CX Technology MIT Sloan Management Case Study

Evaluate the internal resources and core capabilities of CX Technology. This should include as a minimum the value chain for this firm. Overall, what are the key strengths and weaknesses of CX Technology? (Johnson et al., 2014)

Strengths

Weaknesses

Value Chain

Conduct a detailed and systematic external environmental audit of the U.S. automotive industry market. This should include as a minimum; PESTLE, 5-forces, industry life cycle and competitor analysis (Johnson et al., 2014). Overall, what do you conclude about the opportunities and threats for CX Technology?

Industry Overview

PESTEL

Forces

Critically evaluate the factors that an organisation should investigate when considering entry into emerging markets. Use relevant theories and models to support your

References

Question 1 - Evaluate the internal resources and core capabilities of CX Technology. This should include as a minimum the value chain for this firm. Overall, what are the key strengths and weaknesses of CX Technology? (Johnson et al., 2014)

Overview

CX Technologies focused solely on cold forging to create their product mix. Cold forging has many advantages over other forms of steel component production including the fact that it results in a material savings and can create high precision shapes. One of the drawbacks however is that cold forging technics can only typically be used in products that were symmetrical and were smaller than twenty-five pounds.

The organization became the industry leader in using cold forging techniques to produce components used in audio equipment. They entered this market in the late 1970s at which point they began focusing on this niche completely as a result of high demand in the market. Today they supply components to many of the top companies in the audio industry in both the home and auto segments. The case says that the components can be found in brands from Kia to Ferrari (Bhole, et al., 2009).

Once the company began to focus on specifically the audio segment for with cold forged products, the quality and service improved. The company built a reputation as reliable and high quality manufacture that could also deliver on time. This allowed for the company to land several major clients. Furthermore, once the company had a handful of major clients that it represented, it was able to use this association to gain even more business because of the reputation is allotted them. Once the company starting securing a partnership with major companies in the industry, it helped the company establish its credibility and reputation as a leading manufacturer of audio related components and it leveraged its success to become the industry leader.

Strengths

Cold forging expertise -- CX Technologies has been an expert in cold forging for roughly 30 years and has built a solid reputation in the audio component industry niche. Although its production process are specialized and focused on this niche, it is reasonable to suspect that the expertise gained in these processes will be easily transferable to related processes in other industries.

Manufacturing expertise -- not only does CX Technologies have expertise in cold forging, but it has also established itself as a high performance manufacturer in general. Its manufacturing processes are known for reliability as well as being able to provide flexibility in production to meet clients' unique requirements. The company has also acquired ISO 14001 and ISO/TS 16949 certification and a fully implemented ERP system which also serves as an asset that can produce manufacturing efficiencies and flexibility. The company can also provide a full range of manufacturing processes all in-house whereas competing manufactures have to rely on third parties for many finishing services.

International presence in key markets -- CX Technologies was founded and is headquartered in Taiwan, but has also expanded internationally into the Chinese and Vietnamese markets. The company's presence in these markets provides it access to cheap and skilled labor pools as well as provides the potential of integrating into new supply chains that are located in these regions and serve as manufacturing hubs for the automotive industry. There are unique advantages with each market and CX Technologies international presence could be leverage to create a competitive advantage in many different ways.

Weaknesses

Specialized manufacturing capabilities -- although CX Technologies is an advanced manufacture of components that can be produced via cold forging, the production capabilities are also limited to the cold forging process. There are a limited range of application for components produced with this method. Furthermore, the case mentions that many potential customers were not even aware of the possibility of component designs that they require to be produced through cold forging.

Limited marketing experience and capabilities -- the bulk of the marketing that the company has implemented so far has been relatively limited. Marketing did not have a significant amount of experience and primarily used the company's reputation as a world-class manufacture to generate new...

While this strategy was effective in the audio components industry, it is likely that the company will have a marketing capabilities deficiency in any new industry segments it may wish to enter.
Limited research and development capabilities -- the case also mentions the fact that the company has a relatively limited R&D capability. The company's current R&D, as well as marketing function, has been consolidated into one department and has been plagued by resource inefficiencies in joint R&D and marketing efforts.

Value Chain

CX Technology is an industry leader in the cold forging of audio components and has secured this position through core competencies that include quality, reliability, and flexibility in manufacturing. For the company's established clients, it is able to create value primarily through a long-term relationship. This relationship can be defined as being able to take raw steel materials, transform theme in timely manner through cold forging to the exact specifications provided, and deliver consistent results with a low defect rate. Value is created for CX Technology's clients through the advantages of the cold forging process in general as well as the company's specific manufacturing performance and their comparatively comprehensive services that they offer.

Furthermore, although there are many aspects to effectively managing a supply chain, one of the most important aspects to effectively managing a supply chain is to create better downstream visibility and coordination with suppliers. The fact that CX Technology has built long-term relationships as well as invested in advanced operating platforms such as ERP has allowed them to integrate more fully into the supply chains of their clients which also creates significant value. The ability to use technology to integrate distinct companies is a dynamic factor in ensuring all parties can properly react to supply chain disturbances and implement an approach to overcome problems (Rabren, 2010).

Question 2 - Conduct a detailed and systematic external environmental audit of the U.S. automotive industry market. This should include as a minimum; PESTLE, 5-forces, industry life cycle and competitor analysis (Johnson et al., 2014). Overall, what do you conclude about the opportunities and threats for CX Technology?

Industry Overview

The automotive industry in general is considered to be one of the foundations of the modern economies in developed countries. Not only do automobiles account for most developed nations largest industries, this industry has significant subsidiary economic activity associated with it as well. In the U.S. market alone, if you include suppliers, car services, garages, and retailers, there are a total of about five million people who are employed in this industry not including the oil and gas industries that provide the fuel for the motor engines (Seeking Alpha, 2010).

Therefore, many people consider the health of the automotive industry to be an indicator of the health of the overall economy. Much of the modern global economy is dependent of the production and consumption of vehicles and related goods and services. The U.S. industry alone has over one hundred companies who compete in this market segment and the total revenue from the industry is estimate at nearly one hundred thirty billion dollars annually (IBIS World, 2015). Furthermore, in terms of dollar value, U.S. vehicle exports increased 138% from $24.2 billion in 2009 to over $57 billion in 2014 (U.S. Department of Commerce, 2015).

PESTEL

Political

Currently the United States represents a highly polarized political system with some level of instability that seems to be slowly increasing and has been marked by social unrest to different degrees. The United States may be more politically volatile than any time in recent history and many of the Presidential candidates that are popular in polling data are anti-establishment (The Washington Post, 2015). Despite the increasing volatility in the political system, by global standards the U.S. can still be viewed as a politically stable county.

Economic

Although the United States' economy was largely responsible for the global recession of 2008, since the end of the recession it has gone through a period of economic recovery. However, most Americans do not believe that the recovery is strong.

"In a Pew Research Center survey from April, only 6% of Americans said the economy was recovering strongly. Two-thirds (66%) said the economy was recovering, but not very strongly; about a quarter (26%) said it wasn't recovering at all. The same survey found that Americans' financial self-assessment had barely budged since June 2009, when the…