Byd Company Case Analysis Essay

1. BYD Company, Ltd. (BYD) is the existences second largest manufacturer of reversible batteries. Exhibit 1 shows that between 1999 and 2001, BYDs annual gross r purgeue grew three generation exceeding RMB 1.3 billion in 2001. base on the first four months of 2002, BYDs annual sales are expect exceed RMB 1.6 billion in 2002. Founded in 1995 by Wang Chuan-Fu, chairman and president, BYD has built its temper by becoming the largest Chinese supplier of lithium-ion batteries to cell phone manufacturers. Exhibit 3 shows that by 2002, BYD was among the top four manufactures cosmopolitan and was the largest Chinese manufacturer in some(prenominal)ly of the three main battery technologies (with or so 9% market share in Li-ion engineering, 31% market share in NiCd technology, and 8% market share in NiMH technology).Despite the charge of large Japanese competitors including Sanyo, Sony, and Matsushita in the global market and a large number of local Chinese firms, BYDs aim to improve the timber of products while keeping the price impression started winning it business from foreign companies. By doing so, BYD has positioned itself as a live leader in the batter constancy and has move towards cost receipts in manufacturing of its products. BYD show on the technology and product issuance by investing about 2% of the companys revenue in product and offset R&D. Since the cultivation of its first lithium-ion battery in 1997, BYD has do several improvements that increased the cycle life-time of its products. BYD moved from having no patents as of 1999 to place s hollow outs of patents as of the beginning of 2002.The manufacturing turn in terms of sequence of steps at BYD was similar to that at the competing Japanese firms. However, Japanese firms had closely of the processes machinemated and had to a greater extent dry-room space. This kind of set up infallible greater investment in uppercase equipment and accounted for an annual capital expenditure quintet to ten times more than that at BYD. The biggest threat to BYDs competitive advantage is the tough competition face up from the emergence of nearly 200 Chinese firms in the rechargeable battery market.Like BYD did, these Chinese firms too relied on comminute-intense production process. The deficiency of proper regulations in China allows the competitors to mate BYD processes easily. On the other hand, BYD faced a shortage of labor in Shenzhen because of the presence of large number of manufacturers located in that region. At BYD, 95% of the work personnel department on the battery production is childlike women who have come from smaller villages crosswise China. They would work here for a twain of years before returning to their stead villages. As a result of this migration pattern, BYD faced a turnover of 10% to 20% in its manufacturing workforce.2. The core competencies of BYD are bombing Technology (by changing the product materials to benefit them less sensitive to humidity), R&D department, world Resource Management (providing housing, food, and wellness insurance to workers, discipline traning, job revolution to reduce monotony, social activities and promotions), cheap labor and Manufacturing process (labor plus jigs equals automation). Of the above mentioned core competencies, battery technology, R&D department, Human Resource Management, and cheap labor are transferrable to the self-propelled business. However, the manufacturing process which is not automated is not transferrable to the self-propelled business. From the resources perspective BYD should enter the auto industry because getting Qinchuan elevator car Company offers BYD rarified resources much(prenominal) as production permits and shoot down for its refreshing motorcar factory, which are fundamental barriers for entry for bracing competitors, at a reasonable price. These resources coupled with the BYDs mobile resources could result in a self-ma de enterprise.3. The Chinese auto industry is general attractive. There is huge growth expect in the Chinese demand for automobiles from 1 million sedans in 2002 to potentially 6 million by 2010. harbourn up this evaluate growth in demand for automobiles, several Chinese auto manufacturers had partnered with foreign manufacturers, such as General Motors, Toyota, and Volkswagen to sell their vehicles. As shown in Exhibit 13, the production ability of major firms in china slightly exceeded 2 million units in 2002, this jut out is expected to reach 3.5 million units by 2012 as shown in Exhibit 14. Yes The Chinese auto industry is attractive to BYD.Given the expected growth and demand in the auto industry, combined with Chinese brass having stopped issuing production permits for fresh self-propelled companies, there are really few remaining opportunities to get in to this booming auto industry. Moreover, BYD is getting a good bargain as the assets of the state-owned Qinchuan Auto are being sold at a cheaper price. The state owned auto manufacturers without foreign partners accounted for 25% of auto sales in China. Many of the SOE manufacturers did not even have R&D departments. Because close to of the automobile parts were imported, similar models of cars cost more in China than in USA.The existing foreign joint ventures were marketing the vehicles at prices that gave them margins of 10% to 20%. Considering the menses situation, there is room for low-priced entrants. Wang endlessly dreamt of applying Li-ion battery technology to develop an electric car vehicle. Using newer battery technology and bring together it cheaply, the vehicle could be competitively priced and portray a way for China to ricochet forward in an industry and technology in which it had previously lagged other nations. Wang was as well as excited about applying BYDs dusky capabilities in process engineering employ so successfully to design new methods of battery productio n that gave BYD a evidentiary cost advantage over global competitors to automotive manufacturing.4. In addition to religious offering OEMs a one-stop solution for the outsourced manufacturing of their products, BYD should also dumbfound Qinchuan Auto Company. Because of the huge potential for the automotive industry in China and rattling few available opportunities, this is the right piece for BYD to enter the automotive industry. As Qinchuan Auto Company already has a progress to in the market, with its flagship product Flyer, BYD should continue exchange Flyer along with other upgraded new models of car. BYD should also invest in automating the manufacturing process and R&D department.It should ensure that most of the auto parts are internally or locally manufactured in order to keep the costs at minimum and margins high. The company should invest to a great extent in infrastructure needed to offer to the foreseen demand in the Chinese automotive industry. It should inv est heavily in acquiring quality manpower by offering them good salaries, perks etc. If capital is a challenge, because BYD could partner with foreign manufacturer and yield them a platform to sell their products in the Chinese automotive industry. This will give BYD enough time to closely study the Chinese automotive industry and take necessary steps.