HTC Case Study Essay Example

mainly from central headquarters.

Smartphones, being universally utilized in all markets, are recognized as a genuinely global product. This realization leads HTC to adopt a global approach yet employs regional strategies for their goods. To illustrate, HTC, originating from Taiwan, decided to launch its Diamond series phone in London in May 2008. The decision was influenced by the extensive usage of 3G and 3.5G high-end communication standards in Europe compared to North America or any other part of the world. The Diamond series phone focusses on catering to the premium market segment that comprises businessmen. The Europe-first, followed by Asia and then North America strategy by HTC indicates that their sales approach is determined by the distinct characteristics of geographical markets.

Global strategy characteristic and HTC’s strategy action

Bartlett and Ghoshal (1989) proposed that organizations pursuing a global strategy would typically exhibit the following characteristics:

1. Configuration of the asset and capabilities centralized and scaled globally
2. Their oversea operations are to implement parent company’s strategies.
3. The knowledge and product development is retained at center.

HTC carried out the subsequent strategic step associated with these traits:

In their worldwide distribution approach, HTC entered a global distribution channel agreement with Bright Point, the USA's largest mobile phone

distributors. This provides HTC with marketing, selling, as well as worldwide and personalized logistics services via its 25,000 global channels. The share of HTC's proprietary brand sales has increased. Communities dominate brands (2010) further indicated that HTC is even advancing to be one of the top 5 smartphone brands by 2009.

HTC adopted a non-exclusive strategy with its global partners. For instance, the US mobile market, known for its tight competition, posed significant challenges to HTC. Their success hinged on the service provider's readiness to subsidize their products and provide joint marketing support. Unlike APPLE, who mainly targets high-net-worth customers, RIM focuses on large enterprises, and Nokia aims for all market segments; HTC targets the high-end professional and consumer market where people purchase their products. Regardless, HTC maintains a non-exclusive association with all prominent telecom firms except for AT;T due to their exclusive agreement with APPLE. Consequently, other major telecom firms position HTC's products as the " alternative I-phone". Furthermore, HTC appreciates its retail market since customers can purchase their phone from a retail store and utilize it with any telecom service provider.

HTC is deeply committed to making a strong brand presence in the smartphone market, believing that the core to this objective lies in emphasizing R&D to create advanced smartphones. They are working towards this aim by onboarding reputed innovative designers and establishing a fresh in-house research center dedicated to fostering innovation. Their strategic decision to tailor their phone development alongside Microsoft's mobile system product development strengthens their approach. This cooperativity is often cited as a wise move, seeing the growing trend of smartphones centering on the functional integration of phone

and personal computer products.

Branding of HTC

Global strategies offer economies of scope opportunities, a prime example being branding. It can prominently set the groundwork for a global differentiation strategy. Companies deploy their major brands as a tool to establish uniformity and convey a consistent global message. Furthermore, they benefit from wider media opportunities by advertising a single brand with consistent packaging and positioning across various markets.

HTC recognized that without establishing a brand, their capability to grow internationally would be constrained. Therefore, in May 2007, HTC presented their brand and formally commenced their worldwide branding strategy and distribution. Two critical factors play a role in brand development: producing unique, innovative products and demonstrating global business acumen. At the start of 2010, "FAST COMPANY" magazine (2010) acknowledged HTC as the 31st most innovative global corporation and secured the 2nd position in the consumer electronics category. While HTC's innovation is widely recognized, questions remain about their international business prowess and the speed at which they can develop it.

Another big challenge for HTC is marketing as they were not equipped with the size and budget for a global marketing onslaught similar to LG and Samsung. In order to address this, HTC made the decision to create a brand operation center. The primary aim of this center is to develop an internal infrastructure platform to support its global marketing strategies. In 2009, HTC introduced a new set of brand positioning strategies through the “Quietly Brilliant” initiative and the global “YOU” advertising campaign, and became sponsors of the annual “Tour de France” and the “Wallpaper Design Awards”. These initiatives helped significantly raise the

worldwide awareness of the HTC brand.

HTC made several key appointments in 2010, including a new chief strategy officer, chief products officer, and a chief R&D officer. The individual tasked as the chief strategy officer oversees strategic direction and the policies on technology development. The role of the chief product officer is to handle the worldwide development of products. All these officers are expected to collaborate closely with HTC's marketing director.

The development of a brand should always align with a company's vision, as stressed by Chou, HTC's CEO. He expressed that HTC wouldn't blindly chase expansion but would instead deliberately concentrate on "value". Often, corporations lose their core values in their focused pursuit of growth. While Chou acknowledges the significance of economies of scale, he prefers to intentionally seek the value that HTC can offer to its customers. Essentially, regardless of the business model or HTC's brand, HTC emphasizes on establishing their own fundamental values. HTC doesn't solely focus on the value of technology or products but also incorporates the value of innovation, branding, markets, and managerial skills. HTC is no longer just associated with a single product but strives to enhance its competitiveness across all capacities.

Achieve greater economies of scale.

The consideration to adopt a swift, dynamic brand marketing strategy to boost brand recognition was significantly linked to another concern; discovering methods to maximize economies of scale. Results from a survey sponsored by HTC reveal that 80% of consumers prefer buying phones worth less than 200 dollars. HTC asserts that they lack the crucial scale needed to drive down costs, a problem attributed to their insufficient intellectual

property rights in mobile phones. These rights also account for the second-largest expense category for HTC and are inherently fixed compared to labor costs. To address this, HTC relocated a portion of its manufacturing to China, resulting in a substantial labor cost reduction of up to 50%. The company also initiated a partnership with Google's mobile operating system, Android, which is attractive due to its licensing-free open-resource platform status. Furthermore, HTC increased the usage of common components across its entire product range. These moves are expected to enhance economies of scale and reduce the average sales price of their merchandise.

Conclusion

HTC, originally an Original Equipment Manufacturer (OEM), upholds a business outlook that promotes steering its own course. The firm possesses robust capacity for innovation and produces top-tier smartphones. In tune with the dynamics of its industry, HTC has adopted a worldwide strategy. Their resolution to establish a global brand aligns with their goal of evolving into an international smartphone leader. Expansion has been an intentional step taken by HTC to bolster its global presence without compromising on the company's core values and insufficiently pursuing growth. Regarding question 2, "The approach of formulating a worldwide strategy can often be misguided. Superior outcomes are yielded when solid regional strategies are unified into a comprehensive global strategy.", please discuss this viewpoint and provide relevant examples.