1. Second Presentation —HTC Analysis Professor：黃光渠
Group members：許祥哲、陳佩澤、顏瑜、曾彥瑜

2. Outline Porter five forces analysis(許祥哲)
Internal factor evaluation(顏瑜)
External factor evaluation(陳佩澤)
Competitive Profile Matrix(曾彥瑜)

3. Porter Five Forces
Analysis

4. Porter Five Forces Analysis
Threat of new entrants
Bargaining power of suppliers
Bargaining power of buyers
Intensity of competitive rivalry
Threat of substitute

5. Bargaining power of suppliers
Porter Five Forces Analysis
HTC started from ODM, so they have made a good relationship with many components suppliers.
With the advance of technology, there are many companies have ability to make mobile components, so HTC have many choices.
Generally speaking, there is a long-term contract between HTC and suppliers in mobile industry.
So we think the bargaining power of suppliers is low.
Bargaining power of suppliers
Bargaining power of buyers
Threat of new entrants
Threat of substitute
Intensity of competitive rivalry
Bargaining power of suppliers

6. Bargaining power of buyers
Porter Five Forces Analysis
There are many mobile companies in the market, so buyers have many choices.
With free flow of information in the market, buyers can follow market prices easily.
So we think buyers have bargaining power to HTC.
Bargaining power of buyers

7. Porter Five Forces Analysis
Threat of new entrants
Mobile industry is a big market.
There are more and more company entering to the market.
Many company which in other industry started to produce smart phone. Such as Google, Lenovo, Microsoft.
As we mention above, we think the threat of new entrants is high.

8. Porter Five Forces Analysis
Threat of substitute
The substitute of smartphone is tablet.
Although tablet can make a phone call by Skype, Facebook, but smartphone’s characteristic is easy to bring.
In many country, the popularity rates of smartphone are still rising
The CEO of BlackBerry even said “In five years I don't think there'll be a reason to have a tablet anymore”.
So We think smartphone have low threat of substitute products.

9. Intensity of competitive rivalry
Porter Five Forces Analysis
Intensity of competitive rivalry
There have had so many mobile companies in the world.
In Europe and America：
In South Korea and Japan：

10. Porter Five Forces Analysis
In China：

11. Intensity of competitive rivalry
Porter Five Forces Analysis
Intensity of competitive rivalry
There have had so many mobile companies in the world.
So we think mobile industry is a highly competitive market.

12. Internal Factor
Analysis

13. Strength

14. 1. Right partner 2. Loyal customers
HTC cooperated with Google and released new tablet Nexus 9.
Weighted:7% Rate:4 Weighting score:0.28
2. Loyal customers
Weighted:6% Rate:3 Weighting score:0.18

15. 4. International presences
3. High quality products
HTC released high quality smart phones, such as HTC M8 with metal case.
Weighted:10% Rate:4 Weighting score:0.4
4. International presences
HTC sets up maintenance, service and market development stores in Europe, America, Japan, Hong Kong, Shanghai and other places.
Weighted:8% Rate:3 Weighting score:0.24

16. 5. Convenient user operating interface
HTC’s user operating interface—HTC Sense is popular with its customers.
Weighted:11% Rate:4 Weighting score:0.44
6. Good warranty service
HTC provides at-home services and lives on-line customer services.
Weighted:7% Rate:3 Weighting score:0.21

17. Weakness

18. 1. Less product patents 2. Poor marketing plans
Compared with Samsung applied 4683 patents, Sony applied 2100, and Apple applied 1501 patents, HTC only applied 215 patents in 2013.
Weighted:5% Rate:2 Weighting score:0.10
2. Poor marketing plans
Comparing the costs in marketing, in 2013, Samsung cost 363 million US dollars in America, and Apple cost 351 million dollars However, HTC just cost 75.8 million dollars in marketing in 2013.
Weighted:10% Rate:1 Weighting score:0.1

19. Weighted:7% Rate:1 Weighting score:0.07
3. Weak brand image
According to “BrandZ Top 100 Most Valuable Global Brands 2014”, Apple is rank 2, Samsung is rank 29, but HTC is out of rank 100.
Weighted:7% Rate:1 Weighting score:0.07

20. 4. Lack of product characteristics
Although the strategy “Market Saturation” can earn from different customer groups, it also separates HTC’s resources to different products.
Weighted:11% Rate:1 Weighting score:0.11
5. Low market share
The global market share ranking in 2013： Rank 1：Samsung(31.6%) Rank 2：Apple(15.5%) Rank 3~5：Huawei, LG, Lenovo(4.5~5%) Rank11 ：HTC(2%)
Weighted:9% Rate:1 Weighting score:0.09

21. Weighted:9% Rate:1 Weighting score:0.09
6. Too rely on operators in China
(Low ability to bargain with operators)
It let HTC can’t communicate with customers directly. Otherwise, although operators can sell many products to HTC, they also reduce the gross profit of HTC.
Weighted:9% Rate:1 Weighting score:0.09

22. IFE Matrix for HTC Key Internal Factors (Strengths) Weight Rate
Weight Score
1. right partner 7% 4
0.28
2. loyal customers 6% 3
0.18
3. high quality product
10%
0.40
4. international presences 8%
0.24
5. convenient user operating interface
11%
0.44
6. good warranty service
0.21
Key Internal Factors (Weakness)
1. less product patents 5% 2
0.1
2. poor marketing plan 1
3. weak brand image
0.07
4. lack of product characteristic
0.11
5. low market share 9%
0.09
6. too rely on operators in China
Total weighted score：2.31

23. External Factor
Analysis

24. Opportunities

25. Weighted:17% Rate:4 Weighting score:0.68
1. More and more people use smart phones.
There may be more people consider in HTC productions.
By the rising number of smart phone users, there may be more people consider in HTC productions.
Weighted:17% Rate:4 Weighting score:0.68

26. Weighted:18% Rate:4 Weighting score:0.72
2. Rising market share of Android.
There will have more people choose smart phone with Android system like HTC, instead of Apple or Windows phone.
The market shares of Android keep rising. it means there will have more people choose smart phone with Android system like HTC, instead of Apple or Windows phone.
Weighted:18% Rate:4 Weighting score:0.72

27. 3. Reaching a settlement with Nokia.
Nokia and HTC have settled all pending patent litigation between them. For this reason, HTC cleaned the barrier on patents.
Weighted:16% Rate:3 Weighting score:0.48
4. New technology.
With new technology, HTC could develop better production.
Nokia and HTC have settled all pending patent litigation between them, and entered into a patent and technology collaboration agreement. For this reason, HTC cleaned the barrier on patents.
With new technology, HTC could develop better production or reduce the cost.
With low loyalty on China production, China users may change their like easily.
Weighted:12% Rate:2 Weighting score:0.24

28. Threats

29. Weighted:16% Rate:1 Weighting score:0.16
1. More and more China mobile manufacturers.
HTC have to face more strong rivals.
There are many China company starting to join the smart phone market likes Xiaomi, Lenovo, Huawei, ZTE. It means HTC have to face more strong rivals.
In South Korea, government subsidized their companies much to support them compete with foreign company.
Weighted:16% Rate:1 Weighting score:0.16

30. 2. Less subsidies from government.
In South Korea, government subsidized their companies much to support them compete with foreign company.
Weighted:10% Rate:2 Weighting score:0.20
3. Samsung can produce component by itself
Samsung can produce CPU and panel by itself, but HTC have to buy to other manufacture. If HTC want to use best quality component, they should cost much money; if HTC want to cost down, they only can use secondary component. That’s why Samsung can beat HTC.
In China market, HTC rely on operators to sell their productions. However it let HTC can’t communicate with customers directly. Although operators can sell many productions for HTC, they also reduce HTC gross profit.
Samsung can produce CPU and panel by itself, but HTC have to buy to other manufacture. If HTC want to use best quality component, they should cost much money; if HTC want to cost down, they only can use secondary component. That’s why Samsung can beat HTC.
Weighted:11% Rate:2 Weighting score:0.22

31. EFE Matrix for HTC Key External Factors(opportunities) Weight Rate
Weight Score
1. More and more people use smart phones.
17% 4
0.68
2. Rising market share of Android.
18%
0.72
3. Reaching a settlement with Nokia.
16% 3
0.48
4. New technology.
12% 2
0.24
Key External Factors(threats)
1. More and more China mobile manufacturers. 1
0.16
2. Less subsidies from government.
10%
0.20
3. Samsung can produce components by itself
11%
0.22
Total weighted score：2.70

32. Competitive Profile
Matrix

33. Customer’s brand loyalty 11% 0.33 0.44 Market share 2 0.22 1 0.11
HTC
Black Berry
weight
score
Weight score
Entry to china market
12% 4
0.48 3
0.24
Customer’s brand loyalty
11%
0.33
0.44
Market share 2
0.22 1
0.11
Price competiveness
Technology patents
10%
0.10
0.30
Financial situation
0.20
Marketing plan
Reputation and image 9%
0.18
0.27
Information security 8%
0.16
0.32
Product diversification
0.08

34. Customer’s brand loyalty 11% 0.33 0.44 Market share 2 0.22 1 0.11
HTC
Black Berry
weight
score
Weight score
Entry to china market
12% 4
0.48 3
0.24
Customer’s brand loyalty
11%
0.33
0.44
Market share 2
0.22 1
0.11
Price competiveness
Technology patents
10%
0.10
0.30
Financial situation
0.20
Marketing plan
Reputation and image 9%
0.18
0.27
Information security 8%
0.16
0.32
Product diversification
0.08

35. 215 5136 Up to 2013…. HTC Black Berry HTC Black Berry weight score
Entry to china market
12% 4
0.48 3
0.24
Customer’s brand loyalty
11%
0.33
0.44
Market share 2
0.22 1
0.11
Price competiveness
Technology patents
10%
0.10
0.30
Financial situation
0.20
Marketing plan
Reputation and image 9%
0.18
0.27
Information security 8%
0.16
0.32
Product diversification
0.08
HTC Black Berry
Up to 2013….
215
5136

36. HTC’s product diversify from high price to low prices.
Black Berry
weight
score
Weight score
Entry to china market
12% 4
0.48 3
0.24
Customer’s brand loyalty
11%
0.33
0.44
Market share 2
0.22 1
0.11
Price competiveness
Technology patents
10%
0.10
0.30
Financial situation
0.20
Marketing plan
Reputation and image 9%
0.18
0.27
Information security 8%
0.16
0.32
Product diversification
0.08
2013 cost in marketing
(million US dollars)
Samsung : 363
Apple :351
HTC : 75.8
HTC use Android as operating system, which has less constraints on their software, security system isn’t solid. BlackBerry put emphasis on consumer’s security and privacy.
HTC’s product diversify from high price to low prices.
BlackBerry only launched one or two products in one system generation.

37. 2.39 2.44 HTC Black Berry weight score Weight score
Entry to china market
12% 4
0.48 3
0.24
Customer’s brand loyalty
11%
0.33
0.44
Market share 2
0.22 1
0.11
Price competiveness
Technology patents
10%
0.10
0.30
Financial situation
0.20
Marketing plan
Reputation and image 9%
0.18
0.27
Information security 8%
0.16
0.32
Product diversification
0.08
2.44
2.39

38. Thank you

39. Q&A