• 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. Business Enterprise coursework

    Spica invented a process, whereby the inside of the waffle cone was insulated from the ice-cream by a layer of oil, sugar and chocolate. Spica registered the name Cornetto in 1960. Target Market Field Research Target market is a business term meaning the market segment to which a particular good or service is marketed.

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

    This is just away for Sainsbury's to inform their target groups about their organization and the products they offer this area of the mix relates to the promotional objective in the way that by using this method they can communicate with customers this may increase the amount of people that

  1. EVALUATE THE EFFECTIVENESS OF APPLES APPLICATION OF THE MARKETING MIX WITHIN THE UK MARKET

    To maintain this position Apple should try to expand into other areas of the market such as South America or Asia. MARKET RESEARCH Background I carried out my research to see what other people think of Apple and the popularity of their products.

  2. Unit 5 - Customer Service

    A "Flat" structure however does not have this problem. For example if a message is needed to be passed on then there a fewer layers then the "Tall" structure to go through. This is therefore an advantage because there is less of a chance of the message being lost or misinterpreted.

  1. This marketing report is going to look at the internal and external analysis of ...

    Mark Warner also offers childcare facilities, which run for children aged 4 months to 17 years old. All the nannies are qualified in childcare and speak in English at all the resorts (www.markwarner.co.uk). The childcare services at Mark Warner have, however, been questioned recently, when it was found that they recruited un-referenced and under-qualified nannies.

  2. Analyze the impact of globalization on the economic development and standard of living in ...

    Between 1990-98 China showed an average real GDP growth of 11.1% this was one of the highest in the world at the time. China's GNP per capita was $US 3105 in 1995. China had a Human Development Index (HDI) ranking of 98 in the world in 1997 out of 174 countries.

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