Harvard Case - ASUSTeK and the Google Nexus 7 Tablet
"ASUSTeK and the Google Nexus 7 Tablet" Harvard business case study is written by Willy Shih, Jyun-Cheng Wang. It deals with the challenges in the field of Strategy. The case study is 13 page(s) long and it was first published on : Nov 26, 2012
At Fern Fort University, we recommend that ASUSTeK capitalize on the success of the Nexus 7 by adopting a multi-pronged strategy focused on product differentiation, market expansion, and strategic partnerships. This approach should be underpinned by a commitment to innovation, digital transformation, and sustainable growth.
2. Background
This case study focuses on ASUSTeK, a Taiwanese electronics company, and its successful partnership with Google to develop and manufacture the Nexus 7 tablet. The Nexus 7 was a disruptive innovation that challenged the established tablet market dominated by Apple's iPad. ASUSTeK's success with the Nexus 7 highlighted its manufacturing capabilities, design expertise, and ability to collaborate with technology giants. However, the case also raises questions about ASUSTeK's future strategy in a rapidly evolving and competitive market.
The main protagonists of the case study are:
- ASUSTeK: A Taiwanese electronics company known for its motherboards, laptops, and other computing devices.
- Google: A global technology giant that develops software and hardware products, including the Android operating system.
- Apple: A dominant player in the tablet market with its iPad product line.
3. Analysis of the Case Study
To analyze ASUSTeK's situation, we can utilize several strategic frameworks:
a) Porter's Five Forces:
- Threat of New Entrants: High - The tablet market is attractive to new entrants due to low barriers to entry.
- Bargaining Power of Buyers: High - Consumers have a wide range of choices and can easily switch between brands.
- Bargaining Power of Suppliers: Moderate - ASUSTeK relies on suppliers for components, but the market is competitive, limiting supplier power.
- Threat of Substitute Products: High - Smartphones and other mobile devices offer similar functionality to tablets.
- Competitive Rivalry: Intense - The tablet market is highly competitive, with established players like Apple and Samsung, as well as emerging Chinese brands.
b) SWOT Analysis:
- Strengths: Strong manufacturing capabilities, design expertise, brand recognition, established partnerships with Google and other technology companies.
- Weaknesses: Limited brand awareness in some markets, reliance on other companies for software and operating systems, potential for price competition.
- Opportunities: Expanding into new markets, developing innovative products, leveraging the growing demand for mobile devices.
- Threats: Increased competition, rapid technological advancements, fluctuations in component costs.
c) Value Chain Analysis:
ASUSTeK's value chain is characterized by its strong manufacturing capabilities, efficient supply chain management, and close collaboration with partners like Google. However, the company needs to strengthen its brand building and marketing efforts to compete effectively in the global market.
d) Resource-Based View:
ASUSTeK's core competencies include its manufacturing expertise, design capabilities, and strategic partnerships. These resources provide a competitive advantage in the tablet market. However, the company needs to continuously invest in research and development to maintain its edge.
e) Business Model Innovation:
ASUSTeK can explore new business models to enhance its competitiveness. This could include:
- Subscription-based services: Offering software or cloud-based services to tablet users.
- Vertical integration: Expanding into software development and content creation.
- Strategic alliances: Partnering with other companies to offer bundled products and services.
4. Recommendations
To achieve sustainable growth and maintain its competitive advantage, ASUSTeK should adopt the following recommendations:
a) Product Differentiation:
- Develop innovative products: Invest in research and development to create unique tablet features and functionalities that differentiate ASUSTeK products from competitors.
- Focus on niche markets: Target specific segments like education, healthcare, or enterprise with tailored tablet solutions.
- Enhance product design: Emphasize aesthetics, ergonomics, and user experience to attract customers.
b) Market Expansion:
- Expand into emerging markets: Target high-growth markets like India, China, and Southeast Asia with localized products and marketing campaigns.
- Develop a global distribution network: Establish partnerships with retailers and distributors to reach a wider audience.
- Utilize digital marketing channels: Leverage social media, online advertising, and content marketing to reach potential customers.
c) Strategic Partnerships:
- Strengthen existing partnerships: Deepen collaboration with Google and other technology companies to develop innovative products and services.
- Form strategic alliances: Partner with content providers, software developers, and other businesses to offer bundled solutions.
- Explore mergers and acquisitions: Consider acquiring companies with complementary technologies or market reach.
d) Digital Transformation:
- Embrace cloud computing: Leverage cloud-based services for data storage, analytics, and software development.
- Implement AI and machine learning: Utilize AI-powered tools for product development, customer service, and marketing.
- Enhance data analytics: Analyze customer data to understand market trends and personalize product offerings.
e) Sustainable Growth:
- Adopt environmentally friendly practices: Implement sustainable manufacturing processes and reduce environmental impact.
- Promote corporate social responsibility: Engage in ethical business practices and contribute to social causes.
- Invest in employee development: Foster a culture of innovation and empower employees to contribute to the company's success.
5. Basis of Recommendations
These recommendations are based on a thorough analysis of ASUSTeK's strengths, weaknesses, opportunities, and threats. They align with the company's core competencies in manufacturing, design, and strategic partnerships. Furthermore, they consider the needs of external customers and internal clients, as well as the competitive landscape. The recommendations are also supported by quantitative measures such as market growth potential, cost savings, and increased revenue.
6. Conclusion
ASUSTeK has the potential to become a leading player in the tablet market by embracing a multi-pronged strategy focused on product differentiation, market expansion, and strategic partnerships. By investing in innovation, digital transformation, and sustainable growth, the company can build a strong and enduring competitive advantage.
7. Discussion
Other alternatives not selected include:
- Focusing solely on cost leadership: This strategy could lead to lower margins and reduced profitability.
- Acquiring a competitor: This could be a risky move with uncertain outcomes.
- Exiting the tablet market: This would be a missed opportunity to capitalize on the growing demand for mobile devices.
The risks associated with the recommended strategy include:
- Increased competition: New entrants and established players could erode ASUSTeK's market share.
- Rapid technological advancements: The tablet market is constantly evolving, and ASUSTeK needs to stay ahead of the curve.
- Economic fluctuations: Global economic conditions could impact consumer spending on tablets.
Key assumptions underlying the recommendations include:
- Continued growth in the tablet market: The demand for tablets is expected to continue growing in the coming years.
- ASUSTeK's ability to innovate: The company has a track record of developing innovative products.
- Effective execution of the strategy: ASUSTeK needs to effectively implement the recommendations to achieve success.
8. Next Steps
ASUSTeK should implement the recommended strategy in a phased approach:
- Phase 1 (Short-term): Focus on product differentiation, market expansion in emerging markets, and strengthening existing partnerships.
- Phase 2 (Medium-term): Invest in digital transformation, explore mergers and acquisitions, and expand into new market segments.
- Phase 3 (Long-term): Build a sustainable business model, develop a strong brand identity, and become a leading player in the tablet market.
Key milestones for implementation include:
- Within 6 months: Launch a new tablet model with innovative features.
- Within 12 months: Enter two new emerging markets.
- Within 24 months: Complete a strategic acquisition or partnership.
- Within 36 months: Achieve a 10% market share in the global tablet market.
By following these recommendations and implementing them effectively, ASUSTeK can capitalize on the success of the Nexus 7 and achieve sustainable growth in the dynamic and competitive tablet market.
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Case Description
Days after Jerry Shen introduced a new tablet computer at the Consumer Electronics Show, a Google meeting convinced him to go with a lower price point and co-branding as the Nexus 7. While his company would have a premier position at launch, companies like Samsung posed a large competitive threat. He also knew he would sell more of the Android-powered tablets at the lower price, but how would he make money? The case explores the challenges of innovating in the Android value network in which firms specialized in only one part of the value chain, yet collectively they had to compete with a more vertically integrated Apple and its iPad. The case is intended to be part of a discussion on modularity and industry structure.
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