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How Vestel went global*

The core of Vestel’s business is to design and manufacture products on a contract basis. This firm does not plan to compete in the European market with its own brand. The main competencies of this firm include assembly, outsourcing, logistics. Vestel is a supplier of B-market consumer electronics. They target the brand owners and retailers.

Vestel is successful in competition with Chinese television manufacturers because of the flexibility of manufacturing, delivery costs and delivery items. Considering Vestel’s desire to enter Europe, Vestel with an operating profit margin of 7.8% may find it hard in Europe. Considering the productivity, it is higher in Turkey than in China, but there are labor cost differences which do not give a competitive advantage of entering Europe.

Also, since majority of TV sales are for flat screen technology, there should be a reliable source of flat screens and controls. So, delivery times should be cut from 1.5 to 2 months to 1-2 weeks or a Chinese competitor should build a plant in or closer to Europe.

An alternative will be to build or acquire a brand or brands in the A market and gain the earning from the brand, rather than from the manufacturing process.

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