Huawei Porters Five Forces Analysis 2018
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Huawei is a globally recognized telecommunications, equipment and service company majorly dealing in the design, manufacture and marketing of processors, smartphones and tablets. This report mainly examines the smartphone market, one of the most prominent global oligopolies with both high end (Apple and Samsung) and low-end market players. In the smartphone market, Huawei is a low-cost producer, the most fiercely competitive hence it faces extreme competition from especially fellow low cost Chinese rivals including Lenovo, Xiaomi, OPPO, ZTE among others who produce similar products. This report analyzes how industry competition has affected Huawei and examines the various opportunities through which Huawei can grow and develop its brand name including the use of Artificial Intelligence. Nevertheless, Huawei still faces major threats such as major competitors who have greatly hindered its growth and development. This analysis concludes by showing major points (factors) where competition is intense and some strategies Huawei can use to overcome them.
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Huawei Strategy Case Study
Key Learning Outcomes
By the end of the case, students should be able to:
- Use Porters five forces model to analyse an industry on the basis of the five competitive forces.
- Analyse the global smartphone industry and how the five forces have affected Huawei and rival firms and the impact on industry structure, attractiveness, and profitability.
- Understand how Huawei has managed to defend against intense competition and the strategies it uses to create 'blue oceans' that are defensible, helping it capture market share and maintain competitive advantage.
Analyse Huawei through the lens of Porters five forces to assess how the five forces affect Huawei and the smart phones and mobile industry internationally.
***Updated version***See latest here Huawei Porters Five Forces 2021
1.0 INTRODUCTION
The technology industry has one of the largest and most profitable markets in the world with two major players Samsung and Apple having a combined global market share of 39.0%. Huawei on the other hand is one of the world’s largest low-cost smartphone vendors having a global market share of 11.8% with major competitors Xiaomi and OPPO having 8.4% and 7.1% market shares respectively according to first quarter of 2018 (Statista 2018). Besides smartphones, Huawei engages in the design, manufacture and marketing of many other products such as tablets, processors, and currently entered the PC market to take on major brands Lenovo, HP, Dell, among others (Auchard 2017).
2.0 Huawei Porters Five Forces Analysis 2018
2.1 Bargaining power of buyers
Huawei customers have a relatively high bargaining power due to the availability of many similar products (smartphones, tablets, PC’s) on the low-end market from fellow technology companies like Xiaomi, Lenovo, OPPO, among others that have similar price ranges. This makes switching costs low which gives consumers power to choose between a wide variety of products. However, product differentiation and branding make it hard for some customers to purchase Huawei products for example many buy buyers are not willing to switch from using high-end Apple products to low-cost Huawei products (Vilner 2017).
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