Answer To: Introduction (5 points)Part I – Technology Strategy (80 points)A. Emergence:A. Did the firm begin...
Ishika answered on Apr 22 2021
Zongshen Industrial Group
Introduction:
The case study we examine is based on the "Zongshen Industrial Group's" growth since it was formed in the 1980s to the present. Throughout these nearly 30 years of life "Zongshen" has grown to become a significant global player for the small gasoline and motorcycle industries from a small assembler of motorcycles. Ironically, the key cause for the fast and successful first year of growth became a major challenge to tackle by shifting the culture of the organization: from imitation to creativity. The mechanism we are mentioning is not but the alteration of the Chinese laws. In the early 1980, the Chongqing region (which had been settled in the industrial community of "Zongshen") moved from defense to more commercial goods due to the downturn in the Cold War. (""Zongshen" strengthens alternative power business for long term", 2008) The Chinese government promoted this transition through the re-conversion of certain state-owned manufacturers (SEOs) into parts manufacturing firms. Certain regulatory developments recently have forced Zongzhen to walk in the tightrope, such as expanded tax regulation and pollution standards. Yet not just these are the issues that "Zuo" "Zongshen" owned recently faced. One of his key goals is to identify the talent in a more globalized, creative and competitive world.
First years:
To begin with, we review "Zongshen" Industrial Group's formation and first year of growth. Chongqing was one of the centers of China's defense industry, particularly for vehicles, in the central south-western part of China. In the 80s, Chongqing rapidly became a Chinese motorcycle centre. It focused on copying, in particular Japanese labels, this successful pattern. As previously implemented, this was possible due to the change of legislation, and in particular to the fact that Deng Xiaoping's opening policy in 1979 allowed individuals to go business on their own. Also, business licenses were previously applicable to SOEs. With that move, "Zuo" left a production line job and set up his own repair business. During those 10 years, he gained a solid expertise in the repair of motorbikes. In order for "ZUO" to successfully build a business based on motorcycle engines of purchased parts, reforms on regulations were implemented again in 1992 and individuals were permitted to form private companies. "Zuo" used this and selected for its engines the best components produced by SOEs-typically in wide and lo quality quantities. Nevertheless, he faced a few problems. SOEs often declined to sell the quantity and price he had anticipated because he was a private company. "Zuo" was dependent on "red envelopes" to get what his company wanted. (Xu & Li, 2014)
In order to solve these problems, "Zuo" envisaged an in-house development and differentiation approach for his company. Thanks to his knowledge, he understood that the end-users of private companies' endless motorcycles looked the same as they were selling identical parts with identical quality levels and competing only in costs. "Zuo" started to distinguish through the development of internal parts, often bringing positive side-effects to him, as delays when the demand was high were not reliable. He concentrated on new innovations, which were already widely applied abroad, such as CAD, CAM, CNC, Pro-Engineer etc., and also employed design consultants (mainly former Honda employees) to visit other companies in order to "buy" expertise. (""Zongshen" strengthens alternative power business for long term", 2008) The reverse engineering is a good example of all of these early stages' techniques developed by "Zuo". However, he also benefited from the WIP inventory, which meant that private companies did not pay for the parts until they manufactured them and sold them in motorcycles. Inconclusion, these facts have given "Zongshen" the opportunity to manufacture motorcycles ready for sale.
Steps Towards innovation:
In a matured market, instead of the conventional permissible motorcycles, which were common in Chongqing brands, the users should try better quality. Many of these versions are low-quality, with copies of mostly Japanese ones. Thus, "Zuo" envisaged distinguishing as a means of overcoming and increasing market share. In order to achieve this, in 2005, the Cyclone project began with the goal of delivering creative products that "Zongshen" owned. This was a major step forward in the organizational spirit: from making cheap copies to later developing copies through technology and collaboration investments to concentrating on our own research and development. In 2007, the industry introduced the first development of this new age. It wasn't very well priced. The main explanation is that a business like "Zongshen" may have found it difficult for people to accept such a revolutionary change in design and quality; the people did not trust new products at all. (Polterovich & Tonis, 2003) It is the standard case of a malfunction due to the fact that consumer expectations are not taken into account. The price of this latest model was paired with that of the old one, so that a new line, which is over-the-average, was introduced rather than state-of-the-art. "Zongshen" used the technique to apply the skills of the large segments to boost the smaller segments.
The role of the partners:
As explained earlier, "Zuo" tried to gain knowledge and expertise from other firms. Piaggio entered the Chinese market and has failed in its strategies of sustaining a competitive number of sales across the region, given the promising sales volume in (rich) coastal areas. In big cities, the constraints have forced the approach to be modified and concentrated on the rural areas, where Piaggio goods are too costly and not user-specific. It was when the local partner was identified and "Zongshen" the correct one was found. Piaggio outsourced a large quantity of the parts into "Zongshen" and saved costs in the...