Konka Group is a large Chinese manufacturer of consumer electronics facing several problems in the domestic and global CTV markets. These include weak brand equity, excess capacity due to a focus on domestic growth, and price wars with competitors. The document recommends Konka pursue global expansion, leveraging government support and low prices to penetrate new markets. It identifies lack of innovation, rural market penetration, and brand building as challenges Konka must address to strengthen its position internationally.

1. Executive Summary
In this report we describeabout the Konka Group Company LTD. And find out the Problem that Konka is facingin CTV domestic and
Global market likeBrand Equity, PriceWar, Excess Capacity and few more. After that we give a statement about the Problem, why
they are happeningin Domestic and Global market. Then we give Konka Group Co LTD to enter on a Leading Chang Posture
Recommendation where we show how Konka could overcome those problems.We areemphasizingon Global Expansion.As they
have full supportand facility to expand globally.WhereChinese Govt. Domestic Banks are helping with Billionsof Yuan for global
expansion.Later in the report we show the whole documents in broad description.
Emerging Chinese MNC, KONKA GROUP COMPANY LIMITED.
1. Background of Konka
Asia is the largestCTV manufacturer with an output about 76 million sets and among them 60% of Konka’s Global production. Konka
have a giant product lineof Color TV, video recorder, compact disk player and recorders,digital video disks,audio equipment,
telephone, home appliance,fax machines and cellular handset.Konka Group Company ltd was builtin 1979 .Konka's margin in OEM
export market was low3-4% compared to healthy 10- 15% in direct saleto the Domestic Chinese market. In 1994-1995 Konka made
a rapid growth in Chinesemarket by a series of acquiringin Mainland market.
The Bank of China granted a pre-initial loan of 3.8 Billion Yuan (US $458) in 1997-1998,4.2 Billion in 1998-1999 and 1999-2000up to
5 Billion Yuan to Konka for Domestic and Overseas Expansion.
Konka's efforts in promoting its brand internationally 3 began in late 1995,when itset up a subsidiary in Australia to market CTV it
named Konka Pacific Pty. The Low pricestrategy compare to competing models and 3 years’ warranty rather 1-year warranty are the
key strategy for Konka. Within a year Konka become the 1 of the top 1o CTV brands in USA by achievingannual sales of 1 million CTV
sets. Konka set up Konka India with an investment of 50 corers and 70% equity stakes. The Low Priceand warranty strategy made
Konka as the best-selling CTV Brand in China.

2. 2. SWOT Analysis of Konka Group.
Strength
•Government Backed and
Planned
•Economies of Scale &
Cheap Labor
•Domestic Brand value &
market share
•Low Price – International
market penetration.
Weakness
•Brand Equity
•Lack of innovation
•Technology
•Product Design &
features
•Excess Capacity
Opportunity
•Untapped rural market
•Overseas financing
through Govt. bank
•Huge export market
•Technology Shift
Threats
•Price war
•Grey market & imported
goods
•Locally import tariff
•Deflation leads to higher
real rateof Interest

3. 3. Problems in Konka Group.
Though Konka is the one of the Market leader in China mainland
market, they have some problems to face. Like every other company is facingin China.MNCs like
Konka’s problem are stated below
1. Brand Equity
2. Excess Capacity
3. Grey Market
4. Imported Goods
5. PriceWar.
Problems and Challenges:
The casehas stated some problems and challenges thatare faced by Konka and has or might challengetheir operations
1. Konka was more focused in domestic growth than international expansion.
2. Though an export oriented brand, Konka emphasized more on domestic supply,some evidences might clear this-
i. Took loans frombanks and government institution and boosted their domestic operations
ii. OEM operations of Konka was shrinking
3. Konka failed to reach the rural area,reachingonly 22%by the industry.
4. Excess capacity,Konka might face problems in these as itwill increase-
i. Maintenance cost
ii. Inventory cost
iii. Will lostthe chanceof aggressiveexporting
5. Grey market in China,the smugglingof world-recognized brands,pose a threat to Konka and industry.
6. Entry of foreign brand TVs, which areassembled and sold by the foreign subsidies in China.
7. Konka faces a problem of brand-building.As grey market and foreign brands cover the domestic market, Konka took little
effort to create a brand of its own.
8. Government bank loans areof short-term, maturity of 1-year. This created a declinein the profit- margin.
9. Problems in overseas-expansion:
i. Konka did no domestic marketing in these countries,justsmall privatelevel sales.
ii. Konka took a low pricestrategy, but it could affect its operations,as the required profitwi ll takelong time to
achieve.
iii. Konka gained huge market in small-screen CTV, but lagged behind in the development and production of DTV and
HDTV, which was in-demand overseas.
10. Konka failed to create a strong brand-buildingoverseas.
11. Konka was unableto produce large-screen TV, only 6 million areproduced.

4. 12. Konka spent less in R&D, 3& of revenue, where SONY did 6-7%. They reason was, Konka used China’s own workforce in
R&D, where, other MNCs used the brains fromall-over the world.
13. To expand business for existingTV manufacturers,Chinese government didn’t help the new-emerging companies,which
resulted in loss of potential products.
14. Challenges from abroad and brands in mainland Chinaand in abroad-operations.
The most important problem identified: Konka failed to convince the customers that, their products are as good as other
world-renounced products, in low price. Basically, they failed to build a brand and also promote and market the CTV in home
and abroad.
4. Effectsof porter’s five forceson Konka:
The porter’s five forces theory helps us to understand both the strength of current competitive position,and the strength of a
position consideringmovinginto. And through these, we can predict how the company would do in the future.
1. Competition of the industry: Konka had faced a huge amount of competition both in domestic and abroad.Konka faced
domestic rival ChangHong, as-well-asgiants likeSony,LG, Philipsetc.,who dominated most of the world’s CTV shares.
2. Potential of New Entrants into an Industry: In caseof domestic market, the government had restricted new companies to
emerge, whilegivingKonka and other giants to evolve. But in abroad,Konka constantly faced the emergence of new
brands,though Konka didn’t had much problems,as itwas agains tthe giants likeSony, etc.
3. Power of suppliers: The casedidn’t say much about the suppliers of Konka,though the casemade it clear that, Konka had a
abundanceof resources.And Konka also worked as an OEM operator, it made Konka in position of supplier, takinga power
to dominate the market.
4. Power of buyers: Konka understood the power of buyers, and they took advantage of it, and lowered the pricethan any
other competitor.
5. Threat of substitute: Konka will alwaysthethreat of new substitute, when Konka was unableto produce customer-
demanded products likeHDTV, DTV as people hope so. And the new era of 2000,new products would emerge, replacing
the old-goingsmall-screen-CTV that Konka was best in.