Han's Laser (B): The challenge of growth and profitability (2000-2009)
By 2006, Han’s Laser had risen to be the world’s number one producer of laser markers. However, Gao felt that the historical compound annual growth rate of 50% to 60% was not sustainable. Unlike the fast-moving consumer goods industry, the laser market had a finite number of customers and Hans Laser’s machines had a life span of 30 or more years. On top of this, one of the company’s competitive advantages – free maintenance – was gobbling up most of the profits. When the global economic crisis hit the company hard in 2008, it prompted Gao to rethink his growth strategy. He toyed with several alternatives from diversification to going global.
This case serves as the basis for discussion on a growth-oriented model vs. a profit-oriented model.
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