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V Tech SWOT & PESTLE Analysis

ID : 52331453 | Jun 2018

COMPANY PROFILE - V Tech

Business Sector : Consumer Electronics

Operating Geography : Hong Kong, Global

About V Tech : VTech is a leading developer of electronic educational products for children of all age groups starting from infants to toddlers and preschoolers. It is also the world's largest manufacturer of cordless phones. The Company provides contract manufacturing services and total turnkey services to clients in a number of products. Since its inception in 1976, VTech has pioneered the market for electronic learning toys. It offers a wide range of utility products. Headquartered in Hong Kong, it started off originally as a Chinese company capturing the market for telephone products, educational learning toys for children and hospitality products. VTech employs 27000 people across 13 countries and regions with R&D centers in Hong Kong, China, Germany, the US, Canada and Taiwan. This extensive and diverse network permits VTech to stay updated with the latest technology and trends, while maintaining a highly competitive cost structure. As of 2018, this Hong Kongese global supplier of electronic learning products has its presence in 21 countries.

VTech Group has leveraged decades of experience in cordless telephony to offer a wide spectrum of telecommunication products to meet both home and business needs through its cutting edge innovation in technology and exclusive designs. VTech is recognized as one of the world's top 50 electronics manufacturing company and leader in manufacture of cordless devices. The company's business offerings range from entry-level to enterprise-level solutions. VTech Holdings Limited features on The Stock Exchange of Hong Kong Limited.

VTech's USP or unique selling proposition lies in being a vertically integrated organization with a wide spectrum of innovative offerings and in being the world's largest manufacturer of cordless phones. The Group's mission is "to design, manufacture and supply innovative and high quality products in a manner that minimizes any impact on the environment, while creating sustainable value for its stakeholders and the community."

V Tech Revenue :
US$2,079.3 million – FY 31st March 2017 (y-o-y growth 12.0%)
US$1,856.5 million – FY 31st March 2016

Competitive Analysis of V Tech

The SWOT analysis of V Tech is presented below:
Strengths
Weaknesses
1. Long established name in market
2. Diverse product line
3. High Customer satisfaction
4. Pan continental market
1. Inconsistent financial performance
2. Security breaches resulting in compromised data
Opportunities
Threats
1. Global market Growth looks promising
2. Low cost of technology
3. Global market presence
4. Mergers and Acquisitions
1. Threat of counterfeit Products, fear of copycats
2. Changing political systems(de-globalisation)
3. Threats from suppliers
4. Threats from competitors
5. Continuous need for R&D

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Detailed SWOT Analysis of V Tech

 

Strength

1. Established brand name with proven innovative offerings: Though VTech started business creating and selling home TV games in 1976, it soon ventured into cordless telephony and got into providing contract manufacturing services. It has emerged as a record revenue generator in 2017, surpassing US $2 billion marks. It continuously improvised its design, technology and products through its dedicated R&D unit. It manufactures top of the class cordless phone, baby monitors, smart watches, conference phones besides kid’s electronic toys. It has a loyal customer base and has a wide range of products to cater to a various age of the audience. The continuous innovations further establish it as a market leader. The good performance of its existing products also strengthens its confidence to elaborate and further diversify its range. The long trustworthy name established in the market is attributed to its 40 years of continuous operations across all continents and catering to varied geographical location and countries. This has earned the VTech brand trust and reliability amongst its customers and stakeholders.

2. Diverse Product line: VTech has a vast array of products under its banner. They have captured the market in three major segments including: Electronic learning products, Telecommunication products, and contract manufacturing products.It is a market leader in electronic learning toys from infancy to toddler stage globally. It has also gained number one position in cordless phone manufacturing globally and has a presence in as many as 79 countries. Also, it is placed 29th among the world’s top 50 EMS providers as of 2017 which surpassed $273 billion in revenue. The products range from baby’s toys, cordless phones, SMB phone, medical and health products, industrial products, professional audio equipment besides others. The spectacular success of KidiBuzzhand-held smart device and Kid zoom Smartwatch for kids, the Group plans to expand its Kids line of electronics to include an exhilarating new karaoke machine, fun microphone and hi-tech journal.

3. High customer satisfaction: VTech has always maintained and established high quality products and has a vast number of satisfied customers globally that is proven by its share in the market. VTech has a high track record in terms of sustainability and innovation. According to a recent survey by the Eastern Management Group, "VTech, in a remarkable achievement, is the only company for which 100 percent of survey respondents said they would recommend its VoIP phones to a friend." This was unparalleled for any VOIP phone lender to score a cent percent in all 10 customer satisfaction measurements.

4. Pan continental Market: VTech has a huge market globally. It has its presence in 21 countries and a chunky market share in each of them. The diversity of its operation clearly indicates an efficient and skilled management. It has its presence in Asia Pacific, Europe, Latin – America, middle east and Africa and North America. It thus, has an advantage in terms of market understanding and needs for various segments. With such a varied experience and deep understanding of the markets, VTech could very conveniently scale in the upcoming years.

Weakness

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Opportunity

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Threat

1. Threat of counterfeit Products, fear of copycats: The unorganized sector accounts for almost 60 % of all toys of which most of them are counterfeit toys. Chinese companies are known for their copycat products of leading brands. Ironically, Chinese counterfeit products accounted for 62% of all counterfeit toy seizures in 2015. The U.K. toy industry reported a sales decrease of 2.8% due to counterfeit toys entering the market in 2017. The European Union is also facing a similar situation in this space. Europol, the government agency looking into the situation has revealed that counterfeit products including toys and clothes and medicines represent about 5% of all EU imports costing EUR 85 billion. Jobs in companies like VTech have also been threatened. The EU government loses EUR 14.6 billion every year because of counterfeit products according to the Europol statement in 2018. VTech is also susceptible to the growing demand of cheaper products that offer the same or slightly lesser product features.

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The PESTLE/PESTEL analysis of V Tech is presented below:
Political
Economical
1. De-globalisation surge across the globe
2. Economic instability due to trade restrictions in North America
3. Changing leaders in USA, Europe, Asia
1. Changed tax systems in Asian countries
2. Changing economies of scale
Social
Technological
1. Income of people in each country
2. Education level for use of technology
3. Demographic population
1. Continuous Upgradation of technology
2. Ease of transfer of products through technology
3. Development of low cost products
Legal
Environmental
1. Stricter norms and regulation for foreign companies in some countries
2. Changing laws
3. Labour unions and laws
1. Demand for eco-friendly products
2. Demand for low cost products
3. Trade agreements and Special economic corridors
4. Increasing dependence of people on high technology devices
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Detailed PESTLE Analysis of V Tech

 

Political

1. De-globalization surge across the globe: De-globalization is a phenomenon which is slowly spreading across the globe with the election of the new president of United States. Also,the people are becoming more and more centric to their nation and the wave of globalization that engulfed the world in the second half of last century is changing dynamics. The trade rift between China and U.S. that resulted in a 30% tax hike on Chinese solar panel imports may be reflected on other industries too in 2018. The U.S. is firmly against the ‘Made in China 2025’ policy as they feel it will upset the trade relations policy imposed by WTO. De-globalization and changing markets are thus proving to be the biggest challenge faced by multinational companies. The profitability, revenues and markets should all be accessed and then only any strategic action be taken. VTech has to be highly cautious and wake while making a decision. Also, it has to maintain wide options for itself to work upon under changing conditions.

2. Economic instability due to trade restrictions in North America: With the election of the new President in 2016, there have been a number of restrictions imposed upon trade and trade practices in the United States of America. Trump administration is taking advantage of Europe’s lowered clout in international affairs in the aftermath of Brexit. He has levied high tax rates on foreign imports and thus created uneasiness for those whose businesses thrive due to sales of their products in one of the predominant consumer markets in the world. This can have far reaching consequences on world trade as USA plays a major rule in defining trades relations across the world.

3. Changing leaders in USA, Europe, and Asia: Europe many countries are opting for right wing ideology on their governance. With Brexit and thus, changing political order it has become really challenging for multinational companies to continue their operations at the same pace as before. With VTech’s market spread across the globe, it can be a quite taxing for it. The dynamics has to be closely monitored and timely actions should be taken to keep it sustained as a market leader.

Economic

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Social

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Technological

1. Continuous Upgradation of technology: The Guardian had published the details of a survey by UK based analyst Juniper research in 2016. The research survey revealed that the worldwide yearly sales of smart toys are expected to reach $11.3billion by 2020, rising significantly from the $2.8 billion mark in 2015. The fast pace and ease of communication has paved way for international collaborations and operations at much larger scale than ever before. More so, VTech is a company whose core competency is technology and hence it has to be utterly cautious and strategic in the market. Siliconic Home is a technology firm that has come up with Sparky, a digital assistant which can be described as the Amazon echo for kids in the age bracket of 5 and 12. It should integrate its growth in the future revolutionary technologies including artificial intelligence, machine learning and Internet of things to name a few, besides others. It has to use acute business acumen and great leadership skills to be able to retain its position.

2. Ease of transfer of product through technology: VTech should use the current market to its advantage and improvise itself by selling through online channels. It should provide good customer services and return policy for better commitment and developing a connection with customer. It continuously increase its efficiency by the use of technology in each field, from supply chain management, finances, operations, marketing and sales etc.

Legal

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Environmental

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Copyrights and Disclaimer

V Tech SWOT and PESTLE analysis has been conducted by Nida A and reviewed by senior analysts from Barakaat Consulting.

Copyright of V Tech SWOT and PESTLE Analysis is the property of Barakaat Consulting. Please refer to the Terms and Conditions and Disclaimer for usage guidelines.