ASIMCO Technologies: 2005 Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Problem statement

The Asian Strategic Investment Company is a well-known automobile component manufacturing company, famously known in the automobile industry as ASIMCO, located in Beijing China. Currently the chairman of the company is highly concerned about the economic policy of the Chinese government related to the environmental health of the country in terms of fuel generation. Before the policy implementation date the company has to take immediate actions to modify its technology otherwise ASIMCO would not be able to sell its existing products within and outside china.

Introduction

It has been more than a decade that ASIMCO is running its operations in China, they are basically the manufacturer and supplier of the components of all kinds of vehicle traded in china. At present, the company is facing problems regarding its obsolete engine technology that is highly contributing to the environmental pollution. Many of the company’s loyal customers have sent their request for advance automobile parts that will radiate less or zero emission in the society.

To escape from this economic turndown, the management needs to initiate some alternatives that would provide the company with the solution to resolve its problem to generate emission control engine or other elements of the vehicles supplied in china. The alternatives generated from the ASIMCO’s management were useful indeed, however their results would be visible in the long run and the company wants to plan for the contingency which will be affecting ASIMCO‘s vehicle production soon.

There were two alternatives suggested by the management that include the development of in-house electronic unit pump (EUP) that would use a smaller amount of fuel and would also release less radiation as compare to old engines. While the other alternative suggests that the company should go for mergers and acquisition, strategic move, this would allow the company to get merged with other automobile manufacturer giant and to outsource the international technologies that would eliminate the air pollution problem without jeopardizing ASIMCO’s market share and sales growth.

(P-E-S-T ANALYSIS)

Political

Chinese government has always shown a supportive environment for the automobile manufacture which has been evident from 2004 regulation that have shown a compassion for the local manufacturers of china. It had been evident that after taking WTO‘s membership china subsidizes its imports of auto parts so that the domestic owners would also take part in the international competition.

In 2005, Chinese automobile industry has shown its lower growth rates and the industry highly blames the law and order situation regarding this low performance. ASIMCO and other auto manufacturers are highly concerned about the implementation of emission elimination policy by Chinese government due to which all parts needs to be upgraded with advance technology; otherwise it would be hard to survive under Chinese government regulations. Whereas these laws has been already implemented in European countries.

Economic

It can be said that Chinese auto industry is almost a thirteen years old with a remarkable maturity in terms of industry growth and opportunities of technological advances. Although Chinese automobile industry comes in the list after Japan, U.S and Germany, but its aggregate yield has increased auto industry returns by five folds since its beginning in late 80’s. The Chinese auto industry has shown a real boom in between the years from 2001 till 2004 afterwards the industry had been affected through the recessionary period of increase in the oil price which in turn resulted in the increase in the manufacturing cost of vehicle components.

However, this crisis had not affected the automobile exports from china due to the comparison of the low cost of production of china with international countries. Hence we could say that company was still showing positive growth rate for the manufacturers and suppliers of automobile.

Social

The growing population in china with an urbanization problem mainly shown their concern in commercial vehicles. To acquire a reasonable number of consumers, automobile manufacture prefer suppliers who had never compromised on quality. ASIMCO comes into the list of those auto component suppliers who earns income through their brand loyalty as well as their product’s quality.

Technological

Due to the technological advances the Chinese auto industry was growing, financially stronger day by day that its overall revenue has reached RMB 7 million. The innovation of advance vehicle has made automobile industry a market of large capital investment in which barriers to entry are so high and the survival is so hard due to heavy competition related to the quality and reliability of each and every component used in the manufacturing of vehicles.......................

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In April 2005, the chairman of ASIMCO Technologies, a company with headquarters in China and supply of automotive components for the Chinese and international clients, trying to decide on its response to the latest regulations of the Chinese government on auto emissions. Go-San - (national standards III) was to come into force on 1 August 2008. To this date, the automakers will not be allowed to supply the Chinese market with a non-Go-San - compatible products. ASIMCO major customers diesel engine already sent a request to update the engine components to ASIMCO, as well as other suppliers. While the three technologies, it would seem, to the Chinese market with the decision, there were different views of the leadership as to where to focus ASIMCO to improve fuel system, which is in the box. The case can be used in international marketing course (in the sessions of product strategy in emerging markets or customer relationship in industrial marketing). "Hide
by Xi Liu, Taehoo Kim, Liang Liu, Guangyu Nie, Wanhong Shao Xie Xiaotian Source: Richard Ivey School of Business Foundation 15 pages. Publication Date: April 27, 2010. Prod. # 910A01-PDF-ENG