A. SWOT of COMPUTIME Company
B. Does Computime have a sustainable competitive advantage in the EMS and ODM industries? If so, what is the source?
Is Computime wise in its evolution of focus and choice of current strategy?
Although Computime is a small player, it is well recognized for its quality and consumer relations. Computime has successfully developed strong relationships with customers and has been a leader in quality and efficiency resulting in the Grand Prize for Quality (2001), ISO certification, and approval for medical device production for the US market (2003). All of the above offer a competitive advantage over new entrants.
However Computime’s labor costs are rising due to its coastal location and new technology companies with lower labor costs are emerging in central China and SE Asia.
Computime was wise to move into the more lucrative ODM industry, but in order to protect itself from competition and to increase revenues, it must seize opportunities to develop its own IP and brand.
Developing its own brand and IP is likely to prove challenging for Computime. The company must structure R&D’s role and interaction with the strategic business units. In addition, Computime must address the challenges of entering a new market that supplies products directly to retail outlets and business customers rather than passing through major manufacturers such as Phillips, Motorola and Siemens. Thus Computime must increase marketing and sales capabilities and also manage the diverse requirements of its customers across multiple industries without diluting expertise.
C. What long-term strategy should the Computime implement?
Computime should implement a long-term strategy focused on moving from a contract manufacturer to one specialized in customization and innovation. R&D’s role will be two-fold: working with SBUs to anticipate customer needs for unbranded products (for customers like Siemens, Phillips, Motorola) and also creating innovative products and IP that Computime can market under its own brand.
Unbranded Products: Building on its reputation for superior quality and efficiency, Computime has begun to differentiate itself as an innovator. Computime should formalize its ability to innovate by creating opportunities for SBUs to contract with R&D to meet and anticipate customer needs. By offering superior ideas in addition to superior production, Computime can differentiate from competitors, charge a premium, and gain customer loyalty.
Branded Products: R&D must be allowed to innovate to create ideas for new branded products, however Computime will also need to ensure that R&D has guidelines so that products meet customer needs as well as company focus. Computime must strike a balance between innovation and core competencies. Computime specializes in global electronic controls, and it should be careful about straying from this domain. However, computime should capitalize on its R&D department to explore new markets for electronic controls beyond: building, home, appliance, and industrial controls. For example, Computime should consider producing for medical devices, aeronautics, and military applications.