Zongshen R+d
Innovations in strategic planning
Organizational analysis of Chinese industrial firm, Zhongqing Zongshen Automobile Industry Manufacturing Co., Ltd., offers much in terms of understanding the global powerhouse as an industrial economy of scale. If China's macro-economic position is one of increased export growth, then micro-analyses enable us to uncover the ingenuity and strategies behind the giant. Zongshen Motorcycle brand is one of the core subsidiaries of Zongshen Industrial Group, with consumer recognition in the capital market. The mission of the company is to improve the quality of life of human beings through innovation of clean, convenient and safe transportation tools (Zongshen, 2010).
In 2008, expansion of the two-wheeled motorcycle concern in its multi-scale strategic plan encouraged growth through: domestic sales, import and export agreements, and key & important component distribution. The integrated strategy resulted in substantial returns, with export sales at $100 million alone. The Company reports cumulative assets of RMB 1.1 billion, with some 2,500 employees, and annual output of four million motorcycles, and more than seven million key & important components (Zongshen, 2010). This supports the motorcycle manufacturer's vision of world class enterprise, and its leadership in the global motorcycle industry as a value statement.
ANALYSIS OF ENVIRONMENT
Zhonsen Motorcycle's competitive stance may be analysed according to the organizational business environment and the industry survival potential of the entity to compete long-term. In this case a Value Chain Analysis (VCA) using Porter's 5 Forces as a theoretical framework to emphasize price factors where external pressures impact Zongshen's competitive edge are illustration in Table 1.
Table 1
1. The Bargaining Power of Your Customers
2. The Threat of New Entrants into your Industry
3. The Bargaining Power of Suppliers
4. Threat of Substitute Products or Services
5. Rivalry Amongst Existing Firms
Table. Porter's Five Forces
As China advances in the global market, 1) Chinese consumers are also seeing an increase in spending power. Zongshen Motorcycle is responsive to this, and recognizes customer equity as a top priority to the brand. With increased capacity to spend, comes the 2) threat of new entrants to the market. In 2003 announcement by United States-based motorcycle competitor, Harley Davidson to enter the Chinese market was met with an offer of partnership by Zongshen. While certainly a competitive 'threat,' the Chinese company was agile in response; with a mutually beneficial business agreement that would advance Harley Davidson's position through existing channels of distribution and sales in mind.
The 3) bargaining power of suppliers in China's economy of scale is fostered through exceptional industrial production capacity. Even where materials used in the manufacture of Zongshen's motorcycle products are at a premium, the sheer magnitude of alternative suppliers will likely be extensive. Zongshen does not face risks in inadequate or low supplies, nor protracted time to accessibility. In turn, full cost pricing inputs will be kept at a minimum as those materials are employed in the Brand's product line.
In cases where product cycle is restricted due to innovation or competitive 4) threat of substitutes, R+D expertise is likely to come up with new proto-types as an alternative. Zongshen is in an strong position in relation to 5) rivalry by existing motorcycle corporations and is set to expand into the global market if the Company can provide international standards organization (ISO) and environmental certification to its products in accordance with national and regional regulatory compliance rules in those external markets.
SCALE AND SCOPE
An industry leader in China Zongshen Motorcycle is in control of more than 10,000 sales outlets in 31 provinces, municipalities and autonomous regions. With consistent performance as best in its class since 2001, Zongshen Motorcycle's international reach is established in global presence through the Zongshen brand's trademark Zip Star, in over 160 countries. Factories in Thailand and Brazil promote cost savings and presence through local supplier relationships, as part of the Company's strategic activities in the Southeast Asia and South American markets. Marketing of the product elsewhere is conducted by way of its international sales network in more than eighty countries.
ANALYSING STRATEGY
Zongshen Motorcycle's strategic growth model adheres to an R+D prospectus, that promotes innovation and diversification in power machinery above all else. Zongshen Motorcycle's strategic prospectus is supported by an eight (8) point plan of growth in Table 2.
Table 2
1. Company Philosophy
Centralization, outstanding, pragmatic and innovation
2. Centralization
Being centralized in the development of the company's major trade and the thermo-motive; mobilizing and uniting all the stuff in the work and integrating their interests; serving the company heart and soul
3. Outstanding
Being outstanding in precision work and profession and manufacturing fine quality products
4. Pragmatic
Being honest, pragmatic and careful in work and behaving in a down-to-earth way
5. Innovation
Pursuing for and making innovations, accepting new ideas, creating new
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