The Growth and Expansion Path of BYD Company Limited and its Innovation Model*

Abstract

Abstract-This article is themed with the study of the leap-forward development paths and independent innovation patterns of BYD, aimed to search for its main innovative elements and restraint factors that form various bottlenecks so as to provide the small-and-medium-sized private enterprises with experiences for leap-forward growth. Firstly, it analyzes the growth paths of BYD, and then makes comparisons between BYD's innovative modes and general corporate patterns, and applies transaction cost analytic approach to study the innovative elements like "vertical integration" of the supply chain, "branch network channel" of marketing strategies and the market strategy of "turning the second-tier and third-tier cities into first-tier ones", achieving transaction cost leadership; since 2010, BYD has come across various bottlenecks, and the transaction cost of original pattern has reached a critical point. Therefore, the enterprise needs to break through the original mode, and try innovative patterns. The author has put forward that it is necessary to carry out adjustment of development strategies, proper exit of the strategy of vertical integration as well as the organization of product structure; conduct independent R&D, and master core technologies to create its own brand; engage in open innovations, while applying internal and external complementary resources to achieve further innovation, and other viewpoints.