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In the era of hypercompetition in knowledge and technology, the unique capability of high technology
industry that is built upon conventional resource-based theory no longer suffices for its operation.
Therefore, how companies make use of dynamic capabilities and collaborative network is the primary
focus of this study. The study discovers that: 1. In terms of competitive advantages in the high
technology industry, besides developing unique skills using corporate resources, companies should
also combine dynamic capabilities and collaborative network to ensure the sustainability of such
advantages; 2. The determining factors of success of companies lie in the continuous innovation in
functional strategies and capabilities regarding research and development, marketing and production;
3. It is crucial to the successful operation of businesses that strategic collaborative relationships are
developed among both upstream and downstream companies of the industry in a highly competitive
and dynamic business environment; and 4. Companies must continue to revamp their business model
in response to industry competitions and product life cycle. The case study of the business model of
HTC Corporation and the implications of its management can be used as reference for future studies
and actual operation.
Key words: Mobile phones, dynamic capabilities, collaborative network, business model, financial
performance.
INTRODUCTION
21st century is an era of hypercompetition in knowledge resources or skills that are rare, valuable and hard to
and economy, Bogner and Barr (2000) reckon that both imitate, which no longer suffices in the hypercompetitive
the barriers to enter and exit contemporary high era of knowledge and economy in the 21st century. The
technology industry are lowered and technological para- Dynamic Capabilities Theory (DCT) must therefore be in-
digm shifts will introduce revolutionary change to industry corporated, and emphasis placed on the capability in new
structure. The life cycle product are becoming shorter knowledge reconfiguration, acquisition and adoption,
and the competitive advantages of companies can while competitive advantages are obtained through early
disappear overnight, thus resulting in competitions that market entry. Otherwise strategic partnerships should be
become increasingly dynamic and unpredictable formed with other companies to create a network organi-
(Wheeler, 2002). It is therefore worth exploring the sub- sation, thus expanding and accelerating the acquisition of
ject of debate on how high technology companies adopt useful resources and capabilities, in order to sustain
dynamic capabilities at different stages, collaborative competitive advantages on the market.
network and business model in the fast-changing The mobile phone industry is often regarded as the
environment of the industry. classical high technology industry, particularly the smart-
Carlsson (2004) considers, from a resource-based view phones, which combine features of conventional mobile
(RBV), that organisational strategy theory acquires phones with personal computers and fully exploit the vast
competitive advantages through internally controlling benefit of high-end technology. The value chain of mobile
Chiou 295
phone industry consists of operating system, brand firms study is based, and focus on the subjects of this study:
and telecommunications providers. In addition to their high technology industries, dynamic capabilities,
dynamic resources and capabilities, brand firms should business model and financial performance.
build strategic partnerships with both upstream and
downstream companies so as to sustain their competitive
advantages. High technology industries
Taiwan High Tech Computer (HTC) Corporation was
founded in 1997, and in just over a decade has become Companies and firms using fast-developing, fundamental
the third largest smartphone manufacturer in the world. science knowledge to provide services and products are
With a market growth of 119.6% in the second quarter of said to belong to the high technology or high-tech
2008, the company performed better than the global industries. Such industries, in general, are characterised
mobile phone giant Nokia and smartphone groups by: 1. Product technology standard that is an importance
combined as a whole, whose growth are at -8.1and source of competitive advantages; 2. Disruptive tech-
15.7% respectively (Gartner, 2008). Its earnings per nology that is the driving force behind the revolutionary
share (EPS) in 2006 and 2007 were five times its capital, change in industry structure and competitions
and while major manufactures worldwide were generating (Christensen and Overdrof, 2000); 3. Network effects that
losses during the financial tsunami in 2008, the EPS for produce positive feedback loop (Shankar and Bayus,
HTC was still NTD 36.64. It is estimated its revenue and 2003); 4. Firms and companies within the industry and
profit will continue to grow in 2009 (HTC, 2009). The product value chains have close relationships; and 5.
strategies and business model adopted by HTC within Increasingly shorter product life cycle (Wheeler, 2003).
such competitive industry are important reference for Electronic information, the pillar industry in Taiwan, is a
future firms. classical high technology industry.
Zikund (2000) argues that researchers should define Electronic information industry primarily comprises
research scope or questions upon which formal telecommunications, information, semi-conductor,
explanation for the objective of the research is based. electronic components, consumer electronics, photonics
The principal questions and objective of this study are as and instruments (MIC, 2009), where computers and
follows: mobile phones are representative of such industry. For
the mobile phone industry to form an industry value
1. How do high technology firms produce dynamic chain, it must combine operating platforms of information
capabilities? Based on the business experience of HTC network in the upstream and industries assembling
Corporation, the study uncovers dynamic capabilities of mobile phones and electronic or consumer components
different stages of development. in the middle with telecommunication industry in the
2. How do high technology firms undertake network downstream. An example of this would be the
collaboration? Based on the business experience of HTC smartphones, such as Symbian (63%), Windows mobile
Corporation, the study uncovers the development of its (11.3%), Linux (10.2%), RIM (10%), Apple (4.2%) and
network collaboration strategies. Palm (1.3%) (MIC, 2009). There is also the emergence of
3. What is the business model of high technology firms Google’s Android in 2009, which sees the major
like? Based on the dynamic capabilities of different operating systems jostling to lead the market with their
stages of development and network partnership of HTC technological standard.
Corporation, the study uncovers its dynamic business The emergence of smartphones that combine features
model. of mobile phones and personal computers, which exploits
4. Do individual business models of high technology firms disruptive technology, has put an end to the global
provide competitive advantages and profitability? The dominance of former mobile phone giants Nokia,
study analyses whether the financial performance reflects Motorola and Ericsson. According to statistics from the
the business models adopted by HTC Corporation, global International Data Corporation (IDC, 2009), in terms of
giant Nokia and mobile phone industry by comparing their global mobile phone market share, besides Nokia that
financial performance within the last five years. still occupies the leading position, Samsung and LG from
Korea and HTC from Taiwan are catching up. In addition
to product innovation, the fact that Samsung and LG from
LITERATURE REVIEW Korea are able to successfully become the top five global
firms is primarily due to their expansive strategic
Following the dynamic change in the environment of the collaborations with telecommunications providers around
industry, high technology firms must develop unique skills the globe, which produce positive feedback loop due to
and business model at different phases to operate in the network effects. Furthermore, the strategic partnerships
era of hypercompetition, while continuing to maintain among mobile phone firms and their capabilities to
competitive advantages to sustain its financial profit in the commercialise rapidly are key to obtaining competitive
long run. The reviews of literature in this Section serve as advantages and generating profit in the fast-changing
the basis upon which the theoretical framework of this and competitive market.
296 Afr. J. Bus. Manage.
implications (Walker, Kogut, and Shan, 1997). From transmit their values to customers in one or several
Coleman's (1988) standpoint, the optimal social structure market segments. Such values are jointly created,
is one generated by building dense, interconnected marketed and transmitted with their network partners,
networks. From Burt's (1998) position, constructing which eventually generate profit for the business and
networks consisting of disconnected alters is the optimal sustain its existence (Osterwalder et al., 2005). Afuad
strategy. Clarifying the implications of cohesive versus and Tucci (2001) state business models need to
disconnected network structures for various organiz- continuously innovate and remain dynamic to be pro-
ational outcomes is important to our understanding of active and avoid rivalry threats. Innovation is key to
network resources. business profit and survival (Afuad, 2004). In short,
Innovation results from the recombination of knowledge business models include: 1. selecting clientele; 2.
held by the partners to the collaboration, and from the creating advisory values; 3. establishing collaborative
history of their collaboration. Innovation brings partners network partners; 4. continuing dynamic innovation; and
closer together, while at the same time the repetition of 5. sustaining the profit and survival of business.
partnerships fosters trust and helps improving the Hamel (2000) proposes four innovative business
outcome of each round of cooperation (Crowan, Jonard models in The Future of Management, including
and Zimmermann, 2006). A technology-based firm would management innovation, strategy innovation, industry
be push to the higher innovation condition through the innovation and business innovation, each of which will
transactional mechanism or the competitive process bring success of different extent; the higher the rank the
when the external organizations have improvement in higher the value creativity and competitive advantages.
technologies. In other words, technological opportunity is Based on the hierarchy point of view of strategic
mainly fostered by the outside environment and brought management, management innovation is a strategy this
about by the innovation activities of suppliers, customers is at the level of the overall business and concerns how
and competitors define the industry-related part of the firms orientate themselves in the industry or market, while
pool (Becker and Peters, 2005) and it represents that co-ordinating technology with outlook, objective,
firms are dependant on know-how of other firms and strategies and business organisation of the company to
institutions to get competitive advantages. This is in the allow more swift response in the face of changing
line with network theory, in which organizational forms are business environment (Osterwalder et al., 2005).
characterized by repetitive exchanges among semi- Strategy innovation and product innovation relate to
autonomous organizations that rely on trust and strategies at business level, and the kind of market
embedded social relationships to protect transactions and strategy firms adopt to create customer values in target
reduce their costs (Powell, 1990). market and generate revenue (Rappa, 2004). Business
High technology industries are featured with product innovation belongs to functional-level strategies, whereby
technical standardisation and network scale. For firms adopt combined business strategies throughout
example, among the mobile phone industry value chain departments such as production, marketing, finance,
of operating systems, brand firms and telecommu- research and development and human resource
nications providers, the operating system providers have management to achieve the performance of the company
the capability of competing in product technical standar- or business.
disation, and when a certain operating system gains such Summarising the above, business model is a
advantage in the industry the outcome is that big gets combination of strategies at various levels, such as the
bigger. If brand firms can collaborate with such operating company as a whole, business and functional, that firms
system, their product technical support and early market adopt to create customer values, generate profit and
share can be enhanced. Similarly, if brand firms can sustain its operation to compete in the industry or market.
collaborate with global elecommunications providers such In respect of the mobile phone industry, when a new
as the AT&T and Verizon in the U.S., Vodafone and T- manufacturer enters the competitive environment of the
Mobile in Europe and NTTDocMo and Softbank Mobile in industry, how it achieves optimal efficiency, quality,
Japan, a complementary network scale effect will thus be innovation and customer response, thus sustaining its
created and producing a positive feedback loop (Shankar competitive advantages and profit generating ability, will
and Bayus, 2003). The Korean mobile giants Samsung depend on how it orientates itself, and whether its
and LG remained unaffected during the global financial business focus is in one or several domains; or,
crisis in 2008, and even went on to successfully become according to the general competitive strategies of Porter
two of the top five mobile phone firms in the world. This is (1985), its selection of strategies regarding cost
due to their effective strategic partnerships with global leadership, differentiation and focus or strategies at
telecommunications providers (IDC, 2009). functional level.
Business model describes how companies and firms Based on the viewpoint central to the model of industry
298 Afr. J. Bus. Manage.
organisation theory: structure – conduct – performance, used in any scientific field of research through careful design or as
industry structure influences the conduct of firms, which an experimental or quasi-experimental research method (Stake,
1995). Taiwan HTC Corporation is chosen as the subject of study
in turn influences their individual and overall performance because it is the first Taiwanese mobile manufacturer to have
(Scherer et al., 1990). This is why the choice of different successfully entered the global market as a brand firm and to have
industry or competition market will determine the become the third largest smartphone manufacturer worldwide. In
influence firms have over product prices and whether addition, it has topped the Taiwanese stock exchange for over 3
they are able to generate generous profit. years as the most profitable listed company in Taiwan. The tools of
Financial performance is one manifestation of analysis used in this research are based on those considered most
useful as summarized in the book Strategic and Competitive
manufacturer’s competitiveness; it evaluates its current Analysis by Fleisher and Benoussan (2003). An analysis structure
profit generating performance and reviews its business (Figure 1) is constructed based on the literature review in the
direction and adopted strategies. Venkatramam and previous Section. The review demonstrates the establishment of
Ramanujam (1986) propose in an article on strategies competitive advantages of firms has extended from the indepen-
measuring business performance that three aspects dent ability of resources and capabilities building to a dynamic
business model of dynamic capabilities and collaborative network of
should be considered when measuring businesses:
firms, thus sustaining competitive advantages and financial
organisational effectiveness, operational performance performance.
and financial performance. Organisational effectiveness The study conducts an empirical analysis on the HTC
and operational performance can be communicated Corporation using its historical attributes data and the analysis
through firms’ business strategies and financial structure in Figure 1 to analyse its dynamic capabilities, collabora-
performance, and their achievement in business tive network and business model. Its financial performance is also
compared with the mobile phone industry and the industry leader
strategies will be reflected on the financial performance. Nokia by comparing financial ratios and statistical analysis to
Hsin, Chang and Chang (2006) therefore suggest establish whether its financial performance reflects its capabilities
financial performance as the principal performance index and strategies.
for profit-generating standard of any firms. Fleisher and
Bensoussam (2003) consider it more meaningful to
compare financial ratios with historical figures of firms, Dynamic capabilities analyses
industry average index or benchmark competitors. The
measuring ratios frequently used in financial performance The aim is to uncover the necessary resources and
of firms, including return on assets (ROA), return on capabilities of firms at difference stages of development.
equity (ROE) and new profit margin (NPM), are explained The study employs the analysis models of strategic group
below (Venkatraman and Ramanujam, 1986: Robinson, (SG) and product life cycle (PLC).
1982; Galbraith and Schendel, 1983): Hunt (1972) proposes the strategic group analysis
model to depict the different competing positions
1. Return on assets (ROA): measures how firms use occupied by firms in the industry and analyse the
assets to generate more profit. Davies and Boczko competitiveness and probable profit among groups in the
(2006) regard ROA as one of the best methods to industry, thus determining the orientation and competition
compare the performance of firms in the same industry strategies of firms.
and is the fundamental comparative index of profit Dean (1950) proposes the analysis model of product
generated by publicly listed companies. life cycle that divides industry or products into stages of
2. Return on equity (ROE): measures the effectiveness of development, namely entry period, growth period, mature
firms creating value for their shareholders. That is, the period and recession period, which help firms to
profit generated from net assets demonstrates how firms understand market dynamic and establishing strategies
effectively use the money invested by shareholders to for different phases to maximise profit.
generate and stimulate profit.
3. Net profit margin (NPM): measures the actual profit
earning ability of firms each year. Davies and Boczko Collaborative network analyses
(2006) mention the NPM is frequently used to compare
the profit-generating and cost-control abilities of different The aim is to understand the network established within
strategies adopted by different firms within the same the industry value chain at different stages of
industry. development of firms. The study adopts the model of
value chain analysis (VCA).
Porter (1985) proposes the value chain analysis model
in his book Competitive Advantage, which dissects the in-
METHODS
dustry as a whole based on industrial activities (Forrester,
1961). This, in turn, is used to analyse the strategies of
Historical data of HTC Corporation is analysed, and its financial
firms in the industry value system, which helps to connect
ratios statically analysed and compared with those of mobile
industry and market leader Nokia. Earlier case-study research was their internal skills with external competitive collaboration
applied to the field of sociology, and according to scholars such as opportunity, thus creating customer values and business
Yin (1994) and Stake (1995) such research methodology can be profit (Porter, 1985).
Chiou 299
SG/ PLC
Building
DynamicCapabilities
Dynamic capabilities
Collaborative network
Collaborative Network FFA FRSA
Building
VCA
Mobile, they have the competitive advantage of being expressed the three core ideologies of the brand: “make
widely adopted. Smartphones have gradually enter the it mine”, “stay close” and “discover the unexpected” as
mature phase within in recent years, and following the well as focused on the appearance and pricing of
advancement of technology in general smartphones and products. With regards to place strategy, in conjunction
the opening up of new operating systems, the HTC with the business development of its products, the
Corporation has announced in 2008 its adoption of company began with business smartphones as its key
Android, the operation system for general smartphones, products, and established partnerships with telecommuni-
developed by Google to expand its business field. The cations providers in Europe, the U.S. and Japan. It has
development strategies and core capabilities of HTC Cor- now extended its products to include general
poration are analysed below based on product life cycle: smartphones in recent years, and collaborated with
telecommunications providers in Korea and China, while
1. Research and Development Strategies and creating its own place in co-ordination with its namesake
Capabilities: Research and development is core to the brand (HTC, 2009).
HTC Corporation and has helped the company to lead Overall, Table 1 below illustrates the dynamic
the industry by 6 months to a year in regards to its strategies and capabilities of HTC Corporation. The
product technology (HTC, 2009). The research and business model and capabilities of the company
development budget (R&D expenses/ business revenue) demonstrate a dynamic development and mature with the
of the corporation is about 5%, and the number of market of business smartphones. The study divides the
engineers has increased from 70 in 1998 to 1140 in 2006 business innovations of the company into two stages: the
and to over 1800 in 2008. Furthermore, the corporation first being the stage of steady growth from the time the
has fully exploited the innovative strategy. Although being company entered the market in 1997 up until 2006; and
innovative is key to research and development, to fully the second being the period after 2007, when the market
exploit the new technology in the industry will better of smartphones became increasingly competitive and the
optimise the effect of innovation. For example, the company adopted integrated innovative business
collaboration with Qualcomm to take advantage of its strategies. Its business strategies at corporate or
testing technology for 3G chips and the collaboration with business level and functional level are elaborated thus:
Motorola to test its smartphone products, thus fully
utilising the technology of the competitors to enhance its 1. HTC Corporation operates single business products;
core capabilities. its strategies are identical at both corporate and business
2. Production Strategies and Capabilities: HTC adopts levels. The first stage of its corporate or business-level
customised pull strategy that produces products based strategies adopts that of differentiation focus and
on client needs and at the same time build partnerships collaboration in conjunction with entry path and the
with distributors. The production of customised products business environment of the industry. The number of
on the same production platform allows the company to business smartphone competitors has increased after
fast design products its clients’ demands, which in turn 2007 and the advancement in features of general consu-
reduces its production costs. mer smartphones has the substitution effect, thus in
3. Marketing Strategies and Capabilities: The study addition to the abovementioned strategies the company
analyses the strategies of HTC based on the 4P of also launched its namesake brand to enter the market of
marketing strategies: in terms of product strategy, the general consumer smartphones through product
company was initially an OEM and provided companies integration, feature innovation and cost reduction.
such as Qtek, Imate and AudioVox with product 2. The corporate functional level strategies of HTC
strategies and later introduced its own brand, HTC, in Corporation are co-ordinated with its strategies at both
2007. Regarding pricing strategy, HTC targeted high- corporate and business levels. The strategies pursue
consumption business clients during its early days, and competitive advantages of corporate business in terms of
generated high profit through high prices. An increasing customer values, brand, efficiency and innovations, which
number of firms also join in the competition of business are evident in the analysis of key internal value activities,
smartphones in recent years, and the advancement in including research and development, production and
features of general smartphones such as Apple’s iPhone sales and marketing. With respect to research and
and RIM’s Blackberry has considerably erode the market development strategies, the first stage used 5% of the
of high-end smartphones. HTC announced its entrance to research budget each year and hired R&D engineers in
mid-range smartphone market in 2008 with its focus great numbers, while adopting the strategy of “Me First”
primarily on Mainland China. In respect of promotion and fully exploiting the advanced technology of
strategy, the company adopted sales and distributing competitors. Stage two of the strategies focused on the
means of selling during the initial stage, whereby the creation of customer values in product R and D and the
distributors were responsible for the campaigning. Since development of integrated devices with new features, so
the launch of the namesake brand in 2007, the as to stimulate the value of user experience. In terms of
campaigns emphasised user-centred “HTC sense” that production strategies, stage one employs customised pull
Chiou 301
(i) Own R&D – 5% of the R&D (i) Research and develop integrated
budget, good R&D staff features
R&D
(ii) Me First strategies – fully exploit (ii) R& D reflecting customer values
competitor technology
Functional Level (i) Product – OEM and provides (i) Product - HTC’s own brand
Otek with own brand products (ii) Price -high-price business mobile
(ii) Price – high-price business phones and mid-range general consumer
products mobile phones
Marketing (iii) Promotion – done by (iii) Promotion - HTC sense and media
distributors promotion
(iv) Place – collaboration with
telecommunications providers from (iv) Place - expand collaboration with
Europe, U.S and Japan telecommunications providers in Korea
and China to create own brand place
Data source: HTC (2009).
strategy and flexible production platform to produce (1985), the business success of smartphones depends
products that satisfy customer needs and reduce on its relational bonds with developing industry value
production costs. The second stage emphasized the chain, and collaboration between operating systems,
improvement in production technology and strategic production and telecommunications providers are ne-
supply chain management to promote business effective- cessary. Social capital theory advocates that a long-term
ness. Regarding the 4P of sales strategy, stage one of relationship of mutual trust must be established with both
product strategy adopts OEM and provided collaborative upstream and downstream manufacturers. As a product
distributors Otek with own brands, and stage two involved manufacturer, HTC Corporation adopted collaborative
actively developing HTC’s own brand. In terms of pricing strategies and entered the business smartphone market
strategy, the first stage employed high-price business in strategic collaboration with firms of Windows Mobile
product strategy, and the next stage was entering general operating systems in 1997. Due to the global financial
smartphones markets, such as China, and adopting mid- crisis in 2008, the mobile phone market shrank while
range product pricing strategy. Stage one of promotion technical features of general smartphones advanced, the
co-ordinated with OEM and was done by distributors, and company decided to enter the general smartphone
during the next stage the media marketing of “HTC market and expanded its collaboration with the Android
sense” was launched in conjunction with HTC’s own operating system by Google.
brand to build customer value towards the brand. The Between 2001 and 2003, HTC collaborated with
first stage of place strategy co-ordinated with the European telecommunication providers, including
expansion of business smartphone market, and Vodafone, T-Mobile, Orange, mmO2 plc, Virgin and
partnerships were gradually built with telecommuni- Teliasonera. The company entered the U.S. market in
cations providers in Europe, the U.S. and Japan. In 2005 and collaborated with providers such as AT and T,
addition to continuing to establish partnerships with Sprint, Verizon, Cingular and T-Mobile. It entered the
telecommunications providers in Korea and China, place Japanese market in 2006 and collaborated with providers
or HTC’s own brand was being developed. including NTT DocMo and Softbank Mobile, while in 2008
it collaborative with SK Telecom to enter the Korean
market, and signed an agreement with China Mobile in
Collaborative network August the same year to pave the way for entering its
market of 3G communications. HTC Corporation orien-
According to the value chain model proposed by Porter tates itself as the pioneer in business smartphones and
302 Afr. J. Bus. Manage.
Stage
Stage One (2001 to 2006) Stage Two (Post to 2007)
Collaborator
Windows mobile system by Microsoft Windows mobile system by
Operating system firms in the Microsoft
upstream
Android system by Google
Telecommunications providers in the Europe: Vodafone, T-Mobile, Orange, mmO2, Virgin Korean SK Telecom
downstream and Teliasonera China Mobile
U.S.: AT and T, Sprint, Verizon, Cingular and T-Mobile
Japan: NTTDocMo and Softbank Mobile
Data source: HTC (2009).
Distinction
2004 2005 2006 2007 2008 Average
Year
ROA (%) 24.50 15.50 7.44 8.30 7.40 11.23
Mobile industry ROE (%) 32.20 20.00 14.39 14.48 11.25 18.46
NPM (%) 18.40 13.20 12.34 9.09 9.47 12.50
ROA (%) 14.15 16.22 19.04 19.20 5.24 14.77
HTC Corporation ROE (%) 41.00 69.00 77.00 59.00 49.00 59.00
NPM (%) 11.00 16.00 24.00 24.00 19.00 18.80
Data source: Reuters, IDC, Nokia and HTC Corporation (2009).
and adopts the strategy of collaborating with operating including Europe, the U.S. and Japan. Its parent
systems in the upstream and telecommunications pro- company, VIA Technologies, Inc., is equipped with
viders in the downstream, thus consolidating its position technologies such as chip and software development,
in the market of smartphones. It continues to expand its HTC therefore regards its technology to be at least a year
scope of collaboration following business development ahead of its competitors and to have competitive advan-
and changes in product technology. tages over business smartphones competitors, potential
Overall, Table 2 is a summary of the industry value competitors and substitutes. In terms of the bargaining
chain built upon the collaborative network of HTC power of suppliers, its capability to bargain with suppliers
Corporation. It is through such chain that the company is enhanced because of its stable collaborative
collaborated with firms from both upstream and relationship in operating system with Microsoft.
downstream to create customer and corporate values. Regarding customers and distributors, the company has
collaborative relationships with telecommunications
providers in Europe, the U.S. and Japan, providing
Business model business customers with high-end smartphone products,
which distinguishes its products from other mobile phone
HTC Corporation claims to be the pioneer in firms and strengthened its capability to negotiate with
smartphones (HTC, 2009). First of all, the study uncovers customers or distributors. Summarising the above, HTC
its business strategies using the five forces analysis Corporation adopts primarily differentiation focus strategy
suggested by Porter. The corporation entered the and collaborative strategy; the former focuses on
business smartphone group before others and chose providing business users with multifunctional high-end
Microsoft’s Windows Mobile operating system as its smartphone products, whereas the latter the strategic
strategic alliance, before progressing to collaborative with alliance with operating system firms in the upstream to
telecommunications providers in advanced markets, consolidate the continuous technical development of its
Chiou 303
products as well as collaboration with telecommunica- away the high-price advantage of the former; and 3. the
tions providers in the downstream to provide customised effect of global financial crisis in 2008.
products to customers or providers, thus accumulating Secondly, comparing the financial rations of HTC
user experience for its products. Corporation and Nokia in Table 3, the former excels the
Further to the analysis above, the overall business latter within the last five years in regards to average net
model of HTC Corporation evolves dynamically, which profit margin, return on assets, return on equity as well as
follows the technological development of smartphone and growth rate. Further to that, HTC Corporation was less
market growth. Among its market competitors and affected by the global financial crisis in 2008 in
following the rapid development of substituting products, comparison, which demonstrates that the business
HTC extended its business model that focuses on busi- strategy of focusing on smartphones has given the
ness smartphones to gradually include general consumer company an edge in competitiveness and profitability
smartphones from 2007. In respect of its collaborative over Nokia, which adopts the strategy of diverse products
strategies concerning operating systems in the upstream, in the mobile phone industry. According to statistics data
it expanded its collaboration with Windows Mobile for from Gartner (2008) regarding smartphones, the market
business products by Microsoft to include Android by share of HTC Corporation up until the second quarter of
Google for general products As to collaboration with 2008 was 4.1%, an increase of 119.6% over the same
distributors in the downstream, it continues to find foreign period last year, whereas the market share of Nokia in
partners while developing its own place. the second quarter of the same year was 47.5%, a
Secondly, with respect to corporate functional decrease of 8.1% in relation to the same period last year
strategies, in particular the research and development (MIC, 2008). This illustrates the relative market share of
strategies, the company aims to gain a competitive edge HTC Corporation is better than Nokia and it has
through the development of integrated devices with advantages in both business and profitability.
innovative features, which makes its products even more Comparing the financial ratios of HTC Corporation and
compatible with telecommunication providers’ and user- the mobile industry in Table 3, those of the former
end applications and content. In terms of production distinctly surpass the latter over the last five years. While
strategies, the company continues to improve its overall according to the technical data of smartphones by
business efficiency, including technology, manufacturing Gartner (2008), with the growth rate of 119.6% in the
and strategic supply chain management to promote mid- second quarter in 2008, HTC Corporation far excels the
range smartphone products. Regarding marketing stra- 15.7% of other smartphone groups (MIC, 2008). Whether
tegies, the products shift from high price to mid price and it is among the mobile phone industry or the smartphone
from ODM and OEM to HTC’s own brand, with intensive groups, it is clear that HTC Corporation performs well in
campaigns to promote the “HTC sense” while gradually its business and profitability.
building its own brand place.
Building
Dynamic Capabilities
Stretching
Unique Capabilities
Moulding
Business Model Competitive advantages Profitability
Stretching
Collaborative Network
Building
and become blurred. General business models and Inferma (2009). Available at: http://www.inferma.com (Accessed Sep.20,
2009).
related subjects of debate concerning the industry are
Internation Data Corporation (2009) (IDC). www.idc.com.tw (Acessed:
worth further studies by scholars of the field. Sep.20, 2009).
Isuppli (2009). Available at:
http://cdnet.org.tw/techroom/market/eetelecommmobile/09.htm
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