Inter-service Memo - Case Study Example

RE: Inter-service Memo Introduction CX technology is a manufacturing company that was founded in Taiwan in 1972, specifically to produce bullets and bicycle parts (Bhole, Lee, Lu and Sen, 2). However, as the demand in the markets started changing, CX technology company had to shift its business from the initial bullets and bicycle part production, to the production of speaker components, which had proved to be a worthy area of investment. This shift of business was commendable, since the company progressed well and eventually became a giant in the industry, serving over 86 large customers worldwide, which included the giants in the audio industry such as Philips, pioneer and Panasonic (Bhole, Lee, Lu and Sen, 4).

Nevertheless, the business in the speaker component industry is proving to go down, and the company is contemplating on the next viable move. Analysis of the situations CX technology has become a giant in the speaker component industry. However, the growth in new business for the industry is now proving to be very slow. There is a slow demand in the products manufactured by the industry, especially in the USA markets, while globalization has caused another major challenge with a high entry of competitors in the market (Bhole, Lee, Lu and Sen, 4).

As a result of the high competition, the pressure on prices is increasing, threatening to lower the gains of the industry even further. Definitely, some change is necessary to cope with the new developments in the markets that CX serves. A couple of alternatives CX Technology has various alternatives open for business improvement. Diversifying theCX Technology business from the exclusive manufacture of speaker components into the production of other major components required in the automotive industry, forms of a viable alternative (Bhole, Lee, Lu and Sen, 2).

The other alternative that is open for CX technology to improve its business while overcoming the competition and the cost pressures in the speaker component market is to revert to the initial bicycle and bullet production (Bhole, Lee, Lu and Sen, 8). This is a viable alternative for CX, since it already had sufficient experience in serving the industry. The other alternative is to venture in the Beer industry, where some beer kegs were found to employ some parts of cold-forged steel parts (Bhole, Lee, Lu and Sen, 8).

Recommendation The recommended move for CX Technology is to revert back to its initial area of business specialization, where it could continue producing bicycle parts. A proposed action plan The proposed plan of action is that CX technologies opens few branches of the company and equip them with the necessary production equipment for bullet and bicycle parts. This is to be done immediately, so that the company can diversify the risks of business through being involved in a different activity, other than exclusive production of speaker components.

The combination of both speaker components production and the bullet and bicycle parts production will lower the portfolio risks involved, since the company has prior experience in the two fields. Meanwhile, a comprehensive research in the beer and the automotive industry should be undertaken, to assess the feasibility of venturing into the industries. Risk analysis The risk involved in the move to venture back to the bullet and bicycle part production industry is that the industry might be already saturated by now, since it is an old industry, thus the profitability would be low.

Future activities Research in both the beer and the automotive industry will form the future activities of CX Technology, which can then venture into the markets, depending on the viability of the industries, as deduced from the research findings. Conclusion CX Technology is faced with the risk of high competition and reduced business in the speaker component industry. Therefore, the company needs to look for alternative areas of business where it can venture, to keep growing and increase its profitability.

The automotive, the beer and the bicycle part manufacturing industry are all open alternatives for the company to venture in. However, owing to the uncertainty of venturing into new industries such as the automotive and the beer industry, CX Technology should venture into the bicycle part industry immediately, as it undertakes further research to determine the viability of venturing into the other two industries, since the company already has previous experience in the bicycle part production and distribution.

Works cited Bhole, Ketan, Lee Jordan, Lu, Eileen and Sen, Indrajit. CX Technology. Massachusetts Institute of Technology, 1-8. Print.