Case Analysis
Shanzhai! MediaTek and “White Box” Handset Market

Issue Identification
MediaTek Company is a large global chipset supplier in wireless handset market. More than half of the chipsets are selling to shanzhai market like China or South Asia. Shanzhai means illegal counterfeits or “knock-offs”. Over the last 30 years, the company had great success through this target market. However, the CEO of the company Ming-Kai Tsai was in a dilemma. He wants to get more opportunities for the company’s further growth. The primary problem is whether they should serve tire-one companies like Nokia, Motorola or Samsung instead of focus on shanzhai market. The secondary problem they faced is the company’s image and the ethical concern. The …show more content…

The threat of new entrants is medium to low because there are always opportunities for new competitors to emerge in this industry, but with MediaTek constantly improving their capabilities and increasing their resources allows them to fight of the threat of new entrants. Threat of substitution is high to medium because consumers can easily switch from the low-end market to the high-end market without having to incur a huge price increase. Bargaining power of suppliers is quite low due to the fact that MediaTek produces the chipsets for the mobile phone themselves. Finally, bargaining power of buyers is medium to low because MediaTek is one of the only companies who are able to supply chipsets in the Chinese mobile phone market, but on the other hand consumers can easily switch from the low-end 2G product which is what MediaTek offers to the high-end 3G product.
Financial Analysis
Although in the case, not much financial information is provided, people can still get noticed that MediaTek has gained great financial benefits during the past few years. It is noted in the case that MediaTek has been growing in revenue from NT$580M to NT$12.86B within three years from 1997 to 2000. Especially NediaTek wireless chipsets were sold 25% (350 million units/1.4 billion units) market share, and nowadays, their chipsets in handsets were sold in 102 countries. These