Remarkable Telecommunication Revolution - Assignment Example

Introduction Twentieth century can be characterized by the remarkable telecommunication “revolution” (Joshi, 2007:124) into the daily life of the common man. The most considerable changes in telecom industry was due to WTO agreement, signed in “February 15, 1997” (Submarine Fiber Optic Communications Systems: SFOCS, n.d.:3), which resulted in the liberalization of telecom market. This resulted in the effective communication between the trade centers situating in different regions of the world. This liberalization of the market made the companies dealing with mobile phones to think of an international market than concentrating in their domestic markets. The mobile phone hand set market has a various powerfully interlinked entities. It is significant that the popularity and dominance of each company show a discrepancy in each market .In this industry, major operator’s function using a wide-ranging set of diverse operation modes. Nokia, for example has factories, R&D and sales offices all around the world. The factories are generally situated in low-cost nations but most R&D centre are functioning in countries with advanced research and “R&D” (OECD Science, Technology and Industry Outlook 2004, 2004:30) infrastructure such as the United States, Switzerland, Germany and Finland. The competing companies considered at this point are the mobile hand set manufacturers who perform to make their business safe or fight back with the limited factors of production. A complete analysis of the three major international mobile companies, Samsung, Nokia and Apple is done using Yips drivers of internationalization, Porters generic strategies and Porters diamond. 1. Yips Drivers of Internationalization Internationalization is happening in all areas of the organization. Especially in “telecommunications” (Lee, 2009:282) sector, changes are happening each day. The traditional theories of the process of internationalization of organizations are mainly based on the researches carried out on MNC’s engaged in manufacturing. These theories suggest that the firms can start their “internationalization” (p. 173) by entering in to “foreign markets” (p. 177) with a small “psychic distance” (p. 173) by entering in to “foreign markets” (p. 177) such as geographical and culturally close nations. Also the companies can start their “internationalization” “internationalization” (p. 173) along with less committed function modes, such as exports, before the commitment of more capital by spending in the “foreign markets” (p. 177). The procedure is linear and ultimately develops into a “global strategy” by the companies. Another method for analyzing the “internationalization process” (Christofor, 2008:80) is to concentrate on “organizational factors” (p. 89) and policies. A firm’s policies and strategies are developed from the domestic, to the international, to the multinational to universal and finally to the “transnational” (Hill & Jones, 2012:159). “International development strategies” (Moore, Bruce & Birtwistle, 2011:23) relates to the companies that generally export their products to overseas countries, without the investments in important “foreign market” (p. 7) operations. The management of “internationalization” (Caenegem & Hiscock, 2014:125) has concentrated on the manufacturing companies, despite the circumstances where the “service industries” (Baguley, 2004:111) create most part in the development of the nation. The choice of the elements of the “Yip” (p. 88) theories for the company can be analyzed by using different criteria. The “Yip’s drivers” (p. 213) are mostly universal factors external for each company and provides difficulty and opportunities to both the service and manufacturing industries. “Yip” (p. 88) concentrates on a company’s key business strategies in consultation to both the kinds of services and products offered. For knowing the extent of “internationalization” (Caenegem & Hiscock, 2014:125) within the industry, analysis of four elements is needed. Such as, Market Globalization Drivers, Government Globalization Drivers, Competitive Globalization Drivers and Cost Globalization Drivers. 2. Porter’s Generic Strategies Analysis: A competitive strategy happens from the understanding of the business structure and the changes happening in the field. Michael Porter expanded a model of “generic strategies” (Eldring, 2009:13) to examine how a business competes in the market to make and maintain the “competitive advantage” (p. 9). Porter's generic strategies are includes Cost Leadership, Differentiation and Focus strategies. A company could attain high rates of profit over their competitors in also of the two methods: By providing a product at a relatively lower cost that means “cost leadership strategy” (Ireland, Hoskission & Hitt, 2009:104). By providing a product that is distinguished from their competitor products in such a method that the consumers are willing to pay a best cost for the product. This is identified as “differentiation strategy” (p. 104). Cost Leadership: Cost leadership is where the firm achieves relatively lower costs than their competitors and participates across a wide range of divisions. A business has to be able to proposal their goods at the lowest probable cost without creating any negotiations in the value of the product. An industry that concentrates on “cost leadership strategy” (p. 104) will be able to create high profit margins by advertising more product units. "Cost leadership” (p. 104) could be attained by superior management, focusing on minimizing waste, cost-saving opportunities and not adding principles which consumers regard as insignificant to the product. Differentiation: “Differentiation” (p. 104) is the capability of the company to give superior and unique value to the consumer in terms of special features, product quality or after-sale facilities. Although the companies concentrating on “differentiation strategy” (p. 104) sell smaller product components, they will be able to attain high incomes as they have extra “profit margins” (p. 96) on the product. Focus Strategies In a focus strategy, the company focuses only on a specific or a restricted choice of market segments. “Focus strategy” (p. 107) could be used by a firm to increase either differentiation or cost leadership. Focus strategy could be sub categories into two. They are cost focus and focus differentiation. 3. Porters Diamond Porter’s Diamond model Every novel management should be alert on the continuing global business developments even if it does not involve itself in any international business .This is because any impact in international market ultimately will affect the local market. Michael porter opened up a model that consigns to examine the reason why some nations are “more competitive” (Johnson, 2008:71) than others and why some industries within nations are more competitive than others. This model shaping the factors of national advantage is known as “Porters Diamond” (Kondalkar, 2010:388). According to porter the “national home base” (p. 60)of a business create the achievement it will achieve in the international market and this home base provides basic factors, which sustain or hamper the organization from building international competitive advantage. Four Determinants of this competitive advantage named as National “Diamonds” (Aswathappa, 2003) by Porter are, (a) “Demand Conditions” (2003). Porter states national advantages in an industry are attained by nations when home demands are initially utilized by local industries than their foreign competitors. (b) “Factor Conditions” (2003). Condition prevailing in a country concerning the factors of production such as labor capital and natural resource is termed as factor conditions. Every nation will have its own unique factor conditions that enables the emergence of industries for which these “factor conditions are optimal” (Hill, 2003:228) (c) “Related and supporting industries” (Aswathappa, 2003:82). According Porter competitiveness is attained only by the existence of another industry which is internationally competitive and “mutually supportive” (Chary, 2006:114). (d) “Firms strategy stucture and rivalry” (Aswathappa, 2003:82). According to Porter rivalry is the most significant driver of competitive advantage of a nations industry because final result of rivalry is innovation and quality control. Findings Recommendations and Conclusions The competition between the three mobile phone companies can be considered as the attempt by these companies to make their business secure by giving the consumers most favorable services. Correspondingly, the rivalry among these companies arises as the situation exist that only one of them cannot obtain maximum success. The market situation existing in the mobile hand set industry is generally referred to as an “oligopoly” (Merriam- Webster’s Collegiate Encyclopedia, 2000:1189) in which manufacturers are few in numbers resulting that the dealings of everyone will result in an impact on price and on competitors. It’s found that the mobile phone industry is always backed up by the media and every main product launch is swiftly pursued by technical analyses of the new product and its comparison with existing ones. So the struggle to launch highly distinguished products in terms of capabilities, design, brand values and operating systems. The examples of the new launch of high end phones such as Apple iPhone, Samsung Galaxy S or Nokia N8 clarify the statement. However in the ordinary standard feature phones, the subsistence of close substitutes could be acceptable and the competition in this sector is considered as “perfect competition” (Geetika, Ghosh & Choudhury, no date:305). Microsoft Nokia Nokia Mobile is a Finland based leading international telecommunications group which has its headquarters in “Helsinki” (Griffin, 2012:288). Nokia and Yips Drivers of Internationalization The “traditional approach” (Baldwin, 1991:202) towards the process of internationalization has been a model for the Microsoft Nokia, for growing solidly in its “domestic market” (p. 202). Then they started exploring the opportunities for expanding in to nearby countries in the constituency. As the Nokia’s familiarity and experience with the “foreign markets” (Fletcher & Crawford, 2014:265) grows, it has been consequently ventures beyond overseas. Most of the MNC’s have followed this method, and continues with more new technologies and changes in that. A company can enter in to a market naturally through the “internal developments” (Peck & Temple, 2002266) and fully owned auxiliaries. Like the same way, Microsoft has formed alliance with Nokia Corporation and expanded their operations widely in the area of telecommunication. Nokia functions in a comparatively “global industry” (Guile & Brooks, 1987:3), specifically assemble pertains to the competitive drivers and the market. Different companies have the extent of “globalization” (p. 100). Nokia’s market is much similar to the Yip’s theory of internationalization. Microsoft Nokia is modestly international in the development of policies, especially in the areas of products, marketing and market participations. Yip’s model provides closer link in to the driving forces of “Globalization” (p. 100). It helps in understanding the pressure that, the industries under globalization experiences. “Yip” also states that the knowledge of “global forces” (Friedman, 2003:311) assisting the company for identifying the important success factors, in the global market and industry. Nokia and Porters Generic Strategies Microsoft Nokia has followed the integrated “differentiation strategy” (p. 134) and cost leadership to offer low priced smart phones in growing markets and differentiated goods in developed markets. Microsoft Nokia attains a competitive advantage by joining their low “cost advantage” (p. 133) with their mid-tier offering to attract iPhone and Android users. Nokia has recognized a formidable “distribution network” (Chen, 2011:447) to efficiently reach its traders internationally and assist to reduce usage cost and cell phone ownership. In the case of Nokia, unit cost has to be privileged than that of standard company and its unit price have to be equal to that of the standard company. And the firm must have both a higher unit and lower unit cost than the standard company. The major problem with the “differentiation strategy” (Langabeer & Napiewocki, 2000:134) is that it center on the firm’s long-term capability to keep its perceived individuality in consumer’s eye on the market. Nokia mobiles and Porter diamond (a) Demand Conditions: Thinly populated areas of Finland supports adaption of wireless devices for communication among the people. (b) Factor Conditions: Homogeneous market oriented. Finland governments with innovative trade policies have enhanced the mobile manufacturing. (c) Relating and Supporting Industries: High spending on research and development by the Finland government and companies’ strong venture capital and manufacturer network. (d) Firm’s Strategy Structure and Rivalry: Strong network between company’s bank and government. Strong export centered commerce experience. The “regional development act” (Sylvain, 2007:109) which favors intense rivalry. Samsung Mobiles Samsung Mobiles and Yip’s drivers of Internationalization Yip’s drivers suggested that, in order to investigate the globalization or “internationalization” (Ryan, 2013:280) four types of drivers needs to be evaluated in the case of Samsung. According to this theory there are four elements or drivers are there, which needs the attention. They are contained in the areas of marketing, cost, government and competition. Market globalization driver helps in knowing the demands for the new electronic products used in telecommunication segment. Government globalization driver helps in the interdependence among the countries. “Cost globalization drivers” (Parker, 2005:137) are useful in finding low cost methods of production. Competitive globalization drivers are concerned with the increasing threats of new products entering in to the industry. Samsung and Porters Generic Strategies Based on Porter's model Samsung mobile has followed “differentiation strategy” (Langabeer & Napiewocki, 2000:134) with vast concentrates on novel technologies and innovations. Samsung has been a head in understanding the requirements of the customers and has concentrated on developing the services and products given to customers by incremental improvements and changes. Samsung focuses on providing new quality products to the consumer and therefore is expected at creating life easier for its consumers. Samsung make the easiness to competitors could imitate a “differentiator product” (Hiriyappa, 2013:67) and the hard of keeping a premium cost. The different features in these goods have helped the firm increase a huge market share and “consumer loyalty” (Rai, 2014:148).The Apple Company access to guiding scientific research and has extremely creative and skilled product growth team. Strong sales team with the capability to effectively converse the supposed powers of the product and corporate status for innovation and quality. Samsung Mobiles and Porters Diamond South Korean multinational company Samsung South Korean multinational company Samsung Electronics headquartered at Seoul consists of several supplementary and allied businesses under the brand name Samsung. Samsung mobile phones have a great market especially the recent models like Samsung galaxy S, Samsung “galaxy S II” (Schwartz, 2013:15) and Samsung S III. Porter’s diamond of national competitive advantage reinforces Samsung as the South Korean ports and close closeness to China and East Asian Countries. The Samsung’s main R/D facility and all its units situated in Seoul offer an ecological unit that fill matching requirements of each other promptly. (a) Factor Condition Korean Governments continuous effort for improving IT infrastructure by facilitating the usage of information technology was favorable environment for Samsung. (b) Demand Condition High computing and Internet penetration rate in Korea since 1998. The competitive market situation in Korea and forced market players give higher quality service at cheaper rate to users. (c) Relative and Supporting Industries: Korea has gained leading position in semiconductor industry especially for “DRAM” (Argote, 1999: 201) (Dynamic Random Access Memory) - DDR RAM and SD RAM Inexpensive and class hardware production units available for IT Enabled Services like BPOs and KPOs. (d) Firm’s Strategy Structure and Rivalry Koreas constructive business environments such as rapid registration procedure, Lower entry barriers in IT industry, lesser cost for using telecommunication connections, Diverse capital resources and “Korean Government” (Phan et al., 2008: 225) supports which resulted in huge number of small, medium-sized companies in IT industry. This created rigorous domestic rivalry due to market competition. Apple Mobiles Apple and Yip’s Drivers of Internationalization Yip’s drivers suggested the idea of the total “global strategy” (Spulber, 2007:39), containing three stages or components. First one is formation of the key strategy. In this the Apple Corporation may develop the key policies in the domestic nation, which may be the basis for the company’s “global competitive advantage” (p. 12). Second one is the internationalization of “key strategy” (p. 217) of the firm. Under this area, the company performs the global expansion of functions, and masters the fundamentals of the “international business” (p. 44). Third point is, Internationalisation of the “global strategy” (Hult et al., 2013:14). The Apple Corporation integrates the policy across the nations. Apple makes a complex “supply chain” (p. 24), along with the design in the United States and purchasing of parts from Japan and Korea. Assembly and distribution is done in US and China, along with international retailing. Apple Mobiles and Porters Generic Strategies Based on Porter's generic model, Apple follows differentiation and cost leadership strategy. Apple focuses more on novel product quality and lines rather than releasing goods at lesser prices. Apple differentiates itself from the competition by focusing on design quality. The cost leadership strategy is attained by the straight low price inputs to create the cheapest “high quality” (Potts, 2014) product probable. Apple also attains cost leadership by rising ancient business contracts with industries so that they could concentrate on making novel solutions and products to problems. Apple aims the market with goods for example the iPod and iPhone, that follow a differentiation strategy founded on the branding, design and user knowledge, that is what permits Apple to charge a cost premium owing to the lack of limitability of their particular production procedures. In the case of Apple, simulation by competitors and changes are in the tastes of customers. Apple Mobiles and Porter Diamond US based Apple Inc. widely considered the world's most successful modern company. Apple iPhone was launched on 29 June 2007 definitely broke out as a new trend in the mobile industry which was a combination of mobile phone internet communication device and a ipod with touch screens . Factor Conditions Studying the factor condition of United States and “Silicon valley” (Frynas & Mellahi, 2011:66) where the Apple mobile is based, it posses the most expert and pioneering IT personnel’s in the earth where companies such as Google and Face book pull towards them a number of world's most talented IT fans through their inventive and democratic HR procedures. Moreover several of the internationally prominent universities for technology research such as “MIT” (Graham & Diamond, 2004:28) Stanford, Princeton and Caltech offer outstanding research and development amenities to drive this IT industry in the Silicon Valley. Demand Conditions The United States has a high demand for new mobile loaded with new software applications. People are very keen to use the smart phones and the US citizens from the teens to old aged revise their Face Book position or tweet. This strong domestic demand for mobiles ranging from smart phones to tablets and Ipads, has given the impulsion to mobile industry such as Apple to regularly innovate, get better quality and shift to international markets and also by the economies of scale. Apple is able to vend their products at lower prices in international markets and become highly competitive.  Related and Supporting Industries The networking system like “Cisco” (Gerybadze et al., 2010:24) Social networks such as Face book and Twitter, and the whole of Apple is competently supported by the US telecommunication experts such as AT & T and Verizon.  Strategy, Structure and Rivalry The US market is considered as the considered the land of high-tech flourishing businesses is the strong strategy of the industry. “Domestic Rivalry” (Warren, 2011: 317) in US market is another factor that drives national competitive advantage. 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