The external environmental changes that are taking place in the business of Huawei smartphones and Leica cameras are effectively analyzed through the PESTLE analysis.
Political
In regards to the political factors affecting the smartphones of Huawei, China was the key market for the brand as the country had the highest mobile user which was taken over by the United States. The company had to then concept in the international market of United States where there were already established players like Apple. Political factors affected Leica when the company had to go through various ownerships and remaking in the company by the cofounder of the German Green Party (Dyer, Kale & Singh, 2001).
Economic
The economic factors affected Huawei when the economy of China gained stagnation, the Smartphone brand did not have any scope for future growth. Further, there were many foreign players in the international market that took over the position. For Leica, the delisting of the company from the stock exchange for becoming privately traded restricted the company to accumulate a capital from the internal source only (Narula & Martínez-Noya, 2015).
Social
Huawei had to manufacture smartphones for two segments of society. One section of the society involved the emerging rural markets which demanded smartphones of low prices while the other segment of the society included the middle-class growing class that required fashionable brands with different functions and features.
Technological
The introduction of upgraded features and handsets by the new entrants in the international market posed technological challenges to the smartphone brand. Leica faced the challenge of a decline in the use of conventional cameras due to the increasing use of advanced smartphones. The isolation of the cameras resulted in a devaluation of the camera company (Narula, 2001).
Legal
In regards to the legislative factors, Huawei was facing increasing challenges by the licensing system that provided greater scope for the new domestic entrants in the market which resulted in the increase in competition. The inclusion of improvement in technology in both Smartphones and cameras leads to the generation of electronic wastes. This resulted in wide scaled impacts on the environment as consumers no longer used the obsolete models of both Huawei smartphones and cameras.
Environmental
Huawei was finding it difficult to make good impact in U.S so they entered in to the India Market in 2010 and restructure its business unit by introducing the brand Honor. Here the environment of India plays a crucial role as India is the fastest growing smartphone market. This can be said from the statistics I.e. India had a base of 1.02 billion subscribers with penetration rate of 20%. So India provided best opportunity and company had to developed the understanding of the environmental factors.
Decision of Forming An Alliance
By materializing the decision of collaborating Huawei and Leica in regards to have long term partnership, the both the companies would be able to have come back in the market with upgradation in respective genres. Both the companies will be able to amalgamate their features of Smartphone technology and enhanced camera into a single design which will definitely gain a competitive advantage over other companies (Prahalad & Hamel, 1990). The political and economic implications that both the companies have faced can be stated to be beneficial for both the companies which would result in collaborative advancement in technology. There will be optimization in the technology which will surpass the lacuna that both the companies were facing. The threats of the competitors can be eradicated with the partnership as both the companies will be collaborative their respective competencies for counteracting all the challenges that we’re generating in the external environment. Leica will be able to provide Huawei with the best camera models for the new upgraded Smartphone while Huawei shall be able to position Leica back into the global market with the collaboration. Both the companies shall be strengthening the weakened aspect by the partnership venture. They can target the vast customer base and as well as will have a technological advancement as compared to other manufacturers. The rise of smartphones in the current times will enable both the companies to strengthen and improve their competencies which will have wide scaled positive implications on the businesses of both companies. Further, both the companies will be able to regain back their position in the market as the optimum revenue will be generated through the partnership.
References
Dyer, J. H., Kale, P., & Singh, H. 2001. How to make strategic alliances work. MIT Sloan Management Review, 42(4), 37-43.
Narula, R., & Martínez-Noya, A. 2015. International R&D alliances by firms: Origins and development. In D. Archibugi, & A. Filippettie (Eds.), The Handbook of Global Science, Technology, and Innovation: 144-170. Chichester, UK: Wiley Blackwell (http://henley.ac.uk/html/hwss/files/JHD-2014-06-Narula-and-Martinez-Noya.pdf).
Narula, R. 2001. Choosing between internal and non-internal R&D activities: Some technological and economic factors. Technology Analysis & Strategic Management, 13(3), 365-387.
Prahalad, C.K. & Hamel, G. 1990. The core competence of the corporation. Harvard Business Review (May-June): 79-90.
