Huawei Has Developed A Competitive Strategy

1491 WordsSep 30, 20176 Pages
This case study questions whether or not Huawei has developed a competitive strategy. More specifically, it questions whether or not Huawei’s smartphone strategy in combination with the dynamic environment of the smartphone industry will allow Huawei to overtake Apple in three years and Samsung in five. To determine whether Huawei’s strategy is advantageous an analysis of the competitive intensity and attractiveness of a market is necessary. This analysis is comprised of five forces including competitive rivalry, supplier power, buyer power, threat of new entry, and threat of substitutes. Together, the five forces determine where power lies in the smartphone industry. By understand competitive power within the smartphone industry and…show more content…
Buyer Power Buyer power is an assessment of the buyer’s ability to drive prices down. Due to the shift from traditional feature phones to smart phones telecom carriers no longer have a strong grip. Instead there has been a shift of power from telecom carriers to consumers. There is of course the exception in some areas such as the US and Europe where there is still a heavy presence of telecom carriers allowing them to control distribution. Consumer’s switching costs have decreased significantly because they are no longer forced to sign a contract for a fixed duration. This makes it easier for consumers to change brands and products. Customer’s bargaining power is high primarily due to low dependency on distributors, but also due to the increasing buyer volume and increased price sensitivity. Threat of New Entry Since the success of a smartphone is highly correlated with the capabilities of the OS entry opportunities have been created for companies that have a software advantage. However, high capital requirements and advanced technologies limit competition. The ability to create high brand loyalty is essential due to the high degree of differentiation. There are also high switching costs due to the multi-dimensional nature of smartphone users. As a result, this has created niche market opportunities for new brands which creates a medium threat of new competitors. Threat of Substitution A substitution is any product that
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