Essay about Shangzai

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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

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