Decision to set up of a new company diversified into downstream business

Once there was a large organization supplying a lot of raw material to its customers who were then make use of such material to produce their products and supply to the end user market. The organization was very good in controlling its quality and being a leader in the market, it took a major share of the market.

New companies appeared and getting into the same business as the organization and the market become more competitive. One of the major problem faced was that those new companies do not manage to achieve as good quality of product as the organization, and for capturing the market, those new companies started to cut down in their price supplying to their major customers who were once the customer of the organization.

As a leader in the market, the organization will then have to make a serious decision on what they should do. They basically had only two options:

1. To slash down their profit and sell at cheaper price to their long timer customers.
2. To maintain their market pricing, in which they will most likely lost their customers who are looking forward for cheaper supply to those newcomer.

This is a very important decision and it includes a lot of inter-related complication. The organization, however finally decided to maintain their market status and decide to get into setting up new business which is downstream of their existing business so that they can be their won customer. This can only be done if the organization is large and very rich. As this is the fact and thus they manage to set up a new company.

Beside financial stability, human resource is one of the major prerequisite. As the organization was supplying material to its customer and they have a great lab which carried out various study and analysis to help their customer developing their product, there were quite a number of technical staffs who are familiar with technical requirement of the downstream products. Thus the organization finally picked one of their competent staff from technical department and started their process to set up a new company.

Moral of the story:
This is same as one of the teaching in 5000 years old I-Ching teaching which sound as "Qiong ze Bian, Bian ze Tong"(穷则变，变则通).
Literally, it means "once you come to the end of a certain path and found to be no way out, change your self and somehow there is a hidden path waiting for you.". To make it simple, it means "Think out of the box" whenever you run out of idea.

2013 Oct 5 - Decide to change the blogging concept

The following was the original description of this blog:

Started off as a consultant, knowing that it was the company trying to get a trial prior to permanent employment, I decided to take up the offer.

With the so-called Commercial Secret, I decided to keep myself in very low profile.
With the trust provided by the company, I am now building a dream towards organizing a world class company.

It has to be replaced now:
My initial thought was to keep a record on the real life situation on how I build the world class company. But due the the competitiveness in the actual commercial world, there are a lot of "secrets" and thus I should not disclosed and thus did not post much.

Now that I have more chance to provide consultancy to more organization, Hence I think it is time for me to modify the concept of this blog and make use of it to share general management and leadership idea rather than paying too much attention on one single company.

In my coming posts, I will make them General and combining all the real life conditions that I face in all companies, with some of the same opinions from my friends who have the same interest.