Business Capstone Multimedia Cases–Vishay Intertechnology Asia – Case
Declining Market, Asia Growth Strategy
Vishay Intertechnology is a company that specializes in the production and supply of component electronics to manufacturers of electronic devices. The head of their operations in Asia, Mr. Goh was interviewed and here he articulated the issues the company is facing as well as the causes of these issues. The Asian Market is rapidly growing while the American one is declining and this obliges the management to make an important business decision with respect to the issues at hand.
It has been suggested that the company should gradually transfer its operations to Asia so as to take advantage of the increased demand for their products. However, the American operation will continue functioning albeit on a much smaller scale. The criterion that was applied I the coming up with of this solution was integrated decision making since this way, most if not all of the stakeholders and potential effects will have been considered.
The video interview features a Mr. Victor Goh, the Senior Director for Regional Marketing for Asia for Vishay Intertechnology Asia Ltd. This is a company that specializes in the production and supply of commodity electronic products(Vishay 2012). These are the electronics that are assembled to come up with the various electric devices that are used in different applications. In the course of the interview, Mr. Goh outlines key issues that the company is facing accompanied with the factors that have led to the presence of these issues(Goh2013).
Issues Facing Vishay Intertechnology
The main issue facing Vishay Intertechnology is that its top level management has to face a major decision regarding the future operations of the company. This is a result of a significant change in its market segment. It has been noted with growing concern that the different regional markets being served by Vishay Intertechnology have exhibited changes in the levels of demand. The three major affected regions are North America, Europe and Asia. The North American market mainly comprises of customers in the United States has been shrinking over time while the European segment has maintained strong performance. The largest proportion of this company’s market share is Asia. As a result of this change in market trends, the management need to make a decision regarding how they can sustain this growth as well as which directions the operations will take(Goh2013).
Causes of the Issues facing Vishay Intertechnology
The root of the growth challenge being faced by this firm can be traced to the company’s Chinese market. Presently, the number of customers that this company has in China numbers approximately 20000. However, they have been directly serving 250 of these individuals directly on a yearly basis. The challenge wit this situation is the fact that the company has to find a way of catering to this increased number of customers while still maintaining the service that they have been offering those who are directly served annually. It is believed that this rapid growth in the Chinese market is a direct result of the edge that Vishay Intertechnology has in terms of state of the art technology. This has allowed them to produce electronic components that are superior to those being supplied by other players in the market. Given the fact that all the world’s major electronics producers are heading to China to produce their devices as a means of cutting costs, this company has been investing in television-enabling technologies (Goh 2013).
Alternative courses of action
Based on the issues raised in the interview, the company has two possible options to make.
The first one is to completely shift their operations’ headquarters to Asia and then set up a more formidable force in China.
The second alternative that they have is to gradually scale down their operations in North America while they increase their presence in the Asian market. No immediate action is needed in the European market(Hughes 2013).
Criterion of Decision making
The criterion that is shall be used as a guideline during the selection of the most appropriate alternative is integrated decision making. This is a decision making process that takes into account the input of the company’s different stakeholders as well as the cause and effect of any change that is about to be effected(Ullman 2009).
Based on this, of the two alternatives which have been presented and the accompanying criterion for decision making, it will be best to take the second alternative which entails a gradual move from the region whose market is shrinking (North America) to the Asian market where the company seems to have future fortunes due to increased demand for their electronic products(Merchant 2009).
Justification for second alternative
The justification for this decision is the fact that the company still has a long way to go in terms of adequately catering to the demand that has presented itself in Asia and particularly China. Also given the fact that its American Market is gradually reducing, it will be wise to transfer the excess resources that have been allocated to this market to the region where there is a shortfall. This will help in cutting their costs of operation in North America while at the same time increasing the number of customers who will be receiving direct attention in China. Another justification as to why this alternative was considered over the first option is the fact that most technological advancements in the field of electronics are being developed in the United States of America. For this reason, maintaining a presence in the country where new technologies are being developed will give aid them in maintenance of the competitive edge that has brought them thus far(Horder 2009).
Reason for rejecting the first alternative
The reason why the first alternative was not considered despite its being a realistic option is the fact that Vishay Intertechnology has been operating in an environment that is governed by American laws. A sudden change in this regulatory environment is bound to cause ripples in this company’s operations and in effect hamper its growth in the Asian Market. The presence of unexpected embargos especially in the area of military hardware electronics is bound to limit and even completely stall the production of some products this company produces. Secondly given the different economic orientations of the United States and China, such a move has the potential of shaking the confidence of investors who have bought this company’s shares. The effect of this can be the plummeting of its share price which will have an adverse impact on the capital(Ullman 2009).
Implementation of the process
The implementation of this solution as initially stated will be a gradual process. The first step should be to increase the strength of the Chinese operation through increasing manpower as well as assets that will make it possible to cater to the needs of more customers. Since this move will take place over a duration of approximately three to five years, the company will have ample time to strategize on how best they can serve maximize on their Asian market without compromising on the quality of its electronics(Vishay 2012).
Given the present market conditions in Vishay Intertechnology’s Asian operations, the decision to move gradually will prove to be a wise management decision since it will allow the company to leverage the its strengths and opportunities in the emerging market. Being a big company with a lot at stake, it is important that such business decisions are implemented carefully so as to minimize the likelihood of errors and this in effect minimizes losses while increasing profits.
Goh, Victor, Interview by CBS. What caused this issue to arise and why is it important? (2013).
Goh, Victor. Interview by CBS What is an important issue that your company is facing? (2013).
Horder, A. What s Multiple Criteria Decision Making? 2009. http://opportunity-matrix.com/decision-making/what-is-multiple-criteria-decision-making/ (accessed January 29, 2013).
Hughes, J. A business model for a low growth world. 2013. http://www.cityam.com/business-strategy/business-model-low-growth-world (accessed January 29, 2013).
Merchant, N. Strategy Matters: How To Develop Criteria For Achieving Business Goals. 2009. http://www.entrepreneur.com/article/199154 (accessed January 29, 2013).
Ullman, D. Robust Criteria for Robust Decisions. 2009. http://www.robustdecisions.com/criteriacriteria.pdf (accessed January 29, 2013).
Vishay . About Vishay Intertechnology. 2012. http://www.vishay.com/company/about/ (accessed January 29, 2013).
Discussion of Process Used to create the Solution
The first step that was taken was to reflect upon the major issues highlighted by Mr. Goh.
From this, we were able to single out the pertinent issues that needed urgent addressing. However, the material in the issues and their causes section was insufficient for us to get a solution. As a result, we went through the background and found out that the interviewer managed to ask him more questions about his job and the company.
From these we were able to understand this company better especially regarding how it operates as well as what values are held by the firm. From this stage it was easy to draft the two alternative decisions that could be made. However after considering all factors, stakeholders and potential consequences, we settled on the decision to gradually move.