Case Analysis
Shanzhai! MediaTek and “White Box” Handset Market
Issue Identification
MediaTek Company is a large global chipset supplier in wireless handset market. More than half of the chipsets are selling to shanzhai market like China or South Asia. Shanzhai means illegal counterfeits or “knock-offs”. Over the last 30 years, the company had great success through this target market. However, the CEO of the company Ming-Kai Tsai was in a dilemma. He wants to get more opportunities for the company’s further growth. The primary problem is whether they should serve tire-one companies like Nokia, Motorola or Samsung instead of focus on shanzhai market. The secondary problem they faced is the company’s image and the ethical concern. The
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Threat of Substitution (High to Medium) Threat of substitution does exist for MediaTek because they are aimed at the 2G mobile phone market, thus consumers can switch at any time to the high-end 3G market. The 3G technology that is offered by many other companies allows consumers to have a much faster product without having to incur a huge price increase. With customers being able to switch markets very easily MediaTek does face a relatively high threat of substitution.
Bargaining Power of Suppliers (Low) Bargaining power of suppliers is very low because MediaTek produces the chipsets themselves and therefore they are the suppliers in the mobile phone industry. MediaTek is a very well established company, which means they are quite rare in regards to the supplier industry.
Bargaining Power of Buyers (Medium to Low) MediaTek is one of the only companies who are apply to supply chipsets in the Chinese 2G mobile phone Market, so in terms of this bargaining power of buyers is relatively low because consumers don’t have various other suppliers they can purchase from. On the other hand bargaining power of buyers is high to medium in a sense that consumers can easily switch from the low-end product which is what MediaTek offers to the high-end 3G mobile phone product. After analyzing Shanzhai! MediaTek
Bargaining Power of Buyers: The bargaining power of buyers is high in the department store retail industry. The volume of buyers is high, and buyers are very price sensitive in this industry. The products are not highly differentiated, and there are numerous stores that offer the same, or similar, products, giving buyers the opportunity to search for the lowest prices and information. The industry has substitutes available in the form of specialty, differentiated products and stores. This increases the power of buyers,
Bargaining power of buyers is medium-high because of the low switching costs and wider spectrum of similar products selling at competitive prices due to the influence of developing countries
There are many network equipment suppliers, which are suffered from the down telecom market. Having mature technologies also commoditize the products. As such, the bargaining power of suppliers has been weak.
“The mind changes, the word changes, time doesn't stay still, history is a verb, it is ongoing, there is no past tense, future tense, history is constant” Hung Liu told interviewer Rachelle Riechart (Riechart). Hung Liu is a Chinese woman who was born in Changchun, China in 1948. She was born during the age which we call the Chinese Cultural Revolution, which heavily impacted her life. She lived in China for 36 years and then left for the United States. She now resides in Oakland, CA, where she teaches art at Mills College (“A World of Art”). A lot of her artwork is based on photographs and memories she has from China and photographs she’s taken in the United
1a. How did Cisco find itself in trouble with regard to its intended IT prior to Brad Boston's arrival?
1. Cisco suffered from inertia when an attempt was made to engage business management in selecting software for their individual areas, and/or agreeing to participate in the ERP implementation project. List and explain reasons why management would hesitate to become engaged in the IT process/project.
Factor Bargaining Leverage Concentration of buyers If there are only a few buyers, each will wield more power. Large-volume buyers are important to your industry and therefore hold more bargaining power. If substitutes for your industry’s product are available, buyers have more power. If your buyer faces high switching costs, they have less power. If buyers are capable of supplying your industry’s product to themselves, they may use that threat to demand more favorable terms. Explanation Your Industry
The market greatly depends on how powerful buyers are in terms of their willingness to pay certain prices. The following determines the bargaining power of buyers
The Bargaining Power of Suppliers (Moderate): Most of the industry’s products are sourced and manufactured by a network of third parties. The supplier group is diluted compared to the industry; KMD alone has over 45 suppliers. There is credible threat of suppliers adopting forward integration resulting in loss of major suppliers and emergence of new competitors for the industry. Highly effective and specialised products will pose high supplier switching costs for industry firms.
- The Threat of Substitutes is high, since mobile product-life cycles are short. For example, Motorola is currently
The power of buyers in the industry varies at different levels depending on the field. For pharmaceutical drug companies, which have thousands of patients, customers have lower price sensitivity as they are rarely able to refuse the treatments they need and they have low bargaining leverage due to commonly lack of information as well as knowledge on the drugs. For biotech firms that distribute specialized products to the government and hospitals, their customers actually have more of a bargaining power due to being the sole consumer sources
Bargaining power of suppliers. Suppliers have the ability to leverage, control, and negotiate the cost of their products (Hill et al., 2015, p. 56). In the case of the suppliers of the office supplies industry, more so for Staples, the bargaining power is weak and is considered to be low. The reason for its power being weak is a result of large companies having several suppliers that will easily compete against each other to provide the lowest cost of products.
Its high market share means that it will have high bargaining power relative to its suppliers and its low price will also serve as a barrier to entry.
As bargaining power is determined by the uniqueness of supplier’s products, supplier for Apple have little competitive advantage nor bargaining power. In fact, the majority of suppliers compete for contracts with Apple, and seek out maintaining those contracts by providing products at cheaper than competitor rates. Apple has also reduced the power of suppliers through the designing of its own computer chips and processors. Additionally, Apple reduced the power of manufacturers, like Qualcomm, by buying manufacturing equipment and only allowing this equipment to be
The suppliers get the advantages of making their products be showcased for the consumers thru these retailing outlets. A wider scope of retail outlets could mean wider scope for the brand recognition of the seller’s products, that is why these retailing giants has more power than suppliers. But when it comes to distribution, having a strong supplier is important, the company be better over competitors when it comes to qualitative factors such as on time deliveries on their branches and wider network of