HTC 2013 Annual Report Download - page 66

FINANCIAL STATUS, OPERATING RESULTS AND RISK MANAGEMENT FINANCIAL STATUS, OPERATING RESULTS AND RISK MANAGEMENT
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(5) Comprehensive domestic industry base supports current and future growth needs
Active government and private sector efforts to grow the domestic high tech sector in recent decades
have given Taiwan a strong foundation of skilled researchers and technicians. Taiwan is further
benefiting from the increase of industry supply and support systems and industry clustering effects.
In addition to making it easier for us to recruit and retain personnel, these developments allow us to
cooperate with domestic and international suppliers in order to lower purchase costs and respond even
faster to industry trends and changes in.
• Factors adverse to the achievement of HTC growth goals and relevant
countermeasures
Many current and potential competitors are now active in the smartphone market looking to benefit
from the rapid growth and demand of smartphone technologies. Competition is expected to continue
to intensify as the smartphone user base grows, smartphone functions and features increase, and
smartphone model lifecycles shorten. The following outlines HTC measures and response to such
challenges.
(1) We work actively to establish HTC's brand value, enhance global brand recognition and preference, and
leverage effective brand management activities and product promotions to establish the HTC brand as
consumers' "first choice" in smartphones.
(2) We emphasize innovation to maintain a leading competitive edge. Product differentiation and
innovations in user experience allow us to develop a wide range of products tailored to meet diverse
consumer needs. HTC Sense® is designed with customer at the center to make mobile phones more
intuitive and easy to use.
(3) We upgrade our materials requirement planning (MRP) system to improve our ability to manage material
inventories, anticipate future demand in order to drive efficient inventory costs and reduce inventory
devaluation risks. We continue to build and diversify supplier relationships to enhance supply stability.
Our objectives are consistent and uninterrupted supply of all materials. HTC's leadership in the industry
helps ensure that suppliers accommodate and meet HTC priorities in expanding market sales. This
helps mitigate risks related to reliance on overseas suppliers for critical components. We also cultivated
strategic business relationship with our suppliers.
(4) We work hard to maximize the productivity of each of our business chain, enhance time management,
standardize workflows and fully implement ISO quality control practices in order to improve
competitiveness through efficient process, reduced communications costs and comprehensive quality
management.
(5) As the fastest growing sector of Taiwan's economy, the electronics industry requires a steady stream of
human resources. Downsizing in the manufacturing sector has increased the difficulty in hiring entry-
level workers. HTC plans to continue to hire foreign workers and work with schools to help increase
domestic hiring in the future.
6. Competitive Advantages, Business Growth and
Assessment of Risks
1. Potential factors that may influence HTC's competitiveness / business
growth and related countermeasures
Critical competitive factors in HTC's industry include: 1) product R&D and innovation capabilities, 2)
strategic partnerships with industry leaders and 3) accurate grasp of market trends. The following
assesses HTC's competitiveness in terms of factors deemed to support and detract from HTC achieving
its business goals.
• Factors favorable to HTC growth
(1) Partnerships with industry leaders help HTC drive industry trends
HTC has always developed smartphone products in close cooperation with industry leaders such as
Google®, Microsoft®, Qualcomm® as well as the world's leading telecom operators. Examples include
HTC's launch of the world's first Windows Mobile smartphone and first Android smartphone. Our strong
partnerships deliver greater choice to consumers while continuing to drive industry innovation.
(2) Long-term cooperative relationships with telecom providers keep HTC abreast of consumer demand
HTC promotes products directly to mass-market consumers via long-term, unique relationships with
the world's largest telecommunications service providers that include the four big mobile operators
in the United States, five major operators in Europe and several fast growing carriers in Asia. These
relationships not only keep HTC abreast of user demand but also allow HTC to better tailor its products
and services to the needs of each carrier partner.
(3) Diverse and growing universe of mobile digital services drives smartphone market penetration
New mobile phone operating systems such as Android and iOS, which permit easy app store
downloading of social networking, shopping, travel, game and other software, are attracting even more
consumers to the ranks of smartphone users. Smartphone industry is now in the strong growing stage,
and telecom operators' aggressively rollout of 4G fastest mobile Internet networks to stimulate growth
even further. These developments should all have a positive impact on HTC business growth prospects.
(4) Instilling a positive corporate culture enhances organizational flexibility and responsiveness
HTC promotes a unique corporate culture that is designed to instill passion for innovation and
commitment to the highest standards. Our lack of barriers between departments promotes synergy and
dynamism even further. HTC's highly efficient operations have been affirmed by numerous international
quality standards including ISO 9001, TL 9000, and IECQ QC 080000. Outstanding in-house research
and development capabilities give HTC the competitive edge to reach the market first with many
industry leading innovations and features.