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HTC’s Company Background
HTC was founded by Peter Chou, Cher Wang and H.T Cho in the year 1997 and at Taipei,
Taiwan is where the company’s headquarter is located (HTC, 2013). When HTC first emerged
as a business in the laptop market, it switched into producing tablets and hand held devices after
some consideration (Holson, 2008).
Currently, HTC’s goal is to ensure that their phone must be made to suit the user and their
devices are running on the Windows OS & Android OS (HTC, 2013). Besides that, HTC has a
strong reputation in the IT industry as their mobile devices are famous OEM branded in the
market (HTC, 2013). Some of the products that are manufactured by HTC are the HTC Butterfly,
HTC One X and HTC Desire C
HTC’s strongest competitors are Samsung and iPhone as they have dominated the market with
their innovation. Due to the domination of both big giant firms in the market, HTC lost lots of its
market share in the US (Culpan, 2012). Before facing strong competition from its competitor,
HTC net worth was $37 billion and currently it is only the company net worth is $3.7 billion
(Song, 2013). HTC venture into many European and Asian countries around the world, currently
they are focusing on the Myanmar market as it is seen as a promising market.

Myanmar and its telecommunication market
Myanmar, a country with democratic governance is located in Southeast Asia and it is the largest
among all the other countries in Southeast Asia (World Bank, 2013). Despite being the largest
country, Myanmar is actually the poorest among all the Southeast Asia country and it is
considered one the poorest countries in the world (Deloitte, 2013). Among the total population of
Myanmar, 26% are still living in poverty in some states and where education services and basic
health care are not provided due to the limited access to infrastructure (World Bank, 2013).
Furthermore, among the total population, 75% of the citizen of Myanmar is deprive of access to
electricity and blackouts happen quite frequently which would pose a crucial problem to the
telecommunication market in Myanmar (World Bank, 2013)
Myanmar is located between the world’s two most dynamic economic which is China and India
and this cause it to be one of the regional trading hubs in the world, However, limited access to
the infrastructure also caused a barrier for the economic development of Myanmar (World Bank,
2013). The telecommunication sector of Myanmar is actually the last to be developed among the
market in Asia and its mobile phone market penetration rate is only 4% (Deloitte, 2013) in the
year 2012. Among the 60 million people in Myanmar, only less than 10% of the people who
owned a mobile phone (Song, 2013). Besides that, it is not easy to get a SIM card as currently
only limited number of it is made available and there are only two telecom group exist in
Myanmar (Kan, 2013). Internet connectivity plays an important role in the telecommunication
market. With the penetration percentage for Myanmar’s internet connectivity being only at 1%,
many mobile phones company would face a problem as smartphone work best when it has
network connectivity (Kan, 2013). Government has made plans to achieve 75% of mobile phone
market rate in the year 2015 (Deloitte, 2013).

Competitive Pressures Faced
Porter’s Diamond Theory
The venturing of firms into global market has increase the competitiveness in every industry.
Companies have been trying to improve themselves in order to compete with their competitors in
the competitive market. Porters (1990) explain that a company’s competitiveness is associated to
other firms’ performance and a mixture of other factors such as relationship between client and
customer within a regional or local context. In order for telecommunication firms to venture into
Myanmar’s telecommunication market, they must first know and understand the competitive
pressures and advantages they have to face in the industry. Based on the Porter’s Diamond
theory, there are four attributes and they are the demand conditions, factor endowments, firm
strategy, structure, and rivalry and the relating and supporting industries (Hill et al., 2012).

Demand Conditions
With low density of telecommunication services and total population of 60 million, the demand
from the citizen of Myanmar is important as it would help telecommunication companies to have
a favourable demand condition (Leony and Rudito, 2013). It is important for a
telecommunication firm to have a favourable demand condition as the increase in demand would
encourage telecommunication firms to come out with new products and differentiating them to
compete with their competitors (Zhang and London, 2013). For example, the high demand for
Samsung’s smartphones has encouraged them to innovate faster so a more advanced smartphones
can be created and equipped with the latest technology which their competitor do not have.
Therefore, telecommunications companies should take this opportunity to create more market
demand in the Myanmar telecommunication market as it would help them to increase their
market share and efficiency in the telecommunication industry.

Factor Endowments
Myanmar has only 1% fixed line penetration (Kan, 2013) and this causes a major problem in the
telecommunication market as Internet connectivity is a basic needs for smartphones. Without
such an important infrastructure, it would take time for the telecommunication market in
Myanmar to grow unless great investment is done by its government. According to Deloitte
(2013) at least 15,000 communication towers are needed in order to expand their internet
network, and they believe that if the government could build such infrastructures, there would be
increase in foreign direct investment. With the increase in foreign direct investment, the
telecommunication industry would benefit due to the increase in customers and better
infrastructure.
Besides that, the frequent blackout (World Bank, 2013) would be a serious liability to the
telecommunication market as electricity is needed in order for communications to be made.
Without electricity, communications cannot be made unless telecommunications companies use
an alternative energy to keep their operation on going during the blackout. For example, solar
energy which is renewable and more expensive compared to conventional energy. Thus, in order
for the telecommunication market to grow, the Myanmarese government needs to invest heavily
on their country’s infrastructure.
Firm Strategy, Structure and Rivalry
The environmental difference in Myanmar might affect the strategy used by telecommunication
when they are venturing into the market. Environmental factors such as legal, technology and
culture plays an important role in a firm’s strategy. Companies need to understand it properly so
that the right strategy would be applied when entering a market. For example, the pressure for
local responsive and cost reduction cause by the environmental factors would determines what
strategy should the firm applied in different countries (Hill et al., 2012). Nevertheless, the
telecommunication firm’s organization structure in Myanmar might vary when venturing into
another market. Lastly, the presence of intense rivalry in Myanmar would bring in pressure to the
telecommunication market. According to Porter (1990), competitiveness would be improved
when rivalry is presence in the market because a presence of rivalry gives pressure to competing
firms and encouraging them to innovate.

Related and Supporting Industries
One of the most important supporting industries for the telecommunication industry is actually
the mobile service provider industry. During the ruling of the military government in Myanmar, a
SIM card cost at least $2000 and telecommunication network is strictly regulated by the
government (Kan, 2013). However, with the entrance of Qatar's Ooredoo and Norwegian
telecom giant Telenor (Lin, 2013), a SIM card now only cost $1.50 (Kan, 2013). Without the
production of SIM cards from mobile service provider, SIM cards would be limited and this
would cause the increase in its price due to shortage. This would affect the company’s sale in the
telecommunication industry to fall because it is pointless to buy a phone as there are no more
SIM cards available in the market.
Besides that, the presence of leading global telecommunication in the related industries would be
a good sign for the industry (Leony and Rudito, 2013). The reason why it is a good sign because
by having them around, it would the cause competitiveness in the telecommunication industry
would be increase. Nevertheless, if internationally competitive suppliers are present in the
market, it would impact the overall production cost because of the increase in competitiveness in
the telecommunication industry’s supply chain process (Leony and Rudito (2013).

Selection of Strategic Posture
It is often viewed that in order to come up a strategy, it goes through a meticulous process of
designing, planning and implementation (Landrum, 2008). As it is a meticulous process, much
concentration and accurate information is required in order to create a successful strategy.
Despite being a meticulous process, Mintzberg and Waters (1985) proposed that it could be seen
from a retrospective view and explained as a group of activities that combines together to create
a discernible path.
Before entering the telecommunication industry in Myanmar to compete with their competitors,
HTC must come up with a strategy by selecting the right strategic posture so that it could be
employed in the country to attain its goal. There are a few strategic postures which HTC should
consider. A company who is competing in the international market must consider the pressures
for local responsiveness and also pressures for cost reduction so that the right strategy is applied
(Hill et al., 2012). HTC must consider whether to focus more on local responsiveness or on cost
reduction or both in order to gain market shares.
Besides that, the method of entering into the Myanmar market should be considered wisely by
HTC. According to Root (1994), he stresses that the right entry mode chose by a company when
entering a foreign market is seen as the most vital strategic decision. HTC must consider
carefully as its entry mode would determine whether they could gain a competitive advantage to
penetrate the market of Myanmar. If a company chooses the wrong mode, they would fail its
venture into the market even though they might have succeeded if the right mode is chosen
(Dickson and Giglierano, 1986).
Therefore, in order for HTC to enter to the market and compete with its competitor, HTC should
apply a transnational strategy and entering the Myanmar market by cooperating with local firms
through joint venture. The decisions of using these strategic postures are due to the
environmental factor of technology, culture and the economy of the country.

The Strategic Postures
Transnational Strategy
The decision on choosing the right strategy for a new market is determined by both cost
pressures for cost reductions and local responsiveness (Hill et al., 2012). When the right strategy
is used, the company would gain a competitive advantage in the market. Even though HTC has a
low production cost due to the fact their manufacturing plants are produce in Taiwan, they would
still face a high pressure for cost reduction in Myanmar due to its competitors and the economy
environment of the country. Nevertheless, HTC faces a very high pressure for local
responsiveness in the market of Myanmar due to the cultural and technological environment.
Therefore, HTC should apply the transnational strategy in order to compete in the Myanmar
market.

Strategy of HTC

Pressure of Local Responsiveness
One of the reasons why transnational strategy is applied by HTC is because it is to response to
the pressure of local responsiveness caused by the cultural and technological environment. It has
been found that warranty of mobiles phones and computers are often invalidated in Myanmar
because the users must install the fonts in their own language by themselves by going through a
cumbersome process (Reuters, 2013). This becomes a major issue for the locals as Burmese is
their main language. If the consumers do not know how to operate the phone in another language
like English, they would not be able to understand the functions of a smartphone. Besides that,
the invalidation of the warranty of mobile phones would discourage the locals to buy a
smartphone. The technological and cultural environment would cause a big impact on the phone
market. HTC should hold on to this opportunity and come up with a solution to meet the demand
of customer’s taste and preferences.
In order to meet the local’s demand, HTC should consider on manufacturing HTC smartphones
which is equipped with the local language of Myanmar. This would prevent the problem of
invalidation of warranty caused by the installation of additional fonts. Besides that, it would
prevent hassle of installing additional fonts which only skilled smartphone users know how to do
so (Nick, 2013). Thus, by meeting the local needs, HTC creates a value to its customer. When a
customer sees a product or services with a high value, it would increase the profit of a company
(Hill et al., 2012).
However, this is not a sufficient as this technology can be easily copied by competitors. HTC
should consider on improving its feature to further differentiate themselves from their
competitors. According to U Tun Myint (Cited in Khin, 2013), owner of Min Computer, he states
that smartphones which are running on the Android operating system can only use 20% of the
functions if it runs on Burmese. HTC should not only consider on making a simple Burmese
language phone, they should make an advanced Burmese language phone which support mobiles
apps. Besides that, HTC should consider on making their own mobile apps which their customers
could enjoy when they purchase their products. For example, HTC should come up with their
own communication application which uses both Myanmar and English when texting with each
other which competes with Samung’s communication application “ChatON”, which only
supports the English language.

Pressures of Cost Reduction
The transnational strategy should also be applied by HTC is because it deals with the pressure of
cost reduction caused by the economic factors of HTC. As being one of the poorest countries in
Southeast Asia, the citizen of Myanmar are not able to purchase HTC due to its price range. Its
product price range is from $150 – $850 and the markets targeted by HTC are consumers from
the middle to high income level (Song, 2013). Besides that, competitors in the smartphone
market further contribute to the cost reduction pressure in the industry. Competing firms in this
industry are Huawei, Samsung and Sony. HTC faces strong pressure from Huawei as an average
phone costs from Huawei is only $125 (Kan, 2013). Due to this issue, HTC needs to come up
with cost reduction methods in order response to the pressure and demand.
One of the methods which HTC could apply in order to response to the cost reduction pressure is
actually outsourcing. HTC should consider outsourcing to low cost region such as China in order
to compete with its competitor. This would give a competitive advantage to HTC as they are able
to reduce their cost when producing their products (Spee and Douw, 2003). HTC would then
have a chance to sell their mobile phones at a lower cost so that it could compete with the
Chinese company, Huawei. Therefore, the transnational strategy is used in order to response to
the cost reduction caused by the economic environment.

Joint Venture
Due to the fierce competition by their competitors in the global market, HTC would need a large
sum of money and vast knowledge on the local market in order to invest in the
telecommunication market of Myanmar with the transnational strategy. By getting into a joint
venture with a local firm in Myanmar, HTC is able to response to the pressure of cost reduction
and local responsiveness. HTC has a joint venture with a local IT company & mobile distributor
known as KMD Computer group to execute its transnational strategy (Liau, 2013).
When HTC enters a joint venture with KMD Computer, they would share their development
costs and risk when entering the market (Hill et al., 2012). HTC and its partner would be able to
gain market shares by cooperating with each other using their shared capital. With the shared
capitals, HTC is able to advertise more frequently and also having more outlets around Myanmar
in order to build their brand name in the market. By having a joint venture, HTC is able to save
some of their cost as it is shared with its partner, thus, solving the pressure for cost reduction.
Nevertheless, the cooperation between HTC and KMD Computer would extend HTC’s
knowledge of the Myanmar telecommunication market (Hill et al., 2012). Its local partner would
know where would be the best location to set up an outlet and what kind of promotional tools to
be used in order to attract customers into buying HTC products. A local firm is able to serve the
customers as they speak the same language and know what their preferences are, thus providing
a good customer service and handling the pressure of local responsiveness. Therefore, a joint
venture is the right entry mode as it helps HTC to further strengthen their transnational strategy
in the market.

Conclusion
Despite being one of the poorest countries in the world, Myanmar is one of the hotspot where
international firms should consider on investing in. The telecommunication industry would be
one of the industries in Myanmar which would create profit for those who have invested in it as
there is a large population of people in Myanmar. The demand for mobile phones in a few years’
time would increase drastically. However, in order for that to be achieved, Myanmarese
government should consider focusing on investing in their infrastructure such as electricity and
network communication so that it would create a foundation for the rising of the
telecommunication industry in the market. HTC would be able to gain market shares in the
Myanmar telecommunication market if the pressures from cost reduction and local responsive is
solve by using the transnational strategy. Nevertheless, the importance of maintain a good
relationship with its joint venture partner KMD Computer as their support and understanding of
the local telecommunication would is seen as an important ally against their competitors such as
Huawei, Samsung and Sony.

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