The objective of BYD on its inception was battery manufacturing business, with time it ventured in the field of mobile phone manufacturing. Later on, it diversified to the automotive industry and renewable energy sources.
Key operations decisions that helped BYD develop a competitive advantage over other manufacturers
Initially, when they were in the battery manufacturing business, they strategically made and sold their batteries at a cheaper price than their competitors by cutting down on production cost. In the phone industry, they studied the existing models and integrated knowledge from this and made the best models than their competitors. When they expanded to motor vehicle production they studied the market, understood their needs and made products that specially suited their needs. Further on, when they entered the auto and renewable energy (electric vehicles and plug-in electric vehicles), they embraced technology earlier than most companies within the business. All these operation decisions leveraged competitive advantage for them over their competitors.
Description of BYD supply chain to reduce costs and improve efficiency
Their supply chain majorly revolved around demand from the growing middle class in China which necessitated manufacture of low cost/affordable products to suit them, low cost – highly skilled labor since China had a developed education system and yet fewer employment opportunities for graduates. BYD was able to acquire skilled technicians for production of efficient products at lower cost. The local industry environment was unique in nature. Initially when BYD entered business, it was dominated by big Japanese companies. However, the Chinese business environment was very dynamic which presented huge opportunities for BYD. They were able to beat the Japanese companies by lowering their product prices.
The following innovations helped them reduce cost and improve efficiency. In the battery production, they made their own designs by spending time and efforts researching which led to cheaper lithium-ion batteries. Their vertical integration of models into three levels in production tremendously reduced their phone production price while resulting in the best mobile phones. In motor vehicle industry, they considered the design of the vehicles as follows. Spacious to suit family needs of traveling in one vehicle to cut on costs, comfortable back seats for decency for special people who were driven and grandiose designs to meet the needs of social statuses.
Quan, X. I., Loon, M., & Sanderson, J. (March 15, 2018). Innovation in the Local Context: A Case Study of BYD in China. International Journal of Innovation and Technology Management, 1850017.