Analysis of the Strategic Situation of HTC and Its Industry - Case Study Example

?Strategic Management, Analysis of the Strategic Situation of HTC and Its Industry Table of Contents Introduction 3 Analysis of the Strategic Situation 4 Industry Life Cycle 6 Porter’s Five Forces Analysis 7 Value Chain 9 9 Scale & Scope 10 10 Conclusion 12 References 13 Bibliography 17 Introduction Strategic management is recognised as one of the most crucial aspects of modern day business working procedure of an organisation. Strategic management can be defined as the processes of analysing, taking decisions and actions that an organization assumes in order to create and to maintain competitive performance (The McGraw-Hill, 2010). An effective use of strategic management procedure can bestow a company with certain benefits that include gaining a scope for improving the performance of the company, establishing a future direction, introducing quality products and services to enhance future success prospects among others (Washington State Hospital Association, 2006). HTC was founded in the year 1997 and commenced its business with manufacturing and designing of mobile accessories. Since the year 2006, HTC has introduced many mobile phones with various portfolios like tablet, android and smartphones for the developing markets (HTC, 2012). The objective of this paper is to analyse about the strategic current situation of HTC in the smartphone industry. The analysis would take into consideration industry analysis by using Porter’s five forces model, industry lifecycle analysis and value chain analysis. The study would also endeavour to comprehend the scale and the scope for HTC in respect of the existing industry scenario in the upcoming future. Analysis of the Strategic Situation In the present market scenario, it is observed that a number of companies are manufacturing smartphone along with HTC like Apple, Samsung, Nokia and Sony Ericsson among others. Due to which, the competition among the companies is rising day-by-day in the mobile phone market. As a result, many advanced technology smartphones have been launched in the market. A few companies have been recognised to have lost out somewhat in market competition due to facing a lack in terms of offered technology in their smartphones or other mobile devices (Hu & Meier, 2010). With due reference to the context, it can be observed that HTC has been facing quite a tough scenario in the smartphone market to sustain its position among the topmost brands. Since the year 2006, HTC had expanded its reach with its smartphone in a number of global markets. HTC was the first cellular manufacturing company to introduce android phone in the market. Subsequently, it was observed that from 2010 onwards HTC faced a downfall because of the vast developments with modern technologies among the competitors’ products. The leading competitors of HTC include Nokia, Samsung and Apple. These companies also started to offer competitive brands of smartphones which significantly affected the sales of HTC. Generally, HTC was affected due to the rapid growths of Samsung and Apple’s smarphones such as Galaxy line as well as iPhone respectively. Moreover, Sensation and Desire brands of HTC smartphone have also faced quite indifferent responses from the consumers. Thus, this aspect has also led towards the declining trend of HTC in the smartphone market (Hu & Meier, 2010). Source: (Dotmobi, 2012). The above depicted figure depicts the position of the smartphone manufacturing companies in the present scenario. Therefore, it can be avowed that HTC, in recent times, has considerably lacked behind as compared to its major competitors such as Samsung, Apple and Nokia among others. Thus, by considering the downfall, HTC needs to recognise certain strategies to improve its product and to fight back against its competitors. Key strategies that can be employed include making product modifications, changing to the fast-moving approach for unpredictable markets, creating enhanced brand awareness through positioning and targeting high end users (Hu & Meier, 2010). Industry Life Cycle HTC’s business path from the inception to the present market scenario is measured with the help of industry life cycle. Industry life cycle can be defined as the varied phases that an industry goes through while a company commences its business operations until the end of its operation. Industry life cycle is segmented into four components or stages namely introduction, growth, maturity and decline stages (Jones, 2009). From the viewpoint of HTC’s business trends, it is observed that at the introduction stage HTC had attained a credible place for itself through manufacturing notebook computers as well as wireless hand-held appliances. Subsequently, HTC had introduced many new handsets, smartphones, and wireless technologies in the market. In the growing stage, HTC had introduced a new technology based smartphone with android and tablet in the market. After the launch of the product, the market showed a positive and rising demand for the android phone. This influencing behaviour of the market took HTC to a high position in its growth stage. The fast growing nature made HTC to reach the mature stage in terms of smartphone market in the industry lifecycle within a very short span of time. Along with growth of HTC, a number of companies like Nokia, Samsung and Apple among other came to the market as competitors. As a result, there was initiation of vast competitions among the companies in the existing global market. In this competition, HTC has been somewhat lacking behind due to the lack of planning in capturing the mature market as well as deficiency in making continued innovation through the use upgraded technologies. Thus, the performance of HTC has fallen down in the smartphone market and the industry life cycle shows a declining nature of the company in the market (IDC Corporate USA, 2012). Source: (Heene & Sanchez, 2010). Porter’s Five Forces Analysis Porter’s Five Forces model helps to understand the competitive scenario of particular market or industry. It is also useful to measure the current and the future positions of a company operating in the market. Porter’s five forces are supplier power, buyer power, competitive rivalry, threat of substitutes and threat of new entry (University of Copenhagen, 2005). Supplier power helps to recognise the bargaining power of the suppliers regarding how the suppliers influence the product price in the market. The smartphone industry in which HTC operates generally has quite less supplier power. In this context, the suppliers of smartphone such as HTC, Nokia and Samsung do not largely possess the capability to establish their power of bargaining in terms of influencing consumer purchasing decision as there are number of offerings in the market which lowers their authority or command over the market (Kotler, 2009). Buyer power force helps the companies to know about the attitudes of their customers. Consumers’ attitude towards a product can drive the product price up or down in the market. It is in this regard that high product price motivates consumers’ to switch products with its substitutes. Thus, a company operating in the smartphone industry needs to study each individual’s behaviour. According to the market trends, it can be stated that there are high buying power of the consumers in the smartphone market due to the availability of varied choices. This will help HTC to regain its place in the market if it is able to provide high quality and differentiated products (Kotler, 2009). Competitive rivalry dimension facilitates to know the number of competitors present in the market and also to know about the extent of competitiveness. With the help of this dimension, a company such as HTC can measure the longevity and the quality of its products. The rivalry in the smartphone industry is quite moderate with the presence of competitors such as Apple, Samsung and Nokia along with HTC (Kotler, 2009). Threats of substitute factor helps to recognise the alternatives of smartphones in the market. In terms of alternatives, smartphones alternatives are tablets and laptops among others. The threat of these factor is quite apparent, however due to the emergence of quality smartphones, this threat can be largely reduced (Kotler, 2009). Threat of new entry in the smartphone industry is quite low as it can be observed that there are a number of apparent players in the market. Moreover, the cost of research and development (R&D) is quite high which could make it tough for a new entrant to sustain in the market (Kotler, 2009). Value Chain Value chain can be defined as the tool through which a company can desire to provide increased consumer value (Kotler, 2009). The value chain comprises two activities i.e. primary and support activities. They are shown in the figure below: Source: (Food and Agriculture Organisation of the United Nations, 2012). Primary activities are inbound logistics i.e. it depicts from where HTC collects its raw materials for the production purposes. Operations signify the process of using the raw material in the manufacturing unit to form a final product. Outbound logistics refers to the mode through which the final products are sent to the market for marketing and selling purposes. The other dimension of marketing and sales as well as providing services to the customers are also crucial for a smartphone provider. The supportive activities include infrastructure which includes HTC’s operational unit that is well structured with efficient departments and operational workforce. It also possesses a research lab customised for technology based development purposes. HTC provides training and development programs for its sales team to make them competent enough to handle customer requirements. They also use advertisement strategy through social media to create awareness about their offerings (Kleinmann & et. al., 2012). Scale & Scope HTC is one of the initial companies that manufactured android phones, tablets and accessories of mobile phones. Due to increasing competition and lack of preferred offerings by HTC towards the consumers, it faced a significant fall in the market share in recent times. Thus, to cope up with it and gain its position again in the market, HTC has taken few of the strategies. There are certain scopes for HTC to overcome the difficulties and regain its position in the market. The scopes include the fact that many consumers still have the loyalty towards the HTC which is advantageous factor for the company’s growth in the future market. HTC has analysed that at the end of 2012 they will regain the market once again by 30% of the total smartphone market. The android phone has an influencing behaviour in the market. Consequently, HTC can enter the android market easily with making certain alterations in its design and price because it is famous for as well as first introducer of android phone in the market (Bothner, n.d.). Moreover, with the increase in the use of 3G technology as well as the rising scope for expansion of 4G technology the scale for growth of HTC is quite high in the near future, if it is able to incorporate such technologies in its devices conveniently and in a consumer friendly way (HTC Corporation, 2010). Conclusion HTC has been recognised as a leading name in smartphone industry for more than a decade. It has been able to initially generate major success through providing android based smartphones. However, due to increase in competitiveness in the industry with the development of augmented technology HTC has faced certain downfall in its business in recent times (PCWorld, 2012). It has faced reduction in its market share which has affected its growth in the market. Therefore, it needs to take major steps such as providing superior quality and design smartphones towards regaining back its position in the smartphones market as there are major prospects in smartphone industry. 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