Operation Management Case Study
Case 1: Daikin China (word count 983)
Daikin? Maybe you are not familiar with this brand. It doesn’t matter. When Daikin entered China market in 1990, many Chinese consumers always asked same questions, “What is Daikin?”, “Where does Daikin come from?”, “What products does Daikin operate?”, or “Is it a Korea brand?”. But now, Daikin becomes the No.2 air-conditioning manufacturer in the world which is only fall behind Carrier, the US air-conditioning giant who was the inventor of air-conditioning and in China market, Daikin becomes the No.1 air-conditioning manufacturer. In 2011, Daikin achieved US$ 3 billion sales revenue which occupied 16.6% market share in China. The total sales revenue is more than 3 times as Carrier China, 2 times as York China, and 4 times as Trane China. (Note: Carrier, York and Trane are 3 US air-conditioning giants who occupied more than 40% share in the world in 2000.) Daikin achieved 25% net profit which is highest in China market in which the average net profit is only 3%. Daikin developed more than 5,000 distributors and dealers in 31 provinces and more than 500 cities in China. Daikin created a new market, central room air-conditioning market. Daikin sells commercial inverter air-conditionings to high tier residential apartments and villas. The central room air-conditioning concept now becomes one of the symbols for Chinese luxury houses.
Daikin was a small company originating in Japan Osaka. How can Daikin continuously be growing so rapidly in the past 20 years? How can Daikin defeat so many air-conditioning giants in China market? Are there any relationship between Daikin’s operations functions and the competitive success?
First, Daikin has very clear operations strategy.
Daikin’s operations strategy is “A full range to meet customer needs”. Daikin believes that ‘It all starts with the customers1’. To make the operations strategy achievable, Daikin built enough operations capabilities to meet different customers’ requests but
Daikin? Maybe you are not familiar with this brand. It doesn’t matter. When Daikin entered China market in 1990, many Chinese consumers always asked same questions, “What is Daikin?”, “Where does Daikin come from?”, “What products does Daikin operate?”, or “Is it a Korea brand?”. But now, Daikin becomes the No.2 air-conditioning manufacturer in the world which is only fall behind Carrier, the US air-conditioning giant who was the inventor of air-conditioning and in China market, Daikin becomes the No.1 air-conditioning manufacturer. In 2011, Daikin achieved US$ 3 billion sales revenue which occupied 16.6% market share in China. The total sales revenue is more than 3 times as Carrier China, 2 times as York China, and 4 times as Trane China. (Note: Carrier, York and Trane are 3 US air-conditioning giants who occupied more than 40% share in the world in 2000.) Daikin achieved 25% net profit which is highest in China market in which the average net profit is only 3%. Daikin developed more than 5,000 distributors and dealers in 31 provinces and more than 500 cities in China. Daikin created a new market, central room air-conditioning market. Daikin sells commercial inverter air-conditionings to high tier residential apartments and villas. The central room air-conditioning concept now becomes one of the symbols for Chinese luxury houses.
Daikin was a small company originating in Japan Osaka. How can Daikin continuously be growing so rapidly in the past 20 years? How can Daikin defeat so many air-conditioning giants in China market? Are there any relationship between Daikin’s operations functions and the competitive success?
First, Daikin has very clear operations strategy.
Daikin’s operations strategy is “A full range to meet customer needs”. Daikin believes that ‘It all starts with the customers1’. To make the operations strategy achievable, Daikin built enough operations capabilities to meet different customers’ requests but
References: 1. Robert C. Ford et al (2001) ‘Delivering Excellent Service: Lessons From The Best Firms’, California Management Review, p40 2 5. Nathan Proudlove et al (2008) ‘Lessons for Lean in Healthcare from Using Six Sigma in the NHS’, Public money & management February 2008 6 9. Kenneth K. Boyer and Marianne W. Lewis (2002) ‘Operations and Process Management’ 10 11. Michael Hammer (2004) ‘Deep Change: How Operational Innovation Can Transform Your Company’, Harvard Business Review 12 13. Lew Hofmann (2012) ‘Operation as Competitive Weapon 1st edition’