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Huawei
Problem
Huawei was a latecomer to the smartphone market, and needed to find a way to build market share in this competitive field. The top end of the market has been dominated by Apple and Samsung, and their phones are the most technologically-advanced. The lower end of the market was highly-competitive, so Huawei needed to find an edge in the marketplace in order to thrive.
Summary of the Situation
Huawei had strengths that it could leverage in terms of being an experienced producer of dumbphones, and other electronics. The company had a massive domestic market in China that would allow it to get a foothold in the lower end of the smartphone market. The company had a couple of key weaknesses, however. It was inexperienced at building smartphones, or even at innovation, and it had a poor performance in foreign markets, where its phone had earned a reputation for low quality.
Yet, there was tremendous opportunity for the company, because underneath of the big two high-end producers, there was a lack of stability in the phone market. Producers had come and gone from the business, and this left room. If a company could produce...
Moreover, these gains could be made in the developing world, a market in which Huawei had relatively strength. These consumers want high-end features but cannot necessarily afford them. The company that could hit that value proposition would be able to capture this opportunity. The threats come mainly from competitors, and from rising incomes that put more people in the market for a higher-end phone.
Alternatives and Recommendations
Huawei’s strategy has been successful to this point, but the company now must face either a move to the high end market, or intense competition in its current market, from Xiaomi, HTC but also Microsoft and Google. Knowing this, Huawei could enter into an alliance, especially with Microsoft or Google, to produce phones that would run on their operating systems. Huawei could also choose to go it alone, and count on their value prop to defend their position. Another option for Huawei would be to attempt to carve out some success at the high end, while maintaining their strength in the mid-range.
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