L Company's Hidden Champion Path Development Strateg

After decades of development,the SMEs in Germany have figured out a strategic development path that combines specialized management and globalized sales.In many market segments,they rise into industry leaders and are known as hidden champions.As essential players in economic and social development,the SMEs in China play irreplaceable roles in the areas related to people’s livelihood.But they are often large in number and small in scale.It is urgent for Chinese SMEs to follow a healthy and quality development path.The concept of “hidden champion” therefore attracts much attention from the Chinese government and academia.It is a crucial task to apply the hidden champion theory to the development of Chinese SMEs.Supported by outstanding technologies,the L Company grows into a major player in the sector of cooling tower manufacturing for industrial applications.But the Company’s revenues haven’t made any progress since 2018,with the profits keep declining.It is faced with an unclear development path and non-productive corporate culture.This paper uses the competitive advantage theory to study how the hidden champion path helps L Company to address the growth dilemma.After giving a brief review of the hidden champion theory and the competitive strength theory,this paper introduces the tools of PEST analysis,five-force analysis and VRIO analysis.Interviews on corporate management and technological innovation are organized among the staff from different departments,aiming to identify the shortcomings of L Company in comparison with the hidden champion companies.Questionnaires are distributed to ask the respondents to score the external opportunities and threats and the internal strengths and weaknesses.The EFE matrix and IFE matrix are used to make a quantified assessment.The results suggest that L Company has the potential to grow into a champion company despite its current weaknesses.Based on the external environment and internal factors,the feasibility and necessity of following the hidden champion path for L Company is discussed.By exploring the development path of representative hidden champion companies in China,this paper summarizes the application of the hidden champion theory in China.Based on theory and case analysis,seven suggestions for L Company are proposed,including focusing on the high-end cooling tower market,improving the staff incentive mechanism and exploring the global market.The findings help L Company to get out of the current dilemma and grow into a hidden champion.It is hoped that this research is of reference value for other SMEs in China,which wish to grow into industry leaders.