Hon Hai Precision Industry Co., Ltd

Problem Statement

• How will setting manufacturing in India help Hon Hai Precision Industry Ltd. ?

• How will this affect their primary customer Apple’s iPhone volumes

Agenda Company Overview Current Scenario in India Porter’s Five Forces Analysis Challenges Competitor Analysis Indian Market Analysis Forces Impacting Indian Market

Entry Market Entry Strategy Conclusion

Company Overview

Founder Terry Gou

Headquarters Tucheng District, New Taipei, Taiwan

Market Capitalization NT$1.377 trillion

Revenue US$131.8 billion 

Number of employees

1.09 million

Net Income $3.55 billion

• It is the world's largest electronics contractor manufacturer, and the third-largest information technology company by revenue.

• Clients includes Apple, Sony, Blackberry, Xiaomi and Acer.

FOXCONNBuyer Power

Supplier Power

Competitive rivalry

Threat from new

entrants

Substitutes

Porter’s Five Forces Analysis

Indian Market Analysis• India is the 3rd largest smartphone market

in world• Indian Demographics

Growth of 10% every year Estimated figure by 2016 is 650 Million

smart phones• Indian mobile market growing rapidly • Government helping the service providers to

grant license for GSM services.• Indian Market has huge potential• Indian market has private and public owned

service providers

Forces impacting the Indian market Entry• Buyer Power : High PressureApple, biggest buyer keen maintain the manufacturing cost

• Competitive rivalry : High Pressure Big market, many competitors.

• Supplier Power : Low Pressure Most of the supplier will remain same

• Threat from new entrants : Medium to high pressure Many companies are planning to kick off in India to take law advantage

• Substitutes : Low pressureNo big players Foxconn in India so far

Challenges

• Huge Capital : 10 – 12 facilities (₹12,700 crore approx.) • Have already burnt their fingers in India• Changing government• Challenging labour and labour laws

Competitor Analysis

With respect to AppleIf Foxconn increases the CPU, Apple might go for Quanta Computers or Pegatron

With respect to manufacturing in IndiaGlobal Device network, contract manufacturer for HTC. Also Huwaii, Asus, wants to setup manufacturing plant in India.

Market Entry Strategy• Penetration in metro cities like: Delhi,

Ahmedabad, Bengaluru, Kolkata and Mumbai where majority of the states have fairly good spilt between rural and urban population spread

• High end usage- Cost sensitive market• Low cost pricing strategy at initial

phase of its entry• Entering India, partnering with one of

the private owned companies

Conclusion

• Foxconn producing iPhones and iPads in India could result in lower prices on Apple’s hardware in the country where Apple’s hardware is sold at a price higher than many of its competitors. 

• If the company goes ahead and does this it could gain around 11 per cent on duties. If Apple decides to transfer this benefit to buyers, it could make the phones about Rupees 5,000 cheaper

• iPhone sales have risen in the country even with current pricing being higher than some of Apple’s competition

• Low wage costs in India as wages in China where it currently operates rise

Thank you!!!