The treat of substitute products in the industry is low, and no direct substitute exists for making a telephone call whilst on the move. Fixed line telephones are the clearest substitutes, and the call costs are generally lower. There has been some technological development relating to satellite mobile telephones, operating on a different system to the base station networks, although this technology remains in its infancy and offers no credible threat. However, substitutes do exist for many extra features on the latest handsets.
Many of the new devices have incorporated portable music and video players, which may be substituted with other stand alone devices. The quality of cameras on phones is beginning to catch substitute standard digital cameras. T-Mobile UK makes up part of the Deutsche Telekom AG Group. The company was established in 1999 and prior to this it was known as One 2 One, which was seen as a pioneer in introducing low cost voice calls. T-Mobile now has over 109 million customers worldwide. It currently operates mobile telephone networks in the UK, USA, Germany, Austria, The Netherlands, Czech Republic, Poland and Russia.
It was one of the first operators to offer its customers new technology Wireless LAN, GPRS and 3G. (T-mobile. com) Strengths T-Mobile is one of the largest network providers in Europe, it has operations in 65 countries around the world, making it a global brand. The company successfully bid for a 3G license, meaning it has the opportunity to become a key player in this market, although it will need to counter the popularity of Vodafone Live. To do this it recently established a mobile ‘jukebox’ service for downloading music. (CapGemini, Recharging Mobile Innovation, 2004)
Like Vodafone, T-Mobile is expanding its operations into Eastern Europe and other emerging economies. This has the advantage of huge future growth potential. (T-mobile. com) T-Mobile has in excess of 99% UK coverage from its transmitters; this meaning it’s capable of reaching almost the entire UK population. (T-Mobile. com) Weaknesses Symptomatic of all of the network providers, T-Mobile has a high level of debt, which will prove to be problematic if 3G is less successful than anticipated. T-mobile’s customer’s have lower household incomes, and in general come from lower soci-economic group than Vodafone customers.
(OFCOM 2001) This may mean that the company’s customers base is reluctant to make use of more profitable data services. Opportunities T-Mobile’s continued expansion into emerging markets, especially Eastern Europe, and the USA, could prove to be a significant growth area. In terms of the UK market, the successful implementation of a 3G network will provide the greatest opportunities. Threats T-Mobile has large presence in the German market, and the current economic slowdown and associated lower consumer confidence may reduce sales growth.
The risk of future health problems and associated legislation is also a threat. Conclusion In conclusion, PESTLE has provided an analysis of the key influences present in the UK mobile phone industry. It has shown that a major area of concern is the unknown health implications of long term exposure to radiation from handsets and transmitter base stations. In addition, the Five Forces analysis has identified the high degree of competitive rivalry in this mature market, with competition based on price and the retention of existing customers.
Buyer power is shown to be high and supplier moderate to low, with a low threat of new entrants into the market. The TMobile SWOT analysis summarised the key issues in terms of internal strengths and weaknesses and external opportunities and threats for T-mobile.
Agar, J. (2003), Constant Touch – A Global History of the Mobile Phone, Icon Books UK Hall, C. , Scott, C. and Hood, C. (2000), Telecommunications Regulations – Culture, Chaos and Interdependence inside the regulatory process, Routledge Higgins, R. S. and Rubin, P. H. (1995), Deregulating Telecommunications – The Baby Bells Case for Competition, John Wileys & Sons Hoski, H. (2002), Technology policy in the telecommunication sector – Market Responses and Economic Impacts, European Commission Johnson, G. and Scholes, K. (2002), Exploring Corporate Strategy – Text and Cases, 6th Edition, Prentice Hall Joyce, P. and Woods, A. (2001), Strategic Management – A Fresh Approach to Developing Skills, Knowledge and Creativity, Kogan Page Limited Porter, Michael E. (1985), Competitive Advantage – Creating and Sustaining Superior Performance
Porter, Michael E. (1991), Towards a Dynamic Theory of Strategy, in: Strategic Management Journal, Vol. 12, pp. 95-117 Porter, Michael E. (1998), Competitive Strategy: Techniques for Analyzing Industries and Competitors Prahalad C. K. , Hamel Gary (1990), The Core Competence of the Corporation, in: Harvard Business Review, May-June 1990, pp. 79-91 Thompson, A. , Strickland, A. J. (2001), Strategic Management: concepts and cases, Homewood: Irwin Websites BBC News January 11th 2005 http://news. bbc. co. uk/1/hi/health/4163003. stm [Accessed 14 January 2005] BBC News January 14th 2005 http://news.bbc.co.uk/2/hi/uk_news/england/bristol/somerset/4175161.stm