OPPO Electronics Corporation: Strategic Analysis

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8th Feb 2020 Business Strategy Reference this

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Background: OPPO Electronics Corporation is a Chinese electronics and mobile communication company which dedicate to produce smart phones, Blu-ray players and other electronic devices. In China, OPPO Electronics Corporation is one of the top smart phone brand which has a large-scale high-tech company registered worldwide. The company integrates scientific research, manufacturing and marketing to contribute quality product in electronics industry.

They have already had their own mission and vision statement, and we have some analysis below:

1          Vision and Mission Statement

OPPO Electronics Corporation have already had their own mission and vision statement, and we have some analysis below:

Mission: To let our extraordinary users enjoy the beauty of technology.

 The mission for OPPO fits the company pretty well. First, OPPO is a company focus on researching and developing the digital product, their ideal customer is people who pursuing a young, modern and fashionable lifestyle. It shows that their customers are definitely extraordinary users. Second, they focus on product design and they take care their customer, meanwhile, they dedicate to updating product to go with the trend. So, this means it shows “the beauty of technology”. In general, I think the mission really fits OPPO well by its focus and its ideal consumers.

Vision: To become a healthier and sustainable enterprise.

 The vision statement for OPPO is not really well describe OPPO and its goal. OPPO is the first company who got the Real Networks authority in China, and plus its self-developed PAD clean noise reduction technology become one of the best brand in China. It shows OPPO hope it will become healthier and sustainable enterprise. Besides, I suppose that we should add a new item in their vision. I think they should focus on its strength like become the best fashion smart phone in China, it would make more sense for their consumers. We suppose that their vision should be “To become more fashionable, healthier and sustainable enterprise.” The reason why we choose this vision is OPPO focus on younger consumers and also have a high status in smart phone field, especially someone pursue beauty scientific and technological feeling.

2          External Analysis

(1) PEST Analysis

Political

Positive     

        Chinese Government provides preferential policies in science, technology research and development communications to support the production of domestic smart phones and also could ensure the improvement of the quality and performance of domestic smart phones. It shows that OPPO will get more policies support from Chinese Government to ensure the quality of their products.

        Chinese Government decrease export duty to encourage domestic smart phones have more foreign trade with other countries. It means OPPO could enjoy a low export duty for their product so that they can expand more market in the world.

        Chinese Government has increased policies of protecting its own intellectual property rights, to help domestic corporations reducing legal disputes arising by intellectual property issues. So that it will help domestic corporations reduce patent barriers in export. It means OPPO will get better access to entry international market.

        India Government cancels government limited for retail stores which means more and more mobile phone company will is going to open retail stores in India. It shows OPPO could have the opportunity to open more retail stores in India market.

Negative

        The State Council decided to cancel the approval of production projects such as mobile communication systems and terminals with special national regulations which means that some traditional digital manufacturers who are already very powerful have been involved mobile phone field. It means OPPO need to face some challenges from some new entrants in mobile phone field.

        Some countries increase the import duty rate to limit other country’s smart phones like India and the USA, especially 2018 China – United States trade war. It shows OPPO will have to lose some market in the world.

Economic

Positive

        OPPO have about 8% market share in global, it’s a good trend for the future in their industry.

        In 2019 the number of mobile phone users will reach 4.68 billion which is a huge market. The research indicates that through the develop of society, OPPO will have a large customer base in the future.

        Chinese economy is keep growth within about 6.9% in 2017 which means there is a good economic environment for domestic corporation. OPPO will have a good economic environment to make sure they could provide high quality product.

        China interest rate is at 4.35 percent which was last cut by 25 basis points in October 2015 which means corporation will have a low tax to reduce cost. It means OPPO will save their cost in production.

        The exchange rates is 6.87 Chinese Yuan equal 1 US Dollar which shows that OPPO will have a good influence for export.

Negative

        The inflation rate in China in 2018 is about 2.48% while the global inflation rate is about 3.49%. The high rate will lead to OPPO lose some consumers because of consumers have a low purchasing power.

Social

Positive

        More than 27,222,000 followers in Weibo which is the top one in China, and the next one is Huawei which has more than 23,337,000 followers. It means OPPO is really popular in China and it has a big customer base.

        Yearly growth rate for Chinese population is about 0.39% in 2018 and the global growth rate of population is 1.09% in 2018. It shows that it is a good trend to get more consumers for OPPO

        About 16.7% people are from age 0-14 years old in China, 72.5% are between 15-64 years old and 10.8% is greater than 65 years old. It means OPPO have a huge customer group because it has nearly 90% percent population because of OPPO’s younger customer group based.

        Have good relationship with local TV station and celebrities. It’s definitely means a good way for OPPO’s advertisement and publicity.

        Recycle your old phone means customer could recycle their old phone and have a new one. It’s will stimulate their regular customer to buy a new phone from OPPO.

Negative

        Misunderstanding communication in different culture results in conflict between employee and manager. OPPO will face a difficulty beginning of their overseas market.

 

Technological

Positive

        OPPO pioneered the “condensing gradation process” and the water drop screen design which have three colors of fading gradients and can be viewed at different angles to get different flowing colors, it is quite fashionable. It means OPPO could attract lots of younger consumers of their cool design.

        OPPO is the first manufacturer of domestic mobile phone manufacturers to adopt the smart aperture scheme in China. This means OPPO have an advantage of brand effective.

        OPPO has the world’s first commercial model to support TOF 3D vision technology. It will attract someone like high-technological to use OPPO smartphone especially people who love high-vision technology.

        OPPO supports SuperVOOC Super Flash Charger which uses an equivalent 3700mAh battery energy, charging power up to 50W, and charging to 40% in 10 minutes. It means OPPO have a absolutely advantage in China smart phone market because of the high utilization rate of smartphone China.

        OPPO is also equipped with light-sensitive screen fingerprint technology. It means OPPO dedicate to keep up with technology and will have a stable customer base because touch screen is a future trend in mobile phone field.

        OPPO has 1520 patents authorized by Chinese Government. It indicates that OPPO will have a high level of recognition in market and will be a leader in smart phone technology field in China.

 

(2) Porter’s Five Forces Analysis

  • Threat of New Entrants

Threat of new entrants into the internet technology is low. There are entry barriers for new market players. Economies of scale is one of the major factors and entry barrier for new companies. OPPO is able to offer its products for competitive prices because it purchases raw materials in bulk and benefits from the economies of scale to a large extent.

Moreover, entry into the electronics and software industry requires formidable capital investments. OPPO went through series of funding and debt financing of several billion dollars to reach its current state. It may not be easy for new market entrants to secure funding at such a scale to enter the industry.

  • Bargaining Power of Buyers

Bargaining power of buyers in technology and the mobile internet industry is high. Due to high level of competition in the global marketplace. Consumers can easily switch brands given the large number of players in the market. However, OPPO provides customers with high-quality smart phones at competitive prices, making it a major advantage, in order to lower the bargaining power of buyers.

  • Bargaining Power of Suppliers

Suppliers have huge bargaining power over a company when it is new in the market as they are loyal to their old clients, while over the years OPPO has gained loyal supplier and build up a strong supply chain that is one of the backbone. For example, in order to avoid corruption, most companies have strict regulation about “have dinner with suppliers”, but this kind of regulation goes against the traditional way of networking for Chinese people, so OPPO came up with a creative idea – they welcome suppliers to have dinner with them but OPPO will pay the bill, which makes many suppliers willing to communicating with OPPO because they feel that they are treated equally and warmly. So if we see the current situation the bargaining power of suppliers is moderate.

  • Threat of Substitute Products and Services

Threat of substitute products is high. OPPO is committed to product middle to high end mobile phones pricing from ¥1000 ~ ¥6000 ($200 ~ $1200). There are lots of similar products in the current market, such as Huawei, Xiaomi and Vivo. They are also good at R&D, product designing. So the consumers have many options when purchasing mobile phones. Once OPPO cannot satisfy their requirements, they’re probably go to purchase other brands’ products.

  • Intensity of Rivalry Among Competitors in an Industry

Rivalry among existing firms in smart phone industry is fierce. Smartphone industry is very competitive as there are major players in this industry who have worked for years to build up their brand awareness and they are competing on different factors including price, quality, consumer needs and brand loyalty. Especially when it comes to Chines markets, there are some major competitors in this industry including Huawei, Xiaomi, Vivo, and some other that are competing with OPPO. All of these Chinese companies are trying to capture their market share in the international market, where Apple and Samsung are still the major vendors. But it cannot be denied that the Chinese smartphones have also obtained their market share in the global market. According to research, Huawei is currently at No.3 rank in the global market. Therefore, when it comes to industry rivalry for OPPO, it is facing fierce competition in the market.

Worldwide Smartphone Market, Top 5 Company Shipments, Market Share, and Year-over-Year Growth, Q2 2018 (shipments in millions)

(https://www.idc.com/getdoc.jsp?containerId=prUS44188018)

3          Internal Analysis

(1) Primary and Support activities that pertain to the organization in the value chain analysis.

https://www.smstudy.com/article/what-is-value-chain-analysis

Primary Activities

Inbound logistics: Begun from 2011, OPPO initially included specialized designers into their provider determination framework. With the end goal to achieve the most elevated quality level, each thing’s crude material must be tried by the specialized designer to guarantee the majority of the gear are met all requirements for the profitability, quality, produce. OPPO has prohibitive control about crude material buying. Prior to the affirmation of material acquiring, there are four stages to test the material: Model Selection Test, Design Test, Pilot Production Test, and Reliability Test.

Operations:

From some research, we find that OPPO had the biggest manufacture factory, most of OPPO smart phones are still manufacture in China, and India and Indonesia also have factory. Production, testing and developing bases are dominated by China, while Indian and Indonesian factories are responsible for the assembly line of locally sold products. We research some data is every twenty minutes OPPO could manufacture a smart phone of R11 series. A whole day will manufacture almost 6000 smart phones.

        First, automatic assembly line is more efficient and more accurate. The robotic arm operations can avoid errors, and currently the accuracy can reach to 98%; After the automatic robotic arm is introduced, it can be reduced at least 20 manpower for per production area.

        Second, OPPO has their own intelligent production and assembly center, it could make a significant savings in manpower.

        Last but not least, OPPO has a smart phone development test center to make sure the quality of smart phones. The entire test process includes more than 400 detection programs, which include the plug and pull test of the headphone hole of the smart phone, the drop test of the smart phone, the low temperature test, the Wi-Fi signal reception test, etc… Each test time from one week to several months, even six months.

 

Outbound logistics: OPPO is focusing on the offline retails. They also focuses on the small and medium cities market and they set up lots of retail stores in this kind of cities (small to medium cities) in China. Depending on advertising bombing and distributing channels in non-fist-tier cities, OPPO’s shipments has achieved a significant growth since 2015; and in 2016, OPPO took the first position of shipments in smartphone industry in Chinese market; however, they were exceeded by Huawei in 2017.

Marketing & sales

OPPO’s ads are on TV and Internet everywhere. Its videos are brief, but it highlights the advantages of the product. Many consumers understand products, trust products and buy products because of famous starts who endorse OPPO.

Service

There are a lot of OPPO’s offline stores. Consumers can find OPPO’s mobile phone stores everywhere for purchase, service and after-sales.

Support Activities

Firm Infrastructure

        Cultural competitiveness

OPPO has very simple shared value – returning to the nature of things, customer-orientation, pursuit of perfection, result-orientation. It is simple and plain, meanwhile, it is close to the internet. Internet industry just requires the product could be as perfect as possible, user-oriented and result-oriented. The basic mobile phone of OPPO is particular popular within young generation, simple and plain, and very restraint, not like other Chinese Smartphone companies launching tons of mobile phones at the same time.

        Terminal control power

This is about the Depth Distribution, as known as Area Roller Sales. OPPO has built a giant offline retail system. Four years ago, they had already got 250,000 retail stores. OPPO put a lot of work on terminal sales; it truly implemented the concept of “Omni-channel After-sale Service”.

 

Human Resource Management

OPPO has a perfect human resource management system. They oversee the recruiting, interviewing, and hiring of new staff; consult with top executives on strategic planning; and serve as a link between an organization’s management and its employees.

Procurement

OPPO supplier management uses offline channels to stabilize control. It is known that OPPO is a domestic brand and from research we find that 80 % of parts are manufactured domestically and 20 % are imported. OPPO’s demand for raw materials and raw parts is stable. Therefore, OPPO has strict requirements for electronic components suppliers. The famous company in China called IC Microelectronics, a well-known domestic IC design company, once provided OPPO with mobile phone chips and Samsung is also a supplier of OPPO to provide Samsung’s AMOLED curved screen. The smart phone’s processor is supplied by Qualcomm Technologies.

Technology

OPPO provides many features to their customer such as high quality cameras, LCD Screen with high resolution, Dual-core 64-bit snapdragon616 processor, long battery life, Wi-Fi/GPS/A-GPS, Gorilla Anti-Crack and scratch protection screen, External memory 256 GB, 3Gb RAM, 4G LTE with speeds up to 50 to 150Mbpsand many more other features.

(2) Key Resources and key Competitive advantages.

Key Resources

  • Tangible Resources

Tangible resources

Physical

OPPO producing their smart phones in China and also start producing smart phones in India last year. The Chinese tech monster has just started an interest in a gigantic assembling plant in Noida. The organization has purchased a 110 section of land arrive from the Greater Noida Industrial Developmental Authority (GNIDA) for an announced whole of Rs. 145 crores. OPPO is also planning to invest Rs. 2,000 crores in its new plant, which is said to have 30,000 employees.

Financial

BBK Company is the parent company of OPPO, in 1990’s this company had already accumulated enough financial resources; and OPPO had created good profit recent years. That’s also why OPPO doesn’t choose to go public.

Technological

OPPO has their own automatic assembly line and robotic arm operations which is could make the production process more efficiency. Besides, their own intelligent production and assembly line center could save lots of labor resources.

Organizational

OPPO’s organizational structure is clear. In this way, they can complete the strategic plan efficiently and accomplish the targets successfully.

OPPO has a lot of stores in different cities.

  • Intangible Resource

Intangible Resources

Human

OPPO employees are innovative; they always try to invent new schemes for further products. All employees are trust worthy, Target oriented. Specialized abilities of all workers expected to achieve a particular undertaking. These abilities are the blend of formal instruction, preparing, and at work involvement.

Innovations and Creativity

In the digital era, OPPO employees often equate the adoption of new digital tools with innovation. Recently. OPPO also established the OPPO Research Institute to enhance the company’s technological innovation and research capabilities. It will carry out core technology pre-research and reserves based on and beyond user needs to create technical conditions for the company’s future product competitiveness. Meanwhile, OPPO will strengthen its cooperation with universities around the world. At present, the OPPO Institute has established the OPPO-Stanford Collaboration Lab with the AI Artificial Intelligence Laboratory of Stanford University to jointly explore artificial intelligence front-end technology and applications; In 5G field, OPPO has launched institutes such as New York University, Beijing University of Science and Technology.

Reputation

OPPO is effective to keep up his image name in the worldwide forthcoming. Having a decent notoriety can profit an OPPO in a huge number of ways including: customer inclination; bolster for an association during emergency or debate; and the future estimation of OPPO in the commercial center. On the off chance that OPPO has a decent notoriety in the commercial center; buyers may have an inclination for OPPO. The notoriety of an OPPO can empower an organization to separate its item in exceptionally focused markets, enable it to have premium evaluating.

Key Competitive Advantages

  • Substantial Competitive Advantages

OPPO understands consumer demands and take feedback seriously. For example, in the Indian market, OPPO has been expanding its presence through Point of Sales and after sales service centers for giving its consumers a better and customized experience.

Successful marketing campaigns targeted towards reaching out to the young consumers through platforms like Bollywood, Cricket and Entertainment have also driven the brand to gain higher recognition in the Indian market.

OPPO is now also looking at fashion as an important platform to engage the consumers with a taste for the finer things in life. With this, the brand is preparing the ground to introduce its high-end phones in the Indian market.

  • Temporary Competitive Advantages

Concept Marketing. When doing advertisement, OPPO never emphasizes the hardware configuration of the product. They pay more attention to the construction of brand values. The charm of OPPO is just the brand value so that they can create more attraction and appealingness. Obviously, they can’t achieve their current position by relying on a bunch of hardware parameters that consumers are not caring.

4          SWOT

(1) Strengths in the SWOT analysis of OPPO

No.

Events

Descriptions

1

Panoramic Arc Screen

OPPO Find X is the world’s first panoramic designed phone, embracing the beauty of nature into a leading technology product. OPPO Find X combines two seamless pieces of glass with the front screen featuring a gorgeous panoramic view. (OPPO.com, 2018)

2

Brand Building

OPPO has enough marketing budget reserve. They are able to invite hot stars to be the spokespersons, such as TFboys. And then a lot of customers will know about the brand, and a lot of fans will buy their phones.

3

Gradient Design

OPPO Find X has two innovative gradient colors – Bordeaux Red and Glacier Blue, which gleam like a precious gemstone. In order to create the flow like gradient effect, we used an innovative multifaceted color process, so that the phone will shine elegantly at different angles. (OPPO.com, 2018)

4

Price Point

The OPPO phones are available at affordable prices which is another factor which made OPPO phones readily accepted by the consumers in the market. (Hitesh Bhasin, 2018)

5

Good Post-Sales Support

OPPO’s post-sales service is good. It can directly carry out post-sales service back to factories through the business offices in all parts of the country. The time limit for post-sales service is usually 7-10 business days.

(2) Weakness in the SWOT analysis of OPPO

No.

Events

Descriptions

1

Lack of self-design

The newest style of OPPO mobile phones look like iPhone X.

2

Limited Production

They only have smartphones and earphones, no other accessories.

3

User Interface

The user interface is not made keeping in mind the usage from the non-tech savvy consumers. (Hitesh Bhasin, 2018)

4

No Unique Software

Previous versions of ColorOS have distinctive elements from any heavily-themed Android and iOS, now they copied it from iOS. (Raul Armstrong, 2018)

5

Join the Market Late

OPPO mobile was launched in May 2008 and the market share is low.

(3) Opportunities in the SWOT analysis of OPPO

No.

Events

Descriptions

1

Carriers

The rapid development of carrier has also promoted the sale of mobile phones. For example, carriers have some plans for paying bills and getting a free phone.

2

Integration of telecom, radio and TV, and Internet networks

Pilot projects carried out to connect telecommunications, radio and TV, and Internet networks, and it accelerated the development of the mobile phone industry.

3

Expanding Customer Base

Mobile phones are more popular, and everyone needs mobile phones.

4

Overseas Market

Overseas market has not yet been developed.

5

Cooperation

OPPO can cooperate with other mobile phone companies to find new business opportunities.

(4) Threats in the SWOT analysis of OPPO

No.

Events

Descriptions

1

Competition

The mobile phone market is intensively growing and it is getting price competitive which makes it very difficult to survive in the industry. (Hitesh Bhasin, 2018)

2

Suppliers

Parts of mobile phones may have problems. Mobile phone parts are monopolized by several suppliers and controlled by suppliers.

3

Change Faster

Consumers preference change faster. And it is a test of product renewal.

4

Foreign Users

Mobile phones have their own beauty function and it does not conform to the habits of foreign users.

5

New Entrants

With the rapid development of science and technology, people may have other products instead of mobile phones in the future.

6

Patents

OPPO patents may not be recognized in overseas markets.

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