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From Imitation to Innovation: Zongshen Industrial Group Case Solution & Answer

From Imitation to Innovation: Zongshen Industrial Group Case Solution

Value Chain Analysis

Supportive Activities

The labors of the Zongshen were not sufficiently competitive in accordance with the company’s capacity. Thus, Zongshen tried to outsource them from Germany but compensation paid to the labors cost the company was high. Hence, company did not carry on outsourcing of labors.

Zongshen thus, prolonged programs in order to motivate its staff. E-bikes are the technological efficiencies at Zongshen. Furthermore, it has utilized many techniques in order to manufacture the parts of the products by leveraging their expertise.

 Due to innovation of e-bikes, Zongshen Industrial Group has moved towards blue ocean strategy from red ocean strategy. Furthermore, it decided not to continue with imitation brand. However, the high quality and high price strategy of Blue Ocean has not become successful by Zongshen. It transformed its strategy to Purple Ocean that demonstrated modular model to customers. Through Purple Ocean strategy, Zongshen was able to cover the price gap of gasoline and e-bikes even though it was rebounded with the profitability through purple ocean strategy.

Primary Activities

Suppliers of the companies were SOEs, which were numerous in numbers. Hence, Zongshen itself started manufacturing the components of the motorcycle. Therefore, it obtained competitive advantage of producing products, which it has to assemble for motorcycles (Kotler, 2009).

Porter’s Five Forces

Bargaining Power of Buyers

The buyers of e-bikes buy the products, being the distributors. They buy these motorcycles in order to sell them to the end users. Hence, they are the main buyers of the motorcycles. They are able to maintain a critical role in the possible success or failure of the e-bikes at Zongshen.

Bargaining Power of Suppliers

The main characteristic of Zongshen is its assembling of parts. It manufactures almost all the components of the final assembling of the motorcycles. Zongshen has tried to obtain proficiency and talent in order to  progress the company’s technological advancement further. Hence, bargaining power of the company is anticipated to be low.

Hence, low bargaining power of suppliers has been beneficial for Zongshen, as it can develop components of the product in order to assemble its during manufacturing (Kotler, 2009).

Teece’s model of capability

Teece’s model of capability shows the ability of the firm to achieve the levels of competencies.

The first scenario deals with the innovations at the company and competitors can easily achieve it, as Zongshen possesses purple ocean strategy. Second scenario demonstrates that the innovation is

high and replicable, but the company possesses complementary assets; for instance, Zongshen possesses advantage of producing the parts. Third scenario undermines the efficiency of innovation and the hold of the competitors upon complementary assets. However, the fourth scenario consists of absolute dominance that portrays high level of complementary assets by the organization and intellectual property rights. Hence, Zongshen is able to get dominance as well as the whole profit (A. Thompson & A. J. Strickland, 2008)………………….

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