Synnex Case

SYNNEX INTERNATIONAL:
TRANSFORMING DISTRIBUTION OF HIGH-TECH PRODUCTS
Group 2:
Rishabh Jain | PGP36380

Riyank Roy | PGP36382
Sonal Kumari | PGP36392
Tanushree Saha | PGP36397
Though Synnex had the right formula to take
advantage of the rapid growth in the high-
Challenge & tech industry. However, the expansions also
Problem pose Risk to Operational Accuracy as the
company is aimed to maintain it
How can Synnex maintain its level of

operational accuracy and efficiency as
the company keeps growing and its
geographic coverage keeps expanding?
Issues Identified
• Capital Risk
❑ Asset Turnover increased after 2003 and started decreasing after 2006
❑ Capital risk is ever present when expanding.
• Constant Profit Margins
❑ Almost same after 2002, which was the year when Synnex had already started its operation
internationally (Australia, China & Thailand).
• Decrease in Sales revenue in Home Market (Taiwan)
❑ Sales revenue increased from 1997 to 2004 and then it started decreasing from 2005 to
2007.
Porter's Five Forces Analysis
Supplier’s Bargaining Power Customer’s Bargaining Power

• Strong bargaining power from the • Strong customer’s bargaining power
supply side, especially from • Reimbursement for the loss in the
companies like Intel, Microsoft, HP value of unsold stock
• Big vendors decide terms • Vendors in the demand side
of distribution relationship (distributor customer) had high volume
orders and vendors with small-volume
were neglected
• Big retailers had the ability to integrate
backwards into the business
of distributors
Threat of Substitutes Threat of New Entrants

• Mass exodus of manufacturers to China due • Easy to start. Only challenge is to secure
to low labor costs, cutting market size of distribution rights
computer parts and components • Limited capital commitment
• Consolidation in the retail industry had given • Little bargaining power vis-à-vis their vendors
rise to chain stores that had the capacity • Low barriers to entry
to appeal directly to end-users as the
power to deal directly with manufacturers.
• By 1990, several trends had emerged that
changed the channel structure of high-
tech products.
• Moderate Threat
Competitive Rivalry in Industry

• Intense rivalry and competition within the industry
• International companies unfamiliar with local environment
• From the demand side, large number of channel operators and small
number of value-added resellers
• Business Model: Chase big clients by offering volume discounts. Small
clients were neglected
• Distribution had very low value added to high tech products
• Some companies would cover a wide range of functions: warehousing,
promotion, transportation, pre and after sale services
Synnex Vs Other Industry Channels
• Support market entry by committing money, managers, and proven
marketing ideas:
To retain strategic control and replicate two steps logistics system
process, Synnex must commit adequate corporate resources. This is
especially true during market entry, when corporations are least
certain about their prospects in new countries.
• Joint ventures with technology companies in developing countries:
Recommendations Synnex has almost same profit margin from 2003-2007, joint venture
with technology company in new developing market will increase
productivity and generate greater profits.
• Access to new markets and distribution networks
• Increased capacity
• Sharing of risks and costs with a partner
• Access to greater resources, including specialized staff, technology
and finance
• Forward Diversification for European markets:
As Synnex diversifies into the products or services that relate to a later
stage that follows current offering, it can negotiate contracts directly
with the supermarkets and other end users by selling online, negating
the need to work with wholesalers
• More partnerships in Home market with Manufacturers serving as
sub-contractors in supplying western gadgets
Thank you

Synnex Case

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SYNNEX INTERNATIONAL:

TRANSFORMING DISTRIBUTION OF HIGH-TECH PRODUCTS

Rishabh Jain | PGP36380

How can Synnex maintain its level of

Supplier’s Bargaining Power Customer’s Bargaining Power

Threat of Substitutes Threat of New Entrants

Competitive Rivalry in Industry

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