Oppo Smartphone Harvard Case Solution & Analysis

Differentiating Oppo from the Competitors:

Whenever a company outperforms than the industry benchmark, it is said that the company has an edge over its competitors. There are two ways on which a company can make its product different than its competitors, and that is differentiation and cost advantage. A company can have a cost advantage when it is capable of offering products lower in the process than the competitors. Oppo is not using cost advantage as Oppo’s Find 7 is a premium price smartphone. On the contrary, differentiation advantage is the one in which the company offers benefits that have not been offered by the competitors. Oppo, for sure, is using a differentiation strategy.

The company has launched Find 7 smartphones that have some features distinctive from other smartphone companies. Taking the example of Oppo’s Find 7, the smartphone has a rotating camera that is not used by any other giants like Apple and Samsung. In addition to this, Oppo has also broken the record made by Nokia in terms of 41 MP snapper. Oppo Find 7 has enormous 50 MP snapper.

Soon after the launch of Find 7, the Oppo smartphone company ranked number second in China, published by Entrepreneur Magazine. The company has adopted a successful strategy through which it has able to accomplish a striking achievement in the largest market for Smartphones worldwide. By the end of this year, the company is planning to ship around 15 million units of smartphone in mainland along with gradual shifts towards foreign expansion.

The vice president of the company believes in setting slow but attainable targets. As of now, the management of the company is planning to exceed target set by Find 5, a model launched by Oppo earlier. Oppo is hoping to sell at least more than 15 million phones worldwide, especially Find 5 and Find 7.

The company is encountering severe competition from the local as well as international market. The competition is heating up as most of the smartphone giants like Apple, Samsung; Sony and Meizu are planning to launch new models of their smartphones. With its different features in comparison with other smartphone, the company would be able to expand globally with its Find 7 model in various countries in the world like Thailand and Indonesia.

The Vice president of OppoCompany states that the major point of differentiation between the Oppo and other Chinese manufacturers is the level of efforts and exertion added in their products. However, the company and the management is not comfortable with the media and thus lacks in advertising and proper promotion of its smartphones.

Financial Analysis:

Samsung is known to be a leader in Chinese smartphone market therefore, financial data of the Samsung Company have been taken as a benchmark for the calculation of expected gross margin and annual net marketing contribution of Oppo Find 7. The data taken from the financial data will be used according to the market share Oppo has in comparison with the Samsung. Although the smartphone market of Oppo is not as large, but, the company is engaged in several other electronic products. According to Comscore report, the market share of Oppo in china is 3%, and Samsung is 18%. The market share of Samsung is five times greater than Oppo and thus 5% of the values has been taken fromOppoCompany.

Expected Gross Margin:

Expected gross margin can be defined as the proportion of each dollar in terms of revenue that theorganizationcan retain. For instance, if the gross margin of a company is 40%, then it can be said that the company would retain $0.40 from every dollar of revenue that a company has generated. Gross profit margin can never be the same for every industry as it is dependent upon the nature of the business.

In order to calculate the gross profit margin for Oppo, cost of goods sold has been subtracted from the revenues and then divided by revenues to get an amount of gross profit margin that is found to be 39.79%. The company is planning to make further expansion in various parts of the world and thus the company is expected to grow at a rate of 5% every year. By increasing gross profit margin of 5%, it would be expected to reach 41.78% in the next year.

Annual Net Marketing Contribution:

Annual net marketing contribution, also known as marketing profitability which is used to analyze the marketing strategy of the company, that is evaluating the cost associated with the marketing, promotion and advertising activities of the company is being fulfilled or not. Market share is an important factor in analyzing annual net contribution margin of the company............................

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