Memorandum to Chairman of CX Technology

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Table of Contents

Introduction
Analysis
Alternatives
Recommendation
Conclusion
Works Cited

Introduction

CX Technology is one of the leading global manufacturers which specializes in producing the cold forged steel speaker components. The company orients to the definite customers and operates within the same industry and market for a long period of time.

To meet the requirements of the modern developed economy and global market, it is necessary to change the stable strategy and orient to the new market and customers which used the cold forged steel components. The automotive industry provides a lot of possibilities for the development of CX Technology with transforming its manufacturing process to produce the necessary components for the industry.

Analysis

CX Technology has the significant potential to develop the flexible strategy and orient to the more diverse market. The first advantage of the company is the large market to promote the production because cold forged parts are used in many different industries. These industries are associated with the airplane construction, automobile industry, the production of the oil drilling equipment and engines. Furthermore, it is advantageous for the company to orient to manufacturing components for bicycles and air conditioners.

This evidence supports the fact that there are a lot of potential markets where the production of CX Technology will be used successfully. The positive feature of cold forging is the production of highly strong components without the influence of the intense heat treatment. The steel of the product preserves its natural composition. Moreover, the company realizes all the steps of the cold forging process.

The next advantages of CX Technology are the high level of reliability and quality of products. Using the technology of cold forging, the company has the opportunity to orient to new and existing customers, providing them with such strong components as flanges, yokes, and gears which quality are higher than of those ones produced with the help of the other technologies.

The quality of the manufacturing process depends on the in-house production and on the work of quality assurance system. The rate of defects was reduced from 1.17% in 2007 to 0.31% in 2008 (Bhole et al. 4). The customers are inclined to continue working with CX Technology and repeat the orders. However, there is the negative feature of the process because the orientation to the same customers prevents the company from the market’s expanding and gaining more benefits.

Today, CX Technology contributes to the progress of its production plants in Vietnam and China which can be used effectively in developing the new strategy. Planning work in the field of automotive and consumer electronics, the company made accents on acquiring ISO 14001 and ISO/TS 16949 certification with the further implementation of ERP system (Bhole et al. 3). As a result of strategic actions, the production increased from 142 million pieces in 2000 to 245 million in 2008 (Bhole et al. 3).

The negative feature of the company’s work with clients is the prolonged sale process which can last from 1 to 4 years. The problem is in the lack of information which is exchanged between the company and customers. The negotiations often result in discovering the facts that CX Technology does not produced the required component or does not use the necessary technology.

The company’s problems are associated with falling of CAGR from 29% to 11% during the period of 2002-2007 years (Bhole et al. 5). However, the company’s successes in Vietnam contribute to changing the situation.

Alternatives

There are three markets which can be used by CX Technology as potential for entering them and operating successfully.

The current situation in the US automotive industry is based on the recession of 2008-2009. In this situation, suppliers are inclined to be more active in relation to their own supplier selection process. Suppliers in the market have the possibility to orient to the potential clients. The US automotive market is potential for CX Technology because of its large size. The company’s development will depend on the sizable revenue streams. The manufacturers orient to developing the supply chain of the higher quality, and much attention is paid to the role of a supplier (Bhole et al. 7). CX Technology responds to the criteria in relation to the quality of the production.
The automotive industry and market of China are comparably young. Nevertheless, the demand for reliable suppliers as CX Technology is high. Suppliers work in China completely or choose a commanding presence in the industry. The significance of CX Technology’s presence in China is in possibility to pursue business according the most beneficial rules and avoid considerable transportation costs (Bhole et al. 8).
The developing automotive industry of Vietnam is younger than the industry of China. The manufacturer-supplier chains are not developed and stated. CX Technology has a lot of variants to succeed in the potential market because of the possibility to regulate the process of stating the rules of work between the suppliers and manufacturers within the industry (Bhole et al. 8). The developing market in Vietnam provides opportunities for CX Technology to preserve the leading position as Tier 2.

Recommendation

CX Technology must choose the Vietnamese market to enter because its stage of development is correlated with the company’s possibilities to provide the production of the highest quality and develop its abilities within the new market. In this situation, CX Technology acquires the necessary experience and starts with producing the simple components such as steering and suspension pieces. Nevertheless, the company preserves its status within the industry because of the production quality.

Action Plan

Short term goal – to establish the partner relationships with the manufactures in Vietnam and start with developing the production of such simple components as steering and suspension pieces.

Medium term goal – to develop the manufacturing process with attracting more customers, depending on increasing the quality of the production.

Long term goal – to orient to the production of the most complex components as engine parts in order to state the brand equity and leading position in the field with expanding the possibilities.

Future Perspective

CX Technology will gain more experience while operating within the Vietnamese market and can enter the more competitive US market as the supplier of such complex components as engine parts. Nevertheless, it is important to follow the trends and respond to the development of more potential industries where the cold-forged steel parts are used.

Conclusion

CX Technology must develop the strategy to enter the Vietnamese market as a successful Tier 2 supplier to state the leading position within the industry and receive the necessary experience to operate in the more developed and competitive world markets.

Works Cited

Bhole, Ketan, Jordan Lee, Eileen Lu, and Indrajit Sen 2009, CX Technology. PDF file. Web.

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