| dc.description.abstract | Established in 1993, Company A is a brand owner of networking product, marketing its own brand products throughout the world. Early products mainly focused on Ethernet hubs, Ethernet/AppleTalk converters, Ethernet switches and networking peripherals. After 22 years, it went public in 2003, and now offers a full range of networking product lines, in nine categories. With the expansion of product lines and the competitive market trends, there is a need to investigate its changes in cost and profit.
Company A started marketing its brand name in Europe. It focused in brand marketing though global exhibitions, while maintaining an outsourcing (or so called ODM) strategy for product development and manufacturing. At that time, the highest proportion of cost was sales and marketing.
Subsequently, to reduce ODM overhead and to keep its prices competitive, Company A founded its R&D department, starting development from the products with highest margin, and left the low profit products to outsourcing. This resulted in major changes in cost structure, with marketing and R&D taking up the majority of costs. Manufacturing are still all outsourced. Thus, Company A is not loaded with manufacturing assets, it maintained its flexibility, as compared to competitors, and avoided the risks from economic turmoil. With its 3R- strategy (Right product, Right time, Right price), Company A provides full range of networking products for small and medium companies world-wide, selling its products in more than 140 countries with around 400 or more networking products.
This study attempts to analyze the profitability of the nine product lines, and compare the attributes among them. Suggestions are provided for the management based on the analysis. | en_US |