Reduce Operational Costs

One of the areas that operational costs should be reduced is the model of providing support for installed programs and systems. It involves time and effort, and therefore costs, to upgrade software and install patches for customers. Another reason to reduce the time and effort spent upgrading installed programs are the fact that the

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customers are intolerant of downtimes. When their workflow is interrupted because of downtime, revenue and time impacts are significant.

Planned downtime for software and/or hardware upgrades can be minimized by utilizing Web-based technologies where applications self-install or perform automatic upgrades with minimal user intervention. Therefore, VATECH Taiwan should invest its resource so as to speed up the development of Web technologies. To avoid unscheduled downtime due to program and system irregularities, its effort should be placed on improving reliability by continually working towards better quality inspection. The self-install solutions through web, mentioned above are a key step to cut down on operation costs. In this way, the company will only need to install the software programs in the computer, thus saving time and effort by not having to upgrade the software programs and systems.

Alternatively, VATECH Taiwan should negotiate a volume discount with its computer suppliers to outsource the installation of required software programs and systems as each machine is being built. This approach will free up resources to build its core competence. The company should plan for PC vendors to install the required software programs, thus reducing installation and shipping costs. This approach will save the computers from a trip to the company for installation, only to be shipped out again to the final customer site.

81 6.1.2.2. Provide Exceptional Customer Support

A key aspect in the dental digital X-ray market, a market that is growing fast, is customer satisfaction. Satisfied customers provide critical sales and marketing benefits for the company to maintain and increase market share. In a growing dental digital ray market, customers now pay attention to the total cost of operating dental digital X-ray when making a buying decision and not just its initial price. Additionally, customer satisfaction can be adversely affected if customers find out that their costs to support it are higher than they expected. Customer satisfaction is, therefore, a measure to customer perception of cost effective offering.

Besides helping customers cut operational costs, another key determinant that affects customer satisfaction is the level of service and support they get from the company. This has also been identified as one of the key success factors in the industry.

To both the customer and the company, purchasing a dental digital X-ray is just the start of a relationship. As I analyzed, the strong customer service and support are one of VATECH Taiwan’s competitive edges. Therefore, it is very important for the company to continue to understand the factors affecting the drop of customer satisfaction, and to address any related issues accordingly and effectively.

82 6.1.3. Decentralizing Leadership

In addition to deciding on the overall company strategy, management of VATECH Taiwan needs to clearly identify and communicate a transition strategy for the time when the CEO (Mr. Cho) will be less active in the day-to-day management of the company, or when he leaves by HQ’s decision. While formulating a transition strategy and finding the appropriate personnel to carry out this transition strategy are a priority for VATECH, events can occur to delay the implementation of this strategy.

Clearly communicating the transition strategy to the entire company would reduce uncertainty and employee anxiety, and increase morale, and allow for a better competitive response to questions being raised by current customers and competitor of VATECH Taiwan.

6.1.4. Hire Human Resource Manager

Rapid growth, like what VATECH Taiwan is experiencing, can bring its own problems. Organizational structure and culture affect efficiency of a company’s entire business. VATECH Taiwan has doubled the number of employees in the last two years.

As the number of employees increases in the company, the scope, volume, and complexity of activities expand. The challenge of internal growth to the company is simply that there is more work to do. Therefore, the company needs a Human Resource manager who can define and organized the tasks, workflow, and process. Currently, there is a lack of such skill among the present management of VATECH Taiwan.

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Moreover, the need for more capable employees to help VATECH Taiwan stay ahead can be resolved by putting an emphasis on training and careful recruiting which can be done by hiring HR manager with specific knowledge on Human Resource management. From a human resources perspective, training people internally to acquire the right set of business skills and to increase business awareness is an effective way to achieve results. Nevertheless, the success of training depends on the employees’

willingness and ability to learn from the training materials and the trainer’s effectiveness in transferring his or her knowledge and skills.

On the other hand, there are also challenges in recruiting highly talented people, which has been currently done by CEO, Mr.CHO. A skilled individual might not necessarily be of the right fit to the company in terms of work culture and ethics. It is HR manager’s job to recruit right people among candidates and educate employees to share the same enthusiasm, vision, and fit with the existing culture at VATECH Taiwan, because understanding the company culture, increasing communication, and motivating employees are critical success elements for the company.

6.1.5. Reconfiguring the Value Chain and Organization

While the current value chain and organization can be effective, the company must take care to find ways of working across these organization and value chain in order to ensure agility, collaboration, quick decision-making, and sustainable growth as a subsidiary company. Nevertheless, there is no such thing as an ideal organizational design. Each design has strategic advantages and disadvantages. Matching structure to

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strategy involves picking a basic design, modifying it as needed, and adding valuable main activities, supplementing it with coordinating mechanisms and communication arrangements. While practical realities often dictate the nature of things, existing reporting relationships, personalities, internal politics, and other situations and strategy factors must prevail.

To restructure the organization and its value chain, VATECH Taiwan should, firstly, develop a flow chart of total business processes, including interfaces with other value-chain activities. According to Michael Porter, optimizing the linkage along the value chain and reflecting on its strategy, and with better coordination within the value chain, a company can achieve a competitive advantage. Secondly, VATECH Taiwan should assess and streamline, if needed, the current processes for a cost effective business activities. Thirdly, to sustain its current growth and increase its importance as a subsidiary, it should determine to keep some of value added activities in house for the sustainable growth. For example, as I mentioned above, Software development can be added to the value chain, since it will certainly give a new competitive edge to both parent company and VATECH Taiwan, and will lead to the position of a strategic leader as a subsidiary company. Last, it is vital that VATECH Taiwan communicates the organizational change to gain employee support and commitment upfront. As with implementing any strategy, realigning an organization takes time.

Reconfiguring strategy processes and value chain can help the company gain sustainable strength for the future. Potential outcomes are dramatic gains in productivity and organizational creativity where responsibilities and decision-making process are clearly defined. In addition, strategy processes would be unified, permitting

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tasks to be performed quicker, resulting in a company that is more responsive to customer expectations, and increasing strategic importance as a subsidiary.

6.2. Strategic Plans for Long-term Success of the parent company

Having provided issues and recommendations for the company's subsidiary company in Taiwan, I also try to look outside of the box, and look at the whole picture of the parent company, to generate long-term strategies for the parent company at different levels such as product development, human resource management, the organizational structure, and competitiveness for VATECH. I believe these strategies will aid the development of core competences for the company.

First, I believe that the company is moving in the right direction in providing a variety of products to meet different requirements and satisfactions for its different customer segments. The effort should be continued and improved consistently. The company needs to import more customers’ involvement in the market analysis and product development, since only customers know what they need for their clinics and hospitals. Therefore, deep understanding of market demands and customer participation will be critical for product development.

Second, while the company is growing quickly, more and more departments are set up and middle managers are created. However, when a company gets more hierarchies, the communication sometimes is blocked. To improve knowledge sharing and communication, the company should set up formal knowledge sharing events or

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mechanisms to break down any blocks. At the same time, encourage to use web-based database will be an effective approach to the same problem.

Third, VATECH should not ignore big threats from Korean based conglomerates such as Samsung or LG. According to rumors, Samsung and LG are aiming to enter medical industry soon. Once theses Korean conglomerates enter the medical market in the near future, the competition of the market will be significantly increased. Given this market uncertainty, VATECH should design five year or longer market strategies and product development plans, and allocate sufficient resources to conduct research and development on them. These new strategies will not necessary focus on dental digital X-rays, but need to pay attention to new market opportunities and other software products.

The managerial challenges of implementing the above recommendations are huge. I suggest that the executive team of the company must carefully deal with following issues.

First, when the company needs to build up new core competences to fit the dynamic market needs, the new core competences should be measured, defined, and integrated.

Second, how to stretch existing resource and competences is also a big challenge, since employees’ average years of serving in the company is less than two years, according its 2008 annual report. The company has to hire, train, and retain talents to expanding current core competences. Management should pay more attention to manage and integrate new resources with existing ones.

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Third, having developed a strong capability to compete in the market, the company cannot ignore its current core competences, but should appreciate and enhance them.

In this section, after conducting an external analysis of the industry where the company belongs and a company situation analysis of VATECH Taiwan and strategic issues and suggestions in the previous chapter, I recommend some strategic plans and suggestion for the parent company, thus increasing its competitive advantage. Here, I give recommendations on deepening customer understanding, increasing communication and knowledge sharing, and setting up strategic plans for the long-term success of VATECH. As well I mention that management should manage the above improvements by recognizing and embracing the managerial challenges associated with them and avoid assuming past success will guarantee future success of VATECH.

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7. Conclusion

Concluding with results is not an end in itself. With the embedded limitations, the results involve many more implications, possible contributions to practice, and future research opportunities. This chapter is dedicated to these aspects: conclusion of the findings, implications, limitations and future research directions.

7.1. Conclusion of the findings

VATECH is in a rapidly growing, high-opportunity, and attractive industry. At the same time, it faces fierce competition with existing dental digital X-ray companies, most of which are local agencies of major companies mostly from the US, Japan, and Germany. In the past few years, VATECH Taiwan has been successfully gaining its share of the market and building on its reputation in the dental digital X-ray industry.

VATECH is at a cross roads of change where it’s the right decisions will help the company sustain its competitive advantage and continue to be successful in the industry.

In view of the forces operating within and upon the dental digital X-ray industry that VATECH Taiwan is in, this research paper identifies the issues the company should address.

The first major issue is creating new strategic vision. Currently, VATECH Taiwan is just an implementer of the parent company in the local market. Therefore there is a strong need to create a new strategic vision to reach further and become strategic leader serving as a partner of headquarters in developing and implementing

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important strategy. The implication of creating a new strategic vision is that VATECH Taiwan would have to tailor its value chain to provide new activities and products to the selected market segments by its own efforts, and therefore would be a strategic leader to develop and implement a series of strategies shared with the parent company.

The second key issue is related to providing cost effective offerings. In order for VATECH Taiwan to keep the leading position in Taiwan, it is important that the costs incurred in its value chain be reduced. VATECH Taiwan needs to make decisions to reduce the overall costs. This goal can be achieved through reducing operational costs and providing exceptional customer support.

The third key issue has been related to the current situation of centralized leadership in the company. Management of VATECH Taiwan needs to clearly identify and communicate a transition strategy for the time when the CEO (Mr. Cho) will be less active in the day-to-day management of the company, or when he leaves by HQ’s decision.

The fourth key issue is that the company is lack of human resource management skill among the current management. Therefore, VATECH Taiwan needs a well-trained human resource manager who can define and organized the tasks, workflow, and process, hire right people, and educate people to share the same enthusiasm, vision.

The final key issue is reconfiguring the value chain and organization. While the current value chain and organization of VATECH Taiwan can be effective, the company must take care to find ways of working across these organization and value

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chain in order to ensure agility, collaboration, quick decision-making, and sustainable growth as a subsidiary company.

It is necessary for VATECH Taiwan to select a strategy that enables it to meet both the growth and profitability targets imposed on it by its parent company. Given its core competence, culture, and support of the excellent assets provided by its parent company, it is recommended for VATECH Taiwan, to employ differentiation strategy as a sustainable growth driver. Moreover, VATECH Taiwan is advised to assess the state of its value chain activities, including its human resources, organization, and processes for sustainable growth.

7.2. Managerial implication

One of the purposes of this study is to give benchmarking responses to the current international subsidiary companies in Taiwan, and to provide better knowledge.

As the theoretical ground for this study is strategic analysis of the industry and the company, the results of this study have built up a reference guidebook for managers in international subsidiary companies investing in Taiwan or approaching its market. The results of the study, therefore, serve as a reference point to reflect on the strategic developing and planning, and to see its development in Taiwan over time.

These implications are important for managers in both subsidiary-level and parent company-level. At subsidiary-level, regional directors, and manager in international companies in Taiwan will gain a better understanding strategic

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management and planning to improve their competitiveness in Taiwan. On the other hand, at parent company-level, corporate CEOs, and International Directors will gain a better understanding of the distinctive features of business operation in Taiwan as regards value-chain aspects.

7.3. Limitations

This study does not pretend to generalize its results to universal level. This is a study of the strategic analysis of VATECH which have focused its business in Taiwan.

Thus, this study does not even attempt to discover any universal laws about the strategic planning and analysis in general. Naturally, there are many loads of other companies, which have faced the same issues as VATECH Taiwan. Still the events and activities explained in this study are not necessarily very familiar to all companies even in the industry where it belongs.

Nevertheless, even though the activities and strategies in this study have been the specific case of one company, VATECH Taiwan, it does not mean that these issues are limited only to this company. On the contrary, most small international subsidiary companies in Taiwan might face the same growth challenges and strategic issues sooner or later in their development. Although this research does not provide any definitive directives on how to function in these situations, it certainly offers some possible alternatives for consideration by other companies as well. Still, this study has not attempted to discover any universal laws or rules, and so the findings of this research

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can and should not be considered as such. They may apply in the case of some other company, but just as likely they might not.

7.4. Future Research

This study has disclosed several interesting opportunities for further research.

First, the scope of this study could be expanded to other dental digital X-ray companies in Taiwan, thus providing a more extensive picture of the whole industry. Next, a similar study could be carried out in other area of business in Taiwan, which would illustrate the usefulness of the framework in this type of study more broadly. On the other hand, the strategic development and planning of dental digital X-ray companies or the whole industry could also be studied by applying completely another framework that has been employed more often in strategic analysis. This kind of a study could offer new insights, but it might also help to reveal some new aspects to be considered in further research.

Finally, a comparable examination could investigate, for instance, the strategic analysis of other subsidiary companies in other countries or perhaps even globally. This kind of investigation would probably discover very fascinating similarities and differences between various countries, and would thus be especially useful for managers who are considering expanding their business into those countries.

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Friedlander and DonA. (1999). The Changing Face of Dentistry. Canadian Dental Association . Griffiths, D. a. (2000). Are There Any Competencies Out There? Identifying and Using Technical

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