• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

The mobile phone industry and Porter's five forces analysis

Extracts from this document...

Introduction

The mobile phone industry and Porter's five forces analysis Competitive strategy depends on a company capabilities, strengths and weaknesses in relation to characteristics and skills of its competitors. Competitive strategy aims to establish profitability and long term stability. The fundamental basis of above average profitability in the long period is the achievement of a competitive advantage. According to Michael Porter, a Harvard Business School professor and the reigning guru of competitive strategy, there are two basic types of competitive advantage: cost leadership and differentiation. So he has developed three generic strategies: - Cost Leadership (a firm sets out to become the low-cost producer in its industry) - Differentiation (a firm seeks to be unique in its industry along some dimensions that are widely valued by buyers) - Focus (after a company has selected a segment or a group of segments it tailors its strategy in order to serving them to the exclusion of the others. In the focus strategy there are two variants: cost focus and differentiation focus). Porter also claims that a competition within an industry is driven by five competitive forces: - Threat of new entrants - Threat of substitute products or services. - Bargaining power of suppliers. - Bargaining power of buyers. - Rivalry among existing firms. Porter defines them as "the elements of return on investment". ...read more.

Middle

The solution is "in competition, not in regulation" a Vodafone's speaker said (ibid.). If the Government remains on its position of cutting down tariffs Vodafone UK would suffer economic losses. Furthermore, Vodafone UK spent billions of pounds for purchasing its 3G licence. The high costs supported by the company for the acquisition of the licence and for improving 3G services could limit the expansion in the 3G mobile phones market and influence their use by customers as well. In this situation there is a double-sided danger. Keeping high the price of licences (in future) could bring high prices for using services and, in the end, could induce people to choose not to use the new technologies. The market is saturated. Customers, thanks to the number portability, have high incentives to switch. The presence of many other competitors makes it available on the market many "packages" for all tastes. Vodafone UK is aware of the importance of developing new technologies and of following trends in society in order to meet the demand. The company constantly invests in R&D and always tries to purchase the latest innovations suitable for mobile phones which are available on the market. Vodafone UK has invested also many billions of pounds in Research & Development and introducing new services (for e.g., TV on mobile, Internet Access, music downloads etc.) ...read more.

Conclusion

The challenge is to rely upon big and important mobile phone, so to develop a strong relationship between the network operator and the manufacturer. Thanks to the five forces analysis it is possible to understand the strengths and the weaknesses of the current competitive position of both our business and our competitors. Thanks to it, it is easier to develop a SWOT analysis. It is a great way to identify whether new products, services or businesses have the potential to be profitable, so it allows us to make a critical analysis of the most important aspects (such as customer analysis, environmental analysis, competitor analysis and so on) for our business. As far as the limitations of the Porter's model is concerned, I agree with D. Recklies that in his critic on the Porter's model argues that "The model is based on the idea of competition. It assumes that companies try to achieve competitive advantages over other players in the markets as well as over suppliers or customers. With this focus, it dos not really take into consideration strategies like strategic alliances, electronic linking of information systems of all companies along a value chain, virtual enterprise-networks or others.". The model was designed to analyse individual business strategies, so it can not evaluate large corporations or synergies between more companies. Another limitation is that the model does not take into account the fact that sometimes it may be possible to create completely new markets instead of selecting from existing one.(http://www.12manage.com/methods_porter_five_forces.html) ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our GCSE Case Studies section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related GCSE Case Studies essays

  1. unit 8 business online p1

    defeating access controls), malicious code, and denial-of-service attacks. ? Which the computer or network is a place of criminal activity include theft of service (in particular, telecom fraud) and certain financial frauds. ? Traditional crimes facilitated through the use of computers or networks include other gullibility or social engineering frauds (e.g.

  2. Irish Ports: P.E.S.T. analysis

    sometimes we do not have focus our attention on the immediate competitors. We can also take into consideration the external environment in which the companies operate. The PEST analysis enables us to evaluate the possible future influence of the different factors (economic, social, technological and political).

  1. sainsburys. The aims and objective of Sainsburys are very straightforward

    promotional objectives and aims by the quality of that particular product is it worth it is it better then the others, in Sainsbury's they will need to make sure that the products are produced of high quality better than their competitors, to ensure that customers are happy with these products

  2. This GCSE coursework is about setting up a free-range egg unit in the Retford ...

    * To undertake to cut the hedges to all boundaries between 1 January and 29 February each year. * Pay all rates and taxes in respect of the property (Water rates etc.) (http://www.nottinghamshire.gov.uk) Site 2: Owner: Goacher Description : Approximately 7.02 acres of free draining arable or grassland; outskirt of village location; North Wheatley, close to woodland.

  1. Strengths & weaknesses of a business idea. Research for a new electronics shop.

    The customers can be responsible for helping me fulfil my first aim which is to provide a high standard of products. The employees along with the manager will help me achieve my third aim which is to keep customers coming into the store.

  2. Investigating a business and what business do - London Heathrow Marriott (LHM) and Tescos.

    In my personal opinion, Premier Inn should add restaurants from different cuisines so more customers will be appealed to their hotel. I am definitely sure that their popularity will boost and their profit will increase dramatically. LHM and Radisson Edwardian are both 4 star hotels yet LHM have gone out

  1. Arrow analysis

    Competitors Arrow?s closest competitor in 1996 was Avnet Inc., trailed it by more than 20% in sales. Of the next group of competitors the largest, which included foreign entrants Rabb Karcher and Future Electronics as well as longtime rivals Pioneer-Standard, Wyle, and Marshall Industries.

  2. The Influence of Stakeholders on Toyota and Sainsburys.

    Another viewpoint is to simply give Customers the cheapest and best deals on where to shop. Stake Holders Aims and which Stake Holders work well together Stakeholders all have a variety of different influence within an Organisation and it is rare that Organisations can meet the need of all their shareholders.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work