Study On Competitive Strategy Of Changhui Group

Small and medium-sized enterprises(SMEs)are at an unfavorable position by nature due to resource constraints.It remains to be a challenge at the early growth phase following the initial startup period,even after the business starts noticing certain improvements.How to distinguish oneself in the marketplace through its flexible organizational structure despite the resource constraints has attracted much attention and discussion across industries.Founded 9 years ago,Changhui Group is a SME whose core competency lies in the development and manufacturing of modified materials.Transformed from craft shop to mass production,Changhui managed to become an industry leader in Northeastern China due to its superior production capability.The initial business development was remarkable especially considering the fact that Changhui had no prior experience or established business network.Soon after the first taste of success,Changhui Group started blindly expanding the business and diversifying its business profile without thorough research or analysis.As a result,it failed to deliver the expected results through it horizontal and vertical integration.Poor resource allocation and chaotic management left Changhui in crisis mode.To turn around the struggling business,Changhui needs to refocus by adjusting its business strategy.In reference to Changhui Group,this case study is based on the research on the strategic management theory combined with internal and external environment factors.The findings include the positive influence of external environment on main operation such as the price war among low-end products which drives down profit margin and monopoly in high-end and profitable products owned by foreign corporates.Business may take advantage of its patents for research and development on high-end nylon material.Appropriate adjustment of internal resource allocation would also enable strategic transformation.Therefore,the case study concludes that Changhui Group shall adopt differentiation focus strategy to stay competitive.A successful implementation of the new strategy requires organizational structure optimization,differential business concentration,and product research and development through multiple channels.To safeguard the execution of the new strategy,business is also expected to provide human resources and financial incentives along with training sessions.Overall,the case study recommended the above measures with the goal to help Changhui recover from its business crisis as well as using it as an example for other SMEs who are in need of help with a similar situation.