Case Analysis: Synnex International Essay examples

1222 Words Sep 19th, 2012 5 Pages
Case Analysis: Synnex International

Background After two decades of successful expansion and redefining the high-tech product distribution system, Synnex International must make a decision on where it will go next. Founding President Evans Tu has seen the firm grow from a local electronics distribution channel in Taiwan into a worldwide powerhouse in product distribution with vendors knocking on doors requesting expansion into new markets. At this point in the company's growth, Tu has the full support of the board of directors to expand into new markets or new product lines, but he knows that capital management at every step is the key to success. Should Tu move forward with the 26 logistics centers in the plans for China? Should he
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In a way, Synnex operates under the Supermarket Principle. The principle tells us that making tiny margins on products that move very quickly will result in large profits. For Synnex, the way to please smaller customers was to sell smaller orders and make frequent deliveries, which ended up increasing revenue exponentially. While this distribution giant is not exactly like a supermarket, this concept was beneficial to the retailer in several ways. First, it means that the retailer does not have to manage excess inventory and waste money on extra product that will not sell. Secondly, without extra inventory, Synnex is reducing its customers' risk of accruing bad debt. And finally, the super-efficient delivery system makes customer feel confident that they can expect an order guaranteed within two half-days. Building this sense of trust is what has turned Synnex into such an international giant, but the company must remain aware of delivery costs and time spent assembling complicated orders. Synnex has expanded in a few different ways, and can choose between these methods and others for future expansions. The case mentions that the company acquired multiple smaller distribution companies in various countries, and quickly turned them into money-makers by applying the principles of “the Synnex way.” Synnex has also opened many expensive logistics