This article analyzes the business strategy of Bonso Electronics International (BNSO). It provides a brief overview of the BONSO Company on its products, image, ethics and financial performance. The strengths and weaknesses as well as threats and opportunities of the company are also discussed. The company objectives and strategies are evaluated as well contingency plans that are in place to mitigate against unforeseen circumstances, (Daft, 2010).
Overview of BONSO Electronics International
Bonso electronics ltd is listed at NASDAQ, US as BNSO since 1989. The company was established in 1980 in Hong Kong and is headquartered in Shenzhen China. The company is located in China and manufactures goods primarily for its customers living in North America. The current workforce is approximately 2500 comprising of staff and workers. Bonso electronics ltd design, develop and manufacture telecommunications, health care goods, electronic scales and weighing instruments used as consumer, industrial and commercial applications for the global markets, (Bonso electronics ltd, 2012).
The firm is engaged in research and development programs to enhance product quality and innovation. R & D team is experienced in designing new products, manufacturing set-up, total quality management, lean management and just in time delivery to meet the needs of customers in top standard, (Bonso electronics ltd, 2012). The company financial performances have been poor for the last decade. The company recorded a net loss of 1.56 million dollars for the fiscal year ending 31st March 2011 which diluted its share price. It recorded a reduction in net sales, as a result of its decision to give up orders for telecommunication products with low profit margins. It also recorded lower gross margin due to increased prices of raw materials and high cost of labor in after an increase in minimum wage in China. The appreciating Chinese Yuan against Dollars have impacted negatively on financial performances. The mission statement of Bonso electronics is “To be a company of choice in provision of high technology and affordable goods that satisfies the needs of global customers”.
2.0 SWOT analysis for Bosno Electronics ltd.
Table 1: SWOT Analysis
Company strategic objectives
The following are company objectives:
- To cut down on cost of production through the use of high technology and quality human resources to increase productivity, (Pearce and Robinson, 2000).
- To engage in research and development to improve product quality and innovation.
- To reduce the foreign exchange risks due to appreciating Chinese Yuan by lobbying for customers to buy products in Yuan.
- To increase production to meet the expanding market demands for company products internationally by putting up a separate plant.
- To grow product demand through extensive marketing and promotion strategies.
- To increase shareholders value through buying back company shares in the open market to retain its true value in the market.
Plans and strategies
International marketing communication strategies will be employed to market the company products and build brand image, (Bradley, 2005). High pricing strategies will be charged on company products to mitigate the high cost of production. The use of online marketing is essential for building the image and reputation of the company after a period of poor financial performances. The use of social network and search engines has become common and effective
marketing tool for multinationals to expand into new markets, (Köksal H and Özgül, 2007).
Product innovation and development is employed through the R & D team, which led to production of high quality products for our global customers, (Singer, 2008). The company invests a lot of capital in R & D and manufacturing team to enhance manufacturing set up, product design and development, prototyping and economic sourcing of components, total quality management and lean production to satisfy and enhance timely delivery of products that meets the needs of customers, (Roussel, Saad & Erickson, 1991).
Human resources strategies will involve training employees to increase their productivity, (Hamel & Prahalad, 2010). Increased productivity will give the firm a competitive advantage in the global market and will cover against high costs of labor. The use of high technological know-how in production of goods will also increase productivity and reduce cost of production. Financial strategies will include hedging the company against foreign exchange risks through forward buying. The company has managed to convince its foreign customers to buy products in the Chinese Yuan to reduce the risks of foreign exchange, (Walker, 1992).
Contingency plans for possible risks
To mitigate against undervalued shares due to recent losses, the company intends to buy out its shares in the open market to regain shareholders value. The use of international media is necessary to expand into remote markets where online marketing is not available. This includes emerging Asian, African and Latin America economies, (Priester & Wang, 2010).
To cover against foreign exchange risks, the company intends to engage in foreign exchange hedging. To mitigate against high cost of raw materials and labor, the firm will import raw materials to benefit from strong Chinese Yuan. There are also plans to locate a manufacturing plant in neighboring countries with cheap labor to reduce high cost of labor. To reduce losses through disposal of non- performing subsidiaries and reducing telecommunication products with lower margins, (Cummings and Urs, 2009).
Evaluation of strategic plan
Based on situational analysis, the plan is appropriate for the company. Innovation strategies will provide quality products as demanded by the current generation of customers. The new plant will provide products for increasing global demand. Training human resources and use high manufacturing technology will enhance productivity and reduce costs of production, (Bamberger and Meshoulam, 2000). Marketing strategies will help to improve the already declining reputation and will also help it to expand into new territories. Shares are undervalued hence buying shares is necessary to regain its value in the market and R & D is essential for the current global competition.
Business strategic plan is essential for business performance of any given company. It determines the direction to follow in business environment. A good business plan should incorporate contingency measures. This helps the firm to adapt to changing global environment. The company should always assess its strengths and weaknesses before exploiting external opportunities and threats.
Bamberger, P, A and Meshoulam, I. (2000). Human resource strategy: formulation, implementation, and impact. Thousand Oaks, CA: Sage
Bonso electronics ltd. (2012). Retrieved on 20th July, 2012 from http://www.bonso.com
Bradley, F. (2005). International marketing strategy. New York: FT/Prentice Hall.
Cummings, S and Urs D. (2009). A Guide to theFuture of Strategy? The History of Long Range Planning. Long Range Planning. 234–263
Daft, L, R. (2010). Management. 9th Edition. South Western college publishers.
Dealtry, T. R. (1992). Dynamic SWOT analysis: Developer's guide : when looking to the future look for the opportunities and threats and consider your strengths and weaknesses. Birmingham: Dynamic SWOT Associates
Ferrell, O. C., & Hartline, M. D. (2011). Marketing strategy. Australia: South-Western Cengage Learning.
Hamel, G., & Prahalad, C. K. (2010). Strategic intent. Boston, Mass, Harvard Business Press.
Köksal, M. H and Özgül E. (2007). The relationship between marketing strategies and performance in an economic crisis. Marketing Intelligence & Planning 25( 4),326 – 342
Pearce J and Robinson R. (2000). Strategic Management. 7th ed. New York: McGraw-Hill.
Priester, C., & Wang, J. (2010). Financial strategies for the manager. Beijing: Tsinghua Univ. Press.
Roussel, P. A., Saad, K. N., & Erickson, T. J. (1991). Third generation R & D: Managing the link to corporate strategy. Boston, Mass: Harvard Business School Press
Singer, J G .(2008). What Strategy Is Not: Technology- or Platform-Driven Strategy Is a FastTrack to Commoditization. MITSloan Management Review. 49(2),96
Walker, J. W. (1992). Human resource strategy. New York ; Montréal, McGraw-Hill.