In order to manage the business operation effectively, Khind corporate focus on the lower cost strategy and the differentiation strategy. The purpose of the company obviously is to maintain the price of the company’s products through the low cost materials, produce and market a comparable product more efficiently than its competitors and economies of scale and provide the unique products with the special features to expand their market share.
1.0 Competitive Strategies (Porter’s competitive strategies)
1.1Lower Cost Strategy
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Khind Company adapted lower cost strategy as one of their business strategy because their ability to design, produce and market a comparable product more efficiently with its competitors. For example, Khind is a company in Malaysia that can has the cheaper raw material and cheaper labor if compare to other competitors form the other country such as from Japan. By that, Khind Company can produce and maintain their product in lower price with lower cost to gain advantage with the other competitors. So that, the market share of the company could be maintain and increase.
1.2 Differentiation Strategy
The intense competition among the corporate in the same industry have been forced the Khind Company to search an innovation and new technology. In order to differentiate the company product by the other substitute products that can be maintain the profit and sales growth, Khind Company producing a new technology product that is a new saving energy lamps in the year 2009. According to the CEO Company, Mr Cheng Ping Keat, said that due to the global warming issue, the company launching a new technology area in this industry. This offer the customers a cost effective viable choice and the new energy saving lamp can save up electricity consumption among the household and the corporate sector.
This new product had achieved the requisite international compliance standards as marked under the International Electro technical Commission (IEC). Besides that, among the Energy Saving Lamps (ESL) series, Khind Company also offers few new series of ESL LED lamps. One of the examples is the rechargeable LED light tube can have a long lighting duration about 11 hours. The Customers can buy the Khind products with high quality and with a reasonable price. The long lamp life is over 50,000 hours. This series of lamp facilitates easy installation and maintenance, and less consumption of energy. The features and quality of the ESL series have differentiated the Khind product by the other competitors’ products that will attract more customers to purchase the company product.
1.3 Differentiation Focus
Khind Company focus on a particular buyer group and certain geographic market to serve a narrow market in order to gain advantage compare to the competitors. From the speech between Mr. Cheng Ping Keat and the Electronics Channel News (ECN), we can find that Khind Company positions their products as a middle market brand. They avoid competing with other high standard products such as from European and Asian brand in premium sector. This means that Khind Corporate mainly offer products to the lower and moderate income household and customers.
Strategic alliance is a long-term cooperative arrangement between two independent firm and business units. In this business strategy, Khind Company has a partner relationship with Australian brand, Mistral and negotiation being process with the Bamarouf from Iran. The motive of the Khind Company has the relationship with those company is because of the establish brand name can help the group to expand their market into those country market in a short period. That can more easily promote their company product in the foreign market. Khind Corporate Strategies
Due to the intense competition in local even to the global market, Khind corporate promptly manage their corporate strategies and business strategies in order to survive and expand their business line and try to maintain profit growth. There have three main corporate strategies usually been used by the corporate today, that is directional strategy, portfolio analysis, and parenting strategy.
1.0 Directional Strategy
According to the evaluation of the operation, Khind corporate adapted the directional strategy due to the corporate orientation towards growth strategies that is concentration strategy.
1.1 Concentration Strategy
This strategy involves two main strategies that is vertical and horizontal strategy.
1.1.1 Horizontal Growth Strategy Khind corporate adapted horizontal strategy in order to expand the business line and operation into other potential geographic location such as Middle East. There have two type of growth strategies have been used by the Khind Company.
In the year 1988, Khind Company started the international business when the company’s first transaction start ordered in Dubai. The consignment at that transaction is worth about US$4,700. Until now, the company has export over 50 countries all over the world and the amount of the transaction exceed approximately RM43.6 million. The main target of the region by the Khind Company is the Middle East. In this region, UAE is the hub of the re-export and the central of the regional strategy. According to the Company CEO Cheng Ping Keat, more than half of the total global export in this region by the company recorded and the growing keep going. In the year 2007, the company decided to establish warehousing and re-export facility in Jebel Ali Free Zone (JAFZ). The purpose obviously was to increase the market presence of the Khind Company.
(b) Strategy Alliance
In the case of commercial challenge in the Middle East countries, the most critical issue met by the Khind Company is the reliance on distributor to promote the brand in those countries. To overcome this critical challenge, forming a partnership with the local company is crucial. It can bring benefits to the corporate strategy central plan. The example of the strategy alliance is the long standing relationship partner between Khind Company and the Australian brand, Mistral. The relatively unique partnership deal has given the Khind Company the rights to produce goods under Mistral name since the year 1990. By this alliance relationship, Khind Company enter the market occupied by the establish name successfully and effectively.
It leverages the global reputation of Mistral and develops the reputation of the Khind Company in developing the quality products. It also expands the market successfully and avoids to too relying on the local market. Furthermore, through the strengthening of trade dealer relationship, it can increase marketing activities that raised brand and products awareness. The other example of the strategy alliance is the negotiation between Khind corporate and Bamarouf to be an exclusive partnership in Iran. Khind corporate has attempted to have an immediate expansion plan because of the large potential growth of the country. Besides that, through the strategy alliance with other foreign company, Khind Company also can strengthen their financial ability due to the tighter management cost controls.
2.0 Diversification Strategy
2.1 Concentric (Related) Diversification
From the motive and mission of the Khind Company, we can find that Khind Company focus invest and actively in the electronics product industry. According to the Khind Company Chairman, Cheng King Fa and the Chief Executive Officer’s joint statement, Khind Company will continue focus on introducing new technology product that targeted consumers wanting to live healthier lifestyles. Furthermore, the corporate will continue producing and introducing wider selection of home appliance with high technology like energy saving appliances and so on. In conclusion, Khind Company still prefer and concentrate in developing the in this sector to be a more competitive company and towards high marker brand company that compete with other high market brand foreign company.
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