Innovation And Competition In Smartphone Industry Essay

Question:

Discuss about the Innovation And Competition In Smartphone Industry.

Answer:

One Plus-the company:

One Plus is a Chinese smart phone company launched in December 2013 under the leadership of Peter Lau, the former vice president of Oppo as its CEO. The company has its headquarters in China and is the wholly owned subsidiary of Oppo. The main objective of One Plus is to make models of mobile smart phones which would make high-end technology available to the consumers at low prices (oneplus.net, 2018).

Mobile smart phone industry:

The mobile smart phone industry is an internationally spanning industry which generated a revenue close to $500 billion. The industry is dominated by Apple and Samsung. The other significant players are HTC, Oppo, Sony, LG and Nokia. The mobile smart phone industry is experiencing tremendous growth worldwide due to increase in population, easy availability of technology, deeper access of internet, rising income of people and the innovations in mobile phone technology. The mobile smart phone industry is an integration of hardware making companies like Samsung and software making companies like Amazon (Vuori & Huy, 2016). The mobile phones companies also the development of the industry is supported by innovative digital services called applications which enable the users to do a wide range of activities like communicating, banking, shopping and a host of other activities using dedicated applications or apps. Thus, the industry plays a very important role in the social context as well like enabling people to communicate with each other and gain information using internet which otherwise would have been inaccessible to them (Bousquet et al., 2017).

The mobile smart phone industry segments its market into two segments, the upper class segments and the middle class segments. The upper class customer segments consisted of the rich customers who had sufficient disposable income to buy expensive high-end smart phones. The main companies catering to this segments are companies like Apple and Sony. The second segment of customers consists of companies One Plus which make low priced smart phones. The companies like Samsung makes smart phones for both the segments. The main market of smart phones was previously concentrated in North America and Europe. The recent trend of the smart phone markets shows that the main markets are shifting towards Asian nations like India and China. The market leaders like Apple, Google, Amazon and Samsung competing to take advantage of this emergence of the eastern markets (Cecere, Corrocher & Battaglia, 2015).

Market of One Plus:

The main market of One Plus can be divided into North America, Asia, Middle East and Africa to a smaller extent. The main European markets are countries like Belgium and the UK while Canada and the US make up the main North American market. The main Asian markets are China, its home country, India and Malaysia. The present market segment of One Plus as pointed out consist of the middle class people with limited disposable income who want high quality smart phones. This market analysis makes it clear that One Plus faces both challenges and opportunities. The main opportunity which One Plus enjoys is the weak competition in the low priced band smart phone segment. However, its market image is largely responsible for restricting the company’s reputation of catering to the middle class customers and consequent lack of acceptance among the upper class customers. The competitors like Samsung make both low priced smart phones as well, thus giving One Plus stiff competition (Maruta et al., 2016).

Products and services:

The main products of One Plus are smart phones which have advanced features and run on Android platform. The peripheral products of the company include the hardware and the software which are used in the smart phones. The company also manufactures charges and ear phones for its handsets.

The services provided by One Plus include round the clock customer services which enables the customers to contact the company representatives as per their convenience. The company has several service centres which provide the customers services like repair and maintenance (Oh & Oetzel, 2017).

Business model canvas and relationship between the nine blocks:

Key partners:

Suppliers of mobile phone parts.

Governments (home government and host governments)

Employees

management

Investors

All the other stakeholders

Key activities:

Procurement of mobile smart phone parts.

Manufacturing of smart phones

Manufacturing of smart phone peripherals

Marketing of its products

Providing after sales services to customers

Value propositions:

Providing high quality smart phones for customers and reasonable prices.

Meeting new requirements of customers

Providing continuous customer support.

Customer relationship:

Long term relationship with customers by providing high quality products and round the clock services.

Customer segments:

Middle class customer segments in Asia, Europe and North America

Key resources:

Human resources.

Innovative knowledge and technology.

Hardware.

Software

Package

Channels:

Retailers

Ecommerce websites like Amazon

Cost structure:

Fixed costs, variable costs and semi-variable costs

Revenue system:

Sales of handsets, repeat sales


Relationship between the blocks of the business model canvass:

The business model canvas stands on nine blocks namely key partners, key activities, value propositions, customer relationship, customer segments, key resources, channels, cost structure and revenue system, all of which are interrelated and interdependent on each other. The key partners consist of stakeholders or business partners of the company. For example, the business partners of One Plus includes the apex management, the employees, the distributors, wholesalers and retailers which sell One Plus mobile phones. The key activities of One Plus is to produce high quality mobile smart phones which are affordable to the middle class customers. The company seeks to increase the value of customers’ expenditure by providing its high quality products (smart phones) and also round the clock customer support. The company operates outlets of its own and also enters into business contracts with channel partners to provide after sales services to customers to enhance their consuming experience. This value creation is based on the target customer companies serve. As far as One Plus is concerned, the target customer segments consist of middle class customers (Kotabe & Kothari, 2016). The key resources One Plus consist of its human resources and strong financial backing which provides it the base to carry out innovations to introduce new models of smart phones in the market. It must also be pointed that the present CEO of the company has the rich of working with Oppo in a senior position and moreover, Oppo is one of its important financers. Thus, its association with Oppo is also among its key resources backing its business models. The main channels which One Plus uses to sell its mart phone consist of its outlets, retailers and ecommerce websites like Amazon. These three business channels enable One Plus to market its smart phones in Asia, Europe and North America, thus generating immense revenue. The company is able to diversify its immense costs over its revenue base. This shows that the blacks of the business model are interdependent (Vigneau, Humphreys & Moon, 2015).

Critical successful factors to achieve sustainability:

One Plus has mainly two critical success factors namely, it’s pricing strategy and its market strategy. The company keeps its pricing low to make its smart phones affordable to the middle class people. This strategy saves it from entering into direct competition with brands like Apple because the latter does not cater to the middle people. The second strategy consist of presence in Europe, Asia and North America which allows One cater to the huge middle class population in these three markets and generate huge revenue. These two factors have earned financial sustainability to the company which is boosting its further operations (Hoepner et al., 2016).

Contribution towards downside risk:

The dependence of One Plus on Oppo for financial backing and its restricted market image of a smart phone manufacturer for the middle class people can lead to down siding of risk. One Plus is financially dependent on Oppo and restricts itself as the smart phone manufacturer for the middle class people. This strategy in fact prevents the company from coming into direct confrontation with Oppo which manufactures high priced mobile sets. However, the low priced smart phone category is becoming very competitive with emergence of new smart phone manufacturers. This means that One Plus should enter the expensive smart phone market to gain financial sustainability and compete with these low priced mobile phone makers. It should transform into a public limited company and break away from Oppo’s ownership. This would allow the company to compete with leading brands like Oppo and Apple (Giglio, Kelly & Pruitt, 2016).

Proposed changes to the business model:

The two changes which the management of One Plus should bring about in the business model are:

Markets:

One Plus should expand its markets beyond its present markets. The main markets of the company are the USA and Canada in North America, several European countries while its Asia-Pacific presence is limited to China, India, Hong Kong and Australia. The company needs to expand its presence into the other emerging markets like South America (Audrino & Hu, 2016).

Adding of investors’ block in the model:

The investor block would show the sources of capital which form the base of the financial strength of the company. It should give information like main investors to the user of the business model canvass (Heckmann, Comes & Nickel, 2015).

References:

Audrino, F., & Hu, Y. (2016). Volatility forecasting: Downside risk, jumps and leverage effect. Econometrics, 4(1), 8.

Bousquet, J., Caimmi, D. P., Bedbrook, A., Bewick, M., Hellings, P. W., Devillier, P., ... & Chavannes, N. H. (2017). Pilot study of mobile phone technology in allergic rhinitis in European countries: the MASK?rhinitis study. Allergy, 72(6), 857-865.

Cecere, G., Corrocher, N., & Battaglia, R. D. (2015). Innovation and competition in the smartphone industry: Is there a dominant design?. Telecommunications Policy, 39(3-4), 162-175.

Get your OnePlus 5T. (2018). Oneplus.net. Retrieved 25 March 2018, from

Giglio, S., Kelly, B., & Pruitt, S. (2016). Systemic risk and the macroeconomy: An empirical evaluation. Journal of Financial Economics, 119(3), 457-471.

Heckmann, I., Comes, T., & Nickel, S. (2015). A critical review on supply chain risk–Definition, measure and modeling. Omega, 52, 119-132.

Hoepner, A., Oikonomou, I., Scholtens, B., & Schr?der, M. (2016). The effects of corporate and country sustainability characteristics on the cost of debt: an international investigation. Journal of Business Finance & Accounting, 43(1-2), 158-190.

Kotabe, M., & Kothari, T. (2016). Emerging market multinational companies’ evolutionary paths to building a competitive advantage from emerging markets to developed countries. Journal of World Business, 51(5), 729-743.

Maruta, T., Yao, K., Ndlovu, N., & Moyo, S. (2016). Training-of-trainers: a strategy to build country capacity for SLMTA expansion and sustainability: lessons from the field. African journal of laboratory medicine, 3(2), 1-7.

Oh, C. H., & Oetzel, J. (2017). Once bitten twice shy? Experience managing violent conflict risk and MNC subsidiary?level investment and expansion. Strategic management Journal, 38(3), 714-731.

Vigneau, L., Humphreys, M., & Moon, J. (2015). How do firms comply with international sustainability standards? Processes and consequences of adopting the global reporting initiative. Journal of Business Ethics, 131(2), 469-486.

Vuori, T. O., & Huy, Q. N. (2016). Distributed attention and shared emotions in the innovation process: How Nokia lost the smartphone battle. Administrative Science Quarterly, 61(1), 9-51.

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