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November                                        HTC       21, 2011THE STRATEGY-FORMULATION ANALYTICALFRAMEWORK            ...
November                                                           HTC         21, 2011STAGE 1: THE INPUT STAGEStages 1 su...
November                                                     HTC     21, 2011      EFE MATRIX FOR HTCKEY EXTERNAL         ...
November                                                                 HTC         21, 2011compared to the competitorsTO...
November                                                  HTC       21, 2011        CPM MATRIX FOR HTC                    ...
November                                                         HTC         21, 2011ANALYSIS OF CPM MATRIX:  Apple is on ...
November                                                    HTC     21, 2011      IFE MATRIX FOR HTCKEY EXTERNAL          ...
November                                                                   HTC         21, 20111. HTC is not very much rec...
November                                                          HTC         21, 2011STAGE 2: THE MATCHING STAGEStage 2 f...
November                                                                           HTC            21, 2011   defensive str...
November                                                                               HTC            21, 2011    3. Incre...
November                                                                           HTC           21, 2011INDUSTRY STRENGTH...
November                                                                    HTC           21, 2011Directional Vector coord...
November                                                         HTC         21, 2011Market PenetrationMarket DevelopmentP...
November                                                             HTC          21, 2011              High 1.0          ...
November                                                         HTC        21, 2011ANALYSIS OF BCG:All three regions i.e....
November                                                        HTC           21, 2011       The Internal-External (IE) Ma...
November                                                            HTC         21, 2011ANALYSIS OF IE:Asia region lies in...
November                                                       HTC       21, 2011     Grand Strategy Matrix               ...
November                                    HTC     21, 2011   Matrix Analysis SummaryAlternative Strategies         IE   ...
November                                                         HTC         21, 2011STAGE 3: DECISION STAGEStage 3Analysi...
November                                                           HTC      21, 2011        THE QUANTITATIVE STRATEGIC PLA...
November                                                            HTC      21, 20113. Stringent regulation.             ...
November                                                                 HTC         21, 2011brand in the market as compar...
November                                                         HTC        21, 2011RECOMMENDATIONS:STRATEGY 1:LOWER ITS M...
November                                                          HTC         21, 2011EXPAND MARKETS IN ASIA & CHINA:As th...
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Htc complete analysis

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EXTERNAL FACTOR EVALUTION (EFE) MATRIX
COMPETITIVE PROFILE MATRIX (CPM)
INTERNAL FACTOR EVALUTION (IFE) MATRIX

STRENGHT-WEAKNESS-OPPORTUINITIES-THREATS(SWOT) MATRIX
STRATEGIC POSITION AND ACTION EVALUTION (SPACE) MATRIX
BOSTON CONSULTING GROUP (BCG) MATRIX
INTERNAL-EXTERNAL(IE)MATRIX
GRANG STRATEGY MATRIX

QUANTITATIVE STRATEGIC PLANNING MATRIX(QSPM)

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Transcript of "Htc complete analysis"

  1. 1. November HTC 21, 2011THE STRATEGY-FORMULATION ANALYTICALFRAMEWORK • EXTERNAL FACTOR STAGE 1 EVALUTION (EFE) MATRIX • COMPETITIVE PROFILE MATRIX (CPM) THE INPUT STAGE • INTERNAL FACTOR EVALUTION (IFE) MATRIX • STRENGHT-WEAKNESS- STAGE 2 OPPORTUINITIES-THREATS(SWOT) MATRIX THE MATCHING STAGE • STRATEGIC POSITION AND ACTION EVALUTION (SPACE) MATRIX • BOSTON CONSULTING GROUP (BCG) MATRIX • INTERNAL-EXTERNAL(IE)MATRIX • GRANG STRATEGY MATRIX • QUANTITATIVE STAGE 3 STRATEGIC PLANNING THE DECISION STAGE MATRIX(QSPM) 1
  2. 2. November HTC 21, 2011STAGE 1: THE INPUT STAGEStages 1 summarize the basic input information needed to formulate strategies. Theinformation derived from these three matrices provides basic input information forthe matching and decision stage matrices.1. INDUSTRY ANALYSIS: THE EXTERNAL FACTOR EVALUTION (EFE) MATRIX:An EFE Matrix allows strategies to summarize and evaluate economic, social,cultural, demographic, environmental, political, government, legal, technological,and competitive information2. THE COMPETITIVE PROFILE MATRIX (CPM):The CPM identifies a firm’s major competitors and its particular strengths andweakness in relation to a sample firm’s strategic position.3. THE INTERNAL FACTOR EVALUTION (IFE) MATRIX: IFE Matrix provides strategy formulation tool summarizes and evaluatesthe major strengths and weakness in the functional areas of a business, and it alsoprovides a basis for identifying and evaluating relationships among those areas. 2
  3. 3. November HTC 21, 2011 EFE MATRIX FOR HTCKEY EXTERNAL WEIGHT RATING WEIGHTEDFACTORS SCOREOPPORTUNITIES:1. HTC collaborated with Google and 0.12 3 0.36launched their cell phones with GoogleAndroid OS install in it.2. Strategic partnership with Beat 0.11 3 0.33Electronics by acquiring 51% shares.3. Patent agreements. 0.05 2 0.104. Industrial growth rate is high for HTC. 0.10 3 0.305. Increasing demand for Touch screen 0.07 4 0.28phones with 3G technology.6. Manufacturing units in Brazil. 0.02 2 0.047. As BlackBerry is an executive phone, 0.08 1 0.08HTC should also try to reach theexecutive level.THREATS:1. Rapid technological change. 0.13 3 0.392. Intense competition. 0.08 3 0.243. Stringent regulation. 0.02 1 0.024. Difficult to make HTC phones 0.11 3 0.03customer first preference when Apple,Nokia and BlackBerry phones are in themarket (customer loyalty).5.Numbers of products are less as 0.11 3 0.33 3
  4. 4. November HTC 21, 2011compared to the competitorsTOTAL 1.00 2.8 ANALYSIS OF EFE MATRIX: The total weighted score of 2.8 is above the average of 2.5, so the telecommunication business (HTC) is doing pretty well, taking advantage of the external opportunities and avoiding the threats facing the corporation but still there is a great room for improvement as HTC is competing with the great players of mobile market they need to continue producing new mobile models to cope up with the competition. The corporation should take advantage when their competitor make some mistake like blackberry have to called their phone sets from the market due to some defect, in this situation HTC should try to win the customers of blackberry. Striking out the opportunities at the right time and eliminating threats at the right time will definitely help HTC to become the giant of the market. 4
  5. 5. November HTC 21, 2011 CPM MATRIX FOR HTC APPLE HTC NOKIACRITICAL WEI RATI WEIG RATI WEIG RAT WEIGSUCCESS GHT NG HTED NG HTED ING HTEDFACTORS SCOR SCOR SCOR E E EMarket share 0.1 3 0.3 2 0.2 3 0.3Price 0.1 2 0.2 2 0.2 3 0.3Financial position 0.15 3 0.45 3 0.45 2 0.3Product quality 0.15 3 0.45 3 0.45 2 0.3Consumer loyalty 0.15 4 0.6 2 0.30 3 0.45Advertising 0.05 2 0.1 1 0.05 3 0.15Management 0.07 4 0.28 4 0.28 2 0.14Global expansion 0.08 3 0.24 3 0.24 3 0.24Innovation 0.15 4 0.6 4 0.6 3 0.45TOTAL 2.77 1.00 3.22 2.63 5
  6. 6. November HTC 21, 2011ANALYSIS OF CPM MATRIX: Apple is on the top position as compared to HTC and Nokia. Apple is using aneffective technique that has been able to create a brand image, which helps inachieving high market share as compared to other brands. Apple is much popularand highly in demand brand which is the major threat to HTC. It is a big hindrancein the demand of HTC cell phones. Apart from that, the financial crush could alsobe the threat for the company. That’s because HTC smart phones are expensiveand are not affordable for many of the smart phones users. On the other sideNOKIA’s smart phones are way cheaper. So lots of people prefer Nokia on HTC.However, through effective advertising HTC can differentiate its smart phones andcan get maximum advantage of its new ANDROID phones. 6
  7. 7. November HTC 21, 2011 IFE MATRIX FOR HTCKEY EXTERNAL WEIGHT RATING WEIGHTEDFACTORS SCORESTRENGHTS:1. It is the leading maker of PDA’s smart 0.04 4 0.16phones in the world.2. There is the strong setup of R&D in 0.14 4 0.56HTC.3. HTC caters the customer national and 0.13 4 0.52internationally and the numbers ofcustomers.4. HTC smart phones equipped with 0.06 3 0.18windows vista, Android OS, HD videorecording, multiple touch system.5. Industry recognition and awards. 0.11 4 0.446. Financial performance. 0.03 3 0.097. Expending market share in sectors. 0.10 3 0.3WEAKNESS: 7
  8. 8. November HTC 21, 20111. HTC is not very much recognized 0.10 2 0.2brand in the market as compare to theApple, Nokia and Blackberry.2. High manufacturing cost of HTC. 0.07 1 0.073. Declining liquidity ratio. 0.04 2 0.084. Patent infringement litigation. 0.01 2 0.025. Small range of cell phones model as 0.08 1 0.08compared to Nokia.6.huge market share capture by Nokia, 0.09 1 0.09Apple and BlackBerry etc.TOTAL 1.00 2.79 ANALYSIS OF IFE MATRIX: The IFE of HTC shows weight age average of 2.79 is above average which means corporation is able to use is toped resources and focus on strength like updated machinery, new technology used that is increased cost can be control through revenue earned by HTC. However, it has small range of cell phones compared to NOKIA and has very high manufacturing cost as well but still there is a great room for improvement as HTC is competing with the great players of mobile market they need to continue producing new mobile models to cope up with the competition. As entering into new markets like CHINA and INDIA can bring heavy cash inflow to the company but the need is to have heavy spending on advertisement to that will not only give HTC brand recognition but will bring huge profits that can strengthen its financial position and can improve its financial ratios as well. 8
  9. 9. November HTC 21, 2011STAGE 2: THE MATCHING STAGEStage 2 focuses upon generating feasible alternative strategies by aligning keyexternal and internal factors. Strategy is sometimes defined as the match anorganization makes between its internal resources and skills and the opportunitiesand risks created by its external factors.1. THE STRENGHT-WEAKNESS-OPPRTUNITIES- THREATS (TOWS) MATRIX:The SWOT Matrix is an important matching tool that helps managers developsfour types of strategies: SO Strategies use a firm’s internal strengths to taeadvantage of external opportunities, WO Strategies aim at improving internalweakness by taking advantage of external opportunities, ST Strategies use a firm’sstrengths to avoid or reduce the impact of external threats, WT Strategies are 9
  10. 10. November HTC 21, 2011 defensive strategies tactics directed at reducing internal weakness and avoiding external threats. 2. THE STRATEGIC POSITION AND ACTION EVALUTION (SPACE) MATRIX: The SPACE Matrix indicates whether aggressive, conservative, defensive, or competitive strategies are most appropriate for a given organization. The axe of the SPACE Matrix represents two internal dimensions (Financial strength [FS] and competitive advantage [CA]) and two external dimensions (environmental stability [ES] and industry strength [IS]). 3. THE BOSTON CONSULTING GROUP (BCG) MATRIX: BCG &IE Matrix are designed specifically to enhance a multi divisional firm’s efforts to formulate strategies. The BCG Matrix graphically portrays differences among divisions in terms of relative market share position and industry growth rate. 4. The INTERNAL-EXTERNAL (IE) MARIX: The Internal-External (IE) Matrix positions an organization’s various divisions in a nine-cell display. 5. THE GRAND STRATYEGY MATRIX: In addition to the SWOT Matrix, SPACE Matrix, BCG Matrix, and IE Matrix, the Grand Strategy Matrix has become a popular tool for formulating alternative strategies. All organizations can be positioned in one of the Grand Strategy Matrix’s four strategy quadrants. TOWS MATRIX OF HTCSO STRATEGIES WO - STRATEGIES1. Produced innovative products with high 1. Purchase all legal rights (W4, O3).technology (S2, O1).2. Served national and globally with 3G technology 2. Lower their cost by taking advantage of lower labor(S3, O5, O4). cost and production unit (W2, O7). 10
  11. 11. November HTC 21, 2011 3. Increasing market share by providing innovative 3. Overcome short term debt by strategic alliances (W3, products to customers as compared to rivals (S7, O2). O7). 4.Bring out new products in collaboration with 4. Take advantage of sponsorship to make space in hearts experience partnership(S8,O2) of customers (W1, W6, and O6). 5.Acheived many rewards and recognition by Beating electronic rivals(S5,O2) ST- STRATEGIES WT - STRATEGIES 1. Introduced new products to gain customer trust 1. Put attractive features to the product (W6, T5). (S4, T4, and T5). 2. Compete with rival by focus on performance, 2. Keep cost low to attract customers (W5, T4). Technological advancement and brand recognitions and awards (S5, S6, S7, T2, T1). 3. Compete with rivals by providing services to 3. Compete with rivals with new techniques (T2, W6, and customers nationally and internationally (S3, T2). W1). 4. Enlarge sales volume and market share with more 4. Supported by technology launches and threaten by promotional activities as compared to rivals (S7, popular and highly in demand brand because of high cost T5). (W2, T1, and T5). 5. Less brand awareness leads to lower marketing/sales (W1, T5). SPACE MATRIX OF HTCFINANCIAL STRENGTH RATINGS 31. Purchase all legal rights.2. Overcome short term debt by strategic alliances. 33. It is the leading maker of PDA’s smart phones in the world and there is strong setup of R&D in 5HTC. 11 11
  12. 12. November HTC 21, 2011INDUSTRY STRENGTH 41. Compete with rivals by providing services to customers nationally and internationally. 42. Defect in BlackBerry sales decline product brings out HTC product. 63. Producing 3G technology in response to rapid technological change. 14ENVRIONMENTAL STABILITY -21.Compete with rivals with new techniques2. Supported by technology launches and threaten by popular and highly in demand because of -5high cost.3. Less brand awareness leads to lower marketing sales. -64.Compete with rivals by focus on performance, technology etc. -3 -16COMPETITIVE ADVANTAGE -31. HTC has long experience with network suppliers. -22. Introduced new products to gain customer trust.3. Enlarge sales volume by market share with more promotional activities as compared to rivals. -54. Put attractive features to the products. -25. Keep cost low to attract customers. -4 -16 CONCLUSION: ES= -16/4= -4 IS = 14/3 = 4.67 CA= -16/5= -3.2 FS = 11/3 = 3.667 12
  13. 13. November HTC 21, 2011Directional Vector coordinates’: x-axis: -3.2 + 4.67 = 1.47 Y-axis: -4 + 3.67 = -0.33 FSCONSERVATIVE AGGRESSIVE 6 5 4 3 2 1CA IS -7 -6 -5 -4 -3 -2 -1 1 2 3 4 5 6 7 -1 -2 -3 -4 -5DEFENSIVE COMPETITIVE ESANALYSIS OF SPACE MATRIX:Forward IntegrationBackward IntegrationHorizontal Integration 13
  14. 14. November HTC 21, 2011Market PenetrationMarket DevelopmentProduct DevelopmentJoint VentureHTC is competing fairly in an unstable market. Organization lies in“COMPETITIVE” quadrant. They should really go for market penetration, productdevelopment.The result of TOWS analysis is matching with space matrix .The decisionregarding market penetration, product development will be beneficial to move withthe overall performance is good, firms financial strength is a dominating factor inthe industry.BOSTON CONSULTING GROUP (BCG) MATRIX RELATIVE MARKET SHARE 14
  15. 15. November HTC 21, 2011 High 1.0 Medium 0.5 Low 0.0High +20 I Stars Question Marks N D U S AMERICA T R EUROPE Y G R OMedium 0 ASIA W T Cash Cows Dogs H R A T E Low -20 DIVISION REVENUE REVENUE PROFIT PROFIT MARKET GROWTH Billion ($) % Billion ($) % SHARE RATE ASIA 47.7 17.1 9.842 25 21.44 +6 EUROPE 90.1 32.2 14.15 36 39.89 +9 AMERICA 141 50.6 15.338 39 45.60 +10 TOTAL 278.8 100 39.33 100 15
  16. 16. November HTC 21, 2011ANALYSIS OF BCG:All three regions i.e. Asia, Europe and America lie in the first quadrant that isQUESTION MARK, means HTC needs to penetrate its market to bring theseregions in STAR. HTC’s demand has been growing rapidly among upper-middleand working class due to its introduction of ANDROID phones which are moreattractive and have more functions and features compared to NOKIA.Although it has not been reached to the level of apple yet, but can easily targetexecutive class by reaching to the companies and having contract with them to givetheir executive people HTC phones. According to the recent analysis it has beenobserved that many people of top level management have started to prefer Androidphones due to their enhanced operating system. So, it’s a good time for HTC toengage itself in good contracts with well renounced multinational companies andto have a good advertising. 16
  17. 17. November HTC 21, 2011 The Internal-External (IE) Matrix THE IFE TOTAL WEIGHTED SCORESEFEWEIGHTEDSCORE DIVISION REVENUE REVENUE % PROFIT PROFIT % IFE EFE Billion ($) Billion ($) ASIA 47.7 17.1 9.842 25 1.98 2.10 EUROPE 90.1 32.2 14.15 36 2.39 2.53 AMERICA 141 50.6 15.338 39 2.56 2.67 TOTAL 278.8 100 39.33 100 17
  18. 18. November HTC 21, 2011ANALYSIS OF IE:Asia region lies in weak quadrant and HTC after entering into new market INDIAneed to put its huge money on advertising. They need to sow many HYV (highyielding variety) seeds to harvest well, like showing effective ads that shouldparticularly focus executive class. They should not advertise their android phonesonly, but their windows phones and tabs as well.However, America and Europe lie in the medium quadrant means they are doinglittle well, still they need to strength their position through the strategy of productdevelopment to move to strong quadrant. As its rivals apple and Samsung havealready captured a huge market and Motorola is also coming up with new range ofandroid phones, so HTC needs to keep an eagle eye on its rival and must respondto the public demand as both America and Europe are the high profit yielding areasfor HTC. 18
  19. 19. November HTC 21, 2011 Grand Strategy Matrix RAPID MARKET GROWTH Quadrant II Quadrant IWEAK STRONGCOMPETITIVE COMPETITIVEPOSITION POSITION Quadrant III Quadrant IV Concentric HTC Diversification Conglomerate Diversification Horizontal Diversification SLOW MARKET GROWTH Retrenchment Divestiture Liquidation 19
  20. 20. November HTC 21, 2011 Matrix Analysis SummaryAlternative Strategies IE SPACE GRANDForward Integration * *Backward Integration * *Horizontal Integration * *Market Penetration * *Market Development * *Product Development * *Concentric Diversification *Conglomerate Diversification *Horizontal Diversification *Joint Venture *Retrenchment *Divestiture *Liquidation * 20
  21. 21. November HTC 21, 2011STAGE 3: DECISION STAGEStage 3Analysis and intuition provide a basis for making strategy-formulationdecisions.THE QUANTITATIVE STRATEGIC PLANNINGMATRIX (QSPM)This technique is the QUANTITATIVE STRATEGIC PLANNING MATRIX(QSPM), which comprises stage 3 of the strategy-formulation analyticalframework. This technique objectively indicates which alternatives strategies arebest. The QSPM uses input from stage 1 analyses and matching results from stage2 analyses to decide objectively among alternative strategies. 21
  22. 22. November HTC 21, 2011 THE QUANTITATIVE STRATEGIC PLANNING MATRIX (QSPM) DIVERTIFICATIO EXPAND N IN PRODUCTS MARKET IN ASIA & CHINAKEY EXTERNAL WEIGH AS TAS TASFACTORS T ASOPPORTUNITIES:1. HTC collaborated with Google and 0.12 4.00 0.48 2.00 0.24launched their cell phones withGoogle Android OS install in it.2. Strategic partnership with Beat 0.11 3.00 0.33 3.00 0.33Electronics by acquiring 51% shares.3. Patent agreements. 0.05 - - - -4. Industrial growth rate is high for 0.10 2.00 0.2 3.00 0.3HTC.5. Increasing demand for Touch screen 0.07 3.00 0.21 4.00 0.28phones with 3G technology.6. Manufacturing units in Brazil. 0.02 - - - -7. As BlackBerry is an executive 0.08 3.00 0.24 4.00 0.32phone, HTC should also try to reachthe executive level.THREATS:1. Rapid technological change. 0.13 3.00 0.39 2.00 0.262. Intense competition. 0.08 4.00 0.32 3.00 0.24 22
  23. 23. November HTC 21, 20113. Stringent regulation. 0.02 - - - -4. Difficult to make HTC phones 0.11 2.00 0.22 4.00 0.44customer first preference when Apple,Nokia and BlackBerry phones are inthe market (customer loyalty).5.Numbers of products are less as 0.11 1.00 0.11 2.00 0.22compared to the competitorsSUBTOTAL 1.00 2.5 2.33 DIVERSIFICATI EXPAND ON IN MARKET IN PRODUCTS ASIA & CHINAKEY INTERNA FACTORS WEIGH AS TAS TAS T ASSTRENGTH: 0.04 1.00 0.04 4.00 0.161. It is the leading maker of PDA’ssmart phones in the world.2. There is the strong setup of R&D in 0.14 2.00 0.28 3.00 0.42HTC.3. HTC caters the customer national 0.13 3.00 0.39 1.00 0.13and internationally and the numbers ofcustomers.4. HTC smart phones equipped with 0.06 2.00 0.12 1.00 0.06windows vista, Android OS, HD videorecording, multiple touch system.5. Industry recognition and awards. 0.11 - - - -6. Financial performance. 0.03 - - - -7. Expending market share in sectors. 0.10 1.00 0.1 4.00 0.4WEAKNESSES:1. HTC is not very much recognized 0.10 2.00 0.2 4.00 0.4 23
  24. 24. November HTC 21, 2011brand in the market as compare to theApple, Nokia and Blackberry.2. High manufacturing cost of HTC. 0.07 1.00 0.07 3.00 0.213. Declining liquidity ratio. 0.04 - - - -4. Patent infringement litigation. 0.01 - - - -5. Small range of cell phones model as 0.08 4.00 0.32 1.00 0.08compared to Nokia.6.huge market share capture by Nokia, 0.09 3.00 0.27 3.00 0.27Apple and BlackBerry etc.SUBTOTAL 1.00 1.79 2.13SUM TOTAL 4.29 4.46ATTRACTIVENESSSCORE ANALYSIS OF QSPM: The two alternative strategies__ (1) DIVERSIFICATION IN PRODUCTS (2) EXPAND MARKET IN ASIA & CHINA___ are being considered for HTC , by sum total attractiveness scores of 4.29 and 4.46 that the analysis indicates that HTC should go for market development in ASIA and CHINA. As both CHINA and Asia’s largest territory holder INDIA fall under the category of coming up super power country, so its will prove to be a good strategy for HTC to expand but side by side they need to have a good marketing to have a brand recognition. Furthermore, they should try to reach to target executive level as their android phones can easily make their market in their segment due to their operating system. 24
  25. 25. November HTC 21, 2011RECOMMENDATIONS:STRATEGY 1:LOWER ITS MARKET PRICES:The fact that Apples new phone isnt significantly cheaper than its previousiPhone 4 offering should allow HTC to increase market share in key emergingmarkets with its cheaper Smartphone models.STRATEGY 2:ADVERTISE EFFECTIVELY:AS the Smartphone market has grown nearly ninety percent from last year andmore than six times the overall mobile phone market indicates strong demandworldwide and vendors collective ability to meet that demand.STRATEGY 3: 25
  26. 26. November HTC 21, 2011EXPAND MARKETS IN ASIA & CHINA:As the Taiyuan-based company has increased market share in the U.S., Asia andEurope in recent years with its early adoption of Google Inc.s Android software,becoming the fifth-largest producer of Smartphone globally by shipments in thesecond quarter. Over the past year it has acquired a variety of companies, includingBeats, a headphone maker started by music producer Dr. Dre, to build out itsservice offerings and compete with Apple Inc.s iPhone and Samsung ElectronicsCo.s Smartphone’s 26

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