Vivo is a Chinese international manufacturer of smartphones based in China that made its

first global expansion in telecommunication and consumer electronic industry. Recognized

and certified all over 100 countries and regions, Vivo has operated worldwide in the aspects
of designing, manufacturing and selling smartphones. As of 2014 onwards, Vivo is one of the
largest profit making companies in China besides Huawei, Xioami, Apple, Oppo and others

Bargaining power of buyers

Buyer bargaining power indicates the pressure customers can put on the business in order to
obtain higher quality products, efficient customer service and lower prices. In regards to
Vivo, buyer bargaining power may have a significant impact for its business and its
capability to achieve targeted profitability. Vivo customers have an exceptionally moderate
bargaining power as it has many similar product offerings such as smartphone in a high
saturated market when compared with Huawei, Xioami, Oppo and others. Vivo sells
smartphones in the same price range as other competitors. As a result of moderate bargaining
power of buyers, consumers have more convenient options to choose other brands like
Huawei, Oppo and others. and this will influence the switching cost to be lower. For an
instance, Vivo has able to achieve competitive advantage by securing a strong position in
India where its profitability growth is rising steadily at about 12 % . However, Besides,
another factor that may have influenced high bargaining power of buyer is consumers’
sensitivity to price and their knowledge about its product. In fact, Vivo has been releasing
premium smartphones with attractive innovations to strengthen brand loyalty amongst the
customers.

Threat of new entrants

Threat of new entrants that new companies pose to business in the market within the industry.
This particular threat has a significant impact for companies to generate profitability. As new
companies come in to the market offering the same range of goods and services, the
companies that have been strong in the market would likely face a risk. Vivo has able to
achieve economies of scale as it produces products in large capacities which enable Vivo to
have a cost advantage. This will restrict entry barrier by certain extent as new companies
would have to make its production even costlier. Vivo faces low threat of new entrants
because it has large capital outlay in a saturated and competitive market. In addition to that,
Vivo has its own operating system. For an instance, Vivo has created its very own Funtouch
OS which has slight differences to Apple IOS but offer more differentiated features to attract
customers to purchase Vivo Smartphones. Plus, Vivo has much stronger distribution network
where it is able to get the manufactured products through right mediums to the customers. For
an instance, smartphone retailers and online smartphone retailers ( Lazada , Vivo Online
Store ). All in all, it can be seen that Vivo has medium to low threat of new entrants coming
in to replace its business.

Bargaining Power of Suppliers

Bargaining power of supplier indicates the impact of pressure on business by suppliers by

way of lowering quality, hiking up price or limiting the product or service availability.
Supplier power can have a significant impact on the competitive environment for the buyer
and influence buyers’ capability in making profit. Multinational technology supplier
companies like Intel, AMD, Google that supply most of its patented hardware and
information software to most smartphone brands globally. As Vivo is originated from China,
Vivo has faced s scepticism and concerns among global suppliers due to the perception that
Chinese mobile companies produce low quality and cheap imitations of Apple products. This
may be well received by China market as Vivo would be able to sell its smartphones at a low
range of price to build large customer base. However, Vivo has managed to strengthen its
credibility by coming up with its own system operating which is Funtouch OS. It is made on
compatibility with Android. This has benefited Vivo as it can be able to reduce supplier cost.
This has been a strong determinant in convincing the suppliers. Besides, innovation in
coming up with various cutting-edge features which may interest customers is another factor
that able Vivo to secure high-quality supply. It also has strong value chain as it relies heavily
on Chinese market for technology, designing, assembly.

Threat of substitute products

The very existence of substitute products allows customers variety of choices to choose
within an industry that may be able to fulfil the same preferences by customers. Companies
that have been long standing in the market may face low profitability in the competitive
environment if the risk of substitute has increased. As Vivo is one of the top smartphones
brand followed by Xiaomi, Huawei, Oppo and others in the Chinese market, the treat of
substitute is very much highly moderate . This is probably due to lack of variety of products
and services provided by Vivo. Other competitors like Xiaomi, Huawei, Oppo and other offer
not only mobile devices but tablets, laptops and other smart devices. The advantages of Vivo
in having its very own operating system may also be the reason why customers may prefer to
buy other substitute products such as Huawei, Xiaomi and others. Vivo does not offer other
multifunctionality approach to customers. For example, Vivo has planned to release brand
new mobile that focuses on camera technology following Apple recent product which is
Iphone XS Max. This allows customers to explore more and choose other brands which
offers more functionality and better features. Low switching cost reflect that Vivo may not
have much product differentiation to attract existing and potential customers. However, Vivo
may have achieved its competitive advantage by setting a low range of price for premium
mobile devices and offering high quality camera in smartphones. For example, Vivo is one of
the most profit making company in India achieving 12% in Quarter 1 of 2019. Vivo’s product
marketing strategy plays a critical role in achieving competitive advantage. Apart from
manufacturing mobile devices with cutting edge technology, it markets its products globally
by way of celebrity endorsements, advertising and collaborations with other industries. For
example, Vivo India has sponsored $330 million for India’s most famous cricket event.
(Quartz India, 2019 ). This has helped Vivo to achieve profitability in such a short period due
to aggressive marketing and celebrity endorsements. The only way to secure strong position
free from substitute threats is that Vivo can work on building and customer loyalty. This can
be done by incorporating customers preferences and the economic conditions. Hence more
research an development should be emphasised. Besides, Vivo can set up service centres
offering services ranging from repair, customer services to ensure customers are satisfied
with their products.

Threat of rivalry establishes company

The intensity of the competition may have a significant impact in the competitive
environment of a business. High competition may affect the profitability of the company with
lower profit and inability to set price. Highly competitive market would become a barrier to
entry for new business. If it is low competitive market, it would be easy for new entrants to
access. Vivo has a few number of competitors such as Xiaomi, Huawei, Oppo , Samsung and
Apple. It will not go unnoticed as most of these companies are large sized and these
companies have larget market share in global countries. For example, Vivo has 15% market
share in the smartphone segment in the first quarter of 2019 according to Canalsy
Smartphone analysis. Vivo has high fixed cost due to aggressive research developments for
technology and innovation.