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Loctek: Digital Transformation to a Cross-Border E-business
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Reference: IVEY-W27257-E
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Year: 2021
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Number of pages: 14
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Geographic Setting: China
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Publication Date: Jul 19, 2022
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Source: Ivey Business School (Canada)
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Type of Document: Case
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Industry Setting: Manufacturing
Description
On July 15, 2021, the founder and chief executive officer (CEO) of Loctek Ergonomic Technology Corp. (Loctek), located in Ningbo, China, was reviewing the mid-year financial report of his company. Loctek was a global leader in manufacturing and exporting office furniture—primarily monitor brackets and height-adjustable desks. Figures in the report portrayed the company’s solid growth in the midst of the global pandemic; the contribution from Loctek’s cross-border e-business was hard to miss. These figures assured the CEO that transforming Loctek from a traditional exporting business to a cross-border e-business was both correct and rewarding, despite some painful bumps and detours in the process. The CEO now had to decide whether to continue expanding Loctek’s overseas warehouses. If such an expansion were to occur, the resultant warehouse system could be opened to other small and mid-sized firms where international business had been strangled by limited storage capacity abroad. This idea, though never intended, had emerged during Loctek’s digital transformation. Considerable investments—in the millions of dollars—were at stake.
Learning Objective
This case fits well with undergraduate- and graduate-level courses on e-commerce management and strategy, digitalization strategy, or international e-business. The case can also be used in executive development programs to cover strategic decisions used to initiate cross-border e-business as well as the strategic plans of subsequent implementation. The highs and lows in Loctek’s transformation to a cross-border e-business carry valuable lessons for firm digitalization strategies. Specifically, this case aims to convey knowledge concerning the strategic decision to engage in cross-border e-commerce as well as implementation strategies for how to make e-commerce work. After working through the case and assignment questions, students will be able to do the following:
- Analyze the set-up of cross-border e-commerce.
- Grasp the unique challenges of cross-border e-commerce in comparison with traditional exporting.
- Assess the strategic considerations of digital transformation.
- Identify the success factors underpinning cross-border e-commerce.