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Business Development and Strategy for a Computer Manufacturing Start-up

Environmental, external and internal analyses

Research Paper (undergraduate) 2017 19 Pages

Business economics - Company formation, Business Plans

Excerpt

Contents

List of Tables

List of Diagrams

1 Introduction

2 Environmental analysis

3 Market analysis and competitors analysis

4 Internal analysis

5 Strategy derived from the analysis

6 Implementation of the strategy

7 Conclusion

References

List of Tables

Table 1: Sales of computer manufacturer in the UK in 2014

Table 2: CSF and their KPI

Table 3: Adopted CSF and their KPI

Table 4: Objectives for the coming three years

List of Diagrams

Diagram 1: Forecast for global shipments of tablets, laptops and desktop PCs from 2010 to 2019 (in million units)

Diagram 2: SWOT-Analysis of the current situation

Diagram 3: Different services offered to costumers

1 Introduction

My name is Fabio Stohler, I am currently running a computer manufacturing business, which produces own designed computers. My company is located, in my own house in the United Kingdom. I established the company as a hobby besides my employment at an international computer manufacturing company. However, with the beginning of the New Year, I decided to quit my job and become self-employed. To ensure success with my business, I have to create a structured approach for future business development. Within this paper, I will develop my strategy, as well as aims and objectives for the business development over the coming three years.

To begin with, I will analyze the current business environment of the computer manufacturing industry with the PESTEL framework. In connection with the environmental analysis, I execute a market analysis and evaluate the current situation on the computer manufacturing market. Afterward, I execute an internal analysis, which results in strengths, weaknesses, opportunities and threats for the future business development. Based on these findings I deduct my new business strategy and define my product portfolio. In result objectives for the coming three years are defined.

2 Environmental analysis

For the development of my business, it is necessary to analyze the business environment and identify current trends in computer manufacturing. Consequently, the business environment is analyzed with the framework PESTEL.

To begin with, the political situation of the United Kingdom is unclear. Facing the referendum the United Kingdom may leave the EU (BBC, 2015a). With the exit of the UK, businesses will be affected. It is not possible to predict, whether these effects are positive or negative (BBC, 2015b). The UK is a low regulated region, compared to other countries of the EU. This results in the establishment of more business, which can, on the one hand, grow fast, or fail fast (Capelleras et al., 2007). In addition, the United Kingdom is considered to be one of the most open countries for foreign trade (Finger, 2013).

The current economic situation in the UK economy is at its best since 2007. The whole industry grew 2.6% in 2014 and the output in manufacturing grew by 2.7% on average in 2014 (Hawksworth et al., 2015, p. 7). Unemployment is at a low with 5.2% and is lower than most unemployment rates in the EU (Eurostat, 2015).

Globalization brought manufacturing production to Asia. Especially low-cost producer entered the computer market and enhanced competition. Multinational companies need to adapt their product line to prevent customer movement to low-cost producers. In addition, the Asian population generates more income due to the increased production and becomes an attractive market itself (Gregory, 2013).

Due to the attractiveness of Asia, the United Kingdom has to focus on value-added products. Additionally, products converge in quality and performance and do not offer a USP on their own (Alabaster et al., 2009, p. 18). Consequently, the computer industry has to differentiate and focus on services, which are related to the manufactured products to generate unique selling proposition (USP). Although the production is often outsourced, it is still important to join clusters and to use economies of scale to stay competitive (Dobbs et al., 2015). Companies try to generate more sales by the location of the business next to centers of major customers and try to use spill-over-effects (Alabaster et al., 2009, p. 32). From the supplier side, higher resource prices and globalization make it necessary to fasten the supply chain (Dobbs et al., 2015, p. 6). The internet provides an interesting alternative to optimize orderings and shipments (Fennig et al., 2014, p. 6).

New technology influences the social behavior of people. Most people in the Western world own mobile devices like laptops or tablets. The owner of these devices are connected through social media, browse the internet and tend to shop online (Enders et al., 2015, p. 6). Employees even want to use mobile devices for working. This requires the compatibility of the devices with the IT facilities of the companies (Schreiber, 2015). In addition, the population of the UK is more and more concerned about their work-life balance. People try to reduce work stress and enlarge their free time. However, the UK’s work-life-balance is still bad compared to other countries (OECD, 2015).

The digitalisation is one of the most important impulsions of the future. In addition, nanotechnology makes devices smaller and faster and shorts life cycles (Schreiber, 2015, p. 10). Global players have to reorganize their production facilities regularly to keep track with the speed of innovation (Cooper, 2014, p. 16). Technology changes the environment with high speed and will influence product development, processes, automation and business models (Enders et al., 2015, p. 31). Manufacturers need to adapt new technology in order to stay competitive (Ceylan, 2010, p. 72). In addition, it becomes more and more important to think globally and focus on knowledge generation, due to the fast changing environment (Alabaster et al., 2009, p. 28). To guarantee competitiveness, the companies need high-quality employees, who can generate and absorb knowledge. This lowers supply on high-skilled engineers, mathematicians and computer scientists (Enders et al., 2015, p. 11).

UK policy is ambitious in reducing environmental damage through industry production. They implemented several policies, which regulate air pollution and contamination (Defra, 2015). Furthermore, there are higher legal provisions, regulations, and standards, which the companies need to comply with, regarding safety standards, labor law and regarding industry production (Cooper, 2014).

Summing up the results of the environmental analysis:

1. Computer manufacturing is a low cost orientated business, with production mainly outsourced to Asia
2. Mobile products become more important for customers
3. Besides the product, it is necessary to offer services to differentiate from competitors
4. Technology radically shortens life-cycles

Following the environmental analysis, the market analysis adds aspects of competition in markets and market segmentation between the competitors.

3 Market analysis and competitors analysis

As introduced in the environmental analysis, mobile devices become more important in the future. In 2013, 72% of the UK population own a Laptop, whereas 28% of the population own a tablet (YouGov, 2013).

But especially tablets are said to emerge in the coming years. Based on the forecast of IDC (2015) it can be expected, that sales of tablets will increase further. In addition, it can be concluded, that desktop-PC's and laptops will lose market share.

illustration not visible in this excerpt

Diagram 1: Forecast for global shipments of tablets, laptops and desktop PCs from 2010 to 2019 (in million units) Source: IDC, 2015

From this perspective, it is sensible to switch from ordinary computer manufacturing into the manufacturing of mobile computers. Table 1 illustrates the current market share distribution between the manufacturing firms in the UK. As illustrated, Apple has more than 50% of the market share and controls the market. Consequently, Apple can fall back on his economies of scale for production and the excellent design and performance of its products (Gallo, 2012). Similar problems exist with the Laptop market. Apple, Acer, Dell, Hewlett-Packard and Toshiba dominate the Laptop market and separate it from each other. Economies of scale reduce production costs of these providers (LAPTOP Editors, 2015).

illustration not visible in this excerpt

Table 1: Sales of computer manufacturer in the UK in 2014

Source: Kantar Media, 2015

In conclusion, it is hard to enter the manufacturing business, if you only focus on manufacturing of computers. Consequently, it is necessary to diversify into other activities beneath computer manufacturing. Services are more important to tie customers to products. In computer manufacturing, customer service is at a low level (Bertolucci, 2010). This leaves a market gap to small business. Costumers prefer local contact persons if they have to face issues surrounding their computer or laptop (Consumer Report Editors, 2015). Apple adapted to this trend with the locally settled apple shops, in which a plurality of employees helps customers to solve problems or to consult them (Gallo, 2012).

4 Internal analysis

We established our business short time ago. Consequently, our ability to analyze our business insight is limited. The analysis will focus on important factors for future development and an analysis of our resources and competencies. To be successful in an industry it is necessary to meet certain critical success factors (CSF). These are factors, valued by costumers or requirements, which are necessary to compete in business. For the industry of computer manufacturing, these critical success factors are:

- Productivity and Standardization (Hessman, 2012)
- Customer satisfaction, customer acquisition and customer bonding (Manohar and Bairi, 2013)

Hessman (2012) orientates the CSF to the need of business in manufacturing to use economies of scale. Manohar and Bairi (2013) focus their CSF on customer orientation. CSF are measured through key performance indicators (KPI). For the CSF illustrated above, the following KPI are used.

illustration not visible in this excerpt

Table 2: CSF and their KPI

Source: Own illustration

As next step in our internal analysis, we want to focus on resources and competencies, which we can use for the development of our business. Currently, we only have low resources and competencies.

A manufacturing workshop in my private premises is available for the production of the computers. It is furnished with basic equipment for manufacturing and repairing computers. This room can be used as stock for the computer components. Additionally, there is saved money from the former job, which can be used to finance the company and to cover expenses, for at least one year. In addition, I can provide knowledge, know-how, and experience in manufacturing and repairing of the computer from my former job. Moreover, being localized in a city region is an asset as well. The availability to the population of my hometown makes it possible to react faster to customer queries than the big manufacturers. On the other hand, I have no sales location. It would be necessary to rent an area in a department store to sell to customers. In addition, it is necessary to establish a brand to generate customer loyalty.

On the other side the business has following competencies: Based on my former activities at a computer manufacturer, I have experiences with the technology in computer manufacturing. I can judge components on their quality and performance and can install these into computers. Based on the experience I acquired security in the work steps. This allows me to compose computers and repair them quickly. Additionally, I am used to customer interaction.

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Details

Pages
19
Year
2017
ISBN (eBook)
9783668426702
ISBN (Book)
9783668426719
File size
588 KB
Language
English
Catalog Number
v356380
Institution / College
University of South Wales – Faculty of Business and Society
Grade
Tags
business development strategy computer manufacturing start-up environmental

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Title: Business Development and Strategy for a Computer Manufacturing Start-up