Synnex International: Transforming Distribution of High-Tech Products (Essay Sample)

Synnex International: Transforming Distribution of High-Tech Products
Title: Marketing distribution
Student name:
Student number:
Introduction
Synnex international is one of the most successful High-Tech companies in Taiwan and worldwide and has been in operation since 1975 when it separated from MiTACH. The financially sound global tech organization in the year 2007 had a global turnover of $170 billion US dollars whereby 70% of this amount came from international markets (Synnex Corporation , 2007). The report will analyze two aspects relating to the company’s choice to adopt a different distribution strategy that was commonly termed as unconventional in the Taiwan High-Tech industry and how well the globalcorporation’s distribution strategies will cope with the Australian market.
1 Critical evaluation and analysis of Synnex’s distribution strategy
Push versus pull strategies
According to Yeshin(2006) push strategy involved a manufacturer’s effort in making sure that a product reaches the end consumers by encouraging and motivation the players in the distribution channel to continuously market the products to the final consumer. (Yeshin) continues to explain that pull strategy efforts are first hand efforts directed towards the final consumer to pull products out of the distribution channel.
Push strategy
The traditional norm of distribution in Taiwan was that huge manufacturing corporations would distribute to small firms that were small in size with a limited capital base. Most of the high-tech manufacturing companies in Taiwan were foreign companies that wanted to tap the technological advanced market Taiwan had to offer. On the supply side of the distribution chain securing distribution rights for vendors was not easy due to the limited capital requirements invoked(Nations, 2005). The traditional approach to pushing electronic devices to end consumer entailed buying in bulk hence agents received discounts. Distributors on the supply side were faced with the difficulty of serving huge manufacturing companies that often ordered in bulk. On top of this, manufacturers disregarded small purchases based on their opinion that small purchases were not enough to offset the service cost. Dellaert, et al.(2000) explains that when the demand is low, manufacturers who insist on bulk purchase by distributor exert force on the distributors on the demand side of the distribution channel to incur extra costs of maintaining the large inventory. Synnex however viewed this as an opportunity to tap into small retail outlets by eliminating bad debts. Piper(1996) statesthat offering incentives and quality services to agents motivates them to intensively market the product hence maintaining the value of the product and at the same time attract new customers. The push strategies adopted by Synexx included reducing the average order size of retailers and frequent delivery to retailers. The efficiency of this new approach by Synexx was boosted by their advanced logistics system which could not be replicated by competitors.
Pull strategy
Harrison(2005)explains that direct consumer loyalty in the supply chain gives both the manufacturer and distributor long term merit in reducing the overall cost of promoting the brand hence giving them leverage in the distribution process. The traditional practices in distribution mainly involved reimbursement of distributors by the manufacturer if the inventory cost was not offset by selling to consumers. To directly appeal to consumers, Synnex emphasized on customer management through warranties and after sale services, express delivery and finally Synnex was able to conduct telephone sales where other companies had tried but failed. The pull strategies enabled Synexx to reduce its inventory levels and lower the service cost and ultimately the Synexx way was accepted by most retail outlets that had previously rejected it.
2 Analysis of Australian Industry
By contrast, Fitzsimmons(2014) explains that the Australian technology industry has been slow to pick up on the global technology advancement and this is blamed on the government’s negligence to fund the potentially explosive sector. The slow growth of the sector sometimes has also been blamed on size of the economy with just over 1% the economy’s industrial sector being the technology industry(Common Wealth Bank of Australia, 2051). The rapid growth of the information sector in Taiwan was the main reason for Synexx’s success. The company was able to take advantage of the abundance of the large clientele base by evenly distributing power in the supply chain of the distribution channel. While other tech companies focused on serving a large client base Synexx was keen to focus on serving small retail outlets. According to Foreshew(2015) there has been 100% increase since 2014 to 2015 in the demand for technological expertise meaning that the Australian technology sector is slowly taking shape. The question of whether the Australian technology market is ready for an operational model such as that adopted by Synexx Corporation in Taiwan is best answered by analysing the level of demand for technology in Australia and how well the industry would cope with the Synnex model of the supply chain.
Demand for technology in Australia
According to(Sadauskas, 2015) the digital sector in Australia contributed $79 billion in tabulation of the country’s overall economic performance This accounted for 5.1% of the nation’s GDP and 22% employment rate in the technology industry. (Sadauskas) continues to explains that into 2011, Australia’s tech sector contributed $50 billion dollars to the economy hence an increase of $29 billion was realised since 2011 to 2015. Compared to other sectors in the economy the technology sector in Australia is so far growing bigger every year thus demand for tech products would Synnex Corporation well.
Compatibility of the Synnex model in Taiwan to the Australian market
Australia was position nine in business to business internet use compared to other corporations on a global scale; Taiwan on the other hand ranked fifth leaving the gap between the two with a difference of four (Vestberg, 2051). Based on these statistics, Australia is a rising technology giant but the economies supply chain management system may...