1STRATEGY AND LEADERSHIP MANAGEMENT Table of Contents 1.0 Company Introduction.............................................................................................2 2.0 Evaluation of strategic undertaking.........................................................................4 1. Suitability...............................................................................................................4 2. Feasibility...............................................................................................................7 3. Acceptability..........................................................................................................9 4. Rationale and Motivation.....................................................................................11 3.0 Potential problems..................................................................................................12 1. Problem I..............................................................................................................12 2. Problem II.............................................................................................................12 3. Problem III...........................................................................................................12 4.0 Recommendation....................................................................................................13 4.1 Recommendation I.............................................................................................13 4.2 Recommendation II............................................................................................13 4.3 Recommendation III...........................................................................................14 5.0 Conclusion..............................................................................................................14 6.0 Reference List........................................................................................................15
2STRATEGY AND LEADERSHIP MANAGEMENT 1.0 Company Introduction Mergers and acquisitions and joint ventures are considered to be an important part of the long term operations of global organizations. This process is mainly based on the ways by assets or companies are consolidated with the help of different financial transactions. Mergers and acquisitions are thereby considered to be a significant part of the strategic management based actions of a company (Barros, Hernangómez and Martin-Cruz 2016). Google LLC is a multinational corporation that has its base in the United States and operates in the technology based industry. The company mainly specialises in providing internet-relatedservicesanddifferentproductswhichinclude,searchengine,online advertising based technologies, hardware, software and cloud computing (Google.com 2019). HTC Corporation is a Taiwanese electronics organization which has its headquarters in Xindian District, New Taipei City, Taiwan. The organization was established in the year 1997andHTChadstarteditsoperationsasamanufactureroforiginaldesignsand equipments Htc.com 2019 (Htc.com 2019). The analysis in the report will be mainly based on the merger process that has been undertaken by Google. The deal which was made by Google in order to acquire the smartphone organization named HTC is the major topic of discussion in the report. The deal was completed by Google in the year 2018 and the organization mainly aims at acquiring the research and development based division of HTC. The entire acquisition based method of Google can be analysed with the help of proper implementation of the Ansoff Matrix (Daspit et al. 2017). The four major parts of the Ansoff Matrix analysis will be based on market development, diversification, market penetration and product development. Ansoff Growth based matrix is mainly based on the concept of the growth of a business organization based on the existing markets or the new markets. The growth based
3STRATEGY AND LEADERSHIP MANAGEMENT strategies that are developed with respect to the matrix is based on the direction that can be provided to the organization. The four major parts of the Ansoff Growth matrix include, market penetration, product development, marker development and diversification. Market penetration –HTC has aimed at achieving high levels of growth in the market with the help of the existing products that are already sold by the organization. The capabilities and resources of the organization have however not been enough for proper penetration in the market (Demir, Wennberg and McKelvie 2017). Market development –HTC has tried to target new markets with the existing range of products. The organization has also developed new products for the purpose of proper market development. Product development –New products are developed by HTC for targeting the existing segments of the market in an effective manner. The specific customers of the organization are targeted by the products in order to improve the revenue levels (Durand, Grant and Madsen 2017). Diversification –HTC has diversified its business operations in different areas based on the supply of the products to the new market areas. The diversification based strategies of HTC have however not been quite useful for the successful operations of the company.
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4STRATEGY AND LEADERSHIP MANAGEMENT Figure 1 – Ansoff Matrix Source - 2.0 Evaluation of strategic undertaking 1. Suitability PESTEL analysis of HTC The first product that was launched by HTC individually was named as HTC Touch and it was introduced in the year 2006. The first smart screen based phone of the organization was further launched in the following year. The organization also received the award of third best organization based on technological development in the year 2007. Some of the major products that have been launched by HTC in the industry include, Hero, HD2, Desire, Touch Diamond and HD Legend (Dyer et al. 2015). Political factors –The tax based rates in Taiwan is 25% which has a major impact on the profitability levels of HTC. The conflicts and instabilities that have taken place in the political condition have been able to affect the economy and the market strategy of the organization as well. The company has however followed the laws which have been developed by the government. Economic factors –The marketing and sales of HTC have been affected by the deflation that had taken place between the economy of Taiwan and China. The sales of the organization were also affected by the import and export of the machinery that are required for production and manufacture purposes (Engert, Rauter and Baumgartner 2016). Social factors –The living standards of people have been affected by the products of HTC and the needs of consumers are considered to be a major factor for the manufacture of
5STRATEGY AND LEADERSHIP MANAGEMENT different products. The products which are developed by the company are also socially acceptable in nature. Technological factors –The latest technologies are used by HTC for the purpose if developing the products in an effective manner. The features that are provided by the products are based on latest changes that have taken place in the environment (Ethiraj, Gambardella and Helfat 2018). Legal factors –The organization has faced some major legal issues that are related to the patents that have been gained based on its android handsets in the year 2010. Environmental factors –The major priority of HTC is to maintain health of the environment. The recycling of cell phones is a activity is performed for reduction of the effects of the operations of HTC on the environmental conditions (Frynas and Mellahi 2015). PoliticalEconomicSocialTechnologicalEnvironmenta l Legal Changes in tax rates. Conflicts in political condition. Deflation in economy. Importand export activities. Changesin living standards. Developmen t of socially acceptable products. Implementation oflatest technologies. Features related to latest technology. Maintaining healthof environment. Recycling activities. Patents based issues.
6STRATEGY AND LEADERSHIP MANAGEMENT Porter’s five forces analysis of HTC Bargaining power of the suppliers –The bargaining based power of the suppliers are considered to be major opportunities for the organizations in the industry including HTC Corporations. They are able to compete based on the reduction of manufacturing costs.Low. Threats based on the substitutes –The customers are provided with alternative products that are based on lower prices and can offer better levels of performance as well. The threats based on the substitutes in the market are thereby quite high (Dobbs 2014).High. Bargaining power of the buyers –The bargaining power of buyers in the industry is moderate as the smartphone based market is ruled by organizations like, Samsung, Apple and Nokia.High. Rivalry in the industry –The levels of competitive rivalry in the industry are high as the differentiation of the products are also not high.High. Threats based on new entry –The economic downturn is considered to be an important factor that is able to impact the entry of new companies in the smartphone market. The competition levels are high and entry of new organizations is quite common as well (Hill, Jones and Schilling 2014).High. Threatsofnew entrants Industry rivalry Bargainingpowerof suppliers Bargainingpowerofthe consumers Threats of substitutes
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7STRATEGY AND LEADERSHIP MANAGEMENT Figure 3 – Porter’s Five Forces Analysis Source – Created by author SWOT analysis of HTC Strengths HTCisthelargestmakerofthe PDA’ssmartphoneinthewhole world. The research and development based setup of the organization is strong. HTC has received many awards and industry recognitions. Weaknesses The recognition levels of HTC in the market is quite low. Themanufacturingcostsofthe products are high. HTC has faced major issues based on patent infringement. The range of cell phones offered by HTC is small as compared to other organizations. Opportunities ThecollaborationofHTCwith Google is considered to be a major growth opportunity for the company. Thecompanyhasdevelopeda strategicpartnershipwithBeat Electronics. The rate of industrial growth of the organization is high. Threats Rapidlevelsoftechnological changesareabletoaffectthe operations of HTC. The levels of competition faced by the organization are high. The preference of the customers for other brands is high (Meyer, Neck and Meeks 2017). TOWS analysis of HTC SO Strategies Productionoftheinnovative productsthatarebasedonhigh technology. Increasing the shares in the market with the help of innovative products. Developmentofnewproductsby forming experience partnerships. WO Strategies Purchasing the legal rights. Loweringthecostsbyusinglow cost labour. Overcomingthedebtsbythe formation of strategic alliances. Takingadvantageofthe sponsorshipstomakespacein customerminds(Michael,Storey and Thomas 2017).
8STRATEGY AND LEADERSHIP MANAGEMENT ST Strategies Introduction of the new products for gaining trust of customers. Competingwiththerivalsby focussing on the performance levels. Enlargingmarketshareandsales volume. WT Strategies Implementing attractive features in the products. Keeping the costs low in order to attract the customers. Competing with the rivals with the help of the new techniques. 2. Feasibility Physical resources –The physical resources of HTC are mainly based on the vast research and development based facilities which are maintained by the organization. The production based facilities of the organization are located in Taiwan and the major production based facilities are located in China. The outsourcing based activities of production process is considered to be an important factor that is able to affect the costs based on production of HTC. The materials that are used by the organization are also upgraded on a regular basis based on the requirements in production. The organization aims at managing the inventory in an efficient manner based on the future demands in the market (Meyer, Neck and Meeks 2017). A considerable amount of cash stock is used by HTC for the purpose of the increasing the strengths of its production process. The research based process that is used by the company is also considered to be effective for the operations of the organization. Financial resources –The amounts of cash flow that have been held by HTC as a result of the financial year 2011 were not quite high. The organization has invested in the developed of more research and development based activities. HTC also has the capability of borrowing high amounts of funds from the market. The overall competencies and the resources of the company are affected by the levels of financial resources that are gained by HTC. The organization has been enlisted in the Taiwan Stock Exchange and has gained the topmost rank based on stability. The asset management based decisions that have been taken
9STRATEGY AND LEADERSHIP MANAGEMENT by HTC have been based on the priority that is provided to the fluidity and security (Michael, Storey and Thomas 2017). Intellectual and capital resources –HTC has paid high levels of attention to the developmentofin-houseresearchanddevelopmentbasedfacilities.TheR&Dbased capabilitiestherebyaccountfor 30% of thetotalheadcountin theorganization.The organization had proved itself to be an innovator by developing many products that can be considered to be first in the technology market. The partnership that has been developed by HTC with Google and Android has also been able to affect the availability of technological and intellectual resources as well (Demir, Wennberg and McKelvie 2017). HTC has however provided more attention to the development of intellectual resources of the organization. The acquisitions of HTC have been able to play a key part in increasing the levels of intellectual resources. The patent based portfolio is also considered to be important for the issues faced by the company based on patent infringement. Human resources –Human resources are regarded as the most important resource by HTC. The high intellectual value of technology market is related to the importance which is provided to the human resources within the organization. The organization has recently acquiredspecialistsindifferentfieldslike,brandpromotion,designingtheproducts, marketing and sales and user interface. The employee base of the organization consists of greater than 13000 people who belong to North America and Europe(Durand, Grant and Madsen2017).Majorpartoftheemployeesinthiscaseworkintheresearchand development based centres of the organization. The different significant positions in the organization like that of engineers and managers are held by the specialists of Taiwan. Types of resourcesVariablesHow to locate them?
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10STRATEGY AND LEADERSHIP MANAGEMENT PhysicalDifferentfacilitiesand capabilities. Within the organizations. IntellectualPartnershipsWithin the organization. HumanEmployeesWithinorganizational processes. FinancialInvestmentsWithinthepartnershipsof the organization. Figure 2 – Key resources Source – Created by author 3. Acceptability The stakeholders of a company are able to play a major role in the development of revenuesandprofitabilitylevelsinaneffectiveway.Thestakeholdergroupsofthe technology based organizations are considered to be an important part of the organizational operations. HTC has also provided huge levels of importance to the stakeholder groups of the organization (Daspit et al. 2017). The different stakeholders of HTC thereby include, consumers, employees, investors and the employees who work under the distributors and the suppliers of the organization as well. Consumers –The consumers are provided with effective levels of priority by HTC. The consumer based stakeholder group of the organization mainly consist of the buyers and the customers. The major interest of the customers in this case is based on the efficient and effective products that can be offered by HTC. The products of HTC are priced in such a manner which is based on the needs and demands of the consumers. The organization aims at offering the products to different types of customers. The features of the products that are
11STRATEGY AND LEADERSHIP MANAGEMENT offered to the consumers are able to influence the demands and needs in an effective way (Durand, Grant and Madsen 2017). Employees –The employees are provided with high levels of importance by HTC as they are able to play a key part in the growth of the products of the organization. The employees are able to form a major part of the facilities which have been gained by HTC. The major interests of the stakeholders are based on development of the careers and proper levels of compensation that are offered to them. The human resource based capabilities of HTC are determined in an effective manner by the employees (Barros, Hernangómez and Martin-Cruz 2016). The innovations in the products and profitability levels of the organization are also based on the employees of HTC. Investors –The investors of HTC are also considered to be important for the development of different products of the organization. The major interest of the organization is based on the returns that are received by them on the investments. The organization is thereby able to address the stakeholder group of investors with the help of effective financial performance of HTC. The profit margins that have been developed by the organization have a major positive impact on the investors of HTC (Ethiraj, Gambardella and Helfat 2018). The financial position and resources that have been developed by the organization are considered to be affected by the investors. Employees of the distributors and suppliers –The employees who are a part of the supply chain of HTC are able to influence the profitability and revenues of the company. The employees of the suppliers or distributors can be considered to be the indirect stakeholders of the organization. The major interest of the employees in this case is also based on the levels of security that
12STRATEGY AND LEADERSHIP MANAGEMENT have been gained by them. The different employment based practices of the organizations or the suppliers of HTC are able to affect the supply chain in a huge manner (Daspit et al. 2017). Figure 4 – Stakeholder management Source – Created by author 4. Rationale and Motivation The external environment of HTC has been considered to be a significant factor that is able to affect the operations and profitability levels of the organization. The political and economic factors of the organization are considered to be the most important aspects that are able to affect the profits that are gained by HTC. The changes that have been experienced in the technological factors are able to influence the products that are developed by HTC. The technological changes are considered to be highly important for the formation of research and development facilities of the organization (Dyer et al. 2015). The changes that have taken place in the needs and demands of the customers can have an impact on the products which are developed by HTC. The industry in which HTC operates is able to influence the changes that have taken place in the research and development of the organization. The suppliers are Stakeholders Customers EmployeesInvestors Employees of suppliers
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13STRATEGY AND LEADERSHIP MANAGEMENT able to affect the prices of the products and features that are offered with the help of these products. The competitiveness of the industry is considered to be a significant issue that can influence the organization (Demir, Wennberg and McKelvie 2017). The capabilities or resources that are gained by the organization are able to support the operations and product development based facilities as well. The financial resources are able to increase the levels of investments that are made by HTC. On the other hand, the physical resources are related to the development of research and development of the organization. The capital and intellectual resources are also significant for the methods by which the company is able to develop effective partnerships with different companies. The strategic alliances and partnerships are considered to be important for developing high technology based products (Engert, Rauter and Baumgartner 2016). The expectations of stakeholders of the organization are important factors which can influence the performance which is depicted by HTC in the highly competitive technology based industry. The investors have highest levels of expectations from the organization and itsoperationsintheindustry.Theconsumersalsohavehighexpectationsfromthe organization with the help of products that are offered to them. The expectation levels of the stakeholders are able to have a major influence on the products that are offered by HTC in the market. HTC needs to develop the products in such a way which can help in improving the revenues of the organization in an effective manner (Demir, Wennberg and McKelvie 2017). 3.0 Potential problems 1. Problem I HTC has faced major issues based on the infringement of the patents and the rules that are formed by the government which are required to be followed by the organization in an effective manner. The legal issues have been able to affect the ways by which the
14STRATEGY AND LEADERSHIP MANAGEMENT organization is able to operate in the industry (Htc.com 2019).Google will face major issues in acquiring the research and development facilities of the organization due to the lack of proper patents. 2. Problem II The culture and capabilities of the organization also have a major impact on the lack of revenues and profitability of the organization. The resources that have been developed by HTC are not considered to be enough for the development of the revenues of the organization in an effective manner. The organization has not been able to improve the revenues and profitability due to the lack of proper levels of financial resources (Htc.com 2019).The lack of proper resources of HTC will affect the revenues of Google after the acquisition process. 3. Problem III The major issues that have been faced by the stakeholders or investors of the organization are based on the lack of proper levels of profitability recently in the technology industry. The organization has not been able to fulfil the expectations of the stakeholders with the help of the products that have been developed by HTC. The expectations of the consumers have also not been fulfilled by the organization and have affected the profitability levels of HTC in the technology industry (Htc.com 2019).The investors and shareholders of HTC are not able to receive high levels of returns from the company and this can affect the stakeholders Google as well. 4.0 Recommendation 4.1 Recommendation I A major recommendation that can be provided to HTC based on improvement of the external environment based factors are related to the development of patents in such a manner which can help in formation of the products which can be offered to the customers. The
15STRATEGY AND LEADERSHIP MANAGEMENT patents can be gained by the organization which can help in the development of the products in such a manner which can play a vital part in the fulfilment of the expectations of the customers. The company will be able to function in the technology industry in such a way which can help in reducing the negative effects of the environment on organizational operations.The strategic alliance that has been developed by HTC with Google needs to be based on the different legal requirements of the technology industry. 4.2 Recommendation II The financial capabilities of HTC can be improved with the help of effective strategic alliance that has been developed with Google. The alliance is able to play a key role in the ways by which the organization can increase the levels of financial resources in an effective way. The financial resources will be able to play a key role in the development of products that can fulfil the demands and needs of the consumers.Financial capabilities of HTC can be increased effectively by the ways by which Google can use the research and development based facilities of the organization. 4.3 Recommendation III The expectations of the stakeholders can be fulfilled by HTC by partnerships which have been developed by the organization.The partnership with Google will be able to play a key role in the formation of effective resources by the organization.The organization will be able to fulfil the expectations of the customers with the help of resources and capabilities which have been gained by HTC in the technology industry. HTC has not been able to maintain the position that has been developed by the organization in the technology industry. The strategic partnerships which have been developed by the organization are considered to be an important factor which can provide effective growth based opportunities to the organization in future.
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16STRATEGY AND LEADERSHIP MANAGEMENT 5.0 Conclusion The report can be settled by asserting that the merger of Google and HTC will be able to play a keypart in developing the levels of profitability and revenues of the organization. Google will be able to use the major strength of HTC which is based on the research and development based facilities in an effective manner.HTC is provided with high levels of growth based opportunities for the ways by which the organization can increased the revenues in the market and further to fulfil the expectations of the stakeholders as well. The external environment based factors of the organizations can also be influenced by the partnerships that are developed by HTC in the industry.
17STRATEGY AND LEADERSHIP MANAGEMENT 6.0 Reference List Barros, I., Hernangómez, J. and Martin-Cruz, N., 2016. A theoretical model of strategic management of family firms. A dynamic capabilities approach.Journal of Family Business Strategy,7(3), pp.149-159. Daspit, J.J., Chrisman, J.J., Sharma, P., Pearson, A.W. and Long, R.G., 2017. A strategic managementperspectiveofthefamilyfirm:Pasttrends,newinsights,andfuture directions.Journal of Managerial Issues,29(1), p.6. Demir, R., Wennberg, K. and McKelvie, A., 2017. The strategic management of high-growth firms: a review and theoretical conceptualization.Long Range Planning,50(4), pp.431-456. Dobbs, ME 2014, 'Guidelines for applying Porter's five forces framework: a set of industry analysis templates', Competitiveness Review, vol. 24, no. 1, pp. 32–45. Durand, R., Grant, R.M. and Madsen, T.L., 2017. The expanding domain of strategic management research and the quest for integration.Strategic Management Journal,38(1), pp.4-16. Dyer, J.H., Godfrey, P., Jensen, R. and Bryce, D., 2015.Strategic Management: Concepts and Cases. Wiley Global Education. Engert, S., Rauter, R. and Baumgartner, R.J., 2016. Exploring the integration of corporate sustainabilityintostrategicmanagement:aliteraturereview.Journalofcleaner production,112, pp.2833-2850. Ethiraj,S.K.,Gambardella,A.andHelfat,C.E.,2018.Theoryinstrategic management.Strategic Management Journal,39(6), pp.1529-1529.
18STRATEGY AND LEADERSHIP MANAGEMENT Frynas, J.G. and Mellahi, K., 2015.Global strategic management. Oxford University Press, USA. Google.com2019.Google. [online]Google.com.Availableat:https://www.google.com/ [Accessed 24 Jan. 2019]. Hill, C.W., Jones, G.R. and Schilling, M.A., 2014.Strategic management: theory: an integrated approach. Cengage Learning. Htc.com 2019.HTC United States. [online] Htc.com. Available at: https://www.htc.com/us/ [Accessed 24 Jan. 2019]. Meyer,G.D.,Neck,H.M.andMeeks,M.D.,2017.Theentrepreneurship‐strategic management interface.Strategic entrepreneurship: Creating a new mindset, pp.17-44. Michael, S., Storey, D. and Thomas, H., 2017. Discovery and coordination in strategic management and entrepreneurship.Strategic entrepreneurship: Creating a new mindset, pp.45-65.