Htc Analysis

Westminster International University in Tashkent

Level 6 Business Administration

2011 – 2012

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To be completed by the student
|Student’s ID number |00001102, 00001162, 00001151, 00000746 |
|Module name |Strategy in a Complex World |
|Module code |2UZB615 |
|Tutor |Vyacheslav Gazikhodjaev |
|Individual assignment | |
|Group assignment |( |
|Submission deadline |2 February 2012 |
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|For Academic Registrar use only |
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Table of contents

I. Executive summary 3

II. Company profile 4

III. Assessing internal environment 5 a. SWOT analysis 5 b. Porter’s six forces analysis 8

IV. Assessing external environment 17 a. PESTLE analyses 17 1. Taiwan 17 2. North America 20 3. Europe 23 4. Asia Pacific and Central Asia 28 b. Competitive position analysis 31

V. Recommendations for developing a competitive advantage in the new environment 37

VI. Conclusion 39

VII. Bibliography 41

VIII. Appendix section 47

IX. Group log 50

I. Executive summary

HTC Corporation is Taiwanese manufacturer of mobile handsets and tablet PC which is considered to be one of the world’s leaders in technological innovation and R&D. This particular report was commissioned to examine the current competitive position of HTC Corporation; to assess its core resources and capabilities; to analyse its external as well as internal environment within the industry where the company operates; but most importantly, to give recommendation which will help the company to develop competitive advantages in the new environment. The research was drawn attention to the fact that without any doubt HTC Corporation has certain strengths that help the company to be the leader of smartphone shipment in USA market around 50.6% of all handsets are distributed in this market segment; to increase the market share as well as revenue quarter after the quarter, as revenue for the year 2011 twice exceeded the revenue for the previous year. However, certain weaknesses that the company experiences cause barriers in becoming the mobile handset producer with the strongest brand image and recognition. Further research demonstrates that there are certain microenvironments that influence the industry and the company in particular. For example, the market is highly competitive, buyers switching cost is relatively low, quite high threat from substitutes and complementors. Moreover, the assessment of those environments shows the necessity to change the competitive strategy as well. Thus, the following recommendations were developed: changes in market concentration; value chain; advertising campaigns; as well as logo and mottos.

II. Company’s profile

|General Information |
|HTC Corp. is the Taiwanese manufacturer of mobile handset and tablet computers. According to Bloomberg Business week, HTC is put on the |
|perspective list of globe’s 10 most innovative companies in 2010. The company also received “device manufacturer of the year” award.[1] |
|Company history |
|HTC Corp. was founded in 1997 by H.T. Cho and Cher Wang. The main breakthrough became to HTC when it started manufacturing PDA, the iPAQ for |
|Compaq Computer, which became a hit soon after. It was decided to begin the work within the mobile telecommunication market in 1999. The first|
|Windows-based smartphone was presented in 2002. In 2011 HTC announced the air of its first tablet computed device called “Flyer”. |
|Products |
|Currently, the main focus of HTC includes the design, development, and production of wireless handsets based on Windows mobile, Google Android|
|and Brew operating systems. In 2010 HTC produces numerous mobile devices such as HTC Desire, HTC Evo 4G. HTC Droid Incredible, HTC Wildfire, |
|etc. These devices feature HTC Sense, 4.3” screen, dolby mobile and srs surrounding sound. Devices such as HTC 7surrounding, HTC 7 Mozart, HTC|
|7 Trophy, HTC 7 pro, HTC HD 7 are based on Windows mobile platform. Moreover, HTC launched the development of new 4G handsets. In 2011 the |
|company began producing tablets under the “Flyer” name. |
|Worldwide office location |
|The key operation centers include: |
|The headquarter in Taoyuan, Taiwan; Taipei R&D center; UK HTC Europe co.; USA HTC America office in Washington; and HTC Electronics in |
|Shanghai. |
|HRM |
|By March 2011 there have been almost 13.000 people working for HTC. The average age is about 30. Approximately 8.000 of them have tertiary |
|education (Ph.D, Master’s, Bachelor’s, Technical/Vocational)[2] |

III. Assessing internal environment

a. SWOT analysis This analysis is performed with the purpose of discovering HTC’s core resources and capabilities. This tool helps in discovering four major elements of the company’s environment.

|Strengths |
| HTC used to be the leading maker of PDAs smart phones in the world and attracted customers from all around the world before it |
|switched to mobile manufacturing industry. According to the Interbrand’s top 100 brands in 2011, HTC becomes 98th top brand in the report[3]. |
|One of the reasons is that HTC choose the right partners (giant players in software industry, such as Microsoft and Google) to cooperate with |
|so as to enter the market with less risk. Moreover, the research and development (R&D) in HTC has been given more importance as it is the way |
|to know what customers want. So, strength in hardware design and strong manufacture capacity provides high quality products with high |
|technology and innovation. Thus, On February 17, 2010, Fast Company ranked HTC as the 31st most innovative company in the world[4]. Another |
|strong side of HTC mobiles is that the quantity of produced models is over 100 in our days. Also, the customer base of HTC is also very wide |
|and it is increasing as the time passes. Subsequently, the brand HTC was recognized by end users. |
|Weaknesses |
| As to the weaknesses, HTC is not a very much recognized brand in the market. Its competitors, which are Apple, Samsung and Nokia |
|are much more popular and have acquired a bigger share of market. The reason is the lack of advertising and marketing. In addition, HTC mostly|
|provides “touch” phones with high price and therefore got a small range of cell phones models as compared to their competitor, Nokia, which |
|has got a huge variety of smart phones, from cheapest to most expensive ones. Also, the position of HTC is to produce only high priced phones |
|in 2012, as Peter Chou stated, “Customers are willing to pay more, that 's why we have grown nearly five times in China this year. It shows |
|that customers support our philosophy.”[5] Up to now, HTC did not have necessary scale to drive costs down. For example: the company ahs |
|higher cost structure for components and overhead expenses.[6] The other weakness is HTC was too related on Microsoft’s platform which was not|
|mainstream in the smart phone system market. Even after launching the new version of Windows Mobile OS, Android is still much more popular, |
|and it is good that HTC began to focus on Android platform. Finally, HTC does not handle the production capacity properly. Even if the company|
|double its shipment, still HTC would not be able to keep up with the speed of received orders.[7] |
|Opportunities |
|First of all, HTC provides Touch Screen Cell Phones, which are very much in demand these days and most of people who buy expensive phones are |
|looking for the touch screen ones. Also, Google’s OS Android caught attention of end users and collaboration of Google and HTC brings lots of |
|benefits for both of them. Moreover, the Android platform seems to be very successful in the future. One more opportunity for HTC is 3G |
|technology, which has been launched all over the world. Since all modern HTC cell phones have got 3G technology support, they will be in |
|demand where 3G technology launches. In addition, on May 27th 2011, in response to customer feedback, HTC CEO, Peter Chou announced that they |
|will no longer lock the bootloaders on their Android based phones, which means more interest in techie market[8]. Finally, nowadays smartphone|
|category becomes more and more popular, and as HTC operates mainly in the production of this kind of phones, it is can be considered as a very|
|good opportunity. There also several attractive for HTC customer segments: For example: fast growing Asian (Central and Pacific) markets with |
|high consumer spending and eagerness for new technological devices. |
|Threats |
|The major threat for HTC or any other similar company is a very much popular and highly in-demand brand, Apple iPhone. Also, the strong |
|competition from Samsung is also can be a threat for HTC, as Samsung provides smartphones with the same Android OS, but the price of the |
|production is much lower. In addition, Apple and HTC are in the patent war nowadays, but this war may hinder the R&D of HTC, which is one of |
|the main strengths of the company. Moreover, the financial crunch could also be the threat for the company. That is because HTC smart phones |
|are expensive and are not affordable for many of the smart phones users. On the other side Nokia or Samsung smartphones are cheaper and |
|provide the same characteristics, which a smartphone should have. Another threat may occur because of the unlocked bootloader, as it means |
|less support from carriers. Finally, the life-cycle of product becomes shorter, especially for HTC phones. Therefore it is important to |
|announce new models almost every 6 months. However, because of the lifecycle, HTC does not support with updates models after 1 year from the |
|release. While Apple continues support updates even after 3rd year of smartphone release. |

b. Porter’s six forces analysis This model highlights six different forces which identify the level of the competition, consequently, the attractiveness of doing business in the industry. The description below demonstrates how these six elements influence the mobile industry itself and HTC in particular.
|Power of Buyers |
| The first element of the Porter’s model is the buyer power – the extent of how the customers influence the price for the product or service. This|
|depends on the amount of customers, whether the product offered is standardized, how expensive it is for them to switch from the initial product |
|to the substitute, and other. |
|In case of HTC Corporation the power of buyers is considered to be from moderate to strong due to the following reasons: |
|Market (buyer) concentration: |
|Heavy market concentration on North America. About 50.6% of all produced hand sets is shipped to this particular segment. |
|[pic] |
|Profit dependency upon focused market segment: |
|Heavy concentration involves a great profit dependency upon the sales performance in the market segment. Currently, HTC is the leading smartphone |
|vendor in US[9], however, in the highly competitive and price sensitive industry such as this, the stability can not be guaranteed. |
| |
|[pic] |
|Distribution channel dependency: |
|One of the main distribution channels for HTC is mobile operators such as T-Mobile, Sprint, Verizon. In this case the degree for dependency is |
|high as well, because operators can manipulate with the device prices. |
|Switching cost: |
|This industry is highly competitive and price sensitive. Currently, global market share for HTC is only 2.7%[10], and the presence of such amount |
|of competitors offers low switching cost to buyers. Thus, HTC has to be very careful in setting the price for the products. |
|[pic] |
|Power of Suppliers |
| The second element of the Porter’s model is Supplier power – the extent of how easy it is for suppliers to drive up prices. Suppliers are able to|
|drive prices due to the following issues: the uniqueness of supplied product or service; strength and control over the company, the cost of |
|switching from one to another, and so on. The fewer suppliers of the product exist, the fewer choice the company has, the more powerful suppliers |
|become. |
|HTC’s spendingd for supplied components for the year 2010 account for about $164,684 millions of dollars. Basically, HTC has two categories of |
|suppliers: |
|Hardware (chipsets) |
|Qualcomm |
|Intel |
|Software (operating systems etc.) |
|Motorola |
|Microsoft |
|Brew Mobile Platform |
|Power of Suppliers for HTC is considered to be strong due to the following issues: |
|Presence of substitute inputs |
|Unfortunately, HTC has a limited number of suppliers who will be appropriate in terms of the quality of supplies, price, features, etc. |
|Switching costs |
|Currently, during the process of assembling the handset device HTC has the contractual agreements with the best chipsets suppliers such as |
|Intel Digital Technology Corporation and Qualcomm Incorporated[11], thus in case HTC will switch to a new suppliers, it will incur not only high |
|cost, but also time. |
|Importance of the supplied materials |
|Due to the reason that HTC does not produce its own chipsets as well as OS the presence of the suppliers is vitally important for the quality of |
|the finished product. |
|The power of complementors |
|The third element of the model is the power of complementors. Complementors are types of products that do along with the main one. In case of HTC |
|the following items are considered to be complementors: |
|Mobile operators: |
|HTC has strong contractual agreements with eight leading network operators. They are: Verizon, O2, AT&T, Sprint, T-Mobile, Orange, Vodafone, and |
|NTT DoCoMo.[12] |
|Applications: |
|Devices that HTC produces work on three different platforms; these are Google Android, MS platform, Brew Mobile platform. It is important for HTC |
|to control the performance of them as well, because, these companies provide the buyer with additional service such as applications. Applications |
|is considered to be the value of the smartphone. |
|These companies are not considered to be competitors, but it is important for HTC to have contractual agreements with them, because they provide |
|the necessary services for the handset to act fully. |
|Threat from entry by new competitors |
|The fourth element of the model is the threat from entry by new competitors. Profitable markets attract a lot of attention, thus it is important |
|to keep an eye on any new entrance. It is expected that the revenue in the mobile industry will be close to $1.3 trillion.[13] In this particular |
|industry, the barriers for entry are considered to be low due to the following reasons: |
|Economies of scale and capital outlay: |
|So as to enter the market of advanced technologies in the sphere of mobile handsets, the new company should have uniqueness in term of strong R&D |
|program, intellectual property rights, differentiation to some particular targeted segments. Those issues are very expensive and time – consuming.|
|Thus the beginning company is obliged to have assets both in financial and intellectual. As well as it is very difficult to reach at least the |
|break-even. |
|Threat of retaliation by incumbents: |
|Currently, mobile industry market is controlled by giants such as Nokia (23.9%), Samsung (17.8%), Apple (3.9%), ZTE (3.2%), Research in Motion |
|(2.9%), etc. These companies have strong contractual agreement and collaboration with leading mobile operators; some of them have governmental |
|support, as well as strong brand recognition and heavy advertising expenses. Thus it very difficult to compete against them, especially for the |
|brand new company. |
|Information and loyalty: |
|It is extremely difficult to retain customer loyalty even for the leading companies. Usually, buyers switch to the more innovative, advanced as |
|well as less expensive vendor very easily. Consequently, the new company should take this fact into consideration. Moreover, the loyalty should be|
|guaranteed from the retailers (distribution channels) side as well. |
|Threat from Substitute products |
|The fifth element of the model is the threat of substitution. The buyers may satisfy their needs not only with the competitor’s help, but also |
|finding an alternative way. It means the following: the main services that the smartphone handset provides are communication, entertainment, and |
|web access. Thus, instead of using the handset, the buyers may use stationary phone, simple cell phones, tablets, laptops, cameras, mp3 players, |
|etc. However, buyers propensity to stick with the smartphone is explained in terms of the following issues: |
|Smartphone offers the combination of all those services in a single piece of technology, which is light, comfortable, multifunctional and most |
|importantly portable. |
|Switching cost: Smartphone has cost advantage in contrast of buying all those devices separately. |
|Competitive rivalry |
|The sixth element is the competitive rivalry. The fewer competitors the company has the less threat is becomes. Unfortunately, in case of HTC, |
|mobile industry is highly competitive. HTC keeps the seventh position in the list of handset vendors on a global scale. However, taking into |
|account only US market, where the company initially concentrated, HTC is the number one vendor. |
|[pic] |
|Competitive advantage: |
|One of the main strength of HTC is strong R&D program, allowing HTC to release for 23 brand new handsets on three different platforms through |
|eight mobile operators in 2011.[14] Collaboration between HTC and Android |
|Level of advertising expenses: |
|In April 2010 HTC allocated the biggest ever marketing budget for the campaign of four devices. [15]Overall consolidated sales and marketing |
|expenses for HTC in 2010 rose to $21.8 billion as twice as much for the previous two years. This also includes the sponsorship of the Tour de |
|France and Wallpaper annual design.[16] |
|Competitive strategy |
|HTC chooses to follow one out of three generic strategies identified by Porte. In particular: Cost Leadership |
|The average price for the HTC smartphone with T-Mobile operator for two-year contract is $149.99 in comparison to the other seven best selling |
|smartphone this is second cheapest device[17] |
|[pic] |

IV. Assessing external environment

a. PESTLE analysis In this section of the report, we would analyze the external environment where HTC operates. There four main regions that are worth being assessed. First of all it isTaiwan. HTC resides and produces all its products in its home country. As it was stated above, both production centres and R&D laboratories located in Taiwan. Secondly, all three markets where HTC concentrates its distribution operation. There are USA, Europe (EU zone), Asia (Central and Pacific). 1. Taiwan

|Political |
|In any country the government has several tools which it uses to intervene in the economy. Tax policies and labor laws and trading and importing |
|tariffs and rates are all part of these tools. In Taiwan however the political situation is a bit different compared to other countries of the |
|region. There is great instability concerning the political status of Taiwan. At the current time it is the main state of the Republic of China |
|which now has no political power whatsoever. The mainland is controlled by the Peoples Republic of China which also limits the political influence|
|and economical growth of Republic of China. The government is facing a question on which is better, to become part of the Peoples Republic or |
|declare independence and become the Republic of Taiwan? However at the moment Taiwan is country with high level of income and is considered one of|
|the Asian Tigers just like Japan and Peoples Republic of China. |
|Economical |
|In terms of Economical power Taiwan is one of the strongest economies in the region with its fast developing industries in many sectors. Taiwan’s |
|rapid growth and fast industrialization has been called the “Taiwan Miracle”. In the 1960’s the GNP per capita of Taiwan was around $150-$160. |
|This put the country in line with other third world countries like Zaire and Congo. However in the 2008 the GNP per capita reached $33000. In |
|terms of Human Development Index Taiwan was 18th in 2010. The Gross Domestic Product of Taiwan for 2010 grew by 10.8% and accounted to $430.6 |
|billion at the end of 2010. The GDP per capita grew to $35,700 compared to $33,000 in 2008. Moreover Taiwan is one of the leading countries in the|
|world by the amount of foreign reserves just behind China, Russia and Japan. The amount of estimated labor force in Taiwan is around 11 million. |
|Out of these 5.2% are occupied in the agriculture, 35.9% in industry and 58.8 in service sectors. The real unemployment rate is 5.2% which is a |
|lot lower than in many other developed countries. Only 1.16% of the population is below the poverty line which is also a very high score. The |
|international trade of Taiwanese goods jumped by 39% to $526.04 billion dollars which is clear indicator of a developed industry sector. The main |
|industries in Taiwan are: |
|Bicycle manufacturing, ex: Giant Bicycles, Merida |
|Biotechnology |
|Nanotechnology |
|Communication & Network, ex: D-Link |
|Laptops and other computers and displays, ex: Acer, Asus, MSI |
|Shipping, ex: Evergreen |
|Semiconductor device fabrication, TSMC, UMC |
|Smartphone’s, ex: HTC |
|TFT-LCD, ex: Chimei InnoLux Corporation, AU Optronics |
|Photovoltaic industry |
|Socio-cultural |
|Taiwan is a small country with large population of 23,061,689. The population density of 668/sq. km is one of the highest in the world. The age |
|structure in Taiwan is: |
|0-14 years: 15.6% (male 1,875,359/female 1,732,007) |
|15-64 years: 73.4% (male 8,538,881/female 8,406,716) |
|65 years and over: 10.9% (male 1,198,591/female 1,320,225) (2011 est.) |
|However Taiwan does not have a high population growth rate compared to neighbors in the region. The estimated population growth rate in 2011 was |
|0.193%. |
|Technological |
|The technological environment in Taiwan is one the most developed in the world. Due to the presence of countless Original Design Manufacturers and|
|Hardware Suppliers like Foxconn and Benq, the country has no shortage of investment into R&D. Moreover HTC is one of the leading Smartphone |
|producers in the world which makes Taiwan a good place to start any business closely related to technology. In addition Taiwanese firms have the |
|worldwide acknowledgement for the quality of their technology and design. For example Asus is the world’s number one among Laptops developers in |
|terms of quality and has the lowest product failure rate. Moreover the level of innovation in technology development due to recent performances of|
|HTC and other Taiwanese brands has increased and is emulating the US and Japan. In terms of development Taiwan is certainly one of the leaders in |
|the world and the overwhelming number of the firms in the technological industry is a clear evidence of this. |
|Legal |
| The legal system in Taiwan is the Civil Law legal system. Like in any Civil Law countries all laws are written down and formulated by |
|the government. The legal system of Taiwan has certain laws controlling the manufacturing companies. For example there are laws which control |
|imports and exports. Moreover like in any country with a Civil law system all penalties and laws are recorded and are available to the general |
|public. |
|Environmental |
| Taiwan’s Economical Miracle surely caused several ecological problems. Today many scientists are in red alert due to the construction |
|of a new fourth Nuclear Plant as nuclear waste is very hard and harmful to dispose. Moreover another major problem is the waste disposal from |
|local manufacturing plants. There are hundreds of manufacturing faculties both small and large and all of them generate lots of waste. In addition|
|to plants Taiwan has the highest density of cars in the world. Moreover the environmental damaged was further focused on certain areas in Taiwan, |
|due to the limited access to the mountain areas of Central and Eastern Taiwan. Thus Taiwan is having serious problems with sustaining its |
|environment and if necessary steps are not taken soon, then the country will face serious problems. |

2. North America (USA)
|Political |
|The United States of America is a federal constitutional republic, in which the President is the head of state and head of government. Therefore, |
|in light of the future elections in November 2012, the political situation in the United States may be seen as no to stable. Elections in the |
|country always bring some unpredictable situations which may affect the mobile industry too. |
|Currently, the United States has one of the highest corporate tax rates when compared to other industrialized nations. The individual income tax |
|rates for 2011 are 10%-35%, while the federal corporate tax rates for 2011 are 15%-35%, depending on the annual taxable income. Also, Corporations|
|may be taxed under certain conditions with the 20% Alternative Minimum Tax (AMT) method. Moreover, the new administrations Tax plan includes |
|cutting corporate tax rates for companies and giving tax credits for R&D expenditures. This is good for mobile industry, as anytime a tax rate is |
|reduced the cost savings from not paying the decrease in the tax rate will put more money in the corporation’s hands. They can use the savings to |
|pay dividends to stockholders, buy securities, or reinvest in growing the company. |
|Economical |
|The economic factors that affect the Communication Service Industry’s economic growth in the United States are trade barriers, foreign tax rates |
|and interest rates. With the emergence of globalization, the U.S. has been striving to remove trade barriers with other, especially developing |
|nations, in order to help expand economic growth across the globe. These developing nations have increased their foreign investments into the |
|United States which have provided reinvestment opportunities for businesses especially in the Communication Service Industry. Companies like Apple|
|and RIM started to introduce their products in these developing markets, while Asian companies, for example Taiwanese HTC, tried to penetrate into|
|the American market. Also, as we have mentioned, U.S. has one of the highest corporate tax rates, whereas Asian countries have much lower tax |
|rates. Therefore, we can see the economic growth of mobile industry in those countries. |
|In addition, the following table represents the economic condition of the Unites States for the years 2010-2011: |
|Economic indicators |
| |
|Unemployment |
|8.6% (November 2011) |
| |
| |
|GDP growth |
|3.0% (2010) |
| |
| |
|CPI inflation |
|3.5% (October 2011) |
| |
| |
|Poverty |
|15.1% (2010) |
| |
| |
|PublicHYPERLINK "http://en.wikipedia.org/wiki/United_States_public_debt" HYPERLINK "http://en.wikipedia.org/wiki/United_States_public_debt"debt |
|$14.22 trillion (March 21, 2011) |
| |
| |
|Socio-cultural |
|First of all, the demographic factors will be analyzed. The population of the United States is 313,232,044 (July, 2011). The age structure of U.S.|
|citizens is following (2011 year): |
|0-14 years: 20.1% (male 32,107,900/female 30,781,823) |
|15-64 years: 66.8% (male 104,411,352/female 104,808,064) |
|65 years and over: 13.1% (male 17,745,363/female 23,377,542) |
|As we can see, the age of most percentage of citizens is from 15 to 64. Therefore, mobile devices have become a fashion statement as well as a |
|primary way to communicate for everybody. As a result, these industries must focus on finding out what consumers are looking for regarding mobile|
|devices and must find ways to capitalize on some markets while trying to get into those markets left untapped. |
|Technological |
|The corporations in the mobile industry are in a constant race to be the first, to have the newest phones with the latest technology. As a |
|result, research and development play an imperative role in these companies because of the fact that they all want to be known as the innovators. |
|Corporations in the mobile phone industry are constantly trying to overcome each other with having the newest, trendiest, up-to-date technology. |
|Nowadays, the U.S. is the most dominant country in R&D sphere and their spending is projected to rise 2.1% to $436 billion next year. |
|The rate of technological change in this industry is very fast, as companies need to be the first and the best when it comes to having the newest |
|features. “Mobile phones were as much a fashion statement as anything else” (Bancroft, 2007). However, it is important to consider that what was |
|up-to-date technology today, may be out-of-date tomorrow. For example, having a mobile phone that could also act as a camera was, only a few years|
|ago, considered the latest technology. Today, cameras come standard with most mobile phones, especially smartphones. “Advanced features and |
|services such as cameras, MP3 players, multimedia messaging, email and mobile TV are increasingly offered as base capabilities on new phones |
|rather than as extras” (Bancroft, 2007). |
|Legal |
|In the United States of America, the law is derived from four sources: constitutional law, statutory law, administrative regulations, and the |
|common law (which includes case law). However, the most important source of law is the United States Constitution. Thereafter, the certain laws |
|were created in order to control manufacturing processes, and also in order to control imports and exports. Moreover, nowadays the patent wars are|
|very popular among huge corporations, and HTC had some experience too. Thus, after the victory of Apple in their patent war with HTC, the Android |
|based hardware of Taiwanese company, including such bestsellers as Sprint EVO 4G, Verizon Droid Incredible, AT&T Aria, and T-Mobile G2 will be |
|banned in the U.S., beginning from April 19th, 2012. |
|Environmental |
| The environmental policy of the U.S. is federal governmental action, created in order to regulate activities that may impact the |
|environment of the United States. If you import electronic equipment, or use hazardous chemicals or metals in the production of goods, you must |
|comply with certain legislation. You also need to be aware of consumer safety regulations. However, at present, there is no Federal mandate to |
|recycle e-waste. There have been lots of attempts to develop a Federal law, but nowadays, there is no consensus on a Federal approach. On the |
|other hand, some electronics (color CRT monitors, CRT TV tubes, and cell phones) test “hazardous” under Federal law. If so, they are subject to |
|special handling requirements under Federal law, subject to certain exemptions. Environmental Protection Agency encourages reuse and recycling of |
|used electronics, including those that test “hazardous.” |

3. Europe
|Political |
|The country is regulated by certain governmental tools. Depending on that the country is identified with the political system. |
|Constitutional monarchy |
|Republic |
|The government then regulates the work of the factors influencing the development of the country. |
|Political stability |
|The overall political situation is considered to be moderate with regard to instability. This is caused by the deteriorated economical situation: |
|for example, in Italy, and Greece there had been arose massive protests regarding financial and budgetary issues that forced changes in the |
|government management. It has been reported that similar process involving violence happened in Spain, France, Belgium.[18] |
|Taxation |
|Taxation rates for Europe are the following: |
|Top federal corporate tax: 33.99% |
|Top federal personal income tax: 50% (increased with communal taxes – usually about 8%) |
|Top VAT rate: 21% [19] |
|European taxation system is considered to be the highest in the world. |
|Economical |
|The creation of the European Union was followed by the appearance of the union currency Euro. This currency grew stronger year by year and |
|eventually became of a higher value compared to US dollar. Until 2011 the economic situation in Europe seemed to be cloudless and stable. However,|
|recent news regarding Greece, Italy, Portugal and Spain put the economical stability of Europe under the question. The possible default of one |
|country will be drastically resulted in the following financial crises in the whole union. The following figures represent the economical |
|condition of European Area for the year 2011. |
|Inflation and unemployment |
|In December 2011 the rates for inflation and unemployment were reported to be 2.7% and 10.3% respectively.[20] [21]These figures show quite |
|feasible increase in comparison to 2010, where the numbers for these indexes were 1.9% and 9.6% accordingly. [22] [23] |
|Import regulations |
|EU has relatively liberal import regulations such as import licensing is not required for products entering an EU country, except for certain |
|sensitive products like agricultural goods, tobacco, weapons, etc., and products governed by quantitative restrictions (i.e. quotas) and |
|surveillance.[24] |
|Socio-cultural |
|Demographic |
|Population of EU for the July 2010 is almost 492,387,344.[25] The age structure is the following: |
|0-14 years: 15.44% (male 38,992,677/female 36,940,450) |
|15-64 years: 67.23% (male 166,412,403/female 164,295,636) |
|65 years and over: 17.33% (male 35,376,333/female 49,853,361) (2009 est.)[26] |
|Education |
|The tertiary or also known as higher education in Europe is considered to be not fully realized. This is the consequence of shortage in young |
|people to go to universities, as well as the knowledge received is not always match to the needs of the labor market. Currently, there are 4000 |
|higher education institutions, 19.5 millions of students, and 1,5 million of teachers. [27] |
|Consumerism |
|In the Q3’11 there was recorded 0.5% growth rate in consumer spending.[28] |
|Technological |
|R&D expenditures |
|European expenditure for R&D is forecasted to grow by almost 3.5% of GDP, which is about $338.1 billion. This is the smallest out of three, as US |
|and Asia’s expenditure are 2.1% to $436 billion and 8.6% to $514.4 billions respectively. [29] |
|Speed of technological transfer |
|This is the target place for all exporters of technological goods from all industries. Europe is one fastest technological transfer markets in |
|the world. Many specialists even advise both European and Japanese companies to slow down the process of technological transfer. [30] |
|Legal |
|Almost all countries within the EU belong to Civil Law legal system except UK where the Common (Case) Law system is implemented. There is a strict|
|system of regulations and legislations concerning the issues such as labor, import/export, taxation, manufacturing, distribution etc. in EU. |
|Environmental |
|The certain regulations are taken into action regarding electronic imports in EU. For example: manufacturers, sellers and distributors are |
|responsible for tanking care of recycling unwanted electrical and electronic equipment.[31] Moreover, there are plenty of other environmental |
|policies concerning waste disposal processes enforced by the governments within the EU, in particular, new waste prevention initiatives, better |
|use of resources, encouraging a shift to more sustainable consumption.[32] |

4. Asia Pacific and Central Asia

|Political |
|Asia Pacific region or also known as APAC region is placed right next to the western Pacific Ocean. The region includes East Asia, South East |
|Asia, Australasia and Oceania. The Asia Pacific region consists of countries such as Australia, People’s Republic of China, Hong Kong, Macau, |
|Indonesia, Japan, South Korea, Malaysia, New Zealand, Singapore, Thailand, Taiwan, Philippines and Vietnam. India and Russia are sometimes |
|included in this region.[33] |
|Central Asia is another emerging market with the following countries ranked in term of political influence and economic power: Kazakhstan, |
|Uzbekistan, Turkmenistan, Kyrgyzstan, Tajikistan. |
|Political systems can vary from democratic to totalitarian. Even Democratic systems have multiple centers of power, none of which are powerful |
|enough to completely control decision making. Examples of democratic systems in the Asia-Pacific region: India, Indonesia (a new democracy). |
|Totalitarian systems are when the political power is highly concentrated in a small elite group. Examples of totalitarian systems: Myanmar, Laos. |
|All Central Asian Countries are Democratic to most extent. |
|Currently, political situation in both Asia-pacific and Central Asia regions is considered to be highly stable. |
|Economical |
|There is large difference in the development of the economy in different countries of region. Stages of economic development range from |
|underdeveloped nations, e.g. Myanmar, Laos, to developing nations, like Malaysia, to Newly Industrialized Economies, like Singapore and Taiwan, to|
|fully developed nations like Japan - presents both threats and opportunities. Overall the economical and buying power of the region is formidable,|
|due to the amount of potential customers. More than half of the world’s population resides in the region of Asia-Pacific and Central Asia. |
|Moreover countries like Taiwan, Singapore, Malaysia and Thailand have been rapidly developing economically with their annual GDP growth rate above|
|7% for the last five years. Moreover the presence of Peoples Republic of China with a very strong purchasing power of citizens is a lucrative |
|opportunity. In addition India is becoming one of the leading economies in the region with its unlimited human resources, high levels of education|
|and fast developing industries. The presence of several trading alliances like the ASEAN has also created a convenient exporting channel for all |
|local producers. The importing tariffs are low, taxes are import and trade friendly. |
|Overall even the Central Asian economy is developing at a steady rate. Uzbekistan and Kazakhstan are the most developed economies in the region. |
|Kazakhstan is rich with oil resources. Uzbekistan probably has the highest buying power though, due to a larger population compared to the |
|neighbors. Moreover the increasing amount of foreign investments into the region have increased the GDP per Capita, although it is still lower |
|than in Asian-Pacific countries like Taiwan with their GDP per Capita at $35,000. |
|Socio-cultural |
|This is the largest market segment in the world. Overall more than 3 billion people live in the Asian region. The cultural differences in the |
|region are noticeable. Central Asian countries are more social compared to most Pacific-Asian countries like Indonesia. Moreover the region has |
|the fastest population growth rate due to the presence of India and China. The work force is practically unlimited with most companies realizing |
|this, and opening manufacturing businesses in China and India. However the various levels of economical development have created a large gap |
|between countries. |
|For example in Central Asia, Uzbekistan has great healthcare and Japan has more than 40,000 people over the age of 100. Whereas in Tajikistan or |
|Laos, it is practically impossible to find basic healthcare. |
|Technological |
|When it comes to technology, most of it is produced in the Region, especially in China and Taiwan. Thailand is the land where 90% of the world |
|Hard Disk drives are produced. Japan is the home for such brands as Sony, Panasonic, Toshiba, Hitachi and etc. South Korea is the home of Samsung,|
|LG, and Daewoo. Currently China is enjoying the development of their own brands like Midea and hundreds of smaller companies. The region is also |
|the homeland for many wireless technology developers, like Huawei, ZTE, Sagem and etc. |
|In addition most Central Asian cities have 3G and even 4G networks present, with Tashkent being the fourth city in the world after New York, |
|Geneva and Stockholm which acquired and launched a 4G network. |
|Legal |
|There are laws governing foreign imports. Legislation may change from time to time, depending on the need. |
|Laws governing imports include: |
|Tariff/non-tariff barriers |
|Quotas |
|Subsidies to domestic producers |
|Buy local campaign (the Malaysian government had such a campaign during the 1997-1998 crisis) |
|Exchange controls |
|Moreover there are lot countries with corrupted legal systems which make it a hard for many companies and sole proprietors. Almost all countries |
|in the region are Civil law countries. |
|Environmental |
|Due to high levels of industry production there is huge problem over the environment of the region. Taiwan is facing problems with large amounts |
|of waste especially from the nuclear station it operates. Recently due to the Tsunami in Japan the Fukusima Nuclear plant was on the verge of |
|destruction. This incident caused problems to the environment of the region. As it is known nuclear waste is radioactive for hundreds of years, |
|thus it the biggest challenge for countries like China, Japan, Taiwan, India, Pakistan which operate nuclear stations to properly dispose of |
|nuclear waste. |
|In addition there is a certain problem in the are with fresh water supplies. In the Central Asian region the drying out Aral Sea is going to be a |
|big environmental problem. One of the largest lakes in the world is now less than half of its former size is creating a catastrophic situation in |
|the region. |

b. Competitive position analysis

Competitive Environment of HTC Corp.

|HTC products |Principal Competitor |HTC 's market |Intensity and basis |Likelyhood of new |HTC 's core strategy |
| |(market share Q3 '11) |position |of competition |entrance | |
|Smartphones |Nokia (23.9%) |HTC 's is the 7th |Highly intensive |Moderate |Quick acquisition of the smartphone and tablet|
| | |company with market |competition | |market share. HTC claims to be open for public|
| | |share of (2.7%) | | |to have a glance of the company 's product in |
| | | | | |planning and pre-production stage. To be |
| | | | | |collaborative with many carriers. |
| |Apple Inc. (3.9%) | | | | |
| | Samsung (17.8%) | | | | |
| | | | | | |
|Tablets (Flyer) |Apple Inc. |Does not have decent| |Moderate | |
| |(Ipad, Ipad2 around 80%) |share | | | |
| |Samsung | | | | |
| |(Galaxy Note N/A) | | | | |
| | | | | | |
| | | | | | |

Competitor analysis
Step 1: Developing the general picture of the competition
First of all, it is necessary to develop a general picture of the competition in the industry. Thus, main competitor should be analyzed by answering the following questions:
Nokia Corporation:
1. The strength of competitor 's positioning
According to the results for the Q3’11 Nokia is still the world market leader. This company is the pioneer of the mobile handset industry, thus the brand image is very strong.
2. The strength of the competitive offerings
The strength of Nokia’s offering is in the following: • Wide range of devices for all classes with different income • Wide price range between $10-700 • Customization of products for particular geographical location • Simplicity in usage
3. The strength of the competitor 's resources • The largest network of distribution and selling • Strong Brand image and recognition • 142-year experience in the industry
4. Understanding the competitor 's strategy
Nokia’s concentrates on both cost leadership and differentiation.
On a large scale Nokia offers its buyers the products of different price range. For each geographical segment Nokia develops certain devices. For example: for countries with low literacy and income level the company creates the phone with simple interface avoiding over sophisticated process of exploitation, by deleting applications and features of no or little usage, thus reducing the price of the handset.
One of the distinctiveness of Nokia is that the company refuses to make so called “locked” phones which work only with particular operator. Thus most of the handsets are sold independently from the network operator and the tariffs that these operators bind to the phone. This strategy has two consequences: on the one hand any buyer can buy the wanted phone and have the service from the operator that he wishes to use. From the other hand this means that the phone is sold for the full price, thus making the phone more expensive than the “locked” one.
Samsung Electronics:
1. The strength of competitor 's positioning
Korean giant started from home appliance production. However, currently its telecom division is the most profitable one. The company positions itself as the most innovative one from the technological perspective.
2. The strength of the competitive offerings • One of the main competitors of HTC not only in the market but also in the manufacturing products on Google Android. • It attracts customers by offering new and innovative design through understanding the customers that which type of designs are suitable to customers and what they want or asked about.[34]
3. The strength of the competitor 's resources • Advanced technology • Financial resources • Large distribution network coverage (both independent retailers and company’s other product divisions)
4. Understanding the competitor 's strategy
It is considered that the core strategy for Samsung Electronics is a combination of cost leadership and differentiation. Samsung’s large resources in R&D allow the development of the revolutionary new products for large markets.
Apple Inc:
1. The strength of competitor 's positioning This company produces one of the most expensive yet popular devices. Having Apple products became the synonyms of maintaining the prestige and status. The demand for the products is so strong that orders begin to count long before the actual production starts. Moreover, the price is not an issue as well. The level of demand does not fall because of relatively high prices especially for ‘unlocked’ devices.
2. The strength of the competitive offerings • Strong differentiation • Unique features and product distinction • Values such as image and prestige
3. The strength of the competitor 's resources • Highly financially stable company • Strong brand recognition and popularity • Extremely valuable intellectual property rights
4. Understanding the competitor 's strategy
The core competitive strategy of Apple Inc. is strong product differentiation. This company offers the products of unique features and absolute quality on a global scale for comparatively high prices.
Step 2: Developing an overview of competitor’s strength

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[1] HTC Corp. Annual report
[2] HTC Corp. Annual report

[3] Interbrand, (2011). 2011 Ranking of the Top 100 Brands [Online]. Available from: [Accessed 12 January 2012]

[4] Fastcomapny, (2010). Most Innovative Companies 2010 [Online]. Available from: [Accessed 12 January 2012]

[5] Edgar Cervantes, (2011). HTC’s plans for 2012: No cheap phones, better tablets [Online]. Available from: [Accessed 12 January 2012]

[6] According to CourseWork case study
[7] IC Supply, 2012. 3000000-scale factory in Taoyuan. [online] Available from: [Accessed 27 January 3012]

[8] Jerry Hildenbrand, (2011). HTC: No more locked bootloaders [Online]. Available from: [Accessed 12 January 2012]

[9] International Business Times, 2012. Why HTC Has More Market Share Than Apple in U.S. [online] Available from: [Accessed 12 January 2012]

[10]Kool Mobile, 2012. iOS continues to lose Global Market Share captured by Android in Q3 2011. [online] Available from: [Accessed 12 January 2012]

[11] HTC Annual Report 2010
[12] HTC, 2012. About HTC. [online] Available from: [Accessed 23 January 2012]

[13] Chetansharma.com, 2012. State of the Global Mobile Industry – Half Yearly Assessment 2011. [online] Available from: [Accessed 12 January 2012]

[14] HTC, 2012. About HTC. [online] Available from: [Accessed 23 January 2012]

[15] Zimbio, 2012. HTC Marketing Budget is Biggest Ever for Four Phone Launch. [online] Available from: [Accessed 12 January 2012]

[16] HTC Annual report 2010

[17] PCworld, 2012. How much does it really cost to own a smartphone? [online] Available from: [Accessed 12 January 2012]

[18] World Politics Review, 2012. World Citizen: The Threat to Political Stability in U.S., Europe. [online] Available from: [Accessed 20 January 2012]

[19] Ernst&Young, 2011. 2011 Europe, Middle East, India and Africa tax policy outlook. [online] Available from: < http://www.ey.com/Publication/vwLUAssets/2011_EMEIA_Tax_Policy_Outlook/$FILE/2011_EMEIA_Tax_Policy_Outlook_24Mar11.pdf> [Accessed 20 January 2012]

[20] Trading Economics, 2012. Euro Area Unemployment Rate. [online] Available from: [Accessed 12 January 2012]

[21] Trading Econimics, 2012. Euro Area Inflation Rate. [online] Available from: [Accessed 12 January 2012]

[22] IndexMundi, 2011. European Union Unemployment rate. [online] Available from: < http://www.indexmundi.com/european_union/unemployment_rate.html> [Accessed 12 January 2012]

[23] IndexMundi, 2011. European union Inflation rate (consumer prices). [online] Available from: [Accessed 12 January 2012]

[24] HKTDC, 2012. EU Import Regulations. [online] Available from: [Accessed 12 January 2012]

[25] IndexMundi, 2011. European union Population.. [online] Available from: http://www.indexmundi.com/european_union/population.html> [Accessed 12 January 2012]

[26] IndexMundi, 2011. European union age structure. [online] Available from: [Accessed 12 January 2012]

[27] European Commission Eurostat, 2012. Tertiary Education Statistics. [online] Available from: [Accessed January 13 2012]

[28] Visa, 2012. Slower growth in consumer spending in Q3 across the EU. [online] Available from: [Accessed 13 January 2012]

[29] The Wall Street Journal, 2012, R&D Spending to Continue climbing. [online] Available from: [Accessed 13 January 2012]

[30] Wordpress.com, 2012. Technology trabsfer and countercyclical regulatory policy. [online] Available from: [Accessed 13 January 2012]

[31] Business Link, 2012. Environmental and safety regulations applicable to electronic imports. [online] Available from: [Accessed 13 January 2012]

[32] Europa, 2012. Protecting and improving the planet. [online] Available from: < http://europa.eu/pol/env/index_en.htm> [Accessed 13 January 2012]

[33] Economy Watch, 2012. Asia Pacific Economy. [online] Available from: [Accessed 24 January 2012]
[34] Free SWOT analysis, 2012. Samsung SWOT Analysis. [online] Available from: [Accessed 13 January 2012]

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Strategy in a Complex World: HTC Corp.

Bibliography: |technology and innovation. Thus, On February 17, 2010, Fast Company ranked HTC as the 31st most innovative company in the world[4]. Another | |strong side of HTC mobiles is that the quantity of produced models is over 100 in our days