978-0077835439 Case BYD of China

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Operations Strategy at BYD of China, Electrifying the

World’s Automotive Market

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Teaching Note:

CASE DESCRIPTION

The primary subject matter of this case concerns the move towards utilizing

electricity to power automobiles and the potential of a Chinese company to become the

world’s largest automaker, as well as the strategic fit of its innovation with the current

external environment. It asks the students to analyze the situation facing BYD and to

develop an Operations and Supply Chain strategy. Secondary issues examined include

issues of managing growth and environmental sustainability.

With the emerging importance of alternative fueled vehicles, this case should be

interesting to students. The case is useful in showing how the global automobile

industry is quickly changing and the need for speed and innovation is essential for

survival. With the rise of the Chinese automobile market, companies like BYD

represent additional challenges to the American car manufacturers. The case asks

students to do a number of things including assessing the future of electric cars and

providing a strategic analysis of the Chinese producer BYD. These concepts are

interrelated in that BYD has staked its future in the auto business on batteries.

It would be helpful to require students to do some additional research into the

automobile industry; however the case can stand alone without this additional research.

Students should be encouraged to think about the future of the automobile industry and

the means by which vehicles will be powered. Current trends indicate that further

change is likely for this industry. Students should consider the strategic direction of

BYD and its operations and supply chain strategy along with the automobile industry as

a whole. Assumptions should be challenged including one that the United States will

lead the automobile industry, electric cars will continue to be cost prohibitive, or that

gasoline powered vehicles will always be needed. An objective of the case is for

students to see the importance of innovation and creativity in creating a competitive

advantage, and distinctive competence for operations.

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This case was prepared by Charles A. Rarick, Kasia Firlej, and Arifin Angriawan of Purdue University Calumet and was

published in the Journal of International Academy of Case Studies, Vol 17, 1, 19-29, 2011. It has been revised by

Roger G. Schroeder, 2016 and is reprinted with permission.

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Question 1: Do you think electric cars are a viable alternative to gasoline-

powered vehicles? What is the future of the electric car? Explain your answers.

Electric vehicles may become a viable alternative to gasoline-powered vehicles

in the not so distant future, however, major changes will need to occur in order for this

to happen.

There are a number of problems facing the electric car including the current

limited driving distance on a single charge and therefore a frequent need to recharge.

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autos will dominate that future is presently unclear, however, an argument could be

made for a variety of alternative vehicles emerging to at least slowly replace gasoline

powered automobiles.

Question 2: What are the internal strengths and weaknesses of BYD along with

external, opportunities and threats (SWOT Analysis)?

The Chinese company, BYD has a number of strengths, a few weaknesses, a

number of opportunities, and a number of threats. As a relative newcomer to the

automobile industry the company will have to leverage its strengths in innovation to

capitalize on its opportunities, along with overcoming the weakness and threats.

Strengths:

A spirit of innovation and a creative management style that pays attention to detail

Question 3: Given a business strategy of being the word leader in manufacturing

electric cars with innovative technology, what operations and supply chain strategy

do you think BYD should pursue? Identify what operations and supply chain should

do to help BYD compete including a mission, objectives, distinctive competence and

key decisions.

Mission: The mission of operations and supply chain should be to support the high

growth and innovative business strategy. It can be simply stated as: Operations and

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Question 4: What recommendations would you make going forward for the

business as a whole to overcome its weaknesses and threats and then capitalize on

its strengths and opportunities?

There are a number of recommendations that can be given for BYD to continue

its success, and one day become the world’s largest auto manufacturer. BYD will need

to establish its brand identity. Outside of China the brand has little to no recognition.

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may arise. This may require partnerships with companies that supply lithium.

Given the limited range of EVs, BYD should consider exploiting markets other

than the U.S. market until the range improves. Even in the U.S. households with two

cars, one EV as a town car for commuting and limited driving could be a viable market,

with the second car gasoline or hybrid powered for longer distances. In markets outside