.
In addition, the company has an affiliated factory for productions. It covers several thousand square meters and has more than 1500 employees. These facilities allow the branch to produce about 4.2 million electronic units every month. The technicians carry out constant monitoring of product quality using a 10-step system (personal communication, February 8, 2017). This approach has been the main competitive advantage of the company due to the fact that the workers could control the rate of defects very quickly. Moreover, in order to control the levels of lead, the company acquired special monitoring equipment, which enhanced customer loyalty.
Nonetheless, Carve Electronics Co., Ltd. branch in Zhoukou City, Henan Province has been experiencing a severe decline in sales due to a number of reasons. David and Jason claimed that the branch had lost its competitive advantage because the products and services offered by the company are considered outdated (personal communication, February 8, 2017). Apart from that, the leadership cannot coordinate and implement decision-making in terms of co-workers effectively. Poor communication, lack of coordination, and insufficient cooperation among units has resulted in weak company performance (Bolman & Deal, 2008). Thus, the enterprise requires innovative leadership approaches and the joint work of management and skillful employees to be able to improve the situation.
Industry and the Chinese Market
It is important to note that the pace of growth in the electronics industry continues to increase rapidly. Notably, this industry has not exhausted its potential yet. Microminiaturization increased productivity, and reduced costs for equipment have led to the use of such products, which provide a fold increase in demand for electronic components and an increase in the electronics market share. The global market is developing rapidly as well. It is characterized by the idea that manufacturers tend to orient at mass production of fairly simple but functional products (David, personal communication, February 8, 2017). Chinese manufacturers import components and continue to hold the rate of domestic market growth in two to three times higher than the rates of other countries. The policy applied by Chinese manufacturers is also profitable and convenient for investors. There are almost no obstacles to the production of these products due to the fact that the government has removed a number of restrictions and barriers. Respectively, the companies who have been able to use this potential competently could rapidly increase their productivity.
Decision Makers’ Standpoint
The leaders stressed that this industry branch began to develop fast rather long ago, but the average annual growth rate, at present, is not less than 17%. Initially, the market was growing at the expense of the vertically-integrated companies that were developing all core competencies simultaneously. Carve Electronics was one of those companies that carried out the development, production, marketing, and other operations independently (Jason, personal communication, February 8, 2017). At the same time, the company sought to expand the market and to improve efficiency through one factor, in particular, the concentration of intellectual and financial resources.
One of the vice managers has conducted an analysis, which has revealed that despite the successful start in the industry, the company has been deficient in productivity due to the lack of innovativeness. The technology is developing indeed rapidly, but the company cannot keep pace with the other manufacturers to be competitive enough. Moreover, the current setting requires the company to focus on new energy developments. Thus, the company needs to consider and outline its performance with the current industry requirements (Hill & Jones, 2012). As revealed in the interview with the managers, the company adheres to the outdated set of products as well as management strategies (Jason, personal communication, February 8, 2017). Therefore, the leadership has decided to improve the market strategy and enhance company efficiency through the application of transformational leadership. As discussed with the vice manager, a constant yet adequate change would allow the company to enhance its operation through concise and relevant decisions. Most importantly, this approach will ensure that employees can understand the updated work process and the possible confusion and disorientation will be eliminated.
Thus, Carve Electronics Co., Ltd. branch in Zhoukou City, Henan Province experiences several problems that hinder the effective development of the company. The organization’s management is ineffective, and the enterprise needs to apply innovative technologies to be able to increase the product range and tailor customer needs. Moreover, the leadership needs to employ effective strategies to enforce cooperation with the workforce. The transformational approach towards leadership should be considered to improve the situation for the better (Hill & Jones, 2012). Moreover, Porter’s five forces should be employed to analyze current operations within the enterprise. In particular, one force should be chosen to serve as a source of competitive edge. It should be done to ensure the company places emphasis upon the factor, which can influence the most and outlines it with its core competence. It is assumed that by following the proposed approach, the company would be able to meet its corporate and organizational objectives.
Bolman, L. G., & Deal, T. E. (2008). Reframing organizations: Artistry, choice, and leadership (4th ed.). San Francisco, CA: Jossey-Bass.
Hill, C. W., & Jones, G. R. (2012). Essentials of strategic management (3rd ed.). Mason, OH: Cengage Learning.
Zhoukou Carve Electronics. (n.d.). Company introduction. Web.