Analysis of case reports···

SWOT analysisInternal effects External effects Strength Weakness●large market shareand good customerresources●The widespreadinternational market●KEC has a newmodel of sedan●KEC is a publiccompany●The strong moralvalues and sense ofmission●the low average ageof managers●KEC’ s popularity is nothigh●The receipt percentagepercent of main business●Aging facilities, the lackOf core technology,dropped-behind scientific●traditional accountingmethods●R&D is not good●security features of theproducts●acquisition remainingproblems●Current size is not bigenoughOpportunities SO strategy WO strategy● slow economic recovery after the crisiscreate a good chanceto expand overseasmarkets● operating environmentin china is thriving● revenue in handset industry is promising to grow● Joint-venture area isneeded to explore● Opportunities in International markets● R&D● Acquisition of small enterprises to expand production scale ● Pay more attention to the domestic market and existing international market.● Joint-venture with foreign car makers ● Plus a largemarketing and do more advertisement aim to promote its popularity ● Improve the production line to product more and better mini-van &sedan to meet the demand ● Increase research efforts ●ThreatsST strategy WT strategy● competition from home and abroad ● threats come from government policies oftax ● international economic recession and highrisk in overseas market● Others exploration on mass-market hybrid and electric cars ● The future orientation for automobile industryis not clear● Consolidate the existing market ● Develop a low-emission vehicles ● Cooperate with foreign car makers to develop the electric cars● Find somejoint-venturepartnersin the new model● Improvement the productionand management to reduce cost● Raise money to do research and development● Expand in new marketsTextStrength●KEC has large market share and good customer resourcesAccording to the China Association Manufacturers (CAAM), KEC’ s mini-van rank second in the PRC market in terms of sales volume. KEC has 20% of the PRC market .In addition; KEC is one of the dominant producers in the sedan market and holds about 15% of the market.●The widespread international marketKEC’ s major export markets include Asia Pacific , Eastern Europe, South America ,Africa and the Middle East and there is an established international sales network .In 2010, KEC exported its products to 42 countries and regions.●KEC has a new model of sedanKEC released a new model of its premier brand during the year, the ‘Honey Bee’, and this was well received by the PRC market.●KEC is a public company which has been listed on the Hong Kong StockExchange since 2001, so it’s easy to raise money.●KEC’ s strong moral values and sense of missionThey place the 21st century global consumer first. A safe, affordable and reliable vehicle meeting customer’s driving needs –and the need of generations.●the low average age of managersWeakness●KEC’ s popularity is not high enough●The receipt percentage percent of main businessMini-van sales dropped to 46.5% of overall revenue in 2010, and sedan saleswere also at a lower overall revenue in 2010.●Aging facilities, the lack of core technology, dropped-behind scientificMost of the key components are sourced overseas. What’ s more ,both manufacturing plants are operating with out of date and aging production equipment .●the traditional accounting methodsBoth manufacturing plants are adopting traditional costing instead of activity-based costing when costing and pricing products.●Research and developmentThe R&D plant has been in operation since company formation in 2001 but has not been successful in being first to market on any new product .It’s poorly funded and inadequately staffed.●the security features of the productsIn the practice of the Romanian Production Plant Joint Venture, to receive tax credits, Fast Trans has to add local parts to the KD kit, one of which is the full range of safety features.●the acquisition remaining problemsIn 2004, KEC acquired a smaller Kunming-based private automobile manufacturer with a specialization in mini-van business. While company management and financials have been integrated into the KEC structure, the Kunming manufacturing plant operations have remained separate. This is the only acquisition to date.●Current size is not big enough●the main managers with good education are short of rich market experience Opportunities●slow economic recovery after the crisis create a good chance to expand overseasmarkets●operating environment in china is thrivingThe PRC still managed to post overall GDP growth of 8.7% and 8.9% in 2009 and 2010 respectively despite the global recession after the financial tsunami in 2008. This growth was driven by large-scale government stimulus measures and rising affluence that helped the continued boom of the domestic market .Overall growth is likely to be around 9.6% in 2011 amid in a period of high domestic inflation. China has overtaken the US to become the world’s largest car manufactured for the second consecutive years. Most of the vehicles manufacturer in China is sold within China. The domestic market is very strong and is forecast to continue into 2012. It is expected that overall sales for KEC in domestic market will continue to grow, and there will be an increase in mini-van sales due to the continuous improvement on economic climate. And the market for private vehicles within China is growing art an exponential rate.●National policy encourages, Chinese auto industry blossomThe government implemented a policy of replacing old vehicles and electrical home appliances with new products to spearhead a general boost in the industry, as well as to encourage the use of more environmentally friendly cars and appliances.Also the government has committed to the development, sale, and use of electricand hybrid cars, referred to as “alternative powered cars”, in order to strengthen the deployment of energy conservation and emission reduction.●revenue in handset industry is promising to growRevenues from 2009 to 2010 increased from 4.2% to 7.1% of the overall revenue respectively. The rechargeable battery market in handset industry accounted for the leap in revenue growth. So KEC continued its enhancement of production capacity to meet market growing demands.●Joint-venture area is needed to exploreIn 2009, KEC entered into a collaborative agreement with Fast Trans SRL in Romania regarding the construction of an assembly plant. The plant became fully operational in February 2011. What’s more , KEC has not entered into any joint ventures with foreign car makers but would like to explore this possibility.●Opportunities in International marketsThe company expects its export volume to rebound in 2011 in its existing markets and to increase in developing markets, such as Eastern Europe. The collaborative agreement ,the first of its kind in Chinese automobiles going abroad, to operate a complete knock-down (KD) assembly plant in Romania means it can better meet European and Eastern European demand . the European market for the ‘Honey Bee’ is expected to increase due to certification, with a flow-on effect to other models .In the Romanian Production Plant Joint Venture, KEC has entered into its venture to Romanian to avoid import taxes and to receive tax credits for creating local Romanianjobs.●R&DKEC’ s internal R&D division is developing an electric car prototype .There are no joint-ventures with foreign manufacturers.Threats●competition from home and abroadOf the automobiles produced, 44.3% are local brands and the rest of the vehicles are being produced through joint ventures with foreign car markets, including Volkswagen, BMW, General Motors, Hyundai, Nissan, Honda, and Toyota.●threats come from government policies of taxThe purchase tax on passenger vehicles with a displacement engine of 1.6 liters (1.6L) or less was reduced by 50% in January 2009. As anticipated, this subsidy significantly boosted the sale of small displacement passenger vehicles with engines of 1.6L across China. But KEC was unable to garner this advantage as all its vehicles are over the 1.6L engine capacity. And then the PRC government increased general purchase tax from 5% to 7.5% on automobiles in December 2009, however the 50% discount still applies to vehicles with less than 1.6L capacity. Even further, if the government re-introduces its subsidies on alternative powered cars in the latter half of 2011 then sales growth may be further impacted.●international economic recession and high risk in overseas market , lowacceptance of Chinese products abroadThe international market is, generally, weaker than the domestic market. PRC vehicles are perceived as being of poor quality in the developed (for example, European and US) markets and are often viewed suspiciously by consumers. However, this reputation is slowly changing PRC maintains its status as number 1 world producer.●large amount of diesel and petrol leads to large amount of greenhouse gasesThe consultancy McKinsey estimates that demand for diesel and petrol in China will rise from 100 million tones to 500 million tones –a large rise in emissions from a country that is now the world’s biggest source of greenhouse gases.●Others exploration on mass-market hybrid and electric carsMost of China’s largest automobile manufacturers have plants to mass-market hybrid and electric cars but many are now holding off due to the delay in government subsides .R&D is expensive and many manufacturers have entered into joint ventures with foreign manufacturers to develop this market ,in addition to expanding overseas markets.●The future orientation for automobile industry is not clearThe international markets (particularly Europe) are showing a trend towards smaller, more environmentally-friendly vehicles; or even towards substitutes such as public transport and bicycles. Lastly,while electric-powered cars have been released worldwide ,consumer take-up has been extremely disappointing in all instances to the point of causing serious investment loss.AnswersaAccording to above analysis, we draw the conclusion that the priority of the four strategy to the organization should be :1 Growth in existing markets and existing products2 Development of new products3 Cost control4 Expansion into new marketsbAnsoff product-market matrix Market penetration ● Expand the market by reducing price and advertising promotion● Providing better services to gain consumers’ acknowledge ● Improving production equipment .● Acquire small plants or joint–venture with others to expandmarket share Product development● Improving the condition of theR&D plant ,and providing fund and adequate staff to develop displacement vehiclesDevelopmass-market hybrid and electric carsMarket development ● Expand more market in international market Diversification● Develop mass-market hybrid andelectric cars and put them intointernational market before ours● Producing kit for bus or rail inRomanian and then sell them in theEuropean marketCAs far as we are concerned ,the Market penetration strategy is the best strategy for KEC in the next five years .1 Expand the market by reducing price and advertising promotion2 Providing better services to gain consumers’ acknowledge3 Improving production equipment to product more reliable products .4 Acquire small plants or joint –venture with others to expand market share5 According to the following pie chartswhich present revenues of 2010 and 2009 respectively:The company should continue increase the percentage of Automotive parts and components for they are the most profit project of the company.。