In this report I am supposed to be one of the members who work for a consultancy company that specialises in conducting deep strategic industrial analyses for corporate clients. I have chosen the client who is interested in opening a telecom industry. So I gave him a report which contains the sources of competitive advantage in the client's relevant industry, an analysis of the client's competitors and their business and corporate strategies, the major trends in the industry and the implications of these trends for the client and its competitors, as well as the likely trends in the future together with recommendations which may be helpful for the improvement the company.
"Strategic management is a comprehensive procedure which starts with a strategic diagnosis and guides a firm through a series of additional steps which culminates in new products, markets and technologies ,as well as new capabilities (Igor Ansoff , Corporate Strategy,1965).
Technology has changed a lot since decades and is still going on with the rapid advances in each and every item. One of those industries is the telecommunications. The advances took place mainly in the mobile communications data calls and international calls. These vary from provider to provider. This is because of the increase in demand, globalization and mobility of the people and their requirements at each at every point.
COMPETITIVE ADVANTAGE IN THE INDUSTRY:
The competitive advantage of the particular firm always depends on the competitors in the market. In this case of telecommunications industry it is important for the firm to take decisions very carefully such that the decision won't affect their business, customers and in the other way it satisfies the customers and provides them with the benefits like increasing the shares. Their one and only business are the customers and their business only when the customer is very interested in the offers being offered by the particular telecommunication firm.
The main things for this industry to take into consideration is that they have to try to provide good services like providing a network that will be available at every place, providing with offers in such a way that they will attract the people like reduced prices compared to others, provided with good service and also providing with the upcoming technology like 2g,3g and 3gs or any technology if it is going to come out to the market so that they will get the chance to compete with the existing competitors.
The main advantage that the industry is experiencing is the mobiles, landline and broad band. This is how the firm is trying to attract the customers. With the rapid change in technology they are able to introduce things like the Fibre Optic lines in which the connection will be faster and clearer than before. This also helps in the video chatting, conferences, etc..,. Also nowadays the generations of mobiles have increased by leaps and bounds, so all the people are showing much interest in the new models the technology. So the one who tries to get the contract with the best or the most awaited model will obviously be able to do good business compared to the others. The firm must have the capacity to change or react to the change in the trends and should try to understand the needs of the customers.
COMPETITORS IN THE INDUSTRY:
Due to the increase in the demand and the technology the people having the capacity to start the business in telecommunications have increased. Nowadays the increase in the demand of the mobile has increased due to the mobility from one place to the other. As a result the number of connections has been increased and is competing with each other in order to provide with good service and the latest updates. Accordingly they have been ranked depending on the kind of service they provide, the number of connections, types of offers, technology, the network they provide and also the brand name also gives an importance to them. Let us consider the main connections available in the UK. They are as follows:
CORPORATE AND BUSINESS STRATEGIES:
O2: This network is the largest among the other networks. It has more than 47.6 million fixed and mobile customers across Europe with 29,000 employees across the Group. One of the largest telecommunications companies named Telefnica is number one in the world world in terms of market capitalisation. Its activities are concentrated mainly on fixed and mobile telephony, with the broadband as their key tool for the development of both fixed and mobile telephony. Telefnica is the largest active mobile customer base in the uk. (http://www.o2.com/media/business_fact_sheet.asp). O2 alone has 21.5 million customers and it holds the highest market share of 28%. O2 was the first one to take the contract with Apple i phone which was the best and the most awaited mobile of the decade, as a result it had overtaken the other entire network. It has broadband services, internet, 3G and 3GS services. It also provides with international sim cards which are one of the attractive offers.
Business Strategy: The new strategy launched by O2 on 13th July 2006 10:43 was "meet the challenge of UK corporate' changing mobile needs". The three key elements that are driving this new approach are:
- To establish an O2 sales academy as this would help the O2 sales person to understand the requirements of the client.
- By shifting to more of IT-focussed consultative approach of sales.
- Knowing that the partnerships are the key and the partners with O2 are the best in the business.
Vodafone: Vodafone took the second place with a total market share of 23%. It has 17.7 million customers. The market share of Vodafone has been reduced during the early 2009 where then the O2 took over the place of Vodafone. It is because of the lack of understanding the customer's needs. But it provides with internet and also has a 3G service. As it has the networks in many of the countries it is useful and very friendly to the customers.
Business Strategy: The strategy of Vodafone is,' Meeting society's needs creates enormous opportunities to grow our business.'(http://www.vodafone.com/start/responsibility/ our_approach/cr_strategy.html). But Vodafone is the best competitor for O2 because it is also increasing its pace rapidly by establishing in nearly more than 30 countries. Their vision for 2010 is to become the most trusted partners in the markets where they operate.
Orange: Orange owns the third position with 16.4 million customers. It is having 22% of the market share. Orange also provides with broad band services and 3G for internet services.
Corporate Strategies: By 2012 the strategy of orange is to become a leading firm in the telecommunications industry. They mainly want to sustain the market, so for this to happen they have they prioritize three words they are Include, Preserve and Care.
T-mobile: Then comes T-mobile which has 12 million subscribers. It is providing the 3G, broadband, telemetry and tracking facility.
Business Strategy: It is trying to build up the links with Google to create a benefit to the customer and innovation. (http://feedroom.businessweek.com)
3: Then it is the turn for 3 mobile which has 4.5 million customers and with a market share of 5.8%. This is because they are only trying to keep up the customers and satisfy them.
Business strategy: they have mainly focussed on brand and so now they want to change to direct sales. They have appointed Free Style Media to as their online marketing consultant in order to review and update their online marketing. (http://www.freestylemedia.com)
TRENDS IN THE INDUSTRY:
The telephone network was built mainly to provide a narrowband voice service which is useful at home and office. That generation is now disappearing. This may including many reasons like convergence, competition, broadband, increasing data rates, wireless, and others.
PAST: Nearly 4 decades ago the telecommunication was the landline, where there was an operator whom when we call will ask the place and the number to connect and then he will connect it accordingly. Slowly the generation changed and then they introduced the mobile phones in which we had to pay for both incoming and outgoing calls.
PRESENT: As the technology has been changing very fast the mobile technology has been increased enormously where they have introduced such a kind of mobiles which will operate with a touch on the screen with your finger, voice recognition, video conferences, Bluetooth, infrared, etc.., and also they have introduced the 3rd generation mobiles which will are the reason for good voice and video quality, this also helps to connect to the internet faster and when compared to the 1st, 2nd generation mobiles. It is mainly useful in streaming radio and television.
At the end of 2007 there were 295 Million subscribers who were using 3G networks worldwide, which thus reflected 9% of the total worldwide subscriber base. About two thirds of these are WCDMA standard and one third is on the EV-DO standard. The 3G telecoms generated over 120 Billion dollars of revenues during 2007 and at many markets the majority of new phones activated 3G. The Japan and South Korea market no longer supplies phones of the second generation. Earlier in the decade there were doubts about whether 3G will happen or not and also whether 3G will become a commercial success. By the end of 2007 it become clear that 3G was a reality and was on the path to become a profitable venture (http://en.wikipedia.org/wiki/History_of_mobile_phones). Also for the landlines a technology called fibre optics has been introduced to maintain clarity which can send nearly 25 thousand signals at a second, the broadband services to fasten the internet services, the video conferencing, and Wi-Fi technology has changed the generation where you can access the internet from any place if you have the Wi-Fi facility in your gadgets.
FUTURE: The main attractive feature that is going to release in future is the 4th generation (4G) where it much speeder than the existing. Also the advanced VoIP(Voice Over Internet Protocol) is the technology which encode speech allowing transmission over an IP network as digital audiovia anaudio stream(http://en.wikipedia.org/wiki/Voip), the dramatic decline in the narrowband access lines, increasing data rates, forecasts for IP video, high definition television, IPTV(Internet Protocol Television)( http://en.wikipedia.org/wiki/IPTV), etc..,
IMPLICATION OF THESE TRENDS TO NEW ENTRIES:
So for the new entries they have to take into consideration these things mainly like providing good service to the customers, reliable delivery, experienced staff, better offers than the existing one, good publicity and also should try to merge with the existing networks in order to gain experience and to get a brand name. They should be able to change according to the technology like trying to introduce the new varieties before the others. They should introduce new concepts which will attract the customers.
They should consider the porter's well known competitive strategies; Cost Leadership and Differentiation. Cost leadership means like they should try to provide the services with less cost in order to gain the competitive advantage over the other firms. Differentiation means that they should try to be different from the other firms like in the offers or the presentation or by providing with the high quality products. (Ingolf Bambenger, 1989). They should always thing differently and do differently. They should try to merge with the best in their stream and try to develop accordingly.
As the technology is increasing, still the calling rates are higher and are not being able to reach to all the classes so I think that if they concentrate on reducing the prices in such a way that it benefits both customer and themselves then they may have the competitive advantage ex: The richest person in India Mr. Dirubhai Ambani, his dream was that he wants every individual in India should have a mobile and Mr. Rathan Tata he wishes that each and every one should have a vehicle with them so accordingly he made it possible by introducing a car which is just 1 lakh. So what I mean is that if you think much about the customer satisfaction and wealth then it will make a difference. So thinking differently and trying to make it possible will surely make you a competitor and the best in class.
FUTURE TRENDS AND FEW RECOMMENDATIONS:
The future can never be predicted so we should always be able to get along with the changes in the technology and should have the capacity to convince the customers and make them be their long lasting customers. For the landlines there is a new technology which has been evolved named as fibre optics which is useful to provide good quality of audio and video. They should upgrade the mobiles all the time with the new technologies like the 4G, HSDPA (high speed downlink packet access) the new varieties of mobiles and many more. So few of the recommendations in order to be the best among the firm's are:
- Be able to attract the customers with the offers.
- Try to bring up some ideas which will be able to satisfy all ages (given ages).
- They should mainly concentrate on universities where they can have more business because the new or fresher's do need the mobiles so putting a stall on the induction dates of the universities may help them.
- Should be able to introduce the technology well before the others.
- Should have good publicity.
- They should have the capacity to get more number of network towers in order to get good signals which is one of the priorities.
- They should try to give special offers to those customers who are the active users of the network in order to encourage them.
- As the technology has been changing the still the international calling rates haven't been reduced so by reducing the rates will surely be useful for the business.
- They should introduce more offers to the landlines, internet.
- They should try to provide with the broadband which is very fast.
- Igor Ansoff , Corporate Strategy, Second edition, page 12,1965.
- Ingolf Bambenger, Developing Competitive advantage in small and medium size firms Vol. 22, pp. 80 to 88, 1989
- http://www.o2.com/media/business_fact_sheet.asp (accessed on 26/11/09)
- http://www.guardian.co.uk/business/2009/sep/08/uk-mobile-market-share (accessed on 21/11/09)
- http://www.mobileeurope.co.uk/news_analysis/112066/O2_re-launches_corporate_strategy.html (accessed on 26/11/09)
- http://www.vodafone.com/start/responsibility/our_approach/cr_strategy.html (accessed on 26/11/09)
- http://www.orange.com/en_EN/responsibility/att00009283/CSR_report_0900904.pdf (accessed on 26/11/09)
- http://feedroom.businessweek.com/?fr_story=738fbb4328c0b0bb77730d2639d22b2bbc874433&rf =sitemap (accessed on 27/11/09)
- http://en.wikipedia.org/wiki/History_of_mobile_phones (accessed on 27/11/09)
- http://en.wikipedia.org/wiki/Voip (accessed on 27/11/09)
- http://en.wikipedia.org/wiki/IPTV (accessed on 27/11/09)
- http://www.freestylemedia.com.au/portfolio/casestudies/3-mobile-online-marketing-strategy.aspx (accessed on 27/11/09)