How to Establish a B-to-B Brand With Oligopoly Strategy

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How to Establish a B-to-B Brand With Oligopoly
Strategy A Study of Wintek Corporation
Hyley Huang Wintek Corporation, Taiwan and
Jen-Hung Huang National Chiao Tung University,
Taiwan
The 15th annual Conference on Pacific Basin
Finance, Economics, Accounting and Management
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Introduction
  Technology is borderless. Fueled by the 150
billion dollar market for personal computers and
100 billion dollar market for mobile phones,
technology brands are becoming a new force in the
world. The rise of the global economy and
Internet over the past twenty years has made
brands more influential than any time in history.
It is undeniable that technology has had a major
hand in the growth of the global society over the
past twenty years. Amidst this wave of change,
technology companies are now occupying a
different market position than they have in the
past. Oligopoly strategy encourages companies to
throw off the chains of competition and shift
their focus away from their competitors, By
moving outside of the price cutting red ocean,
companies enter high value added and high profit
niche markets. Oligopoly strategy is the best
strategy for building brands. From another
perspective, successful brand strategy can also
create oligopoly markets and realize the
oligopoly strategy.
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? B-to-B Mainly Offers Customer Competitiveness?
From Oligopoly Strategy to B-to-B Brand
Technology and Scale Become Industry Benchmarks
B-to-B Brand
A.B.C. Strategy
Wintek Oligopoly Strategy
Maximize Consumer Surplus
B-to-B Oligopoly Competition
Develop B-to-B Oligopoly Markets
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How to Establish a B-to-B Brand
Technology and Scale are Industry Benchmarks A
B-to-B company can share technology field with
company brand by developing technology and scale
to industry benchmark levels and this also brings
brand value to the company.
For example, Intel usually comes to mind when
thinking of CPUs. When one thinks of small to
medium mobile phone display suppliers, one thinks
of suppliers such as Epson, Samsung, Sharp and
Wintek. Wintek Corporation is a leading company
in the small to medium STN and CSTN mobile phone
panel field. In fact, the name Wintek has
become the representative brand in the industry.
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How to Establish a B-to-B Brand

• Maximize consumer surplus
• B-to-B oligopoly definition Selected qualified
  suppliers of dominant company.
• When the consumer surplus reaches the industry
  benchmark, the company easily becomes selected
  qualified supplier of dominant companies. Once
  the company becomes one of these few suppliers,
  the company can then develop B-to-B oligopoly
  markets and build a B-to-B brand.

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Demand
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Wintek oligopoly Strategy
1.Establishing core competency through knowledge
management For sales, technology, product,
service, system, management, finance and assets.
? Increase customer value, reduce
cost 2.Core vertical integration ?
Increase customer value, reduce cost
3.Dominant products ? Increase customer value,
reduce cost
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• Establishing core competency through
  knowledge management

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Strategic Architecture Concept
Using the strategic architecture process,
companies can reconceptualize the marketplace and
redirect future business development by
determining what core competencies are needed to
establish a blueprint for future development.
When the strategic architecture is put into
place, all personnel in the organization clearly
understand how various resources are allocated to
create shared goals for everyone in the
organization. Strategic architecture processes
allow the company to overcome the technical
barriers in building or acquiring core
competencies. The critical technology, which can
be obtained through attracting talent,
independent development, licensing or business
alliances, is then integrated into a core
competency that is capable of creating value for
the customer.
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Core competence and Business Strategy
(Hamel Prahalad 1989, Hamel Prahalad 1990)
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Core Competency Business Concepts

• Prahalad and Hamel core competency business
  thinking
• Core competency of an organization is
  organization-wide knowledge especially
  technology that organizes different product
  skills and integrates different trends.
• Core competency is comprised of the skills and
  knowledge from various departments in the
  organization. It is cross-functional work that
  involves personnel and functions from many
  departments and levels of the organization.
• Companies should first develop core competencies
  and then expand the range of products (business
  units) that employ these core competencies.

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Five Characteristics of Core Competency
Core competency is group learning in an
organization. Core competency organizes different
skills and integrates related technology
throughout the organization. Core competency is
communication, participation and dedication
across department lines (organizational levels).
Core competency is not used up like a tangible
asset. Core competency focuses on application and
sharing or customer requirements. Core
competency acts as an adhesive between business
units and a driving force for future new
businesses and should be combined with business
strategy.
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• Knowledge management
• -Knowledge spiral

(Nonaka, 1991, 1995)
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The Process of Business Core Competences
TK1
TK2
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1
3
.
TKn
2.No SBU Barriers
3. BCC Formation
1.KM
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Application of ESADI CC
ESADI CC
Increase Customer Value Reduce Cost
Application of ESADI CC
Enable- company- to Succeed And competitor-
Difficult- to Imitate CC
Sales Technology Product Service System Managem
ent Finance Asset
ESADI CC/BCC Formation
Application of Competence
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• Core Vertical Integration

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Vertical Integration - Total Solution for
Customers
LCD Panel Manufacture
TFT
Equipment MP
Total solution for customers
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• Dominant products, dominant strategy
• Imbalance advantage

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Average market price
Average industry cost
80 of average industry cost
Dominant product cost
70of average industry cost
Fixed cost
Variable cost
Purchase of used equipment
Vertical integration
China production facilities
Investment in equipment manufacturers
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Background Information Vertical Integration
Note Current conditions Externally purchased
ITO conductive glass costs US7. Cost of
self-manufactured ITO conductive glass is US2.5.

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Net Sales and Major Investment Milestone
UnitMillion
CAGR 57
Introduction of knowledge management signed
foreign s US34 million dollar loan
Core vertical integration, development of
dominant products Established Dongguan back-end
assembly plant in April and American subsidiary
in December
Strategic panning introduced , Establishment of
core competency H.K subsidiary founded in April
1990 Company established
Issued ECB, issued GDR
Acquired TFT module assembly technology and mass
produced CSTN
Hyley Huang named President
OLED division spun off to form Windell
Corporation Invest in Mactech, issued CB
Signed foreign US70 million, GDR issued in Nov
Europe subsidiary founded introduced COG
production line
Subsidiaries set up in Japan, England, Germany,
STN/ITO line introduced
Korean subsidiary and United Win (China) founded
3G TFT production line purchased, India
subsidiary established
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Conclusion

Winteks oligopoly strategy increases customer
value, reduces cost, raises entry barriers of
price and cost for other competitors, and has
made Wintek into one of the selected qualified
suppliers of dominant company. Wintek
continuously creates oligopoly strategy for an
improved future has also made Winteks
technology and scale into a benchmark of the
industry which in turn BUILDS WINTEKS B-TO-B
BRAND.
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The End