AM Lecture 4

Management > Asian Management > Culture-organisational background > Laoban characteristics > Structure > Effectiveness of structure > Guanxiqiye > Management problems > Problems and solutions > Implications for management > Internationalisation > Superior strategies

Superior strategies

Effects of the 1997 crisis on firms surveyed were uneven. Taiwan companies were better able to deal with it than larger firms for a number of reasons:

• Reduction of costs. They reduced their costs a relatively small amount, but not as much as the larger firms. Rather than downsizing, many expanded.
• Putting more value-added on products. They expanded to fund better goods and the services surrounding goods. They gave something a little extra to the consumer.
• Shift of orientation from manufacturing to service
• Relocating some production to China and SE Asia
• More use of professional managers
• Concentration on core business
• Outsourcing and use of casual labour.

Their reactions were fast, dynamic and creative, meaning that Taiwan companies survived very well.

Chiou et al. (2002) considered cost-reduction strategies in 102 Taiwanese IT-related OEM enterprises. He specifically tested "postponement strategies", which were used in the IT industry due to high production values and short product lifecycles, meaning that keeping costs down was difficult.

Just to clarify, postponement strategies are when a manufacturing firm does not act until the business receives an order from a customer. They can respond to customization as required and there is never any leftover stock.

This can only be done if the firm has excellent relationships with other firms, such as suppliers. Since these relationships were one of the Taiwan companies' competitive advantages, it worked perfectly for them.

Further superiority