The big picture

Founded almost 45 years ago in the US, Helius is a well established camera firm.

Andreas Mitropoulous, a Greek immigrant, established a small one-man shop in Boise,

Idaho just after the Second World War. The company has undergone substantial growth

since its humble beginnings. Originally, they made their mark producing 35mm film

cameras, and have realized considerable success with a transition into the digital

market. Helius is a mid-level brand that specializes in affordable digital SLR cameras

that rival higher-end digital models, but at a cost considerably lower than their higherend competitors. These cameras are sold predominantly to the North American market,

and sales are augmented with a healthy online retail channel.

Helius have a long-standing and trusted relationship with SajinCorp, a Korean original

design manufacturer. Sajin design and make digital SLRs under the Helius name. As a

result of this wellestablished business relationship, Helius are Sajins biggest customer.

An unexposed firm?

Helius executives have become concerned that they are losing market share,

particularly to two other large firms that market more innovative product lines. In

addition, the recent drop in the price of high-end digital SLRs worldwide has directly

impacted Helius overall profit margins. Executives are contemplating a company-wide

move into the Chinese market. The favoured market entry strategy involves locating

Chinese suppliers and manufacturers. Once design and manufacturing has been

established, Helius would distribute and sell their cameras throughout China. Currently

in China, there is an abundance of cheap and mostly unreliable digital cameras, and

exclusive highend cameras that are sold at a high price. With the surging buying power

of Chinas growing middle class, and the Chinese appetite for American products, the

Helius brand is in a position to rank favourably in the mid-ranged market. Some

managers have serious reservations with this suggestion. They are nervous that

Chinese manufacturers will not be able to produce the quality product that Helius

requires to maintain brand reputation. On top of this, there are some grave concerns as

to whether Helius proprietary information would be safe with a new Chinese supplier.

With a well established and trusting relationship with Sajin, would they be able to sell in

China and maintain their competitive prices and quality, while keeping Sajin as their

sole manufacturer?

Is Helius out of focus?

Helius, interested in the possibility of sourcing components and manufacturing in China,

have started to scope out the potential. On the ground, the situation looks very

promising. In Beijing, the sheer ease of logistics makes the choice all the more

attractive. Nanyuan Airport provides domestic air transport, while the international

airport, sea port and rail system are all within an hours drive. Helius have met with two

potential sourcing and manufacturing firms. The prices these companies quoted were

much more competitive compared to that offered by Sajin, but Helius sourcing team are

not convinced these other companies could compete with Sajins quality

While in Asia, Helius executives decided to pay Sajin a visit. Sajin revealed a new

strategic plan, which has caused a great deal of concern for Helius executives. Sajin are

planning a bold move aimed at expansion and growth. They are going to source their

materials from China, which they claim will create cost savings for both Helius and

Sajin. In addition, Sajin have plans to establish a research and development centre in

the US, so they can collaborate more effectively on digital SLR innovation. They plan to

create smaller compact models, and to improve the LCD viewer capabilities. This would

in turn allow Sajin to ship products directly into Helius warehouses, cutting their

transportation costs.

Helius wonder if Sajin is making a move that would end up putting Helius in direct

competition with Sajin. They have no direct knowledge that Sajin is in the process of

developing their own product line. They certainly have the expertise, and their strategic

plan may very well include that possibility. Helius are now extremely concerned that

they are going to face a sourcing crisis in the very near future. On top of this, they are

troubled that their primary supplier and manufacturer would end up creating their own

brand and product, and compete head on with Helius in North America, and possibly in

China as well.

Case Study Discussion Questions

1.) Using the information provided in this case study, perform a brief PEST analysis

for Helius when considering Chinese suppliers and manufacturers. (5 Marks)

2.) What are they key considerations Helius will need to formulate in their Chinese

sourcing strategy? (5 Marks)

3.) Is Helius investigating a factor input strategy or a market access strategy, in

regards to their plans to source design and manufacturing in China? Explain. (5

Marks)

4.) What risk factors will Helius need to consider when planning a sourcing strategy

for a move into China? (