Emerging Chinese MNCs: Konka Group Company Limited - A look into the future Presented by: Ahmed Binte Kashfi
Konka Group Company Limited • • • • •
Introduction Economic Analysis Company Analysis Recommendations Q&A
Syed Najibullah Rashid Rezoana Hassan Tareq Group - C
Company Analysis
Economic Analysis Impact of inflation on economic growth & exchange rate
Introduction Economic Analysis
Economic Analysis
25
P ercentage
Company Analysis
Introduction
30
20 15
Company Analysis
10 5
Recommendation
0 1992
1993
1994
1995
1996
1997
1998
Recommendation
Year
growth rate
inflation3
exchange rate
1994 1995 1996 1.13% 1.50% 2%
Group - C
Group - C
INTERNAL ORGANIZATIONAL ANALYSIS Konka's market share in China
Introduction
Company Analysis
Recommendation
30 25 20 15 10 5 0
P e rc e n ta g e
Economic Analysis
Introduction
25
4.39
5.8
9
13
18
Economic Analysis Company Analysis
Recommendation
1993
1994
1995
1996
1997
1998
1) Financially sound company 2) Already emerged as the best selling CTV brand through its own brand and low price 3) Backward & Forward linkage 4) It has set up Konka Technology Development Centre Co. in the Silicon Valley in December, 1997
Year Mkt share in chinese mkt Group - C
Group - C
1
Consolidated Balance Sheet: Konka Group Co. Ltd (unit '000 Yuan)
Net Sales & Profit Margin
Introduction
Recommendation
Economic Analysis Company Analysis
1996
1997
1998
Recommendation
6,343.00
6,000.00
5,006.00
4,000.00 2,000.00
1995
8,574.00
8,000.00 V a lu e
Company Analysis
10,000.00
2500000 2000000 1500000 1000000 500000 0
V a lu e
Economic Analysis
Introduction
0.00
3,059.00
2,400.00
0.09 0.09 0.07 0.07 0.05 0.05 1993/12
Year
3,580.00
3,610.00 2,180.00
1995/12
0.06 0.06
1997/12
1999/06
Year
Fixed assets Net current asset Shareholders equity share capital
net sales
profit margin
Group - C
Group - C
COMPETITIVE ANALYSIS Introduction Economic Analysis Company Analysis
Recommendation
BROAD ENVIRONMENTAL ANALYSIS • China facilitating international market expansion for Konka Konka is accessible to large loan (in 19971998 US$458 million)
Introduction Economic Analysis Company Analysis
• High entry costs acts as a blockade for new entrants • Demand for television is growing with the emergent number of “couch potatoes”.
Recommendation
Group - C
Economic Analysis Company Analysis
Recommendation
• Possibility to create a positive brand image through heavy promotion and advertising • Awe the market with newly developed products
Introduction Economic Analysis Company Analysis
• Existing brands (Sony, LG etc.) can counter attack Konka making survival challenging Group - C
• Research and Development is feasible for Konka for it’s inexpensive R&D cost structure. Konka spends 3% of its revenue whereas players like Sony spend around 6-7% of sales revenue on R & D. • Penetrating the market with low price better quality products.
Group - C
OPPORTUNITIES FOR AND THREATS TO AN ORGANISATION Introduction
• Existing players with strong brand recognition (Example Sony, LG etc).
Recommendation
STRENGTHS AND WEAKNESSES OF KONKA - Chinese brands are hardly recognized in the foreign market - Konka is deficient in technological advancement judge against to the industry leaders and followers - Commendable cash position would hasten market promotion •- Market entry would not be much daunting as it already has fairly strong grip in several markets Group - C
2
SWOT Analysis & Organizational Objective
NEED FOR STRATEGIC ACTION Introduction Economic Analysis Company Analysis
Recommendation
• Strategic action is required for creating strong brand image and awareness globally
ORGANIZATIONAL LONG RANGE OBJECTIVES
Broad Environmental Analysis
Competitive Analysis
• Sustain long-term growth in the global bazaar
Opportunities for & threats to Konka
Internal organizational analysis
Strengths & Weaknesses of Konka
Need for strategic action
Group - C
Organizational
long-range objective
Group - C
RECOMMENDATION Introduction Economic Analysis Company Analysis
Recommendation
• Transnational Strategy can be used to achieve core competency and to get a better hold of the markets. • Konka can use a three step penetration approach where it will - Push sales in biggest markets - Nurture its way through the secondary Market - Seek new markets
Introduction Economic Analysis Company Analysis
Recommendation
Group - C
Introduction Economic Analysis Company Analysis
• The company can welcome custom made products ordered by the customers
Group - C
Q&A
• Increase share of trade in parts and components. •Reintegrate through Global Production Network (GPN).
Recommendation
Group - C
Thank You. Group - C
3