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TD 8 : Mr. Alain de Rozaven Bastien Bonneau : [email protected] Janette Chea : [email protected] Samy Abdou : [email protected] Ruixuan Qu : [email protected] Erdem Kiranoglu : [email protected] Introduction The strategic analysis of a company is the application of theoretical and conceptual frameworks. Its methodology is to understand the success or failure of a company during its life. As future managers, our report will study how a small company, Wiko, with a low-cost strategy, conquered the Smartphone market where the giant constructors seemed unbeatable. In early 2014, Wiko was ranked second on the French market for the sale of Smartphone without bundle subscription. They were just behind Samsung, with 10 to 15% of the market share. Wiko was created in 2011 in Marseille by Laurent Dahan and it is Tinno’s subsidiary at 95%. Tinno is a mobile technology limited company, and they supply products and services used to work on GSM cards as a first-class manufacturer. Tinno's strategy is to supply technology support for their European Corporate Clients, for a small investment with quick result and high economic benefits. Wiko has developed a special commercial partnership; the Chinese team is in charge of developing and producing mobile phones desired by Wiko depending of the market’s location (France, Europe, and USA). The French company is also responsible for the marketing and selling strategy. How did a three year old company succeed as Wiko did? This success intrigued us and we wanted to learn more about it and explain the key success. The first Smartphone “IBM Simon” has been created in 1992 followed by the main mobile phones manufacturers as Nokia, LG, or Samsung and more recently the first Iphone signed 2 Apple in 2007. Through our analysis, we will discover that the mobile phone market is fundamentally defined by high barrier of entry, on a tight market situation with a high bargaining power of suppliers. In this industry, Wiko managed to make a lightning entrance by using a cost strategy based on price sensitiveness. Through our report we will investigate on how a small company as Wiko entered a market with huge barriers to entry and fierce concurrency. Since 2011, Wiko is grinding the ladder in the mobile phone market. During 2015, Wiko earned more than €200 000 000 in revenues, they were dreaming of reaching the Top 5. In this report, we will present the analysis that will be done by applying appropriate frameworks on Wiko’s Micro-Environment (Porter’s 5 forces) and Macro-Environment (PESTEL). Secondly, we will present the Internal Environment (Resources & Capabilities and VRIN analysis). Thirdly, we will focus on the Business and Corporate strategy in order to understand what the competitive advantages of the firm are and what its business scope is. Finally we will add some recommendations for the future Wiko’s strategy, they will always need to improve their technologies but the difficulty will be to stick on their personal identity. I. External and Internal Analysis In this part, we will study how external and internal analysis can lead to a strategy assessment for a company, especially Wiko in our case. The external analysis is the study of opportunities and threats in the mobile phone industry; while the internal analysis will be about the study of strengths and weaknesses related to the company internally. Once both analyses are identified, the company will be able to identify the problems raised and propose strategic options for problem resolution. 3 1. The External environment a. The Macro-Environment The Macro-Environment is what defines the first layer of analysis of a strategic assessment. It is here where we will be analysing the Pestel framework to get a deep understanding of the six main types of the environmental influences that could or will affect Wiko Company. i. Political Factors In terms of the general political environment, the world is now in a relatively peaceful stage, the French society is relatively stable, the level of consumption of the French people hadn’t been affected although experienced a terrorist attack, the French society's demand for smart phones has always been in the rising trend. The French government started to attract foreign investors since 2012, and promulgated foreign investment promotion policies and incentives as following, including increased support for scientific research innovation, the development of "future employment contract", starting "Say oui to France" action, and the introduction of "talent passport". With 25 member states and 380 million total population of the European Union unified market is one of the biggest attractions to foreign investors. The high degree of integration of the EU, the strong purchasing power of the residents and the free flow of goods, services, funds and personnel within the Union. France is geographically located in the heart of the world's largest market, which means entering the French market is equivalent to entering the entire EU market. As a French company invested by Chinese company, the potential of the French electronics market plus France government political support, so Wiko can become the N°3rd mobile phone after Apple and Samsung sold in France. 4 ii. Economic Factors France is one of the world's economically developed countries, is the EU countries, with the implementation of the modern market economic system, the basic form of property rights is private ownership, the market is the main mechanism for the allocation of resources, the economy is relatively open to a high degree of freedom of trade policy . However, the financial crisis began in 2007; the French economy has been plunged into a state of distress, and in 2016, due to strikes, floods and terrorist attacks led to a further economic recovery in France . During 2017，according to the statistic, the unemployment problem is even worse for young people: 24% of those between the age of 15 and 24 don't have a job, even worse for young people: Government debt, meanwhile, has ballooned to almost 90% of GDP, up from just 58% a decade ago. The emergence of WIKO happens to deal with this tense economic state, Wiko’s main marketing strategy is its low prices, the high spec of its hardware, chic design and even the quality of its packaging. People can buy expensive, high-cost mobile phones without the expensive prices, and Wiko is an excellent choice for families which is in tension 5 in the economy or the office worker.，Wiko now has become the second-largest online Smartphone vendor in France, with 14.2 percent market share as of this May. iii. Socio-Cultural Factors 1. Smartphones Are Everywhere For 2017, the number of Smartphone users in France is estimated to reach 43.35 million, with the number of Smartphone users worldwide forecast to exceed 2 billion users by that time. From 2015 to 2022, the number of Smartphone users is expected to increase 17.68 million users. This is equivalent to 26.26% of user growth. The data was calculated in July 2017, covering all people with one or more Smartphone of all ages, and using at least one of these devices per month. 2. Smartphones Change Lifestyles In the hustle and bustle of modern life, there are so many important elements. You might find yourself with a busy and hectic schedule. But Smartphone can help you, one of the most important things that make Smartphone so vital to our daily lives is their efficiency and it 6 make people’s life more easily. People can access Facebook and other social networking sites with ease to post their daily life. And there are things like Vibes, which acts as an international call service like Skype; it saves money on your phone call allowance. One of the most popular connectivity apps for Smartphone is the instant messaging app Whatsapp. This works over the internet connection and can make use of Wi-Fi to ensure it doesn’t cost into your data plan. And with Smartphone people can also enjoy music, statically, as much as 60.7 percent of polled users said they listen to music on their phones every day, while another 34.6 percent said they do so occasionally. In effect, more than 95 percent of people with Smartphone use their phones as much as portable music players as anything else. Now, it is a international security, Smartphone play an very important role in the security, Wiko as a popular Smartphone, it has variety of functions and strong operation systems and still focus on technique development, so that Wiko has become top 3 of France Smartphone marketing. iv. Technological Factors 1. Research Company and Operating System Actually, Wiko Smartphone far from being 'made in France', it’s actually made in China. Wiko is made by a Chinese company called “Tinno” which has spent several years on dual- SIM phones’ development ，Tinno has put their best dual-SIM card technology into the phone, at the same time they also chose popular Andrews system as the operating system. Android with a powerful operating function have some operating function which other operating system is the lack. For example like data transfer which is a lot of users’ metrics when they the purchase mobile. On IOS, if the user wants to transfer the phone data to the computer, they can only through iTunes or third-party management software to achieve, the operating steps is very inconvenient, and Android mobile phone only need to connect the data 7 line, then to be free to operate, convenience is better. And according to the analysis and statistic, the user of Android on their Smartphone has now over 27 million.