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Inventec Case Study

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Inventec Corporation Case Study Inventec Corporation lies in the ODM industry which designed and manufactured electronic products for client companies that marketed the products globally. Despite its growth and size, Inventec is not very profitable for the following reasons. To begin with, the ODM industry’s average profitability is low. Net margins of leading taiwan ODM companies range from 1% to 6%. The low profitability is mainly driven by the huge customer bargain power and the fierce competition. ODM’s clients, these global electronic companies face fierce competition themselves and have a need to lower cost. Their strategy to diversify contract manufacturing partnerships reduces their reliance and …show more content…

Instead of just keeping the software in-house as embedded on hardware, the subsidiary will market the software to other manufacturing company. Expansion of the subsidiary can also move away from hardware programming onto true software programming in area such as translation software or similar programs. Invectec should also diversify client base to include multiple companies instead of focusing on the top brand in each field. This will allow Inventec a greater bargaining power with their OEM clients, and it will ensure the survival of Inventec in case a major client decide to leave, such as the influence they suffered from Apple’s decision to split its iPod contracts among other competing ODMs and HP’s acquisition of Compaq. To maintain more clients, since many OEM refuse to contract out new technology to ODM, Inventec could create a subsidiary company that approaches existing OEM client, and the new subsidiary will deal solely in the production of next-gen PC, PDA, cell phone, or MP3 designed by the OEM. This would enable Inventec to become more competitive against EMS substitutes and achieve possible economic scale if they only focus on production so that cost can be further

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