The mobile phone industry and Porter's five forces analysis

Authors Avatar

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”. He also argues that the five forces determine industry profitability because they influence the prices, costs, and required investment of firms in an industry.

After having read the article titled “the mobile phone industry” and its five forces analysis, I believe that three most important threats, for a network operator such as Vodafone, could be: the monitoring of the Government on health diseases; the regulation of 3G technology tariffs; and the development of new services and technologies.

Join now!

Vodafone Group is a company leader in the telecommunication sector at global level (source: FT research centre, 2005 Report). In UK Vodafone has an important position with more than 16ml customers. The company tries to maintain a high public profile following the latest trends, always developing new technologies, and offering high quality services. Vodafone UK is very concerned about how its business impacts the community and is committed to developing a reputation as a responsible firm.

 If the new research, wanted by the UK Government, on health diseases caused by the use of mobile phones should find concrete evidence, the ...

This is a preview of the whole essay