Business Strategy Assignment March 2016 (Final)

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Table of Contents
Executive Summary...................................................................................................................3
Question One: External Strategic Environment Ireland ............................................................3
Political (PESTEL Analysis) .................................................................................................4
Economical (PESTEL Analysis)............................................................................................4
Sociocultural (PESTEL Analysis) .........................................................................................6
Technological (PESTEL Analysis)........................................................................................6
Environmental (PESTEL Analysis).......................................................................................7
Legal (PESTEL Analysis)......................................................................................................7
Michael Porters Five Forces ..................................................................................................8
Major Trends..........................................................................................................................8
Digitalization of Industries:...............................................................................................8
Big Data:............................................................................................................................8
Endless payment: ...............................................................................................................8
Budget smartphones:..........................................................................................................9
Building digital ecosystems: ..............................................................................................9
Implications on future strategy ..............................................................................................9
Question Two: Strategic capabilities (key issues) ...................................................................11
SWOT Analysis ...................................................................................................................12
Vodafone SWOT..................................................................................................................12
Virgin Media SWOT............................................................................................................13
Eircom SWOT......................................................................................................................14
Competitive Advantage........................................................................................................14
Question Three: Choices and Positioning (Porter, n.d.) ..........................................................15
Current/Future Strategy........................................................................................................15
Positioning:......................................................................................................................15
Strategic Direction...........................................................................................................17
Strategy Method:..............................................................................................................18
References................................................................................................................................19
Appendix..................................................................................................................................20
Bibliography.............................................................................................................................33

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Executive Summary
Strategic definition (Andrews, pp. 18-19)
“Corporate strategy is the pattern of decisions in a company that determines and reveals its
objectives, purposes, or goals, produces the principal policies and plans for achieving those
goals, and defines the range of business the company is to pursue, the kind of economic and
human organization it is or intends to be, and the nature of the economic and non-economic
contribution it intends to make to its shareholders, employees, customers, and communities.
This report will analyse the current strategic environment in Ireland, specifically the
Communications, Media and Technology Industry. We will use theoretical models to
highlight the various aspects and key drivers of strategy. We will also assess and evaluate the
internal strategic capabilities and current strategic choices and positioning. Finally we will
recommend the future strategy as it pertains to strategic choices and positioning.
External Strategic Environment Ireland
In the last twenty years, Ireland has experienced major upheavals in its economic position on
the global and domestic scale. From mid-1990s to mid-2000s Ireland was known as the
‘Celtic Tiger’ sustaining a period of rapid real economic growth fuelled by foreign direct
investment and home property boom. The subsequent property bubble rendered the real
economy uncompetitive later leading to an economic depression.
During the Celtic Tiger, the Irish economy expanded at an average rate of 9.4% between
1995 and 2000 and continued to grow at an average rate of 5.9% during the following decade
until 2008. From mid to late 2000s the economy started to dip with GDP contracting by 14%
and unemployment rising to 14% by 2011 and falling later to 8.6% by Jan 2016 (App.1).
Since 2010, Ireland’s GDP had started to increase slowly (App.2). Ireland’s economy grew by
7% in the third quarter of 2015 compared with the same period in 2014. (Economics, n.d.)
The CSO reflect increasing output in “all business sectors” in the three months to September
compared with the previous quarter of 2015. (Times, n.d.)
On 28 November 2010, the Irish Government agreed to a Programme of Financial Support
from the EU and the IMF. (Finance, n.d.)
The programme was to stabilise public finances and sustain growth in the employment
industry. The overall package was €85billion provided by EFSF, EFSM, IMF and Ireland
providing €17.5billion. In December 2013 Ireland left the programme after meeting the key
objects; (Finance, n.d.)
 Putting finance back on sustainable path to recovery,
 Restore financial sector viability,
 Restore financial market funding
 Raise capital growth potential.
The exit has raised confidence in Ireland from the global business community and now
Ireland is positioned for a sustainable future and as a place to do business once again.
(Finance, n.d.)

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Political (PESTEL Analysis)
Politics plays a vital role in business due to the balance between systems of control and free
markets. When identifying optimal areas for growth or sales, political factors should be
considered. Political factors can help determine the location of corporate headquarters.
Political Factors:
 Tax policies:
Ireland has a low tax environment with a low corporation tax of 12.5% make it a
desirable location not only for current competitors but also for future competitors.
These include;
a. Double taxation agreements
b. Research and Development Tax Credits
c. Rate of 25% applies to non-trading (passive) income
d. Capital Gains tax – companies resident in Ireland for Tax purposes 33%
(Ireland, n.d.)
 Stability of government:
Government stability is a key driver in a company's future strategy, it enables
them to gauge an informative outlook to development and investment in that
economy with confidence in the future state of the country. Ireland has a stable
government set up over the past 10 years allowing companies operating here
to plan accordingly without doubt of instability (App.3).
 Entry mode regulation's:
Entry into the Irish market as a low bureaucracy state is relatively easy for
those within the EU. With EU trade policies and inclusion in the WTO,
Ireland is open to many global markets and can cause global competitors to
enter with ease, opening new markets both to and from EU. Existing and
increasing Free Trade Agreements make trading cheaper and faster.
 Trade regulations
EU membership is the main player to Ireland's Political policies on trade
regulations. As it is the only English speaking jurisdiction in Eurozone and the
closest EU member to the US many of the Global companies have taken up
base using Ireland as a gateway to the rest of Europe. Intra EU trade has no
border controls again making trade easier, cheaper and faster.
Economical (PESTEL Analysis)
Economic factors measure the health and determine performance of any economic region,
with the economic state changing during the firm’s lifetime. By comparing current levels of
inflation, unemployment, economic growth, and international trade you can optimise your
strategic plan.
Economic factors:
● Disposable income of buyers
● Credit accessibility

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● Unemployment rates – currently 8.3%
● Interest rates
● Inflation
● Foreign exchange rates
● Economic Growth patterns
These enable an organisation to pre-determine the operational cost and factor in the spending
pattern of a selected country. It is also a method for an organisation to predict how a market
trend may change over time. The Irish industry has changed its economic environment from
agricultural toward a more technical. This change in the early 2000’s changed the face of
Ireland as Europe’s most desired HQ for international high tech businesses including eBay,
Google, Facebook and Microsoft to name a few.
Ireland is now considered the largest exporter of service around the world due to “Silicon
Valley” in Dublin, which attached all types of trade and investments which greatly grows the
economy. Irish GDP growth of 4.3% is forecast for 2016, a marginal upward revision to the
previous projection (App.4), while the forecast for GNP growth, at 3.9%, is marginally lower
than predicted (App.5). The Irish GNI averages is $46,550 roughly €42,500, this is also
confirmed by the World Bank.
In Ireland, the unemployed is supported by the government through social welfare (App.6).
This can impact businesses on the salaries provided to their employees as the wages would
have to be higher than social welfare to attract staff. Irish banks and construction are still in a
recession but banks have started to give out loans again and construction has picked up with
current work being done such as the Luas lines and LinkedIn new European HQ. With these
improvements the CMT Industry can look to a wider, more skilled workforce in the industry.
Ireland introduce a policy of social partnership which is a pact between the trade unions,
employers and government ensures fair treatment of both staff and employers. This is
Ireland has the same exchange rate as all other EU members which benefits many businesses
as it is seen as equal trade. Ireland’s minimum interest rate is also set by the ECB with no
right to independent monetary policy. The labour regulation remains flexible and non-salary
cost of employing staff is low. However Ireland does carry the reputation of being expensive
and is ranked in the top 10 countries in Europe as the most expensive with high living cost
and expenses.

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Sociocultural (PESTEL Analysis)
● Growing young population
● Change in lifestyle
● Increment in services which includes digital television, voice and high-speed internet
services and various social applications
● Chain of information
● Building awareness and connecting people
● Exploitation of young minds, too compulsive, and sometimes too much information
● Career attitude safety - safety regarding mobile phones also needs to be taken into
consideration by the telecom industry.
There has been an increase in the desire for mobile phones which include basic features as
well as several exceptional features like 3g, conference calls, etc. Safety and easy
accessibility must also be considered by the company. Cultural aspects involves trends,
population growth rate, age distribution etc. This dimension has a big impact because of the
rise of the internet as a communication tool on mobile devices. It has different and sometimes
harmful consequences for the companies that compete in the telecommunication industry,
especially for the operators.
The use of smartphones for communication has increased and as a consequence landlines
suffered a drop, in some cases due to a substitution of landlines for mobile phones.
Another consequence for the operators is the tradition of Voice and SMS are being
substituted for instant messaging apps such as “WhatsApp” and voice apps such as “Viber”.
These “disruptions” in services caused major drop of the telecommunication operator´s
tradition profits and a revision of business strategy for the telco industry. (Deloitte)
Technological (PESTEL Analysis)
With emerging technologies, businesses risk falling behind as we have seen in the past with
tech giants such as Nokia and Blackberry. Business must focus on this area to plan for future
technological advances and application within various platforms they use and build.
Ireland has in recent years been involved with the ETAP. It aims at developing relationships
between research institutes, universities, expert knowledge group, finance and industrial
sectors and governments bodies. (Commission, 2007)
The green project support this as it encourages organizations in Ireland to adopt a higher
standard to improve practices and to minimise any negative impact it may have on the
environment. This program promote environmentally friendly production through best
practice of management, increase resources and reducing waste.
Technological factors:
 New discoveries and innovations
 Rate of technological advances and innovations
 Rate of technological obsolescence
 New technological platform
Innovations in technology may affect the operations of the industry such as;
 The market favourably or unfavourably,
 Automation,

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 Research and development
 The amount of technological awareness that a market possesses.
Technological advancements can optimize internal efficiency and extend a lifecycle of
product or service from being obsolete. The role of technology in business increases each
year due to R&D driving innovations.
Evolving technologies optimize efficiency which is a great asset within management.
However there are a number of threats and in order to survive your strategies should not
sidestep threats, but rather embrace opportunities and adopt new practices.
Environmental (PESTEL Analysis)
Environment factors relate to ecology or environment aspects, sometimes being decisive for
the buyers with companies developing social awareness and considering ecologic measures
like using renewable energies or waste processing.
It will be easier for the companies in the industry to react to these factors that cannot be
avoided. They could take advantage of the positive factors and react quickly to those that
could damage the company as they are very sensitive to these. There are few factor´s that do
not affect the industry in a positive or negative way.
Legal (PESTEL Analysis)
Irish Law is based on common law, legislation, the Irish constitution and EU Law. It is
critical to ensure all company policies are in line with the legal factors to avoid unnecessary
legal costs. Companies should consult the legal elements when focusing on current or future
strategy. A number of legal issues can affect a company that does not act responsibly, by
including this it ensures they are protected and compliant with legal requirements.
Common legal factors that companies focus on include:
● Company Law regulations:
o Introduction of the ‘The Companies Act 2014’ (Taoiseach, 2016)
● Employment regulations:
o Employment protection policies. (General, Companies Act 2014, n.d.)
o Workplace relations commission.
o Minimum wage. (Information, 1993 - 2015), (App 7,8)
● Competitive regulations:
o Competition (amendment) act 2012. (General, COMPETITION
(AMENDMENT) ACT 2012, 2012)
o Competition and Consumer protection commission enforce Irish and European
competition law.
● Health and safety regulations:
o Legislation on Health and Safety in Ireland. (Authority, n.d.)
● Product regulations:
o European Union. S.I. no 199 of 2004 European Communities (General
Product Safety) Regulations

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o The National Standards Authority of Ireland (NSAI) is Ireland’s national
standards body.
● Antitrust laws: (Curran, n.d.)
● Patent infringements/Intellectual Property Laws:
o Irish Trade Marks Act 1996
o Copyright and Related Rights Act 2000
Michael Porters Five Forces
An alternative model for analysing the external environment is Michael Porters Five Forces.
These include Threats/Barriers to Entry, Threat of Substitute, Power of Buyers, Power of
Suppliers and Competitor Rivalry. We conducted a similar review ending in the same results
as above. Further detail in App.9/10/11.
Major Trends
According to PWC major trends for telecom toward the end of 2015 will change the face of
how operators work together with their consumers. One of the key point from their finding is
the move towards digitizing core business.
Digitalization of Industries:
The value and potential benefits such as cost saving, customer satisfaction and increased
revenue is a compelling advantage. Organisations face these issues due to legacy service,
application and complex systems slowing down progress. Smaller telecoms can be more
flexible by coming into an established industry where the big players have tested the area and
smaller business can leverage their learnings.
IoT - Internet of things refers to all types of electronical device such as planes, tablets,
smartphones, etc. with a sensor connected via Wi-Fi and other technology. IoT connects /
creates communication and intelligence from all devices. IoT also sets the stage for
development in Big Data.
Vodafone's IoT innovation platform in Co. Cork is a joint venture with EMC, allowing
businesses to test solutions for the IoT in manufacturing, fleet management, machinery and
even clothing. This technology offers cost saving and increased productivity. Everything
indicates that the technology is set to continue gaining traction in 2016 and beyond.
Big Data:
As we get "connected" the volume of information available is staggering. Businesses are then
unsure of what to do with all the information “Big Data", which is becoming a 30 billion euro
industry this year and with 89% of leaders believing Big Data will change business
operations the way the internet did. IBM has lead this area, announcing it was investing $1B
and acquiring Merge healthcare last year. Other organisation are following suit, with 2016 to
be the year where we may see more business investing toward Big Data.
Endless payment:
Subscriptions have always been a factor in enterprise software but is now moving to
consumer. Leading this is Microsoft’s product – “Office 365” which subscriptions grew to 50
million per month since April.

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Offering Office as a subscription product opens it up to a potentially larger audience as it no
longer requires a large upfront cash payment making it “affordable”, locking in a recurring
revenue stream. Historically, numbers were harder to predict because consumers would skip
upgrades to the suite, sticking with older software already owned. The consumer are now
happy pay subs and not to own the software or device, with the condition the product keeps
improving.
Budget smartphones:
Currently phones are purchased on an 18-24 month contract with the cost of new devices in
the range of €400. Budget smartphone could be the rival for expensive phones.
Organisations are trying to change this with the Android OS devices selling for €200 or less
with same functionality. With this trend, we would expect the average selling price of phones
in Ireland and Europe to decline. As mobile developers increasingly catch up, it can lead to
winning back some market share as healthy competition grows.
Building digital ecosystems:
Telecommunications providers have entered into growth through innovative digital
ecosystems enabling joint ventures (Vodafone/ESB), acquisitions (Three/02) (UPC/Virgin
Media), or internal R&D such as MDM (Vodafone/Verizon). Most have been able to
establish their own independent incubators or venture funds focused on digital innovation and
next-generation services.
The downside is Apple and Google have already covered a range of interwoven
communications, multimedia, shopping, entertainment, and financial offerings. To succeed in
this arena organisations will need to invest in people, technology and infrastructure to
understand the coherent digital ecosystems, develop or acquire the capabilities needed to
implement and make sure the ecosystem is greater than the sum of its parts.
Implications on future strategy
According to Deloitte, there are number of changes emerging that will impact future strategy.
These include a $17 billion dollar market for used smartphones, an increase in 50% from
2015. It could allow an increase in their market share by offering a cheaper smartphone
alternative, moving people towards the “internet age”, triggering more uptake in their data
bundles, increasing revenue. When pricing new handsets, this should be a factor as they could
stand to lose revenue with consumers opting for a cheaper second hand phones.
When we analyse the PESTEL factors above, it is hard to envision a scenario where all of
these would not impact a future strategy. Over the past decade this type of analysis has been
key to delivering changing strategies to a changing market.
Political policies in Ireland will only further increase the desirability of new entrants to this
market but can also open up markets further into mainland Europe. The current election in the
UK around whether or not to stay in the EU could be used as leverage showcasing Ireland as
a gateway to Europe for English speaking countries if the UK leaves. To current competitors
could mean loss in market share due to inflexed companies but could mean a widening of the
market for those moving globally.

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Companies could look to increase their market share by offering better deals due to more
disposable income while also allowing those on a budget to participate. Overall
unemployment is down leading to more income and opportunities for expansion.
A growing youth population further increases the need to keep up to date with the latest
communication advances. Technological factors in a dynamic environment, companies will
need to stay ahead of the trend with the latest in technology with consumers wanting the best
in technology. The growing youth population in a digital age should be considered as a
priority when it comes to future strategy.
A potential differentiator for a society growing in environmental awareness would be a
company's Eco/Environmental policy. Using eco awareness to connect with consumers will
engage loyalty and willingness to choose them over competitors.
Finally legal factors will always be a part of strategy as there is no way to survive without
adhering to this. In recent years there have been more cases brought against those who try to
break these rules for example Google with Tax Evasion. With legal systems being connected
through the EU it will be vital to stay on top of these changes when determining strategy. It
will ensure your products and services relating to intellectual property are properly protected.

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Strategic capabilities (key issues)
Organizational Internal Strategic Capabilities and resources in telecom industry are mainly
grounded on technological innovation that are highly supported by its innovation-friendly
tangible and intangible resources. There is a strong positive relationship between resources
and capabilities that helps the organization to handle its internal and external environment
using strategic tools like PEST and SWOT analysis. Competitive advantage is a –
combination of Tangible and Intangible Capabilities (App.12):
These resources do not have the same importance to a company strategy. Financial, Structural
and Technological are highly important in contrast to physical resources having ordinary
importance for the organization. Reputation, Organizational Culture and Human Resource are
also having high importance to the strategy. Regarding these resources, the organization is
able to develop strategic capabilities. They can be evaluated through analysis of its value
chain activities. Organizational functions direct employees toward development of
capabilities. It is vital for the organization to identify its capabilities in order to support
primary activities and ultimately succeed.
One of the most significant capabilities developed by the providers (Vodafone/Virgin
Media/Eir) is delivery of very fast and guaranteed quality telecommunication services at low
cost. From a technological point of view – organizations in the industry have become able to
exploit technological opportunity, develop and apply technologies.
For handling human resource management, firms have developed its capabilities in concern
of recruiting and training competent personnel for technological innovation, motivating and
compensating all employees for more technological innovation.
With regard to telecom infrastructure related activities, it has developed capabilities like
recognising and promoting the aspect of innovation, financing and planning for technological
innovation, integrating all functional departments, evaluating technological innovation, legal
support to it, and attaining essential government support to finance and protect its
technological innovation (Dodourova 2003).

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SWOT Analysis
This SWOT analysis of companies within the CMT Industry is a strategic analysis of the
companies’ businesses and operations. It shows strengths, weaknesses, opportunities and
threats. It is the most important and first stage of planning and is a feedback mechanism to
create new strategies for any organisation. Weaknesses and Strengths are correlated and
examine the internal part of the business analysis whereas Opportunities and Threats deal
with the external environment of business operation. Weaknesses and strengths refer to
aspect of marketing, finance, manufacturing or organisational structure. Swot analysis helps
clarify the objectives of the organisation.
Vodafone SWOT
Internal Analysis, Facts & Figures
Vodafone has more than 403 million customers across the world. (Vodafone, n.d.) Vodafone
operate in more than 30 countries and are partners with network companies over
50(Vodafone, 2013) (App.13). Vodafone’s corporate strategy and key resources are shown
below:
External Analysis
Industry structure is broken down into a mixture of monopolistic competition and oligopoly;
hence the market is dominated by a number of telecommunication providers. Liberalization
has been extremely helpful to this industry, as it has made induction of new completion easy.
The exit barriers are also high, due to the complexity of the mobile industry and its structure.
(Vodafone Plc, 2012)

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Virgin Media SWOT
This Swot is based on UK statistic as Virgin is a new entrant to the Irish market based on its
takeover of UPC. Externally, the opportunities and threats facing Virgin Media are ever
changing. The media sector is developing an exceptionally fast pace, resulting in both
opportunities and threats for companies such as Virgin Media. Threats to Virgin Media come
from other similar media companies such as Eir and Vodafone who remain as large players in
the market.

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Eircom SWOT
Competitive Advantage

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Choices and Positioning (Porter, n.d.)
Current/Future Strategy
By evaluating the current strategic choices in relation to CMT Industry and the positioning of
companies within this industry, we can look to form a future strategy.
Strategic choices relate to Business Strategy, Strategic Direction and Strategy Methods,
(App.14/15/16). The same models can be used to form current and future state. For both we
will look at positioning under the Generic strategy models (Cost Leadership, Differentiation
and Focus) however Strategy clock (App.27) can also be used. In relation to Strategic
direction we will focus on Corporate Strategy direction model instead of the Portfolio
Matrices (BCG Matrix, GE-McKinsey Matrix and Parenting Matrix – (App.18/19/20).
Positioning:
Business Strategy determines the optimum route for companies to position themselves within
the market in comparison to competitors to improve or maintain advantage. Companies
should look to have multiple SBUs (App.21) for diversification purposes to achieve
competitive advantage. Allows tailoring business strategy depending on needs of external
market and focuses on financial accountability without affecting other SBUs.
In an age of unbridled competition branding is used to set businesses apart. Good brands,
valued customers and price efficient packages are required. Most telecoms industries tend to
offer similar products and packages with varying degrees of efficiencies and value. Creating
a successful brand for the future requires identifying the brands primary values and
acknowledge it in the organisations mission statements (App.22/23/24).
Cost Leadership Strategy:
Cost leadership strategy is aimed at gaining a competitive advantage through being the lowest
cost provider in telecoms industry by the number of “included minutes, text and data”
(App.25/26/27). EIR has mostly lead this area with low costs on both mobiles and fixed line.
The reason they have been able to sustain this is the fact that they own the infrastructure.
Where Vodafone, Three and Virgin would have to buy the fixed line and add this to their
overheads when coming up with price plans, EIR is able to cut this cost and provide a lower
price plan to their consumers.
Due to this they can sell below average industry prices to earn a higher profit than that of
rivals in times of price war. Eir also have the potential to maintain profitability while the
competition has to go through losses such as it were during the recession. EIR has 54%
market share of fixed voice lines; 40% market share of fixed broadband; 11% of mobile
broadband; and 17% of mobile.
The downside of this was that management did not invest in Eircom’s service and damaged
their brand name which lead to the rebrand as of 2016 to EIR. Financial considerations and
budgetary constraints shape competitive price of the products. Besides the production
efficiency, brand and marketing skills are also used in this kind of competition.
To be successful an organisation must compete on cost of services and products while
retaining existing and attracting new clients. It is achieved by driving down cost becoming
unchallenged in this position. It’s essential where the target market is price sensitive.

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Ireland’s demographics of 18 – 64 year old is 67% and must be targeted and positively
retained as valued customers. The risks involved are many as others may be able to lower
their costs leading to price war. May be difficult to sustain cost-leadership in the long run.
Differentiation Strategy:
A firm with a differentiation strategy attempts to achieve competitive advantage by creating a
product or service that is perceived as unique and valued by customers. Differentiated goods
and services satisfy the needs of customers through a sustainable competitive advantage. This
allows companies to desensitise prices and focus on value that generates a comparatively
higher price and a better margin.
Virgin media differentiates its service by providing focus on exceptional good quality of
service rather than focusing on low price. The differentiating organisation will incur
additional costs in creating their competitive advantage. These costs must be offset by the
increase in revenue generated by sales. Vodafone’s unique services and products such as 4G,
MDM, Total communication (fixed, mobile and TV) and managed services add value
allowing them to charge a premium price for it. The higher price will eventually cover the
extra costs and if the suppliers increase their prices, they will pass along the costs to their
consumers.
Customers value high broad band speed or latest new unique mobile phone and are willing to
spend to get that product or service. The risks involved are, customers can become price
sensitive and chose on price rather than uniqueness. The differentiation factor may no longer
apply. Imitation can drive price down and customers to competitors.
Focus/Niche Strategy
Organisations focus effort and resources on a narrow, defined segment of a market.
Competitive advantage is generated specifically for the niche. A firm following this generic
strategy often enjoys a high degree of loyalty and discourages the other firms from competing
directly.
A company could use either a cost focus or a differentiation focus (App.28). One
differentiation agenda, is looking at consumer needs and providing a better service by
focusing on it entirely. Three/02 although were two separate companies both organizations
focused on the need of the consumer. 02 closed the gap on Vodafone by concentrating on
consumers instead of enterprise.
They provided excellent customer care, ensuring return business by allowing consumer to
upgrade package plans and mobile without penalties. Three focused on a premium network
without premium price, allowing consumers to purchase high end mobiles “Free” and
providing “all you can eat data”.
Unfortunately cost focus is unachievable with an industry depending upon economies of scale
such as telecommunication.
As telecommunication companies are always developing new methods of innovation in
communication to bring new services to the market, some of these will impact on Ireland.
 Mobile money transfer (App.29)
 Ease of shopping (App.30)

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Most forwarding thinking organisations allow BYOD (App.31) allowing cost saving as they
do not have to supply the device or support it, only provide a secure interface and software to
protect their data.
To ensure competitive advantage the telecom industry must provide cheap, reliable, secure,
individual price packages (bundles) and fast infrastructure to their customers. Therefore the
best option for the telecoms industry is to base their products and services on the cost-
leadership model. Customers are very technical savvy and find it very easy to change service
contract with a telecom provider if unsatisfied. According to Stewart “A firm that constantly
learns, accumulates and expands its knowledge base or intellectual capital enjoys competitive
advantage.” (Stewart, 1997)
Strategic Direction
When developing a future strategy for a Telecommunications company within the CMT
Industry we looked at Strategic direction under the headings of Market Penetration, New
Products/Services, Market Development and Conglomerate Diversification.
The deeper the penetration, the higher the volume of product sales. In order to expand the
sales of current products in markets where products are already being sold, all companies
utilise market penetration strategies such as cutting prices, increasing advertising, obtaining
better, bigger, brighter stores.
Market penetration occurs when a company enters/penetrates a market with current products.
The best way to achieve this is by gaining competitors customers (part of their market share)
All companies focus now on super-fast broadband included in bundles with TV. Virgin media
has an advantage due to merger with UPC. Other ways include attracting non-users of your
product or convincing current clients to use more of your product/service, with advertising or
other promotions. This is exactly what Virgin media is doing right now, they started a very
aggressive advertising campaign to attract new customers. With such coverage in media the
company is trying to make the point that they have the best, fastest broadband on the market.
Market penetration is the least risky way for a company to grow.
Vodafone came up in the market with the innovative pricing strategy of charging tariff per
second in a bid to get as many customers as possible. Few differentiations between
competitor's products and services result in cut throat competition in order to steal customers
by means of price wars. Customers are price sensitive. As call rate is high and switching cost
is low, attractive Tariff is not enough and has to be backed by superior service quality. This
shows that consumer bargaining power is very high because of the number of choices
available and all the mobile operators provide same kind of coverage and services as well.
Most companies are focusing on 4G and providing more data were Virgin is giving customers
more for the price. The most expensive, Vodafone is trying to get back the cost of research
and development put into all the new services launched over last years.
Eir on the other hand is offering double the data at no extra cost which is the best way to go
at the moment considering that everything is going on line and customers require service on
the move. Everyone wants to have access to their favourite TV shows and all the applications
on the go. Providing fastest best possible connection such as 4G is essential but also main
focus should be on providing unlimited data packages to consumers. Virgin is advertising its
mobile unlimited offer which is in true limited to 30GB. So to diversify air should provide
TRUE UNLIMITED data plan for a bit higher cost then competition to attract new
customers.

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As we see from the current strategy new and existing market players are improving current
products and services like connectivity quality, broadband speeds or as simple as providing
fibre broadband or fixed broadband to areas within Ireland that could not previously avail of
the service. Continuing to do so will allow any market player to increase their market share
through market penetration.
Another way to increase market share would be to continue the trend of outsourcing back
office to cheaper locations therefore reducing costs and increasing economies of scale along
with the production of products also being outsourced. There are some negatives to this as it
could cause competitors to retaliate by adopting the same approach therefore causing market
share to remain stagnant. There may also be legal barriers with outsourcing back office e.g.
Redundancy Laws, Sales of Goods and Service act which will still remain the responsibility
of the company within that market or industry.
In this industry we would recommend the utilisation of diversification and related
diversification as opposed to conglomerate diversification. Conglomerate diversification
would not be a route we would recommend due to the high risk factors and can radically
increase scope which may be difficult to manage. Product development will be essential to
allow companies to continue to grow or stay relevant within this Industry.
As we see with Vodafone now offering a TV option as well as Broadband, Mobile etc. to
compete with Eir and Virgin who are seen as total communications companies within the
sector. The use of related diversification here is a method we would highly recommend as
part of their future strategy to widen their customer base. Market development is another
example of this whereby companies within the CMT industry can look to provide their
existing products and services to a new market. Although Vodafone and Virgin have already
being using this strategy the continued use will allow them to compete.
In relation to EIR as they are not yet Global this would seem like a viable option although as
discussed before market saturation is quite high and may be difficult to make that leap. This
could be due to cost restraints, project management’s issues or lack of experience in new
market against established players who have loyal customers.
Strategy Method:
This can be organic or through acquisitions or alliance, examples include acquisition of UPC
by Virgin to gain access to the Irish market, Hutchinson’s takeover of O2 or Vodafone’s
takeover of BT’s consumer base. There is no doubt that there are further options of
acquisitions or alliances not only by new market entrants but also by those currently within
the market. In relation to organic growth Vodafone’s decision to include TV as a part of their
product portfolio is an example of how the future strategy method of companies within the
industry can be organic, there are still competitors within the market only providing some
services when they could potentially provide total CMT packages e.g. Sky.

19
References
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Deloitte. (n.d.). Deloitte, Newsletter 2013.
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programme
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Information, C. (1993 - 2015). Employment protection developments 1993-2015. Retrieved
from Employment law update:
http://www.citizensinformation.ie/en/employment/employment_rights_and_condition
s/employment_rights_and_duties/employment_law_update.html
Ireland, D. o. (n.d.). Corporate Tax. Retrieved from Corporate Taxation:
http://www.finance.gov.ie/search/node/corporate%20tax
Porter, M. (n.d.). Michael Porter’s “Generic Strategies” . Retrieved from
www.http://faculty.bcitbusiness.ca:
http://faculty.bcitbusiness.ca/kevinw/4800/Bobs_porter_notes.pdf
Stewart, T. (1997). Intellectual Capital: The New Wealth of Organizations. In T. Stewart,
Intellectual Capital: The New Wealth of Organizations. New York:
Doubleday/Currency.
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Times, I. (n.d.). Central Statistics Office. Retrieved from
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Vodafone. (n.d.). About Vodafone. Retrieved from www.vodafone.com:
http://www.vodafone.com/content/index/about.html

20
Appendix
App.1: Unemployment Rate Ireland 1996 – 2016 (tradingeconomics.com)
App.2: GDP Growth Rate last predicted on Sunday, February 14, 2016.
(tradingeconomics.com)

21
App.3: Government Instability
App.4: Ireland’s GDP growth

22
App.5: Ireland’s GNP growth
App.6: Ireland Unemployment Rate is currently sitting at 8.3%.

23
App.7: Legal gross minimum wage per month
App.8: Legal gross minimum wage per month

24
App.9: Michael Porters Five Forces
Threat/Barriers to entry
Profitable markets attract new entrants, which erodes profitability. Unless incumbents have strong
and durable barriers to entry, for example, patents, economies of scale, capital requirements or
government policies, then profitability will decline to a competitive rate. Differentiation and
market penetration. No government restrictions. Eircom own all lines in Ireland so other
companies do depend on them for access to infrastructure.
● Broadband subscriptions
● Mobile subscriptions
Threat of substitutes
In Ireland the market share in mobile is owned by 2 largest networks are Vodafone and the newly
merged Three/02 with Meteor and Eir following in 3rd place under the new umbrella of Eir group.
Between Q2 and Q3 of 2015 the telecoms, Comreg statistics show growth within the telecom space
This shows that there is a market available in Ireland but below is a list of all operators that
currently have market share. For a new coming the entry would be difficult as it is an industry that
is already heavily guarded. From a mobile view Vodafone hold the card to the best coverage and
running with 4G and from the landline side Eir owns the wholesale business.
Substitutes can only ready survive by entry into rural areas where the bigger operator do not want
to invest in or entry to the market with a low rate such as the way Three first joined the telecom
industry back in 2005. Ireland has a history of users switching networks on a yearly base due to
rates. New port for mobile and new customers for landline tends to be offered better value and
discounts. Operators do not tend to have great incentives for customer to stay on their network.
This could be a good entry point for a new coming to offer.
Where close substitute products exist in the Irish market, it increases the likelihood of customers
switching to alternatives in response to price increases. This reduces both the power of suppliers
and the attractiveness of the market.
Recently products and services from non-traditional telecom industries pose serious substitution
threats. Vodafone, and Eir have recently launched cable TV and satellite operators now compete
for buyers. The cable businesses have their own direct lines into homes and offer broadband
internet services, and satellite links can substitute for high-speed business networking needs.
Railways and energy utility companies are laying miles of high-capacity telecom network
alongside their own track and pipeline assets. Just as worrying for telecom operators is the internet:
it is becoming a viable vehicle for cut-rate voice calls. Delivered by ISPs - not telecom operators -
"internet telephony" could take a big bite out of telecom companies' core voice revenues. We have
seen this happen over the past few years and the traditional telecoms businesses have all move on
to offer more product and service to compete. Entry into this market now as a telecom business is
no longer valuable to consumers and if this is the area you are looking to invest in you will need to
offer more than just telecoms.
Power ofbuyers
Power of Buyers: High
Buyers in Telecom industry usually fall into two categories: Enterprise Customers and Individual
like IT companies, Banks etc. There are ample number of telecom providers in the market with big
product variance and cheaper prices which gives buyer many options to select operators and thus
have a large bargaining power.
● Buyer’s Price sensitivity: High
● Product Differentiation: High
● Cost of products relative to total cost: High

25
● Bargaining Power: High
● Buyer’s switching cost: Low which means High buyer power
● Buyer’s Information: High
Increased Social networking, high advertisement through TV, banners and Word of Mouth, buyers
are well informed about the substitute products with better offerings.
● Size and concentration of buyers relative to products: High
Big size and big concentration of consumption.
● Buyer’s ability to backward Integrate
Not much intermediaries between the producer and the consumers. High Investment required for
backward integration. Less likely to have backward integration and hence low buyer power.
● Buyer’s Power Analysis:
● Product Differentiation:
● Competition between Buyer:
Enterprise customers generate major part of the revenues for any telecom companies like
Vodafone, Virgin Media or Eir which means Higher Buyer Power. But this is not significant for
the one that who deals with individual customers.
Power ofsuppliers
Supplier Power for the Telecom Industry:
The Suppliers Bargaining power in Ireland has increased influence on profitability of the organization.
Increase of bargaining power of the supplier will lead to a decrease in profits or increase in the price of the
end product – Buyer.
There is a price war happening between the different operators at the moment, which means that even
suppliers are chosen carefully so that they do not drag down the profitability of the company. This indicates
that suppliers have less bargaining power in the telecom industry.
• Price Sensitivity: Low
• Cost of product relative to total cost: Low
• Product Differentiation: Low
• Competition between suppliers: High
• Bargaining Power:Low
• Size and concentration of suppliers relative to products: Low
• Buyer’s switching cost: Low
• Buyer’s Information: High
• Supplier’s ability to forward integrate: Low
Competitor Rivalry
The main driver is the number and capability of competitors in the market. Many competitors, offering
undifferentiated products and services, will reduce market attractiveness.
Competition is "cut throat". The wave of industry deregulation together with the receptive capital markets of
the late 1990s paved the way for a rush of new entrants. New technology is prompting a raft of substitute
services. Nearly everybody already pays for phone services,so all competitors now must lure customers
with lower prices and more exciting services. This tends to drive industry profitability down. In addition to
low profits, the telecom industry suffers from high exit barriers, mainly due to its specialized equipment.
Networks and billing systems cannot really be used for much else, and their swift obsolescence makes
liquidation pretty difficult.

26
App.10:.Irish Quarterly Communications Market Data Q3 2015
App.11: List of operators in Ireland

27
App.12: Tangible and Intangible Capabilities
Resource Characteristics
Tangible
Financial  Large Financial Capabilities,
 Strong financial position (constant growth)
Physical  Land, Buildings (stores across the whole country), Servers.
Intangible
Technological  Key technologies and resources include the telecommunications
licences that the provider holds and related network infrastructure which
enables the provider to operate their telecommunications networks
around the world.
 Providers have become able to exploit technological opportunity and
developing and applying technologies
Reputation  Big and loyal Customer base, Brands are highly recognized (Virgin,
Vodafone, Eir)
 They offer Price premium over competition
 Repetitive buying – customers are committed to one provider
 Consistency of performance
Human
Resource
 For handling human resource management, it has developed its
capabilities in concern of recruiting and training competent personnel for
technological innovation and motivating & compensating all employees
for more and more technological innovation.
App.13:

28
App.14: Business Strategy
Refers to positioning of a company in relation to its competitors.
App.15: Strategic Direction
Refers to various segments to pursue in relation to services, products, markets and Industries.
App.16: Strategy Methods
Refers to method in which strategy is realised can be organic or through Acquisition, Mergers
or alliance.
App.17: BCG Matrix
App.18: GE-McKinsey Matrix

29
App.19: Parenting Matrix
App.20: Bowman’s Strategy Clock
App.21: SBUs
Strategic Business units

30
App.22: Eir’s mission and value statement
● We will be the provider of choice for communications services in Ireland.
● Our Customers will value us for delivering one–stop solutions which are easy to buy,
easy to use and which offer quality, service and value for money
Our Values:
● We work: as one company, for our customers, together as one team
● We are: ambitious, inventive, accountable and cost effective.
● We do this with: Integrity, spirit and pride
App.23: Vodafone’s mission statement and vision
● We will be the communications leader in an increasingly connected world
● Our vision is to lead the industry in responding to public concerns regarding mobile
phones, masts and health by demonstrating leading edge practices and encouraging others
to follow.
App.24: Virgin Media Mission Statement
Issues and responsibilities we're focussing on:
● Looking after our people
● Becoming the undisputed customer champion
● Helping our suppliers live our values
● Being a responsible service provider
● Managing our environmental impact
● Understanding our role in the community
App.25: Virgin 2016
App.26: EIR 2016

32
App.28: Cost and Differentiation Focus
Cost focus aims at being the lowest cost producer in that niche or segment. Differentiation
focus creates competitive advantage through differentiation within the niche or segment.
App.29: Mobile money transfer
Mobile remittance services alongside new mobile payments highlights the opportunities for
the mobile phone to redefine the movement of money by lowering the cost of money transfer
transactions and also being available 24/7. Money transfer by phone is common in Asia and
also in the new emerging markets in Africa.
App.30: Ease of shopping
With the glut of Smartphone’s it is possible to buy/sell products effortlessly. Returning
customers can be targeted by data gathering cookies left behind on their smartphones.
Organisations can then use this data to analyse shopper habits and target offerings to the
shoppers.
App.31: BYOD – bring your own device
Allows employees to gain access to various parts of the company intranet without incurring
device costs.

33
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clock

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