Assignment 6
Yuying Zhang
917492787
Case: Inventec Corporation
After reading this case, I found that the challenge the company was facing at that time is
not very profitable. And there might be two reasons. Firstly, the extensive industry
competition. In the case, personal computers have become commodities and OEM’s
aggressive pricing strategy leaves Inventec Corp. with just little profit margins. And the
industry reached saturation. Many competitive rivals have already existed, for instance,
ODMs and EMSs are competing for the same client base. What’s more, Inventec Corp.
doesn’t own the distribution channel and can not make the rules, so it just could follow and
obey the orders made by the powerful parties in the electronic industry. Secondly, low
barging power. Inventec Corp. owns a short list of customers, however, their purchase
volumes are really high. Additionally, OEMs are sensitive to the price and they have
multiple partnerships. Also, this company is operating in a dynamic industry with very
short product life cycle.
For solving this challenge, the company do have valid strategies to compete with its
competitors. Firstly, Inventec produced new products to satisfy the customers’ standards.
Besides that, the company launched its own line of notebooks in China in order to compete
with the likes of Lenovo, Toshiba on the mainland. Moreover, Inventec had been
developing software solutions for more than two decades.
Finally, from my perspective, these effective strategies will help the company be out of the
dilemma, even though Inventec fell into a not good situation. Especially, if Inventec
differentiate itself by offering its sophisticated software design together with the hardware
manufacturing. Software development is adding much value to the OEMs and is also a
strength of Inventec. By taking this competitive advantage, Inventec can obtain a higher
price premium and stronger bargaining power.