CIRCLE ELECTRONICS CORPORATION

Circle Electronics Corporation:

Circle Electronics Corporation (CEC) was founded by Bob Murray, the entrepreneur (80% stake) and Fairbanks (20% stake) in 1979. Circle has begun as a contract manufacture, assembling printed circuit boards, but by 1991 it has broadened operations to include procurement and engineering design. CEC is involved in semiconductor manufacturing, this involves getting product designs from the electronics firms for their chipsets, boards etc. CEC after getting these designs procure different electronic parts required to manufacture product and also CEC provide design services in which they analyses the manufacturing designs provided to them and suggest improvements over it.

SWOT Analysis for Circle Electronics Corporation:

Based on the inputs from the case SWOT analysis was done for Circle Electronics Corporation to better understand its Business Strategy as it provides a fundamental basis for analysis. STRENGTHS High quality products. Good reputation in mind of customer as responsive and flexible in meeting needs of customer. Long term relationship with the customers. OPERTUNITIES Close down of many small contract manufacturers provide opportunity to CEC to increase its market share. Purchase of equipment for SMT and recruitment of technical manpower will help to retain customers and attract new customers for turnkey projects. WEAKNESS Lack of equipments and technical manpower for new Surface Mounting Technology (SMT). Very few turnkey customers and nearly half of business come from contract manufacturing. THREATS Threat from five prominent competitors within the 100 mileradius target area which contains most of CEC customers. Liquidity/Financing constraints in near future as Bob Murry want to come out of CEC.

Business Strategy of Circle Electronics Corporation:

1. Segmentation Strategy: Circle Electronics Corporation adopted an approach to target customers within restricted area of 100 mile radius of its headquarters and those who could contribute at least $80,000 to its annual sales volume. This strategy is basically to leverage its strength of high quality products, responsive and flexible in meeting needs of customer. This strategy help CEC to maintain long term relationship with customers which was evident from the fact that in FY1991, 50 percent of $1.8 million revenue is generated from only five customers. 2. Differentiation Strategy: From 1988, Circle Electronics Corporation shifted its focus to in-house manufacturing design of innovative products and delivering high quality products which helped its many customer like Micorp, a automobile antitheft device manufacturer, to increase their business many folds which was earlier in deep trouble due to both quality and delivery problem with the overseas manufactured devices. Also inclusion of new Surface Mounted Technology (SMT), a new process that was used to expand the capability and performance of Printed Circuit Boards (PCBs), in manufacturing helped to target big customers. 3. Cost Leadership: Circle Electronics Corporation did opposite here. CEC focused in high quality products rather than compromising quality for reduction in cost, which would otherwise put pressure on profit margin and force the company into bankruptcy like many other price competing semiconductor manufacturing companies. This strategy of focusing on high quality products helped CEC to not only retain customers but also maintaining long term relationship with them despite being high price of CEC products.

4. Forward and Backward Integration: In 1988, Circle Electronics Corporation changed its strategy from contract manufacturing to more of value added manufacturer by doing procurement purchasing parts that were needed in the manufacturing process and doing in-house manufacturing engineering for new innovative products. This new strategy allowed Circle to increase efficiency and maintain high quality in manufacturing design, thus improving its profit margin.