Qualcomm Case

Decent Essays

Transaction costs accrue when one firm has greater power than another, which could give rise to the threat of opportunism (market hold-up costs). This can originate from one of several ways. Analysing TCE for Qualcomm-NXP:
1. Relation specific investments: Compatibility of products is great underlying market driver in this industry. Firms manufacture products that follow their own standard (protocols) of communication and configuration. Thereby, the technology needed to make these devices (semi-conductor chips) work together becomes critical. In this case, to capture the automotive market together, Qualcomm and NXP would have to invest in designing technologies and retool their factories such that their products are compatible with each other – Qualcomm’s connectivity solutions with NXP’s processing and security solutions. This relationship specific …show more content…

Resource Based View
Core competency of Qualcomm is R&D of wireless connectivity technology solutions. This allows it remain at the forefront of new technologies- starting from CDMA in the 90s to 5G today – Qualcomm has often been at the cutting edge and ushered in new technologies. This is valuable to its customers in multiple applications- smartphones, industrial, IoT, automotive and connected devices. It has been built by Qualcomm over several years and is protected by many patents, which makes it tough to imitate.
NXP’s competitive advantage is its strong sales channel in the automotive industry. This gives it an entrenched market share and makes it easier to introduce new products successfully.
Thus the combined entity would utilise Qualcomm’s wireless connectivity R&D capabilities to dominate the market of automotive semi-conductors using NXP’s strong sales channels.
Analysing from this resource based view:
1. Ability to keep the source of competitive advantage

Get Access