Place of Vodafone in the UK Mobile Telecommunications Sector - Case Study Example

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This study "Place of Vodafone in the UK Mobile Telecommunications Sector" reveals that Vodafone is facing an uphill climb that demands the company aggressively attack a market where conditions have not been working in its favor as a result of recent developments…
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Download file to see previous pages The joint venture of T-Mobile of Germany and Orange of France has turned the fortunes of these two companies in the UK market upward (Wray, 2009).  Prior to their union, they were the third and fourth-largest mobile operators in the UK market after O2 (28%), and Vodafone (23%), with a combined market share of 37% respectively (Wray, 2009). The union with T-Mobile was one that Vodafone courted as it represented the obvious corporate growth choice as a means to gain market dominance. The dynamic of their union has changed the market for Vodafone from the position of being able to see the top of the mountain, to one where it now looks up at the market leaders and is followed only by the much smaller players. With the T-Mobile, Orange union accomplished, there is only one major deal left on the table, which even if it could be arranged, the Competition Committee would be hard pressured to approve it as in that it would leave too few players at the top. Thus, Vodafone must look elsewhere for growth. As brought out in this report, there are opportunities open to the company to accomplish achieving gains through factors as uncovered in the marketing analysis tools used to dissect the market. The options open to Vodafone to gain on number three in the market (O2) are there, and owing to the position of T-Mobile and Orange, catching the market leaders anytime in the near future is a goal that does not have merit due to their commanding lead (Wray, 2009). Those strategies, along with the reasons for these approaches are a factor of the market analysis as brought forth herein whereby the fortunes of the company are not as bleak as they seem. The mobile telecom sector is one of the few industries that have recorded growth in the current economic climate in the UK (British Telecom, 2009). An assessment by the Office of Communications (Ofcom) made the following observation “Mobile phone services are an increasingly influential commodity … (that) … are practically indistinguishable from fixed Next Generation Networks in Functionality” (British Telecom, 2009, P. 4). Ofcom rated the performance of the mobile sector as vibrant in the face of the economic downturn (British Telecom, 2009). A published report generated by ENTER (2010) of Madrid, Spain stated that the annual growth for the mobile sector globally had slowed to 4.2% in 2008, with the financial crisis contributing to a pullback in consumer spending on their mobile phones as the main reason (ENTER, 2010). In Europe, the growth rate for the sector has slowed to 2.0% in 2008, down from 3.7% in 2007 as a result of the saturation of the market (ENTER, 2010). The preceding is significant in that in the face of the current downturn the mobile telecom sector recorded positive results. The preceding analysis by Ofcom points to continued growth in the market despite the effects of the economy. In conducting an analysis of the UK mobile telecom market, three distinct tools were utilized as a means to gather information on the state of the industry as well as its competitors. The PEST Analysis is an important means to understand the environment a company is operating in as an input area for planning corporate strategies and has factors that can aid in the marketing process (Hammond, 2002). The letters in the PEST Analysis stand for Political, Economic. Sociocultural and Technological factors that provide an understanding of the macro-environmental make up of a market (Hammond, 2002).
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