Case Study Analysis - Beijing Mirror Corporation (BMC)
Beijing Mirror Corporations key objective is to timely commercialise their mirror taking into consideration their financial limitations and business expertise. Speed to market is a critical consideration as only eight years remain on patents, and the threat of imitation and technological supersession continue to grow with time. Key decisions:
Retain current business entity - Financial ratios highlight the company has significant cash flow and liquidity issues. A cash injection is required to drive production enhancements to resolve spoilage rates and production limitations; however, the existing financial position may be a hindrance to securing a loan. Deficiencies in marketing, finance, distribution, and global market experience are also hurdles. Clearly, the company does not appear to have the ability or funds to commercialise their product alone in a timely manner, so the real question is whether a joint venture is the best solution. With the window of opportunity diminishing, the company needs to focus on the following within the venture decision process.
1. Production capacity, efficiency and process concerns
2. Broaden product applications
2. Secure long-term sales contracts
3. Increase distribution channels
4. Recruit global business acumen to scrutinise financial performance
5. Develop marketing strategies to hasten development and sustain advantage
6. Asset value optimisation, sales, lease, outsource opportunities
These strategic issues are fundamental to enhancing economies of scale, as well as strengthening the company's price, and market position in the global market.
Domestic joint venture - PAC can provide the cash; however will it be a strategic fit. Their focus appears to be solely on ROI so I would question their long-term support and expectations. BMC is losing money and significant infrastructure expenditure is required, thus delaying ROI. There are also no defined benefits concerning business expertise, sales development, or distribution channel...