The Study Of Multiplex Strategy Of The Shenzhen Kaifa Technology Co., Ltd.

This paper first reviews and summarizes relevant theories on pluralistic strategies. The pluralistic strategy theories are then employed for a far-reaching analysis of the reality of Shenzhen Kaifa Technology Co., Ltd. (hereinafter"Kaifa"), covering the external environment (macro environment, industrial environment and market rivalries) and internal environment (business resources, strategic competence and core competence).PEST Model is employed for the analysis of the macro environment of Kaifa. The analysis of the industrial environment begins with the HGA and related products, the core product of Kaifa, and covers three aspects, namely the potential of the HGA and relevant sections of the industry, the market concentration and the barriers of entry for this industry. For the purpose of the analysis of market rivalries, SAE Magnetics (H.K.) LTD.("SAE"for short), the only enterprise overdoes Kaifa on the market of HGA and relevant products is selected and the analysis covers the background and history of development of SAE, advantageous and disadvantageous facts influencing the production and development of SAE. The internal environment and the existing strategy of SAE are analyzed by using the chain analysis model. The analysis of the management resources of Kaifa is based on an overall understanding of visible resources including the human, financial, material and organizational resources and invisible resources including technology and business credit. The analysis of the strategic competence focuses on the financial competence, marketing competence and corporation culture of Kaifa. For the analysis of core competence of Kaifa, technical research, the core competence of Kaifa, is selected for an in-depth discussion.For a comprehensive evaluation of the strategic environment, i.e., the external and internal environment, of Kaifa, SWOT analysis techniques are employed, outlining the advantages and disadvantages of the internal environment of the enterprise and the opportunities and challenges it faces externally.Advantages of Kaifa include world-class technical work flow, abundant financial resources and current funds, leading technology, remarkable shares of the global market, first-class R&D competence and excellent managerial personnel. Disadvantages of Kaifa include mediocre profitability in a number of fields, a continuous flow of new techniques, difficulties in increasing market shares, few top R&D engineers and the characteristic of organizers in some state-owned enterprises. Opportunities presented to Kaifa include the continual growth of Chinese economy, the likely introduction of new technology, China's membership of WTO, the change in the consumer psychology, strengthening protection of intellectual property, stable industrial structure, clear and unchanging strategies of the market rivalries. Challenges confronted include the entry of new enterprises in the HGA market, impact of memory cards on hard disk products, forced inclusion in the SAE purchase framework and sales system. Based on the advantages and disadvantages, opportunities and challenges outlined in the foregoing relations, and the matched consideration of those factors, a series of strategy combination are proposed, namely SO, WO, ST and WT strategies.Furthermore, the industry attractiveness—competitiveness Matrix is employed for an analysis of all the existing operations of Kaifa from the perspectives of strategies for expansion, maintenance and constriction of the business scale. The pluralistic strategy based on the foregoing analyses is that the R&D investment and the scale of production for the core products of Kaifa—MRHGA, base plates for hard disks, HD drivers and photomagnetic products—should be increased, that for electronic product processing (OEM) and photo-communication sections should be maintained at the present level while broad-band access section should be cancelled for the purpose of withdrawing the management resources of the company. The reasons for the expansion of the business scale of MRHGA, base plates for hard disks, HD drivers and photomagnetic products are as follows: (1) Kaifa is one of the enterprises in the world engaged in the design, production and R&D in HGA and related products accounting for 10% of the international market. Kaifa holds a leading position in the industry globally in terms of technical development and scale of production. (2) Inspired by the state"Golden Card Project", the company has developed the electronic remote control meter (AMR meters) employing the most advanced electricity measuring, industrial control, communication and network techniques following the development tendency of meter industry in the world, and has built an edge-cutting competence. In 2004, the company developed a new type of theft-proof AMR meter, which features a number of theft-proof and competent magnet-resisting capacity as well as accuracy in measuring. (3) Upon the launch of the national"Golden Tax Project", Kaifa took the hint that the national tax authorities will employ advanced tax control equipment and approaches, which provides a huge market for tax control equipment. Kaifa has been well under way in development tax control business and is one of the earliest enterprises engaged in the industry of fiscal cash registers. Kaifa participated in drafting the state standard for fiscal cash registers and is one of the first enterprises obtaining the qualification certificate for tax control cash register products and license for manufacture of fiscal cash registers. It has long completed the design and modeling of the tax control products for the purpose of the state tax, which has been authenticated by competent authorities. The reasons for the maintenance of the production scale of electronic product processing (OEM) and photo-communication sections include: (1) The electronic product processing (OEM) has been developed in answering the need of clients. In recent two years, the processing and assembly of plates and cards for mobile phones and have been the source of profit growth of the OEM section of the company. The Photo Communication in Kaifa., established jointly by the company and Kingston, a world-famous memory manufacturer as a program of strategic cooperation to supply memory sticks and U-disk processing for Kingston, enjoy a reasonable return on the investment. (2) The Photo Communication Section of Kaifa specializes in the development, research and manufacture of photoelectric products and recently it began to produce optical isolators and other photo communication products. However, the competitiveness and industrial prospects of the company in these two sections are of an average level. Considering the reasonable profit from them, it is recommended that these two sections are maintained at their present scales. The reason to cancel the broadband access business is that it is of a low profitability and weak competitiveness. It is recommended that Kaifa cancel this section and investment the resources in other business.With the view of ensuring the successful implementation of the pluralistic strategy for the development of Kaifa, this paper further discusses the guarantee system for the implementation of the strategy. The guarantee system includes the supportive role of HGA and related products, the guaranteeing role of the core competitiveness and financial support from the capital operation and financing system. This guarantee system will well meet the needs for Kaifa to implement the pluralistic development strategy.