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RamonV.DelRosarioGraduateSchoolofBusiness
StrategicManagement
INZPECTTECHNOLOGIES,INC.
RespondingtotheDownturnintheElectronicsIndustry
SubmittedBy:
Group3:STRAMAZING
DeLuna,Rochelle
Francisco,Marvin
Nito,Orenz
Siao,Limuel
Silva,AidaMay
SubmittedTo:
ProfessorJosephPangilinan
23January2016
I.
Introduction
CaseFactsandBackground
Inzpect was incorporated on 8 May 2003 by Mr. Rolando and Mrs. Maria Teresa
Laya, Mr.JoseandMrs.DignaSumalabe,andMs.ReginaMasilangwith apaidupcapitalof
PhP 100,000.00, alongwiththeequipmentreceivedbythetwohusbandsfromtheirprevious
employer, Autosys. The company is based in Taguig City, Philippines. The company has
grown from 11 employees in 2003 to about 75 employees in 2012. Mr. Laya handles
marketing and sales, while Mr. Sumalabe is incharge of research and design. Their wives,
Maria Teresa and Digna,handletheadministrativefunctions (humanresourcesandfinance)
in the company. The management once tried hiringasupervisorfromoutside.However,the
employees felt alienated because the supervisor has a different training background.
Thereafter, the management created a rule that all employees should be hired on an
entrylevelbasistoensurethateveryonehasthesametrainingbackground.
ThePhilippineElectronicsIndustry
The electronics industry in the country will continue to be the driver of growth of
merchandise exports. At an annual growth rate of 10 percent, electronics exports are
expected to hit more than US$50 billion by 2016. The priority subsectors in the electronics
industry include: (a) components/devices (semiconductors) (b) electronic data processing
(c)automotiveelectronicsand(d)solarpowerorphotovoltaiccells.
II.
VisionandMission
The vision of the company is, to be the best in Machine Automation and the
foremost in Systems Integration. This vision enables to identify managements view of
where the company is heading, which is to be the best based on the framework of Collins
and Porras. Further,itenablesInzpects visiontobalance thecompanyscoredogma,which
is machine automation and systems integration with its envisioned to be the best in the
comingyears.
Moreover, the mission of the company is, to serve their customers with utmost
perfection with their completed projects and give them absolute satisfaction with their
services. Basing from the framework of Collins and Porras, Inzpect mission lacked some
necessary element unlike its vision. For a mission to be effective, it is important that it
includes the nine components which are 1. Customers 2. Products or service 3. Markets
4. Technology 5. Concern for survival, growth, and profitability 6. Philosophy 7.
Selfconcept8.Concernforpublicimageand9.Concernforemployees.
III.
Problem
How should Inzpect Technologies, Inc. respond to the economic downturn and the
subsequentdevelopmentsintheelectronicsindustry?
IV.
PointofView
The group is taking the point of view of the owners of the company, particularly
RolandoLayaandJoseSumalabe.
V.
ObjectivesFramework
The group identifies the following objectives for the company as it respond to the
downturn and developments in the electronics industry. The group ensured that the
objectives are specific, measurable, achievable, realistic, and timed, following the SMART
frameworkincraftinggoals.
Forthenexttwoyears,Inzpectwillbeable:
To identify new products and services and tapprospectivenew clientsforexpansion
inthePhilippines.
Forthenextfiveyears,Inzpectwillbeable:
To become the leading Filipinoowned original equipment manufacturer in machine
automationandsystemsintegrationinthecountry
To remain a highly dynamic and diverse organization that values its human
resourcesandprovidesqualitytraining
To establish a global sales and marketing presence in key information technology
marketsinAsia,Europe,andNorthAmericainthenextthreetofouryearsand
To establish financial and quality control measures that will allow theorganizationto
remaincompetitiveinthelocalandinternationalmarketsinthelongterm.
VI.
Threats,Opportunities,Weaknesses,andStrengthsAnalysis
Threats
Strengths
Expertise in the
electronics/technol
Increasing
globalization,
which could lead
to a more intense
competition.
Semiconductor
companies
transferring their
operations
to
cheapermarkets.
Increase in labor
cost
in
the
Philippines
will
drive
investors
away.
Unreliability
of
power supply and
expensive
electricity rates in
thePhilippines.
S/T
Possible
international
O/T
Adaption
to
Technological
current
change in the
technological
electronics
changes
and
industry.
investing on high
Manufacturing
quality electrical
process
generators.
innovation.
Productinnovation Expansionoutside
the
Philippine
inthecompany.
through
ASEANintegration
international
allows for easier
partnerships.
expansion in other
Southeast Asian
markets.
Weakening of the
European
economy offers
opportunity
to
expand in the
region.
Opportunities
S/O
Increasingin force
on the high quality
SO/T
Inzpectexpertise
inelectronicswill
ogyindustry.
Able to adapt to
different demands
andchallenges
Fast
decisionmaking in
the company and
vibrant
management
team.
High
quality
product
customization
Fair compensation
policies
and
benefits.
Strong culture of
teamwork in the
company.
Weaknesses
Salary is lower
than
other
companies.
Size
of
the
company
is
relatively
small
compared to other
companies in the
electronics
industry.
Unable
to
massproduce
Financial
resources of the
company may not
be as deep as its
competitors.
It doesnt have
experience
operating in the
international
market.
partnership should
beconsidered.
Increase
promotion
on
Inzpects products
as ahigher quality
and customized
outputprovider.
W/T
Target
international
marketswhere
tariffsarelowso
astocompete
internationally
Studythe
satisfactionofthe
presentemployees
intermsoftheir
salariesthrough
survey,interviews,
andfocusgroup
discussionsand
reformatthe
compensationplan
accordingtothe
pulseofthe
workforce
S/W
S/WT
Leverage
on Competein
highquality
international
product
marketswhere
customization that
tariffsarelow
gives
maximum
satisfaction.
Strengthening
team
building
activitieswithin the
company among
itsemployees.
customized output
topromote Inzpect
as
a unique
company.
Inzpect willuseits
existing networks
to penetrate new
industries.
makethemeasily
adaptchangesin
technology.
Leverage
on
highquality
product
customization that
gives maximum
satisfaction.
W/O
O/WT
likesolarenergy
By
considering
inlightofthe
international
energycrisis
partnerships, this
will increase profit,
hence, possibility
of
increasing
employee's
salary.
SO/W
Competein
international
marketswhere
tariffsarelow,
introducingnew
technologies
eitherthrough
manufacturingor
distribution
TOWS
Strengthenthe
workforcethrough
trainingand
improved
compensation
Investinnew
technologysuch
asrenewable
energy
Competein
international
marketswhere
tariffsarelow
VII.
Frameworks
Essentially, applying the framework to the case, the nature of competition in the
electronics industry can be determined using the combined outcome of the competitive
pressures generated by the five forces. The owners of the companycanhaveanedgeover
rival firms if they can can use this model to better understand the industry context in which
thefirmoperates.
Figure1:TheFiveForcesModelofCompetition
PrevailingrivalryorcompetitionamongthesellersHigh
ThreatcomingfromthepossibleentryofnewcompetitorsLow
CompetitivepressuresfromsubstituteproductsLow
Inzpect tends to have less leverage to bargain over price and other terms of sale
because they are supplying major clients which are the semiconductor multinational
companies. The companys wellbeing is closely tied to the wellbeing of the major clients.
Inzpect then has a big incentive to protect and enhance their clients competitiveness via
reasonable prices, exceptional quality, and ongoing advancesinthetechnologyof theitems
supplied.
CompetitivepressuresfrombuyerbargainingpowerandsellerbuyercollaborationHigh
Figure2:TheCompetitiveAdvantageFramework
Costleadership
Under this setting, Inzpect will have to look into its production processes or
operational expenses and see if there are areas where the company could save up on its
costs. However, these efforts would have to be balanced to ensure that the quality of the
productsandserviceswouldnotbecompromised.
Productdifferentiation
Under this setting, Inzpect will ensure that no other electronics companywillbeable
to copy and manufacture similar machine automation and systems integration products. If
the company pursues this approach, it can put a premium on its products and servicesand
pricethemabovetheindustryaverage.
VIII. AlternativeStrategies
The group identified the following strategies that the company can implement over
thenextfiveyears.Thesealternativestrategiesinclude:
1. Local Geographic Expansion Under this strategy, Inzpect will begin expanding
outside Metro Manila. The company will initially put up offices and factoriesinselect
export processing zones in the Philippines in order to take advantage of fiscal
benefits and tax incentives that are being offered by the government. As part of this
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strategy, the company will also set up branches in major business centers in the
VisayasandMindanao,particularlyCebuCityandDavaoCity.
Advantages
Disadvantages
Advantages
Disadvantages
Itisverycostlyandtimeconsuming.
The company has no experience in
operatingabroad.
Thereareculturaldifferences.
Unstable exchange rates might lead
unfavorablereturnoninvestments.
3. New Industry Penetration Under this strategy, Inzpect will begin to penetrate
select industries and sectors outside the electronics industry. Manufacturing firmsor
enterprises in the food, beverage, and pharmaceutical industries will be the primary
target. Apart from these industries and sectors, the company can also look into the
garments, telecommunications, appliances, and even in transportation industries for
possiblepenetrationandexpansion.
Advantages
Disadvantages
Advantages
Disadvantages
Advantages
Generally,thisstrategywillgenerate
moreprofit.
This willcreatemorejobopportunitiesfor
theFilipinos.
This strategy will allow the company to
achieveitsvisionandobjectives.
This strategy will allow the company to
focusandprioritizeitsefforts.
Disadvantages
IX.
Recommendation
DecisionCriteria
The group used the following decision criteria when assessing each of the alternative
strategiesforthecompany.
Financial
Thestrategywillbefinanciallyviableforthecompany.
Operational The company can have coherent policies, procedures, and activities
underthestrategy.
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The group is giving equal weights to all criteria as every criterion pertains to an
indispensable aspect of the business as awhole. The groupassigns5pointsastheperfect
scoreforeverycriterion.Thus,thehighestpossiblescoreforanalternativestrategyis30.
Alternative
Strategy1
Local
Geographi
c
Expansion
Alternative
Strategy2
International
Geographic
Expansion
Alternative
Strategy3
NewIndustry
Penetration
Alternative
Strategy4
New
Products
andServices
Introduction
Alternative
Strategy5
Combination
ofAll
Strategies
Financial
Operational
Logistical
Human
Resources
Profitability
Sustainability
25
24
26
25
28
Criteria
TOTAL
Based on thedecisioncriteriaabove,thegrouprecommendsalternativestrategy#5:
Combination of All of the Above because this strategy captures all the criteria that were
set to ensure that it is the best choice to tackle the givenproblems.Underthisstrategy are:
expanding locally, internationally and penetrate another industry. In addition, the groupalso
suggeststhecompany todevelopnewproductsandservicestobeoffered tothecurrentand
future customers. All mentioned strategies are to be implemented accordingly at different
time periods and may overlap eachother(ShortTerm(12years),MediumTerm(35years)
andLongterm(610years)).
Given these, the following is the suggested time frame and a brief overview of the
actionrequiredtoensurethesuccessofthesestrategies:
1.)
Expanding Locally (Short Term)
The company will identify exporting and
processing areas and zones that the government has allotted toreapthefiscal benefitsand
tax incentives.These areasarealsowherepotentialcustomershavefactoriesandoffices.In
order for them to do this, the company should do a cost benefit analysis and compare all
potentialsitesthegovernmenthaslisted.
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2.)
Expanding Internationally (Medium Term)
Thecompanywillcreateofficesin
areas deemed attractive for exporting such as China, Singapore,Germany, theUS,andthe
UK to be able to sell and market their products. The companyshouldresearchcarefullythe
methodsofhowtooperateinthesecountriesandprobablyfindagoodpartner.
3.)
New Industry Penetration (Short Term)
The company will look into other
industries that they currently dont serve like the manufacturing and pharmaceutical
companies and see if they can sell the products and services that they offer to these
industries. In order to accomplish this, they need to be able to familiarize themselves with
the operations of these firms and from there find potential products and services to be
offered. They should also ensure that they have the capacity to service these additional
industries.
4.)
Developing new products and services (Short Long Term)
Thecompany
should invest money on research and development in order to ensure that they are
consistentlyabletolaunchproductsthatisworking,usefulandofqualityfortheseindustries.
Generally, these strategies aim to enlarge and gather more customers inthemarket
to ensure profit and in turn combat the economic downturn and be proactive given the
subsequent developmentsintheelectronicsindustry.Havingmultipleprojectsandstrategies
to implement can beextremelyhardandtrickyforthecompanybutwiththeproperplanning,
implementation and attitude they can be successfulanddowhatisnecessarytoensurethat
thecompanyisabletocompeteintheindustry.
X.
LearningPoints
We can get inspiration from the path that the founders of the business took in
building theirsystemsintegrationcompany.Theyfirst
builtontheir expertiseintechnology,
acquiring knowledge and experience from company to company, until they learned how a
systems integration business is run. This expertise has been the solid foundation of their
business.
XI.
References
HarvardBusinessReview.HowCompetitiveForcesShapeStrategybyMichaelPorter.
Pages137145.MarchApril1979
Inzpectwebsite.
http://www.inzpect.com/aboutus/visionamission
.Retrievedon21January
2016.
PearsonEducationInc.StrategiesinOperationsManagementStrategiesforCompetitive
AdvantagebyMichaelPorter.
11
Thompson,A.andStickland,A.J.(2003),13thEd.,StrategicManagementConceptand
Cases,pp73111
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