The Government of the Peoples Republic of China (PRC) in 1997 introduced a housing project with the intention of creating an opportunity for affordable housing in Hong Kong (HK). Hong Kong was recognized as having one of the most important ports in the country with a growing middle class. The project would cover a 90 block radius by 1998.
Unicon, given an opportunity to complete this project for the PRC, faced a big challenge. The capacity of the project was 90 blocs. The company has only been able to complete a 7 block per year radius. The total capacity of the industry itself was 20 blocks per year.
Demand for 2 of its 4 products - precast concrete facades & slabs, which are in current production, is in high demand for the Hong Kong market. These 2 products already represent close to 54% of the sales of Unicon.
The fact that the total capacity of the industry is 20 blocks per year clearly indicates that competition will be entering the Hong Kong market. Unicon, in fact, already expects a minimum of 5 new competitors to enter the HK market for construction suppliers. There are currently already 4 competitors in the HK market.
Unicon needs to move fast to be able to stay ahead of the competition entering the market. The opportunity for expansion is great.
Based on our evaluation, we recommend that Mr. Li:
• Work on the blanket approval with the HKHA to short cut the approval process;
• Re-organize the company structure by moving from “make to order” to “make to stock” between interior walls, facades and slabs to support the demand for these product;
• Implement changes in production - introduce a second shift to solve the problem of the 2.5 hours morning set up in order to support our strategic operational plan.
To implement these recommendations, we have considered an strategy of 0-6 months while our 5 year long-term...