Qian Hu Study Case

Qian Hu study case

Qian Hu is a Singaporean company that sells exotic fish. It started as a family-owned fish farm in the mid 1980s and has evolved into an integrated “one-stop” ornamental fish service provider that carries several brands of pet accessories.

 What made this business successful in the first place ?

 How might the growth of the company continue ?

 Beyond the Asian market, are there more markets to be tapped ?

 Will Qian Hu become the world’s number one ornamental fish and pet accessories service provider ?

1. Analyse the roots of company’s success

Externally : threats and opportunities in its competitive environment

The five forces model of environmental threats

Threat of entry

The industry is very fragmented and still traditional, in other words, there is no economies of scale or product differentiation that could create a barrier of entry. However there is a real the know-how in breeding fishes. Overall, the threat of entry is high.

Threat of rivalry

This industry counts a lot of small low-differentiated firms and competition from other Asian countries rises. However the high growth in the ornamental fish industry (8%) would tend to decrease competition. Finally the threat of rivalry is higher and higher.

Threat of substitutes

Buying exotic fishes is a secondary spending that can be easily cut off in case of economic turmoil. That is why the threat of substitutes reaches a middle level.

Threat of powerful suppliers

For each species, there are only a few breeders specialized who are very sensitive to environmental climates so they may not be able to deliver retailers.

Threat of powerful buyers

The market is fragmented in small shops that cannot have power.

In short, the original farm was threatened by the high level of uncertainty in the ornamental fish industry.

Opportunities in a fragmented industry

The main opportunity for Qian Hu was to consolidate the market creating a big company established in overseas markets. Qian Hu could introduce new products to compete in a still very traditional business.

Internally : strengths and weaknesses according to resources and capabilities

Is their strategy able to generate a sustainable competitive advantage using their resources and capabilities ? (the VRIO framework)

Value