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Shanzai! MediaTek and the “White Box”

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Shanzhai Media Tek is a power house in the generation of handset. This has advanced through the several process and steps in technology. The first handsets that were produced by the company were the first generation 1G phones. They were synonymous because of the verity that they utilized analog transmission. However, the advancements in technology have since rendered analog transmission obsolete. This has been marked by the introduction of second generation phones, (2G phones). However, the connectivity, especially with regards to internet proved to be slower. This prompted the introduction of third generation phones (3G phones). Nonetheless, the uniqueness in Shanzhai Ji is based on the actuality of producing intermediate generation phones. This is attributed to the fact that the company produced 2.5G and 2.75G phones for use in the market (Mohr 256). Problem statement:

The significant problem is based on the verity that the company sold most of its chipsets to the Chinese producers. This was done in the hope that the producers were legitimate. However, the middlemen ended up selling the chipsets to the secondary markets and pocketing the profits. In essence, Intel faced similar problems with the middlemen. This was especially with regards to their microprocessors. They were sold to producers who appeared legitimate, but were not legally allowed to purchase the microprocessors (Doole 134). In the long run, the producers sold the chipsets at a profit. External analysis:

Industry structure:
Media Tek is a company that deals in the production of wireless electronic chipsets for mobile phones. It has been in the industry through the transition from analog to digital chipsets. The company has grown to be the third largest producer of electronic chipsets for mobile phones and related hand set equipments. It is estimated that in the first quarter of 2009, the company sold an approximate of 80 million chipsets, through exports. In the second quarter, it sold an approximate of 100 million chipset. Ideally, it is estimated that in the end of 2009 the company had exported an approximate of 300 million chipsets. In the global market trends of wireless chipsets the company commands an export of 1.2 billion chipsets. This is, by far, a significant achievement for the company. The relationship of the company with the consumers was modest despite allegations from power houses like Nokia. The allegations purported that Media Tek produced cheap knock off phones and introduced them into the market (Haig 23). Industry directions and trends:

It will be noted that Media Tek had come under great attack from competitors and newspapers as well. This was especially after the company was branded the status of knock off. In fact, some newspaper is reported to have described Media Tek product as counterfeit cool. Key success factors:

The Company banks on an economics of scale, especially when it comes to the amounts of chipset production. The company produces wireless chipsets in bulk, which are utilized in the production of handsets. The wireless chipsets are priced at relatively low prices compared to their competitors (De Moije 285). Therefore, it sells a lot of handset chipsets at low prices. Ideally, the success of the company comes from targeting low income earners by ensuring that they are at a position of owning a phone (Masterman 126). It is evident that the electronic chipsets link the phones will command the retail price of the phone (Pride 278). Therefore, Media Tek focuses on narrowing the cost of production of the chipsets. Competitive forces:

The mobile industry is advancing at an alarming rate. This is accredited to the verity that most technological firms are engaged in the phones race (Shimp 408). They are all bent on producing user friendly phones. This is, of course, with the considerations of pricing. Therefore, the competition of the company is derived from allied companies like Nokia, Intel, amongst others. Moreover, these companies have often purported that Media Tek is linked with the production of counterfeit phone chipsets. This aspect has dealt a blow to the sale and export of the chipsets from the company. The most amicable strategy that can be utilized by the firm will be based on convincing the consumers that the chipsets are not counterfeit (Arnold 47). This can only be executed by ensuring that the chipsets are durable. Strategic issues in the industry:

The Company has been on the path of innovation and invention. This is evidenced by their first colonization of CD-Rom controllers. This made the company acquire 50% of the market share of CD-Rom controllers. The largest opportunity for the industry is based on the fact that technology is always dynamic. In fact, it has reached a point that human lifestyle is defined by the level of advancements in technology. The most significant threat lies on the validation of the counterfeit claims. In the event that such claims are substantiated and validated, Media Tek will lose a significant market share. The risk and uncertainty in the industry emanates from the verity that wireless chipsets are manmade. It is common knowledge that man is not perfect. There is bound to be some level of imperfections in technology, which may render purchased handsets to malfunction. Internal analysis:

Financial analysis:
According to Taipei News, Media Tek profits rose by 21.4%. The net income increased to $ 169 million. The Company has made significant profit margins from the sale of cheap wireless chipsets, which have been used in the electronic gadgets. This is because of the verity that the company controls 1.3 billion of the global exports in wireless chipsets. Moreover, the company is assumed to be the third largest producer and export of chipsets in the global market. Furthermore, the colonization and adoption of CD-Rom meant that the company acquires a 50% of the market share. Operational analysis:

The Company enjoys an economics of scale based on the fact that it allows for the exportation of cheap wireless chipsets. This is unlike other competitors like HTC, Nokia, Research in Motion, LG who prioritize on the quality and pricing of their chipsets. Media Tek has a vast capacity of production in the sense that it produced 80 million exports in the first quarter of 2009 (Cooke 112). Moreover, it is noted that it produced 100 million in the second quarter of 2009. This is an indication that the capacity of production for the company is massive. Marketing and competitive position:

The Company has majored in the production of china white box handsets. The target market for which the handset has been sold has been in China. This is the area that has attracted most of the purchasers of the white box handset. The sales and marketing share of Media Tek have been on an upward trend. This is especially because of the colonization of the CD-Rom controllers (Stobbs 116). This made the company acquire 50% of the CD-Rom market controllers. The company is well aware of its market. The vast market of the white box models is in China. The consumers are in China. However, the company also exports to other countries. The competitors of the company are RIM, LG, Nokia, Sony Ericsson, Samsung, Motorola, HTC, Palm, Apple and allied Japanese vendors. Human Resource analysis:

Media Tek is headed by the chairman of the board of directors, who is also the Chief executive officer. He is called Mingjie Cai. The human resource is bias on employing wireless technology professionals. The productivity of the workforce is tailored towards the production of semi conductors. Evaluation of strategic issues:

The Company ought to optimize on the verity that it operates on more than 10 countries. Moreover, the employee strength is greater than 4,275 in the world, and the revenue of the firm is $3.625 billion. Furthermore, there is a positive outlook in the market for electronics and semi conductors. This implies that the company will always remain in business. Alternatives:

The company should invest in legal proceedings in order to eliminate the chances of selling to middlemen producers, who sale the products at an escalated profit. This spoils the brand of the company on price basis. This is because the secondary producers alter the price from Media Tek, hence making it appear an expensive company. Recommendations and implementations:

The Company ought to eliminate the rumors on counterfeit products. This can be accomplished by escalating the quality standards of their products. This can be executed by ensuring that a quality assurance section is incorporated in the production chain. This will improve the accountability of the organization. An introduction of a whole department will have cost implications in the overall budget of the company. This is especially because an inclusion of the quality assurance department may be perceived as an overhead cost. However, this will save the company the cost of being eliminated from the market on quality basis. Therefore, a quality assurance section will, in the long run, suffice in improving the quality of wireless technology productions.

Works Cited

Arnold, Michael. Mobile Marketing For Dummies. New Jersey: John Wiley & Sons, 2010. Print. Cooke, Philip. Re-framing Regional Development: Evolution, Innovation and Transition. New York: Routledge, 2013. Print. DeMooij, Marieke. Global Marketing and Advertising: Understanding Cultural Paradoxes. California: Sage Publications, 2009. Print. Doole, Isobel. International Marketing Strategy: Analysis, Development and Implementation. Mason:Ohio: Cengage Learning, 2008. Print. Haig, Matt. Mobile Marketing: The Message Revolution. Connecticutt: Kogan Page Publishers, 2002. Print. Masterman, Guy. Innovative Marketing Communications. New York: Routledge, 2006. Print. Mohr, Jakki. Marketing of High-Technology Products and Innovations. New Jersey: Pearson Education Inc, 2010. Print. Pride, William. Marketing. Mason:Ohio: Cengage Learning, 2011. Print. Shimp, Terence. Advertising, Promotion, and Other Aspects of Integrated Marketing Communications. Mason:Ohio: Cengage Learning, 2010. Print. Stobbs, Gregory. Software Patents. New York: Aspen Pub. 2012. Print.

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