Rise And Fall Of The Road - On Changsheng Business Development Strategy

Under the market economy, corporate strategy plays an important role in the development and growth of enterprises through competition. The differences among enterprises in the formulation, implementation, and control of competitive strategies to a large extent determine the competitive advantages in the market place as well as the fate of enterprises. For a state-owned enterprise, the effectiveness of strategy has to be based on the in-depth reform in the operating mechanisms and establishment of the modem enterprise system, hence a most difficult task requiring special attention. This paper, employing Michael Porter抯 industry structure analysis framework as its major tool, analyzes the evolution of gasoline dispenser industry, and the strategic failure of Changsheng Co.,Ltd., a state-owned company, which was once the leader in the industry. Then, the author proposes an overall competitive strategy as an alternative for Changsheng to enter into the natural gas dispenser (a substitute to gasoline dispenser) industry. The paper comprises of four chapters. In the first chapter, the history of Changsheng in 1990抯 is reviewed, the intention and effect of its strategic action is discussed. In the second chapter, factors and evolution of gasoline dispenser industry, and the direct causes of Changsheng抯 failure are analyzed. In the third chapter, three hidden causes of the strategic failure, i.e. corporate governance, choosing, motivating and evaluating mechanism of human resources, and corporate culture are discussed in detail. In the forth chapter, the author firstly deals with the profitability of the natural gas dispenser industry based on the analysis of its five competitive forces, then, proposes a cost leadership strategy for Changsheng to employ. The core of this strategy is a framework synthesized by four parts, competitive marketing strategy, technological innovation strategy, quality excellence strategy and strategic partnership. To actualize this strategy, the company must drastically reform in four aspects, corporate governance, choosing, motivating and evaluating mechanism of human resources, reengineering, and corporate culture. In addition, an effective balance scoreboard evaluation system should be introduced to ensure effective control and adjustments in the process of implementation of the proposed strategy.