Htc Analysis

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HTC’s CEO has asked you to help him by preparing an analysis that addresses the following:

1. Identifies and analyzes the industry and competitive environment of the mobile phone industry based on information contained in the case: HTC Corp. in 2009 including key industry and environmental trends, competitive and structural characteristics of the mobile phone industry. 2. Your assessment of the key challenges HTC faces in trying to achieve a sustainable model and long-term success in the industry? 3. Your assessment of the competitive and strategic position of HTC Corp. at the time of the case information. 4. Your assessment/identification of any major changes in the competitive situation for HTC from the perspective of the fall of 2011 that he should bring to the board’s attention based on current information available publicly.

Question 1) Identifies and analyzes the industry and competitive environment of the mobile phone industry based on information contained in the case: HTC Corp. in 2009 including key industry and environmental trends, competitive and structural characteristics of the mobile phone industry. Answer 1)

HTC is basically a very young high tech company, initially dealt with PDA’s and computers. But in the recent years HTC has emerged as a smartphone firm which has received strong appreciation for the design and high tech products. It has been known for interoperate the Windows OS into the mobile phone devices which sparked the revolution towards the “SMARTPHONE” industry. HTC received strong appreciation because of this strategy.

To understand the industry, we need to know the participants involved in the industry. Smartphone industry has the following key participants.

* Suppliers
* Buyers
* Mobile phone manufacturers

Suppliers:
These are the firms which provide the hardware, software and other raw material for the mobile phones. E.g. Qualcomm, Carl Zeiss, Google (Android OS).

Buyers:
Buyers consist of the end consumers or the major network operators which provide subsidy on the mobile phones in lieu of specific contracts. E.g. AT&T, Verizon, Sprint and T-Mobile.

Phone Manufacturers:
HTC lies in this category of the industry. Manufacturers are the firms which produce the end product using the design to integrate products either using their own software/hardware or assembling products purchased from third party firms.

This is a big market but only a few get sustained recognition. The major players in this category are Apple, Nokia, RIM (BlackBerry), HTC, PALM, Samsung, Motorola.

Five force Analysis:
Mobile (smartphone) industry is very competitive and can be analyzed better by understanding the five forces. The five forces which are most important in defining the industry can be analyzed using the Michael Porter’s five forces. 1.) Barriers to Entry

2.) Competitive rivalry in the Industry

3.) Negotiating power of Buyers

4.) Negotiating power of Suppliers.

5.) Threat of any substitutes.

Let’s discuss the smartphones industry using these five forces.

1.)Barriers to Entry (opp.Threat of New Entrants)

* High R&D Costs:
The small product cycle ranging from 6-9 months makes requires persistent research and development to come up with new ideas and new products. As a result of this short life cycle, companies have to invest a lot into R&D, so as to come up with innovative design and products. This high R&D investments makes a strong barrier for new entrants.

* High Marketing Costs
In order to keep the end users aware about the latest products and services, every firm invests huge amounts of capital in marketing and advertisements. So this again posts a strong barrier for new entrants.

* (Economies of Scale)Profit Margins
Because of the innovations and the major players trying to gather more market share, the price tags linked to the handsets needs to be very competitive. With...
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