Strategic Formulation: Htc Corp

REPORT: DISCUSSION OF STRATEGIC ACTIONS
REQUIRED FOR HTC CORP.

TO:
FROM:
DATE:

LIST OF CONTENTS

1. Introduction 3 2. Historical strategy of HTC 3 3. Current strategy of HTC 4 4. Appropriateness of strategic choice 5 1. Consistency 5 2. Consonance 6 3. Advantage 6 4. Financial analysis and business risk analysis 6 5. Corporate Strategy 7 6. Conclusion and recommendations 7

Appendices:
A: International value chain for HTC Corp. 9
B: Strategic evaluation of HTC using the tests of Johnson and Scholes 10
C: Smartphone industry analysis using Porter’s five forces 12

List of References 14

1. Introduction
HTC Corporation was founded in 1997 and progressed, by 2009, to become the world’s leading manufacturer of smartphones which run Microsoft’s Windows Mobile operating system (Yoffie and Kim, 2009). The company operated in two segments being the original design manufacturer (ODM), manufacturing smartphones for branded handset companies and its mobile phone operator business, designing phones for service providers. In 2006, HTC embarked upon branding phones under its own label which was seen as a risky step by stakeholders. Despite prevailing challenges the CEO, Peter Chou, was optimistic (Yoffie and Kim, 2009).

The discussion entails strategic actions required to achieve the goal of HTC Corp. to become the world’s leading smartphone company in the world. An analysis of resources, strategic capability, the environment and assessing stakeholders will be undertaken, as well as choosing a strategy by identifying, selecting options, as indicated in Boojihawon and Segal-Horn (2006).

2. Historical strategy of HTC
The company’s initial focus on laptops, diversified into handheld devices. HTC employed a competitive strategy to differentiate itself through offering mobile phone operators customized phones which

References: The phone industry, being dynamic, predicted the growth of smartphones to comprise a third of the world’s mobile phone market by 2013 which reinforced the need to review the strategy of HTC (Yoffie and Kim, 2009). 3. Current strategy of HTC The CEO, questioned where HTC would partake in the expanding value chain of phone software and the subsequent actions necessary to enable HTC to be unique in such a dynamic sector (Yoffie and Kim, 2009) HTC invested greatly in research and development to create further product innovation. The subsequent differentiation and innovation strategy indeed created a shift in the industry structure as mentioned in Viney and Gleadle (2007). Furthermore, efforts to control costs meant less customization as per the original approach (Yoffie and Kim, 2009). 4.2 Consonance The key strategy of innovation and emergent technology is an indication of the creation of social value, as mentioned by Rumelt, cited in Viney and Gleadle (2006) 4.3 Advantage HTC is able to maintain the value it creates, superior skills and resources, which Rumelt, cited in Viney and Gleadle (2006) indicates competitive advantage, together with a superior position 4.4 Financial analysis and business risk analysis An analysis of financial ratios will be conducted as per Parkinson (2003). A current ratio analysis was conducted for 2008 (1.86:1), 2007 (2.42:1) and 2006 (0:1). This reveals that cash was unavailable in 2006 to cover liabilities. However, subsequent growth in 2007-2008 adequately covers liabilities. 5. Corporate Strategy Diversification is a key element in corporate strategy (Viney and Gleadle, 2006) and highlights a move away from a single industry and a relationship with other organizations, which HTC has indeed accomplished with Google. (adapted from Segal-Horn, 2006) Existing Value Chain 4.3 Acceptability This criterion focuses on stakeholder’s perceptions of the results of the strategy according to Johnson and Scholes, cited in Viney and Gleadle, 2006 Adapted from Mcafee, 2009 Entry Barriers