Orange Business Services - Essay Example

? France Telecom is the largest telecommunication corporation in Europe and Second largest in the World. Orange is the official brand for the mobile and landline telephone services of the company. Vision, Mission, Goals & Objectives The overall mission of France Telecom (Orange) is to be a global leader in the integration of communication solutions. (Orange, 2010). This mission statement of the firm is reflected in the overall echo system of the products and services it offers to provide an integrated communication experience to its customers. Though it is the second largest communication network in the world however, it is still concentrated in EU and some other countries. This aspect of the business of the firm however may not truly align with the mission of the firm to be a global leader. In order to fulfill its mission, FT has to actually expand at the global level and branching out of EU region in order to be a truly global leader in integrated communication solutions. The above mission statement of the firm is also lacking in the sense it may fail to provide quantifiable direction for the firm to fulfill. Though it has set clearly outlined objectives for itself however, considering the mission statement only of the firm, it may seem that it fails to provoke any emotional association of the employees or other involved with the firm. It is highly desirable that a mission statement must be flexible and invoke the related degree of emotions in order to be aligned with the overall firm’s direction. The overall strategic goals and objectives of the firm are described in its strategic initiatives called Conquest which sets out its overall goals and objectives for the period 2011-2015. The overall objectives are for medium period and are divided into two phases of adaptation and conquest. The first phase will identify the investments in the network growth opportunities and during the second phase, firm intended to return to sustained revenue and cash flow growth targets. The combination of both these objectives set the overall direction of the firm between 2011-2015. During the first phase, the firm has set specific quantifiable targets of achieving EBITDA as well as other financial measures in order to critically outline as to how much firm wants to progress in next five years. (Orange, 2010) The objectives of the firm are at least clear and quantifiable for the period which firm has set for itself to achieve the target. It is however, important to note that these goals and objectives are focused more on the existing markets of the firm. The overall focus is on the existing markets and as such the emphasis that the FT would like to become a global leader in the integrated communication may not be at least manifested into the overall goals of the firm. Firm seems to be focused on further penetrating into the markets in which it is operating and most of its focus is on the EU market which is also its traditional stronghold since years. Stakeholders Source: http://www.codeproject.com/Articles/10794/Project-Management-Part-2-Stakeholders The above is a typical, general grid for stakeholder analysis wherein both the high powered and low powered stakeholders are identified and based on their interests, organization actually deal with them. A stakeholder is one which can either be affected or affect the actions of the firm and based on this they can be either internal or external to the organization. Stakeholders are normally those individuals or organizations which are directly affected by the organization and its actions. It is also important to understand that individuals may also belong to different stakeholder groups and their overall role may vary under different conditions. It is therefore critically important to know the expectations of different stakeholder groups even if they fall into different categories. Viewing the overall stakeholders of FT, it is clear that the firm has actually adapted a commercial approach to deal with its stakeholders. It is however, important to understand that the firm has been able to maintain a balance between pursuing its commercial objectives while at the same time becoming a more responsive and open member of the community in which it operates. (France Telecom, 2012) A closer look at the overall stakeholders of FT would suggest that its major stakeholders are its customers. Due to its presence in different countries of the world and low switching costs, customers tend to be important stakeholders whose actions directly affect the organization. It has developed a CSR methodology under which it uses a systematic approach to actually deal with all its stakeholders. This strategy is being considered as viable by the firm as it tend to help the organization to respond positively to what is expected by the society from it. This strategy also seems to provide the firm the opportunity to evaluate the stakeholders. Firm also develop different metrics to actually evaluate the impact and power of different stakeholders and design its strategies accordingly in order to better address the individual needs of the customers. (France Telecom, 2012) The overall approach to maintain the stakeholders is based upon individual focus as the firm attempt to manage each stakeholder separately. This approach may not result into optimal solutions as many stakeholders may be overlapping in nature. In order to develop a better and more comprehensive management of stakeholders, it is critical that the firm must actually ascertain group dynamics of stakeholders too. Customers are considered as number 1 stakeholders of the firm and as a result of this, the firm has actually developed different products and services which are aimed at satisfying the customers. Customers are high powered and high interest stakeholders group of the firm and therefore firm tend to manage them through effective products and services. Firm has also put in quality and innovation as two of the important strategic tools to help customers derive more value from the overall actions of the firm. Shareholders are also another group of stakeholders of the firm and firm manage this group of stakeholders by striving to make their investments more profitable. Shareholders are also high powered and high interest stakeholders group for the firm. It is also important to note that major shareholding in this firm has also been from the French government as FT remained under the control of government for quite some time. Government therefore has a dual role as a stakeholder as it not only has to ensure fair play and clean business practices by the firm but also to play its role as a shareholder also. Employees and suppliers are other stakeholder groups with diverse range of interests of both the stakeholders. Employers are internal stakeholders whereas the suppliers of the firm are external stakeholders. Similarly, competitors are also another group of external stakeholders which firm has to manage. Since FT is a global organization therefore its human resource base is really diversified in nature and is subject to different legal environment. FT therefore has therefore to manage those external stakeholders too to which its foreign subsidiaries are subject to. It is also important to note that FT has remained under the government control therefore government is also one of the key stakeholders. Government has not only has the power to influence the firm but can also significantly create other legal barriers for the firm which can essential restrict its growth prospects for the future. FT’s major market is in EU therefore it is also subject to the regulations from European Union. EU therefore is also one of the major stakeholders and firm has to comply with its requirements. PESTLE Analysis “The PESTEL framework categorises environmental influences” and, as a result, “provides a comprehensive list of influences on the possible success or failure of particular strategies. [...] For managers, it is important to analyse how these factors are changing, drawing out implications for their organisations. Many of these factors are linked together. …As can be imagined, analysing these factors and their interrelationship can produce long and complex lists. Rather than getting overwhelmed by a multitude of details, it is necessary to step back eventually to identify the key drivers for change. Key drivers for change are the environmental factors likely to have a high impact on the success or failure of strategy.” (Johnson et al., 2011,) Political / Legal 1. Low intervention by the government in the industry. 2. Overall legal framework is supportive of the private enterprises. 3. Subject to requirements of obtaining licenses to operate in any new market. Economic Factors 1. World Economy is going through recession. 2. Europe is the hardest hit region with serious sovereign debt crisis. 3. Low consumer confidence. Social Factors 1. Consumers are increasingly using communication technology for socializing purposes. 2. There has been greater focus on communicating through mobile phones and other media. 3. Young consumers are using communication technologies more extensively. Technological Factors 1. Technology is changing fast with communication networks are advancing. 2. Since this industry requires higher capital expenditure therefore it may be relatively difficult to match with the overall technological changes taking place in the industry. Environmental Factors 1. Environment is not affecting much this industry. 2. However, installation of communication towers may damage the environment. It is critical to note that many factors may be overlapping or absent in one market or another. One of the key external challenges to the firm is to keep pace with the technological changes. Technological changes are not only fast but uncertain and considering the overall capital expenditure requirements, it may be relatively difficult for the firm to actually respond to the new technological changes. Five Forces Analysis “Porter’s five forces framework helps identify the attractiveness of an industry --. These five forces together constitute an industry’s ’structure’, which is typically fairly stable. ... Once the degree of industry attractiveness has been understood, the five forces can help set an agenda for action on the various critical issues that they identify.” (Johnson et al., 2011) Considering the combination of these five forces, the overall attractiveness of an industry and the chances of success for a firm can be ascertained with ease. In order to perform strategic analysis, it is critically important that a comprehensive view of these forces is taken into consideration before making any strategic move by the organization. Source: http://notesdesk.com/notes/strategy/porters-five-forces-model-porters-model/ Threats of potential entrants 1. Industry requires higher level of capital expenditure therefore there are natural barriers to entry into this industry. 2. Industry has government protection also where firms are required to obtain licenses before they can actually start business. 3. As such the overall threats of potential new entrants are low. Threat of Substitutes 1. There are potential no substitutes to electronic and mobile communication. Bargaining power of Buyers 2. Overall switching cost is low therefore buyers can easily switch from one carrier to another. 3. Firms however, lock the customers through offering them long term contracts. Bargaining Power of Suppliers 1. The overall size of suppliers relative to the firm is low therefore overall bargaining power of suppliers is low too. 2. Forward integration prospects for suppliers are low too therefore suppliers naturally do not have relatively higher bargaining power to dictate the firm. Rivalry among Existing Competitors 1. Industry is highly concentrated in nature with few firms controlling most of the market. 2. Since firms are few in numbers therefore they have been able to develop the relative market power to create strong competitive pressures for the firm in any country. 3. Firms have to continue to offer add-on services in order to retain customers. Considering the overall factors affecting the industry, there is only credible force which may create serious threats for the firm. Considering the nature of the industry, it is the strong rivalry among the competitors which can be one of the critical factors for the firm to manage. FT should continue to focus its efforts to beat the competitors by improving its technology as well as create better experience for its consumers. Users are mostly concerned about the quality of voice and internet facilities they receive therefore FT must focus on upgrading its technology to improve the customer experience in order to successfully negotiate with the competition. Internal View of the Strategy Resources & Capabilities One of the key resources of the firm is its technology and heavy investment it has made over the period of time. It has been able to establish itself over the period of more than 200 years and such extensive experience of the industry has actually allowed the firm to develop resources which are relatively difficult to imitate. Since this industry requires extensive reliance on technology therefore FT (Orange) has been able to develop its technological base. Investments in 3G and advance network capabilities have allowed the firm to capture the market which is more inclined towards using smartphones. Future technologies such as 4G and LTE have also been considered by the firm and it is actually making efforts to continue to upgrade its technological base to serve more consumers. Better and more integrated technology has also allowed the firm to actually increase its network coverage in those areas where other firms have actually failed to provide the required coverage. Apart from this, firm has also been active in capitalizing on new and emerging trends such as mobile payments, content aggregation as well as free and paid applications. FT has been able to achieve these capabilities mainly due to its access to advance technology. With the help of technology it is creating strong competitive advantage for itself over its competitors. Competencies A core competence of any firm is the permanent and transferable cause of a competitive advantage of a company, based on resources and skills. Firms, in order to gain competitive advantage over other firms have to use these competencies to survive. These competencies however, emerge as the firm improves its learning curve and achieve more experience in delivering what it promises. One of the most important core competencies of the firm is the relationship of the firm with the regulatory agencies. Since firm operated under the ownership of French government therefore it naturally enjoys better and closer relationships with the government. This provides it one of the important competencies which is relatively harder to imitate also because of the overall nature of the firm. Another important core competency of the firm is its effective brand management under which firm has been able to effectively manage its brand and offer its customers a unique experience which is relatively hard to replicate also. Effective pricing methodologies as well as better quality services have further allowed the firm to create distinct competencies. Firm has also been able to develop effective relationships with the mobile phone manufacturers and retailers. By forming better strategic alliances with these firms, FT has actually been able to offer more value to its customers while at the same time cross selling its own products over the period of time. Since customers are locked in through contracts therefore strategic alliances with other firms have allowed to better penetrate into its existing market. Analysing Strategic Capabilities VRIN Framework “Threshold capabilities may achieve parity with competitors but not advantage over those competitors.” (Johnson et al., 2011). “Of course, not all firm resources hold the potential of sustained competitive advantages. To have this potential, a firm resource must have four attributes.” (Barney, 1991) Valuable Rare Inimitable Non-Substitutable It is critical to note that the firm’s attributes are valuable in the sense that they offer the firm a consistent competitive advantage. One of the core competencies of the firm outlined above is its relationship with the government which is not only valuable but rare, inimitable as well as non-substitutable also. Though technology can be easily replicated and with proper investment and strategic approach, any firm in the industry can actually upgrade it services. What is however, really valuable and rare for the firm is its relationships with the government. This attribute cannot be easily imitated by other firms and firm can take advantage of this for longer period of time. Having the solid backing of the government also offers FT a ready access to investment required to expand at the global level. Since firm is already operating at the global level with consistent success therefore it will be lot easier for the firm to raise funds. Diversified geographic presence is also one of the aspects of the business which can fill into VRIN framework as not all firms can easily enter into new markets with the ease available to Orange. Value Chain Analysis “A value chain is a chain of activities. Products pass through all activities of the chain in order and at each activity the product gains some value.” (Feng, 2009) Source: http://www.marketingteacher.com/lesson-store/lesson-value-chain.html This figure provides a general view of the value chain of any firm in any given industry. “Value Chain Analysis describes the activities that take place in a business and relates them to an analysis of the competitive strength of the business. “ (Riley, 2012) This concept outlines as to how the activities of a firm are related with each other to actually generate more value for the firm. The systematic view of the different levels of activities of the firm therefore provide a critical insight into how the firm’s activities move from one place to another and in during this process, how firm actually generates value out of those activities. Source: http://www.slideshare.net/nishatmbm/france-telecom-sa-orangekaist-mba The above value chain of France Telecom suggests that overall activities are divided into three important components of Media, IT and Telecommunication. Telecommunication is the primary activities of the firm under which firm offers basic transmission services for voice telephony and internet. These are the basic products and services which are offered by the firm whereas most of other product offering revolves around these two core products and services. Value added services such as maps as well as access to online portal services are offered in order to increase the overall customer experience. These services are duly supported through sales and after sales services. In I.T. Services, firm has to actually engage into procurement of hardware as well as software required to effectively manage and offer primary services. Hardware not only includes satellites and relay towers but other in-house equipment too required for the effective distribution of services. Software also required effectively providing the same level of high quality services and managing the existing hardware. Sales and services are also part of this process as firm also offers hardware i.e. mobile phones in partnership with different mobile phone manufacturers. In Media, firm focuses on content creation, aggregation as well as distribution of the same to the customers. Most of the content aggregation and distribution takes place through mobile devices however, firm also offers broadband services through which it also distributes its contents. The overall value chain activities of the firm suggest that it has been able to generate value for itself through offering multiple services at different levels. On basic level, it is creating more value by offering high quality internet and transmission services. At the core level, consumers require excellent voice quality and consistently high ratio of signals received. Orange has been able to deliver these services through its consistently high class services. It is also important to note that the overall value chain of FT has expanded and changed over the period of time. This has been mostly due to the changes underlying the technology and overall dynamics of the industry. Consumers are expecting more services from telecommunication companies and in order to satisfy the needs, these firms have to continue to expand their overall value chain. How Effectively Firm is using its Resources and Capabilities? Considering the above discussion and the overall success of the firm, it is critically important to ascertain as to whether the firm has been able to effectively use its resources and capabilities are not. The consistently high performance of the firm, its penetration into different markets and quality of the services it is offering suggests that the firm has been able to effectively use its resources and capabilities. It is the second largest telecommunication firm in the world and the first in Europe which itself suggests that the firm has been able to expand its reach and market. The sheer size of the firm and its presence in different countries clearly outlines that the firm with the help of effective technology and support from the government has been able to use its resources and capabilities well. Firm has been able to consistently maintain its revenue levels despite the fact that Europe is still officially going through recession. Its average return on equity during last five years has been 13.28% suggesting that the firm has consistently been able to perform well. (FT.COM, 2012) Overall, it can be suggested that the firm has been clearly able to perform better and has effectively used its resources and capabilities to expand into different markets and continue to each better financial performance while at the same time expanding its technological base. Bibliography FENG, B. (n.d.). Use Value Chain Analysis for Customer Satisfaction. Retrieved November 10, 2012, from http://gscmotion.wordpress.com/?s=value+chain+analysis France Telecom. (2012). Orange Group Code of Ethics. Retrieved November 10, 2012, from FT: www.orange.com/en/content/download/.../code_of_ethics_2012.pdf FT.COM. (2012, November 11). France Telecom SA. Retrieved from Ft.com: http://markets.ft.com/research/Markets/Tearsheets/Financials?s=FTE:PAR JOHNSON, G. WHITTINGTON, R. and SCHOLES, K. (2011). Exploring Strategy. Ninth edition. Harlow: Pearson Education Limited Orange. (2010, September 9). conquests 2015: Orange Business Services aims to be leader in communication solutions, converging telcos and IT. Retrieved November 10, 2012, from Orange Business Service: http://www.orange-business.com/mnc/press/press_releases/2010/conquests-2015.html Riley, J. (2012, October 12). Value Chain Analysis. Retrieved November 10, 2012, from Tutor2u.com: http://www.tutor2u.net/business/strategy/value_chain_analysis.htm Read More