Case Analysis: HTC Corp in

2009
- GROUP C
 QUESTION 1

• Evaluate HTC’s performance to date. What are its

competitive advantages and vulnerabilities?
 ODM Business Mobile Operator Own Brand
Business Operations

• Started as an ODM • It started designing • It started designing

for other handset phones for service phones which would
manufacturers. providers such as T- directly be sold with
Mobile and Vodafone. the HTC brand name.
• No responsibility for
sales, marketing or • A direct relationship • Need to differentiate
inventory with the end customer. itself from
management. competitors and have
• Better margins than the greater control over
• Contract ODM Business. company’s future.
Manufacturing with
little connection to • Mobile Operator’s had • Focus on high end of
end users. greater control over the prosumer market.
business.
Competitive Advantages
• Product Innovation
• Association with giants
“Microsoft” and “Google”, “T-
Mobile” and “Vodafone”.
• Short product development cycle.
• Culture of the organization
- Quick and nimble organization.
- Chou’s leadership and stretch
goals.
 Vulnerabilities
• High cost of R&D.
• High cost of Customization.
• Late entrant as an own brand.
• Lesser known brand name.
• No intellectual property rights.
• No experience in marketing and inventory management.
• Targeting a very niche segment – prosumers.
• No economies of scale.
• Warranty risk.
 VRIO framework for CA
Resource Valuable Rare Inimitable Exploite Weighted
? ? ? d? Score
(10%) (20% (30%) (40%)
)
Product Innovation 5 2 3 5 380
Association with
“Microsoft” and 3 2 1 4 260
“Google”
Short product
4 4 3 5 410
development cycle
Quick and nimble
4 3 4 4 380
organization
Chou’s leadership 4 3 3 5 390
QUESTION 2

• What should HTC’s OS strategy be? Should

HTC build its own platform? Add/drop others?
Using Windows Mobile

Advantages
• More compatible Disadvantages
due to large Not user friendly ->
number of Windows ME.
Windows
applications. Weak support for
graphics oriented
applications.
• Readily available
applications. High licensing costs
Developing an own OS

Advantages
Disadvantages
Long term solution
to problems with Very high R&D and
other OS. maintenance costs
No dependence on involved.
external OS No prior experience in
developers. software
Customized offering development.
for HTC products. Lot of time required.
 Solution: Using Android

• Advantages
– Open Source platform.
– First mover advantage.
– High potential growth.
– Long term partnership with Google.
– Large number of applications will be available.
• Disadvantages
– Losing out on long term Microsoft association.
– Some applications might not be compatible.
QUESTION 3

• Should HTC open its own app store?

Online application
store

• Imitate Apple’s model of selling 3rd party

applications for HTC.
• Revenues can be shared between HTC and the
3rd party developers.
• Less effort required than opening physical stores.
• Trusted/ Tested applications.
• Contributes in increasing brand equity.
 Vertical Integration

ODM
HTC - ODM
Manufacturer

HTC
Compaq
BRAND

HTC BRAND with

Mobile Operator
Mobile Operator

FORWARD Customer
INTEGRATION
QUESTION 4

• What strategic actions are needed to become

the leading smartphone company?
 Threat of Rivalry
• Threat of Rivalry - High
Threat of Buyers
– Large number of big players such as Nokia, Samsung.
– Rivals enjoy
Threat of Suppliers
• Economies of scale.
• Cost leadership.
• OvercomingThreat of Entry
threat of rivalry
– Product differentiation.
Threat of Substitutes
– Branding.
– Push strategy.
 Threat of Rivalry
• Threat of Buyers - Moderate
Threat of
– Lots of options for buyers.
Buyers
– Buyers switching costs very high.
Threat of Suppliers
– Wide variety of buyer’s demands in different
markets.
• OvercomingThreat of Entry
threat of buyers
– Low price through higher economies of scale.
Threat of Substitutes
– Attract buyer’s through innovation.
 Threat of Rivalry
• Threat of Suppliers
Threat– High
of Buyers
– Dependency for OS.
– Royalty and licensing fees.
Threat of Suppliers
– Higher costs for components.
– Availability of cheap labour in Taiwan and China.
Threat of Entry
• Overcome threat of suppliers
- Develop common components across different
Threat of Substitutes
phone models.
- Use open source OS - Android
 Threat of Rivalry
• Threat of Entry - Low
Threat of Buyers
- Huge capital investments.
- Overcome customer loyalty of existing players.
- Difficult to establish relationships with other members of the
Threat of Suppliers
value chain.
• Threat of Substitutes – Low
Threat of Entry
- Fixed line telephony, laptops.
- Ease of use for mobile phones is higher.
Threat of Substitutes
THANK