In 1998 the soon-to-retire founder of China Kelon Group, a major home electrical appliance manufacturer, was confronting issues of market diversification (urban to rural), product diversification (refrigerator to now also produce air conditioners), and the evolution of his senior management team (from an entrepreneurial firm to one managed by professional manager). Besides offering a context to address the above issues, this case illustrate to a non-Chinese audience just how rapidly local Chinese manufacturing has developed, and that such firms are future competitors for foreign companies. It also helps students explore the broader question about the ability of founder/entrepreneurs to effectively manage the transition to becoming a larger, more diversified company. Supplement to this case is China Kelon Group (B): Integration After Merger, product number 9B03M005.
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