Htc Corporation Case Study

Problem Statement:

Reflecting on High Tech Computer (HTC) Corporation's rapid success in the hypercompetitive high technology industry, Peter Chou and his executive team are challenged to continue the upward trend of maintaining competitive advantage and expand globally while continuing to launch the HTC brand to general consumers.

Analysis:

In the economic era of high technology companies, there is constant evolution of rapid growth and technical change that exists, as companies like HTC push themselves to deliver state of the art products in a highly competitive marketplace. Using the DeVos line-of-business model, this case study analyzes HTC's business strategies over their short, but highly successful lifespan and offers suggestions for long-term survival.

HTC started in the business of manufacturing communication chips and other logic systems, and it is through this high-tech knowledge that allowed them to become quickly and efficiently familiar in the mobile phone marketplace. In the exceedingly saturated and progressive smartphone market, HTC was considered a fairly new entrant, establishing operations in Taiwan in 1997. Founded by H.T. Cho and Cher Wang, their business model began as an original design manufacturer (ODM), and HTC focused on product innovation. Employing highly skilled and creative engineers, they produced a business to business model, operating as a contract manufacturer to big names like Microsoft, and designing high-end, high quality, and high priced customized "phones for service providers like T-Mobile and Vodafone" (Yoffie, 2009). HTC executives realized the existing business to business model was limiting because they were giving away their intellectual value which is the most important attribute of HTC. They begin exploring how to reach the customer directly and bring global brand recognition to HTC.

Primary

Pinpointing a company's primary need in this highly competitive and saturated market of high technology is challenging because it seems that every company offers some level of differentiation. For HTC, their most credible attribute is also their primary need which is their dynamic innovation in engineering customizable products quickly to the market on behalf of their long term partners such as Microsoft and Google. As a behind the scenes designer, HTC offers the unique ability of reinventing their skill set quickly to acclimate to the rapid changes the market dictates within the smartphone industry.

Required

HTC's core required need is through their diversified business to business relationships. They offer them a competitive advantage because they are more widely adopted than others through their product design and feature integrations to Windows and Android operating systems.

HTC's research and development capabilities allow them to launch products months ahead of competitors. They take full advantage of innovative strategy through associations with longtime partners such as Qualcomm with testing 3G chips, and their cooperative alliance with Motorola to test its smartphone products. This competitive expertise is used to enhance their own core competencies.

HTC's marketing efforts became a critical component when they decided to market the HTC brand directly to consumers. In context of the four 'P's of marketing, HTC's promotion strategy in the early years involved heavy reliance on their distributors to market on their behalf, and later when HTC introduced their own brand, they highlighted their phones as user-centric with attention to aesthetics, increasing marketing expenses to six percent. HTC realized the need to invest in marketing resources in order to effectively expose their brand. Also in the earlier years, HTC's pricing strategy catered to high-end businesses, selling large volumes at high prices. As the market saturated and HTC launched its own brand, they recognized the need to adapt and extended their reach direct to consumers and employed China as the market for entry. HTC's product strategy as an ODM allowed them to customize their smart phones to the specifications of their business partners. They created a placement strategy with telecommunications service providers and non-operating companies for their smartphones. This produced a market reach prior to launching their own brand and these business partnerships supported HTC's ability to globally brand themselves.

The case discusses the progression of HTC over its relatively short life and we are led to conclude that the very important required need of HTC's ongoing success, that being the foresight from Chou and Wang to continuously challenge the next cutting-edge technology. HTC's business philosophy began with a delineation strategy of producing customizable phones for each of their business partners. The case discusses their reach of producing over 400 SKU's for about 70 countries. This differentiation of products kept their costs high, and though HTC discovered and created the first touch screen technology, Apple beat them to launch. The ever opportunistic Chou viewed this as an opportunity to launch the HTC brand, allowing Apple to carve the path for them, and although Apple launched first, one could argue it was HTC that created first a blue ocean strategy of uncontested market space.

Secondary

HTC and Microsoft developed a long-term relationship early on that HTC was able to successfully leverage. It was only when they expanded their strategic plan to design on Google's open Android platform that allowed them to reach millions of new customers; however they likely lost some loyal Windows platform users. HTC's ability to offer their product on the proprietary closed Windows platform as well as the novel Android platform, "created a strategic sweet spot for the company where it met customers needs in a way that rivals could not, given the context in which they competed". (Collins, 2008).

Another secondary need identified in the case surrounded HTC's brand reach, specifically, their international penetration into China and how HTC used China as a testing site to launch new smartphone technology and features. They also built a manufacturing plant in China with an altered strategy in mind to produce smartphones for the general consumer at a lower cost, reducing their average sales price (ASP), thus making them more competitive. The focus of HTC to expand economies of scale by reducing costs, increasing its customer base could be perceived of having certain risk associated and confuse and offend existing loyal customers who view HTC as the BMW