Qualcomm Situation Analysis
Qualcomm is an established company of semiconductors and software that has an important position all over the world. The company has a significant brand awareness and trust among its users. Moreover, it has a strong logistics base but suffers because of lack of active research and prompt development strategies in comparison to other manufacturers. Thus, it must work on increasing its research, innovate and launch more products with better marketing strategies.
Industry Structure and economic feature
The company has segregated its business into three groups: QCT (Qualcomm CDMA Technologies) that includes CDMA wireless products and generates 80% of the company’s revenue; QTL (Qualcomm Technology Licensing) that generates 19% of the revenue through licensing; and QSI (Qualcomm strategic initiatives) which is the part that generates the least revenue and involves investing in other tech companies (Qualcomm, 2019).
The company invests on foundational technologies that are being designed for further inventions. The company produces processors, modems, RF systems, optimized software, 5G, 4G and legacy connectivity solutions; things needed for building premium wireless applications and products (Wireless Technology & Innovation 2022).
i)Business Level Strategies
Qualcomm’s mass market strategy has been distribution focused that have standalone processors such as snapdragon 820, 410 and Krait) along with connectivity modules that are targeted at medical imaging, robotics, portable computers and desktops, digital televisions, and 360 degree cameras (IDC Insight, 2016).
ii)Corporate Level Strategies
Qualcomm’s has three primary tenets that incorporate particular platforms to address the specific needs of the submarkets with customization as per the requirements of the customers; portfolio that have wide variety of processing, security, connectivity and interoperability; and partnerships with other company’s through the company’s technology-agnostic positioning (IDC Insight, 2016).
Competitive Analysis and Advantage in the industry
Qualcomm had an overall advantage over its competitors in the last year. With a net margin of 25.21% Qualcomm had a higher profitability in comparisons to its competitors (CSIMarket, 2022). It has an increase in net income of 2.64% while majority of the company’s rival companies had experienced contraction in net income by over -60%.
The advantage Qualcomm has over its competitors is that it adequately licenses its technologies and thus enables an increased number of manufacturers to use their services. In addition, it is also aware of the rising competition and therefore, keeps improving their products to retain their hold on the market.
STRENGTHS: Qualcomm has a strong free cash flow that helps the company to put resources to expand into new projects. It also enjoys a high return on capital expenditures as it creates new revenue streams (Xaif, 2022). Moreover, it has a strong brand portfolio build over the years, which is very important factor for a brand while expanding. Apart from that, it possesses a highly skilled workforce by investing resources for training and development for its employees. It also has a good record of integrating various companies that had helped the company to establish a stable supply chain.
WEAKNESSES: With the expansion by integrating more companies, more investment is required in new technologies. The present investment in technologies is not at par with the company’s vision. The company also has a higher rate of employee dropout in comparison to other organizations. Thus, it needs to spend more and more money on training and development in comparison to its competitors. The financial planning of the company is also not efficient (Xaif, 2022). The positioning of the company’s products is also not unique, which makes it susceptible to competitor’s attacks.
OPPORTUNITIES: With the rapid digitalization, the company can use its strong hold on this sector to achieve greater profits. This opportunity can help the company build a stronger relation with its customer base online. This will also help to attract new customers. New free trade agreements and other government policies regarding technology will also help Qualcomm to increase its profits.
THREATS: As the company deals with semiconductors and processors of devices, any lagging or hanging issues that hamper the user experience create a negative impact for the company. There are also various liability laws in various countries and Qualcomm may face difficulty to adhere to such laws. In addition, the increasing competition in this sector is also a great threat for Qualcomm.
POLITICAL FACTORS: Growing political tensions and instabilities in the political environment in countries where Qualcomm has established itself can hamper its growth and development. Moreover, constant changes in government policies are also a major threat to the performance of the company. Countries that have high taxation rates and corruption in their government are also equally dangerous for the effective growth of the company (Case48 2023). Thus, it is important for Qualcomm to study the political scenario of a country and its laws to have an idea about impact of governmental changes on the company’s development.
ECONOMIC FACTORS: The economic factors that affect the development of Qualcomm include inflation rates, interest rates, consumer spending trends and unemployment trends. A moderate inflation rate will be helpful for the company to grow and evolve into a bigger company; however, an increased inflation rate will lead to lower expansion rate for companies along with reducing consumer trust. With adequate interest rates, consumption patterns will increase, which is beneficial for Qualcomm.
SOCIAL FACTORS: Social factors involve education, demographics, family size and structure as well as health consciousness. Having a higher percentage of younger population will be beneficial for Qualcomm (247caseanalysis, 2023). A population that is highly educated helps to ensure that Qualcomm is able to incorporate higher skilled and educated workers. The high middle class is also the most appropriate class of people that the company targets for its products and thus, presence of these factors help to increase its loyal consumer base along with higher skilled employees.
TECHNOLOGICAL FACTORS: The most important technological factors are technological infrastructure, internet penetration, social media use, and investment in R&D. Countries that have high investments in the R&D sector helps to develop companies such as Qualcomm with more efficiency as they are able to spend more on research (247caseanalysis 2023). Social media use is also an important factor because the company uses social media to promote its services and products. Thus, having a stronger social media presence of consumers will help to attract more consumers.
LEGAL FACTORS: Legal factors include health and safety law, employment laws, and anti-discrimination laws. Qualcomm adheres to all legal laws and policies as per the country it is operating and maintains the health and safety of its employees along with providing an environment free of discrimination.
ENVIRONMENTAL FACTORS: Environmental factors include recycling, waste management, green consumption, and renewable energy sources investment. Qualcomm and its subsequent companies are making tremendous efforts to use more renewable sources of energies such as solar light and hydroplanes for its operations. It also engages in environmental friendly activities such as introducing a line of green products to promote sustainable living.
Target Market Analysis of Qualcomm
Demographic Characteristics of Market: Qualcomm’s target audience is the young population that has a stronger presence and influence in the market that they produce products for. The company must study the host country’s attitude as well towards the company’s growth.
Psychological Characteristics of the Market: The psychological factors that influence consumer behaviour include motivation, perception, belief system and learning. Thus, the company needs to study these factors prior to expanding its products into the market so that it can gain the trust and build strong consumer base.
Behaviours of the Target Market: The Company needs to target the audience by analysing the behaviours of the people. This will help to design and implement products in accordance with the target audience.
Strategies Appealing to Market: The Qualcomm’s marketing strategy is based on understanding the needs of their customer and then providing products and services that aligns with these needs.
Marketing Mix of Qualcomm
Product Strategy (Product Mix): The product mix of the company is mostly based on semiconductors. They produce semiconductors for almost all companies and thus, this is their primary source of revenue. They are also making constant upgrade of their technology to better fit with the needs of the people.
Pricing Strategy: Qualcomm focuses on minimising the cost of all its products and services constantly and so they focus on investments that will yield higher returns.
Promotional/ Advertising Plan: It focuses on direct marketing by consulting on specific companies to inform about their services and products. Moreover, they also perform digital marketing and sales promotion.
Qualcomm Competitive Analysis
4Ps’ comparisons with competitors
Product: Qualcomm works extensively on all its products to improve them. It semiconductors are its main source of revenue and have the biggest hold on the market as they produce these for almost all companies of the world (M.B.A.S Team 2017).
Pricing: The pricing is based on the demand, technology, and competition. It aims to reduce its annual cost from $3.7 billion to $1.1 billion without hampering their goal or technology.
Place: It constantly makes mergers and acquisitions to increase the market for its semiconductors and mobile technologies.
Promotion: Its promotional strategy is different because it does not cater to the end users directly. It makes consumer publications, does online marketing as well as television ads to promote the company products and services.
Strengths’ comparisons with competitors
It has many strengths in comparison to its competitors such as strong market base and over 12,600 US patents for CDMA and related technologies. It also has a strong customer base.
Weaknesses’ comparison with competitors
The weakness of the company is its inability to merge firms that have work cultures different from each other’s. Moreover, its strong market hold may also weaken because of the increasing competition in this sector.
Organization’s Competitive Advantage
It has a strong cash flow that allows the company to invest in various technologies. It also ensures a dominant share of the premium smartphone market. It also has 5G technological leadership.
Key success factors
The most important success factor is its strong hold over the technological market in the world. In addition, its licensing model is used by most of the smartphone manufacturers. It has over 150 5G agreements, which is its reason of strong market hold.
Problems and Issues in Qualcomm’s Organization
The Company’s primary challenges include strong competition from the rival company MediaTek because it has caused the company to lose significantly on its global market share (Sun 2016). In addition, leading smartphone makers such as Apple are making their own chip designs which reduce the market for Qualcomm.