Chapter 2 Helius

PEST Analysis
Due: February 1, 2011
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 higher-end
competitors. These cameras are sold predominantly to the North American market and sales are
augmented with a healthy online retail channel.

Helius has a long-standing and trusted relationship with Sajin Corp, a Korean original design
manufacturer. Sajin designs and makes digital SLR’s under the Helius name. As a result of this well-
established business relationship, Helius is Sajin’s 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 SLR’s 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 high-end cameras that
are sold at a high price. With the surging buying power of China’s 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, has 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 hour’s drive. Helius has 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 Sajin’s 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 is 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 has 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 wonders 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
is 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 Question

1. Prepare a PEST analysis for Helius when considering Chinese suppliers and manufacturers.

2. Prepare a PEST analysis for Helius when considering selling to Chinese consumers,

See Chapter 2, page 20, in the textbook, Global Supply Chain Management.

Research is required to answer this question. Be sure to quote your sources. Do not copy and paste
your answer. Your answer must be in your own words.

As you gather facts about China, be sure to analyze the positive or negative impact on Helius' plans
to source from Chinese suppliers and manufacturers and their plans to sell to Chinese
customers. The students who are able to do this thoroughly will get the best marks.

Assignment should be three to five pages long, double spaced, 12 point font. There is no preferred
format.

If you plagiarize you will receive zero on the assignment and be reported to the college for
academic dishonesty. Plagiarizing means:

1. Failing to cite sources in proper format.

2. Copying from extensively from a source, whether or not the source is cited.
3. Copying from another student
4. Allowing another student to copy your work