Executive Summary:
HTC transformed itself an ODM to one of the leading
provider of telecommunication devices. Empowered with strong R&D the
company enters market as a first movers with numerous innovations which prized
the company with high growth and many recognitions. While innovations,
partnership with giant brands, strong manufacturing facility its strength HTC
also have weakness of producing pricy products, having weak shipment network, using
stumble marketing strategy. Moreover, the company faces threats of intense rivalry
from competitors, being substituted by cheaper products and patent. Despite all
of this the Taiwanese company has many opportunities.
HTC is a ‘Question Mark’ in BCG matrix. It
experiencing high bargaining power from customer, low bargaining power from
suppliers, medium threats of substitutes, high threat of new entrant, high
competition from rivals. The company adopted growth strategy as corporate level
strategy and differentiation as business level strategy. It also gives high
priority in innovation strategies. Influenced by innovation strategy its
organizational structure is organic.
HTC should continue to produce innovative and
cutting edge technology driven product to sustain its competitive advantage. It
also should focuses on producing low end phones and penetrate more markets
around the world. The company should produces wider categories of products and
develop better marketing strategies for wider audience. Finally it should also
make patent war to end for own benefit.
Introduction
HTC formerly High-Tech Computer Corporation, is a Taiwanese manufacturer of smartphones and tablets headquartered in New Taipei City, Taiwan. Founded in 1997, HTC began as
an original design manufacturer and original
equipment manufacturer, designing and manufacturing devices such as mobile
phones, touchscreen phones, and PDAs based
on Windows Mobile OS and Brew MP to market to mobile network operators who were willing to pay a contract manufacturer for customized products. After initially making smartphones
based mostly on Windows Mobile,
HTC expanded its focus in 2009 to devices based on the Android, and in 2010 to Windows Phone.
As of 2011, HTC primarily releases and markets its smartphones under the HTC brand, ranking as the
98th top brand on Interbrand’s
Best Global Brands 2011 report.
HTC is a founding member of the Open Handset Alliance, a group of
handset manufacturers and mobile network operators dedicated to the development
of the Android mobile device platform. The HTC
Dream, marketed by T-Mobile in many countries as the T-Mobile G1
or Era G1, was the first phone on the market to use the Android mobile device
platform.
Organogram
Literature Review
SWOT Analysis
A SWOT analysis (alternatively SWOT
matrix) is a structured planning method
used to evaluate the strengths, weaknesses,
opportunities, and threats
involved in a project or
in a business venture.
A SWOT analysis can be carried out for a product, place, industry or person. It
involves specifying the objective of the business venture or project and
identifying the internal and external factors that are favorable and
unfavorable to achieve that objective.
Benefits of SWOT analysis:
SWOT analysis provide
benefits in followings
Ø Understanding business in simple
and practical procedures.
Ø Addressing weakness
Ø Detecting threats
Ø Discovering opportunities
Ø Taking advantage of strengths
Ø Using resource efficiently
Ø Improving operation
Ø Competitive Positioning
Ø Developing business goal and
strategies
SWOT Analysis in strategic decision making
Strategic decision making describes
the process of creating a company's mission and objectives and deciding upon
the courses of action a company should pursue to achieve those goals. SWOT
analysis is precursor strategic decision making. It put company’s strengths,
weaknesses, opportunities and threats into proper perspective. By this it
provides clear picture to a manager in terms of internal, external factors and
competitive positioning which ultimately helps in strategic decision making.
BCG
Matrix
Boston Consulting Group matrix ( aka Growth Share
Matrix is a planning tool that uses graphical
representations of a company’s products and services in an effort to help the
company decide what it should keep, sell, invest or divest. The BCG growth
share matrix plots a company’s offerings in a four square matrix, with the
y-axis representing rate of market growth and the x-axis representing market
share. It was developed by the Boston Consulting Group (BCG) in the 1970s.
Cash cows:
low growth rate, high market share
Stars: high growth
rate, high market share
Question marks:
high growth rate, low market share
Dogs: low growth
rate, low market share
Porter’s
Competitive five forces model
Named after Michael E. Porter, this
model identifies and analyzes 5 competitive forces that shape every industry,
and helps determine an industry's weaknesses and strengths.
- Threat of new entrants (how easy or difficult is
it for new entrants to start to compete, which barriers do exist)
- Threat of substitutes (how easy can our product
or service be substituted, especially cheaper)
- Bargaining power of buyers (how strong is the
position of buyers, can they work together to order large volumes)
- Bargaining power of suppliers (how strong is the
position of sellers, are there many or only few potential suppliers, is
there a monopoly)
- Rivalry among the existing players (is there a
strong competition between the existing players, is one player very
dominant or all equal in
strength/size)
Organizational
Structure
An organizational
structure defines the scope of acceptable behavior within an organization, its
lines of authority and accountability, and to some extent the organization's
relationship with its external environment. More specifically, it shows the
pattern or arrangement of jobs and groups of jobs within an organization and
yet it is more than an organizational chart.
The individual
elements of an organizational structure typically include a variety of
components that one may usefully see as building blocks: 1) departments or
divisions; 2) management hierarchy; 3) rules, procedures, and goals; and 4)
more temporary building blocks such as task forces or committees.
o
Mechanistic Structure: Hierarchical and bureaucratic characterized by highly
centralized authority, formalized procedures and practices, and specialized
functions. Mechanistic organization is relatively easier and simpler to
organize, but rapid change is very challenging.
o
Organic Structure: Characterized by Flatness: communications and interactions are horizontal, Low specialization: knowledge resides wherever it is most useful, and Decentralization: great deal of formal and informal participation in decision
making. Organic organizations are comparatively more complex and harder to form, but are highly adaptable, flexible, and more suitable where external environment is rapidly changing and is unpredictable.
Finding and Analysis
Strengths:
§ Strong
R&D
R&D team accounting for 25% of
total head count.
§ Aggressive
product innovation
Many industry’s first
-
1080 pixel display - HTC DROID DNA (2012)
-
4G LTE Windows Phone - HTC TITAN II (2012)
-
Smartphone with f2.0 aperture - HTC One X and S (2012)
-
Smartphone with Beats Audio – HTC Rezound (2011)
-
Microsoft-powered smartphone (“Stinger”) – the SPV (2002)
-
Microsoft wireless Pocket PC – XDA, MDA and PPC (2002)
-
Microsoft Pocket PC – Compaq iPAQ (2000)
-
Color palm-size PC (1999) etc.
- § Numerous
awards and recognitions
-
HTC One – Best Smartphone in the Planet
– MWC (2014)
-
HTC One – Phone of The year – T3 Gadget
Award (2013)
-
HTC Onex X – Best Smartphone of MWC –
Laptop Magazine (2012)
-
HTC Onex X – Best in the Show – Tom’s
Hardware (2012) etc.
- § Wide
portfolio, 42 smart phone till now
§ As
an Original Design Manufacturer (ODM ) it enjoys high profit and can overlook
threats of new market entry.
- § Considerable
market share and large loyal customer base.
HTC hold leading position in both
Android and Windows phone market
- § Partnership
with giants brands (Microsoft, Google etc.)
- § Strong
manufacturing capacity. Ex. 14.7 million, 23% of global phone shipment in Q2,
2010
- § High
growth rate. HTC smart phone market grew 41% in USA on the year 2010
Weakness:
§ Mostly
high end touch based phone. By this it lose large portion of South Asian and
African cheap mobile market in which their competitor Nokia dominate.
§ Weak
shipment network. Despite having high manufacturing capacity HTC shipment
network in Europe and America is weaker that it’s competitors. Lack enough
product reduced HTC market share 9.3 % to 2.5% in Q1 2013 compared to Q1,2011
§ Stumble,
unaggressive marketing. According CEO Peter Chou, main reason behind their
market share decline is their stumble brand marketing compared to their giants
competitors like Apple, Samsung etc.
§ Too
many similar products with short life cycle. HTC has so many phones providing
almost same features which confuses the customers. Again its product varieties
are not many as Nokia.
Opportunities:
§ Highly
popular Android market. Android currently holds largest share in mobile market.
As a top manufacturer of Android, HTC market share will likely to increase
more.
§ Tech
gurus suggest, coming age technology market will be led by new technologies and
innovations. Empowered cutting edge
R&D department HTC products likely have to more popularity.
§ New
markets. HTC yet to formally enter in large African and South Asian market.
Penetrating these markets will increase brand value and profit.
Threats:
§ Strong
competition. HTC experiencing intense competition from other prominent
brands like Apple, Samsung, Sony, Motorola etc.
§ Cheaper
substitution. By exploiting HTC high price numerous Chinese and Korean
manufacturer providing same functionalities with reasonably cheaper price.
§ Patent
war. There are many patent war going on with Apple, Samsung and Nokia which
could potentially cut HTC’s competitive edge in innovation.
BCG Matrix
As HTC gained most growth over years (up to 450%)
among smartphone vendors while it’s relative market share quite low
(4.9%-5.8%). This scenario makes HTC a ‘Question Mark’ in BCG matrix.
Porter’s competitive five forces Model:
Ø Bargaining power of customers: High
Customers have a huge
influence in the types of phones, their features, looks and functionality that
HTC produce.
Through phone discounts and multiple service offerings magnifies the bargaining power of these
service providers and retailer's. By virtue of product quality HTC enjoys
some degree of customer loyalty.
Ø Bargaining Power of Suppliers: Low
Phones are normally assembled using
components from various suppliers. The intellectual property for these
components is owned by the OEM`s (in this case, HTC). This structure allows HTC
to quickly switch between different suppliers to meet demand
Ø Threat of new Entrants: High
The Smartphone market being highly
competitive has a significant threat of new entrants.
Ø Threat of Substitute Products: Medium
Mobile phones etc. are based on similar architecture
and are converging into the same segment. So there is a risk that the demand of
Smartphone can be absorbed by a substitute such as a web-enabled tablet, Laptop
etc.
Ø Competitive Rivalry within Industry: High
Smart phone industry is hugely competitive. Because of market position
HTC have to participate in intense rivalry with other prominent brands like Apple,
Samsung, Sony, Motorola etc.
Strategies of HTC
v
Corporate level:
v Growth Strategies:
è Concentration: Every year HTC launces
11-12 phones and it continuously trying to expand its business in newer markets
of the world.
è Backward Vertical
Integration: As
Original Design Manufacturer (ODM) and Original Equipment Manufacturer (OEM) HTC
holds complete control over its supply line.
è Horizontal Integration: In 2007 HTC acquired the mobile-device company Dopod
International.
è Related Diversification: On July, 2011 HTC
bought majority of share of S3 Graphics. In August, 2011 it acquires Dishwire,
a cloud based mobile service. In same month, it acquires 51% share of audio
electronic company Beats Electronic. HTC also holds long term partnership with
two software giants Windows and Google.
v
Business-Level Strategies:
è Differentiation: In 2006, HTC Corp.’s CFO, HM Cheng
claimed, “HTC would name the price and they [customers] would take it (Yoffie,
2009).” HTC was able to
charge premium prices for its products, because its products were specifically
customized to gratify consumers’ desires. HTC’s customers were willing to pay a
premium since they believed that HTC’s products had characteristics which were
worth the higher price.
v
Innovation Strategy ( First Mover) :
On February 17, 2010, Fast Company ranked HTC as the 31st most innovative
company in the world. HTC introduced many things as industry’s first like first
1080p display mobile, first 4G LTE windows phone, first Microsoft pocket pc,
first 3G Windows phone etc.
HTC organizational Structure:
As innovation is key strategy of HTC we think it has
organic structure. Because innovation requires highly flexible and adaptive
structure, open communication network, minimal formal rule, employee
empowerment etc. which mechanistic structure doesn’t have.
Again this table shows, large span of control i.e.
little direct supervision. Number of specialist is lower than one fourth of
total employees, which suggests number of non-standardized jobs in high. Both
of these scenarios suggest company’s organic structure.
Recommendations
Ø Should
produce more innovative and technological advanced products to sustain
competitive advantage
Ø Product
strategy isn’t appropriate for versatile market, HTC should produce low priced
phones beside their high end phones to meet demand of different classes of
customer , to survive in different economic meltdowns to minimize the threats
of cheaper substitutes
Ø The
company should develop strategy to penetrate big cellphone markets like China,
India and Africa etc.
Ø HTC
should follow strategy of Nokia by producing more diverse categories of phone
with longer product life. This will also help lowering their production cost.
Ø Better
marketing strategy. Mobile phone industry is rapidly growing with demand
increasing proportionally in every year. To reach out this huge potential
customers HTC must come up with better marketing strategy (advertising,
promotion, sponsorship) than competitors.
Ø To
minimize the threat bigger economic and brand image loss HTC should come in
agreement with rivals like Apple, Samsung, Nokia to stop patent wars.
Conclusion:
HTC
has established itself as one of global leader of telecommunication design
manufacturing. Besides sustaining high growth rate it should focus on acquiring
more market share over competitors. To do this HTC have to take leverage of its
popular brand image by manufacturing low cost devices and exploiting new
markets. Otherwise it will be very hard to maintain competitive edge in current
unstable and rapidly evolving global economy.
References
1.
http://en.wikipedia.org/wiki/HTC
2.
http://www.htc.com/in/about/
3.
http://en.wikipedia.org/wiki/SWOT_analysis
4.
http://www.strategicmanagementinsight.com/tools/swot-analysis-how-to-do-it.html
5.
http://www.inc.com/encyclopedia/organizational-structure.html
6.
http://www.businessdictionary.com/
7.
2012 HTC Annual Report,www.htc.com
8.
Management, 11th Edition, Stephen P
Robbins, Marry Coulter
9.
http://investors.htc.com/
10.
http://shahneil.com/2010/02/smartphone-war-part-i-smartphone-os-differentiating-factor/
