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Inventec, Inc

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Submitted By truluve421
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1. Despite its growth and size, why isn’t Inventec very profitable?

Inventec isn’t a profitable company due to three reasons: increased competition, loss in profit margin from notebook manufacturing, and loss of contracts. Inventec was one of the first Taiwanese companies to open an original design and manufacture plant in China in 1991. During that time, the company had been successful in the venture. However, in 2001, the Twainese government eased the restrictions on high tech investments in China to capitalize on the lower operating cost. Additionally, Inventec lost some of the contract that it held with Cisco to manufacture VOIP phones. All these decisions affected Inventec’s stock and their profitability.

2. What are the drivers of the average profitability of the Original Design and Manufacturing industry?

The average profitability of the ODM industry is due to their ability to produce products at a lower cost. Clients of the ODMs would take the product specifications and have competitive companies bid on the projects. Thus, giving clients a chance to receive valuable design at lower costs. ODMs offered clients the chance to collaborate to develop a better product. Additionally, these companies since they were located on the main land in China were able to produce products at a lower operating cost, including lower cost of labor. Lastly ODMs are able to take advantage of the offering limited products. Since this was the case, ODMs did not have to worry about sourcing many materials and were able to buy many of their production products from companies like Intel and Microsoft.

3. What are the key factors that a company like Inventec needs to manage to earn above average profits in this industry?

In order for companies like Inventec to manage to earn above average profits, the company will need to be able control their cost. Lowering cost and

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