Environmental Analysis HTC - Essay Example

Executive Summary This report entails about the environmental analysis of HTC Corporation and formulating a strategic plan for the company. The environmental analysis depicts some of the key strengths, weaknesses, threats and opportunities having an impact on the company. Based on the SWOT analysis, three strategic options and its associated merits and demerits have also been discussed in this study. The current market scenario of mobile devices and especially the Smartphone market in which HTC engages itself indicates that the company is losing its market share to competitors like Apple and Samsung mainly because of the high average sell price of the products offered by HTC. Hence a strategic plan has been suggested in this study which could address this particular issue concerning the organization. The strategic implementation plan has also been recommended which can help HTC revive its position in the market and lead to increased revenue generation and profitability in the long run. Table of Contents Table of Contents 2 Environmental Analysis 3 Goal Structure 5 Strategic Options 6 Strategic Plan 7 Strategic Implementation 8 Works Cited 9 This study entails about formulating a strategic plan of HTC Corporation. The company engages itself in the business of designing, manufacturing and marketing Smartphone that are based on Android operating system developed by Google and Windows operating system developed by Microsoft (“Company Profile for HTC Corp (2498)”). The strategic plan and its implementation process have been discussed after analyzing the internal and external environmental factors affecting the organization. Environmental Analysis Environmental analysis of HTC Corp. refers to the various internal and external factors having an impact on the business activities carried out by the company. SWOT analysis can be used as an effective strategic tool to analyze the internal and external factors associated with the organization (Williams, Champion, and Hall 108). The primary objective of using the SWOT analysis is to uncover the opportunities, strengths, threats and weaknesses of the company. The SWOT analysis of HTC Corp. is presented below: A. Strengths: The research and development (R & D) capabilities of HTC is immense. The company has been involved in investments related to enhancing its R & D capabilities on a consistent basis since its inception. A significant portion of the revenues generated by the company accounts for R & D investments made by the company. Moreover, R & D professionals constitute most of the employees working in the organization. This is a major strength of the company because through investments made in R & D, it has been successful in creating value differentiation in the products offered by them thereby delivering performance to the customers. Other strength of the company is its strong relationship with the industry leaders worldwide. HTC has been successful in developing long term partnerships with some of the technology industry leaders like Google, Qualcomm and Microsoft. These large corporations act as active research labs for the company which helps it to innovate and differentiate its products. This helps the company to address the changing needs of the consumers in an effective manner. B. Weaknesses: One of the major weaknesses of HTC is its declining market share in the recent times. The Smartphone market is highly competitive in nature. HTC is found to losing out its market share to some of its major competitors like Samsung in the Android market (Bradshaw, and Francisco). The company management’s decision to shut down its operations in Brazil has also led to the loss in its market share (Walton). The profit margin of the company has also declined in the recent years. The net profit margins of the company in the years 2009, 2010, and 2011 were around 17%, 16% and 15% respectively (“2011 HTC Annual Report” 137-138). Hence HTC’s profit margins are significantly low as compared to its major competitors like Apple and Research in Motion (RIM). C. Opportunities: The Smartphone industry is experiencing a rapid growth in recent times (Atluri, Cakmak, Lee, and Varanasi). It is expected that the growth in Smartphone industry would continue in the forthcoming years as well. HTC being one of the major players in this industry indicates that it is a great opportunity for the company to increase its revenue generation in forthcoming years. The tablets market is also experiencing a robust growth in recent times. HTC has already developed its tablets and thus has a great opportunity to increase its revenue generation through the sale of increased number of tablets as well. Strategic acquisitions are also an opportunity for the company to increase its product portfolio thereby increasing its revenues in the long run. D. Threats: The current major threats of HTC mainly include the intense rivalry amongst the competitors in the global mobile devices market. To be specific HTC is facing intense competition from some of the major players in the market like Apple, Nokia, Samsung, and Research in Motion. The high average sale price of the products offered by HTC as compared to its competitors like Apple and RIM is also a threat for the company which can lead the company to further decrease in its market share. The Table – 1 shown below presents a summary of the SWOT analysis of HTC. Table – 1 SWOT Analysis of HTC Strengths Weaknesses Significant capabilities related to research and development Strong relationships with market leaders Losses in market share Low margins as compared to its competitors Opportunities Threats Evidence of significant growth in Smartphone market Positive trends related to the market for tablets Strategic acquisitions Intense Competition High average sell price (ASP) Goal Structure The mission and vision of HTC mainly revolves around the strategic initiatives taken up by the chairperson of the company, Cher Wang. The original vision of Cher Wang and HTC was to develop a small mobile device which could be operated like computers. The primary goal of the company should be to increase its market share through gaining competitive advantage in the market. This goal can be achieved through strengthening its core competencies and creating more value for its customers, shareholders and other stakeholders of the company. With the prevailing intense competition in the market of mobile devices the company should build up strategies to develop long term sustainability of its business. The key performance metrics than can be utilized by the company which could help it to create a strong sustainable strategic plan for itself includes its operating margin, the average sale price per mobile device offered by the company, return on investment and its revenue growth. Strategic Options Based on the SWOT analysis performed in this study the three most prominent strategic options that HTC might consider in its strategic planning process is illustrated below: i. One of the strategic initiatives that can be considered by HTC is rapid expansion of its business in various parts of the world. The main advantage of this strategic choice is that it could help the company to increase its brand awareness and enhance its revenue generation in a significant manner. However the primary disadvantage associated with this strategy is that with the existing poor global economic condition and HTC offering high priced products, it may not be attractive for the consumers who are cautious about their spending activities. ii. HTC can also opt for enhancing its product portfolio through the inclusion of new attractive applications in its mobile phones. This can be achieved through increased investments in various strategic acquisitions in order to integrate gaming, music, social and other innovative applications in its products. This can be advantageous for the company to create distinctive core competencies for itself which can help it to gain competitive advantage. However, it requires huge investments and returns are not expected to generate from such investments in short period of time. iii. Another strategic initiative that can be taken up by HTC is to target customer segments of different income levels by introducing products with differentiated prices. This can be helpful for the company to penetrate into new market segments and expand its customer base. However, this can be a risky strategy for HTC because the company would be moving into new market segments in which it does not have any prior experience. Strategic Plan Out of the three strategic options that have been discussed in this study the best option for HTC would be to adopt the differentiated pricing strategy for its products. As mentioned in the SWOT analysis of the company the high average selling price (ASP) of its products as compared to its peers is a major threat for the company. Hence the company needs to introduce products in the market that comes in lower price range. However HTC cannot compromise in quality which is one of its core competencies. Moreover HTC is known for its innovation and it has a strong relationship with some of the large companies like Google and Microsoft. HTC was the first to introduce a mobile phone in the market that runs in Android operating system developed by Google. The main advantage of Android is it being an open source software and thus HTC can cut down on its licensing expense in a significant manner. This in turn would help the company to reduce its operating costs thereby increasing its operating margin. The return on investment and the revenue generation of the company would also go up if it ca cater to the needs and requirements of new customers. Strategic Implementation Planning for optimum utilization of the existing resources is always an important part of the strategy planning process of a company (Simerson 2). However the most important part is its implementation (Bryson, and Alston 37). HTC needs to bring about change in its strategy in the field of targeting new customer segments by introducing products that come at lower price. However implementing such strategy would first require the company to create a strong brand awareness program to make people aware of the product they are about to offer to its new customers. Next the company needs to strengthen its distribution channel as well. Introducing products of lower prices would help the company to decrease its ASP and would ultimately increase its revenue generation also. The operating costs would go down thereby increasing the operating margin of the company. Works Cited “2011 HTC Annual Report.” HTC. PDF file. . Atluri, Venkat, Umit Cakmak, Richard Lee, and Shekhar Varanasi. “Making Smartphones Brilliant: Ten Trends.” McKinsey & Company. Jun. 2012. PDF file. . Bradshaw, Tim, and Sarah Mishkin. “Apple and HTC end patent battle.” The Financial Times. 11 Nov. 2012. Web. 15 Nov. 2012. . Bryson, John M., and Farnum K. Alston. Creating and Implementing Your Strategic Plan: A Workbook for Public and Nonprofit Organizations. 2nd ed. Connecticut: John Wiley & Sons, 2004. Print. “Company Profile for HTC Corp (2498).” Bloomberg n.d. Web. 16 Nov 2012. . Simerson, B. Keith. Strategic Planning: A Practical Guide to Strategy Formulation and Execution. California: ABC-CLIO, 2011. Print. Walton, Zach. “HTC Pulls Out Of Brazil, Terminates Plans For HTC One Line.” WebProNews. 22 Jun. 2012. Web. 15 Nov. 2012. . Williams, Chuck, Terry Champion, and Ike Hall. MGMT. Connecticut: Cengage Learning, 2011. Print. Read More