Table of Contents

Part A: Cesim Business Report. 2

Introduction. 2

Overview.. 2

Competitive Position. 3

Critical Analysis for External Environment. 6

Comprehensive Analysis. 6

Porter’s Five Force Analysis. 8

Overview: 8

Analysis. 9

The Industry Lifecycle Position. 11

PESTLE Analysis. 12

Competitive Advantage Internal Analysis. 14

VRIO Framework. 15

VRIO Analysis for XYZ Organisation. 15

VRIO Framework Model 17

Value Chain Analysis. 17

Competitive Advantage of Other Firms. 18

Investments in R&D.. 21

Recommendation. 22

Conclusion. 23

Part B: Stakeholder Analysis Report. 24

Stakeholder Analysis. 24

Stakeholder Management. 25

References. 28

Part A: Cesim Business Report

Introduction

Overview

Cesim global challenge and business simulation is an effective way to understand and improve the capabilities of an organization. It is highly beneficial for companies running global business operations to lead in a competitive environment (The Cesim Global Challenge Strategy & International Business Simulation, 2019). Our company XYZ is a phone manufacturing, and telecommunication service provider headquarter in London since its inception in 1991.

Additionally, it operates globally in regions of Asia, Africa, Europe and Oceania and has reached in 25 countries, and partnered in 47 countries (Vodafone.com, 2019). However, with such reach, XYZ has made many competitors from the last 28 years. Furthermore, the London Stock Exchange has considered XYZ with a market capitalisation of 53 billion and eight most massive in the year 2016 (Stockchallenge.co.uk, 2019).Still, in the year 2019, problems are raising over issues of marketing budget expenditure. Even though XYZ is acknowledged worldwide, it has been difficult to survive and sustain. Hence, through Cesim simulation, we are trying to identify potential capabilities to stand out among competitive telephone industry.

XYZ is trying to rebuild its position in the marketplace; however, with other competitors (A, B, and C), it is challenging. As a mobile manufacturing company, marketing, research and development as well as outsourcing, are key areas. Through Cesim global challenge, we focus on improvising marketing budget to stand out from other fellow competitors. Hence, this report will focus on competitive position, internal analysis, competitive advantage and marketing expenditure analysis. Whereas, recommendations for being better shortly is another panel of discussion provided in this report.

Competitive Position

XYZ has different competitors across the national and global level in the regions of Asia, Africa, and Europe mainly. The similar telecom and phone manufacturing companies increase competition for products and services exist in the industry, focusing on the same customer groups. A B and C are three fellow competitors who pose threats to our organisation. Consider company A in London headquarter from XYZ ultimately and has unique reach on own. ‘A’ has approximately 30 million consumer reach, provide telecom services to 1.2 million organisations in the UK and operates in 180 countries (Btplc.com, 2019). The massive challenge for XYZ is reaching out this much expansion of the business. While ‘B’ operates from China but has global reach towards 943, 590 customers reach in approximately and listed on the Hong Kong Stock exchange (Chinamobileltd.com, 2019). Company C is also considered another fierce competitor which provides wireless phones to approximately 119 million subscribers globally (Verizon.com, n.d.). Hence, all three competitors are widely global, has the vast market reach and has been surviving the phone manufacturing industry focusing on customer groups similar to XYZ. Hence, this has put our company in a tight spot for reasons like geographical location, technology, buying preferences, and design. The following table provides a competitive position with competitors A, B and C.

Table 1. Competitors Comparison Source (Own Illustration)

Revenue Graph for Company XYZ

Source (Statista.com)

Revenue Graph for Company A

Source (Statista.com)

Revenue Graph for Company B

Source (Statista.com)

Revenue Graph for Company C

Source (Statista.com

Critical Analysis for External Environment

Comprehensive Analysis

• Geographical Location

The company has an extend and reach with other geographical locations in regions of Asia, Europe, and Africa. The global reach for the mobile industry is another important concept, and it changes with regions. For example, in Asia people demand some features whereas in the other two some other. Therefore, XYZ producing mobile phone handsets are demanded by different regions as per customer demands. Clearly, approximately 80 countries demand services from XYZ in mobile phone manufacturing.

• Technology

The technology must have a global reach towards the customers involved. XYZ has implemented several technological platforms for women, as well as youth employment(Vodafone Group Plc, 2019).Thus, technology must be considered by the company to attract customers and divert them from other competitors such as A, B and C.

• Buying Preference

The customers prefer handsets that have unique features, flexibility, and different applications. However, our fellow competitors also have the same mobile features. Hence, it is up to us to incorporate new technologies so that buying preferences changes.

• Design

People often get attracted to the mobile phone handset design and outer presentation. The screen, colour and other accessories offered are essential features that should be kept in mind. For instance, Samsung Galaxy Note 1 has a bigger screen, which makes it unique and competitive with Apple iPhone. Therefore, XYZ should also consider design as an integral part while manufacturing smartphones.

• Phone features

The features such as hardware and software components in a mobile handset is another vital part. Competitors offer hardware and software that are compatible and user-friendly. For example, android apps should work properly and support mobile handset. In the year 2014, approximately 40 billion applications downloads were from Google Play. It shows software demands and support in the mobile handset is mandatory. While core processors used in the manufacturing of mobile phones are also necessary. However, competitors also consider hardware component such as a processor should not become a hear and air fast battery wastage. Therefore, XYZ should also consider this concept before implementing hardware.

• Market share

Market share is the percentage that identifies sales of the companies in the year.The sales for A, B and C in the market is equally important. Company A has a market share of 40 per cent, B has a market share of 23 per cent while C has approximately market share of 35 per cent. While XYZ has a market share of 31 per cent in the year 2019 as per the quarterly annual report. It shows that XYZ lacks A, moves forward from B and C.

Figure 1: Market share analysis Source (own illustration)

Porter’s Five Force Analysis

Overview:

Porter’s five forces were established by Michael Porter to analyse and understand the competition in the marketplace. In other words, the organisation should respond and monitor the competition to avoid market ambush that affects position and market share(Kabeyi, 2018). Hence, XYZ is a worldwide acknowledge phone manufacturing company that requires adequate supervision to sustain in the marketplace. Therefore, porter’s five forces have their own characterises, which are the base of standard analysis (Figure 1).

 Figure 2: Porter’s Five Forces Source (Google Image)

Analysis

In this section, five forces concerning XYZ organisation and phone manufacturing industry will be discussed with their position analysis for competition (Figure 2).

1. Rivalry among Existing Competitors

The mobile phone manufacturing industry is vast and has global reach among masses. Smartphones are available to everyone due to the different brands available. One of the reasons for several brands is existing competitors in the industry. The competitors will offer the same product to the same customer-focused groups or even better features as compared on the existing one(Kabeyi, 2018). Hence, it is essential to consider that rivalry to be better in the marketplace still exist. XYZ itself has three competitors such as A, B and C, which makes rivalry much higher (Figure 3).

Some reasons for HIGH rivalry are as follows:

• Number of Competitors: A, B and C are prominently dominant and takes market share space. For example, XYZ only has a 31 per cent share over A and C (Figure 2).
• Brand loyalty: People does not have brand loyalty towards one product.
• Quality differences: Each handset has a different quality which suits people.
• Switching cost: The switching cost for another brand replaces ours.
• Diversity of competitors: There are diverse competitors; for example, B and C come from Chinese as well as American phone industries.

2. The threat of New Entrants

The phone manufacturing industry is increasing rapidly with the demand for mobile phone (Figure 2). However, the threat of new entrants is shallow because of capital investments and barriers to entry. One of thebarriers could be advanced technologies which are difficult for new entrants to develop and sell(Rahman et al., 2019). Secondly, new entrants will require capital investment to become stable in the market. Wileyfox, a new entrant in London, went through funding issues when the central bank of Russia stopped to lend capital investment outside the country (Collins, 2018). Therefore, the threat was new entrant is much lower due to adoption barriers and capital fund investments.

3. The threat of substitute products

The threat of substitute product depends on several substitutes available in the market. For instance, A, B, and C offers mobile phones which basic, smart and advanced. The poor people will afford a primary phone and rich will buy a highly technological smartphone (Rahman et al., 2019). Whereas, switching cost also is responsible for choosing other substitutes due to being cheap. Due to such reason, it has a medium as well as a high possibility in the market (Figure 3). XYZ must consider their products are easily replaceable with other brands.

4. Bargaining Power of Supplier

The bargaining power of supplier is medium because of limited supplies in the organisation XYZ. In the case of hardware, different suppliers are readily available due to company reputation.

5. Bargaining Power of Customer

The bargaining power of the customeris more significant because they can buy mobile handsets as per choice(Rahman et al., 2019). There are several reasons; for example, –price sensitivity and switching costs are more significant concerns. Firstly, customers only buy a product that is in the budget and have good quality. Hence, XYZ should consider that the bargaining power of customers and develop products as per their demands for technologies. Secondly, switching costs are another issue where other brand offers the same features at a lower price. Therefore, the bargaining power of customers is an essential concern and is high.

Figure 3: Porter’s Five Forces for XYZ (own illustration)

The Industry Lifecycle Position

The industry’s lifecycle position is essential for company XYZ in the mobile phone manufacturing industry. It will identify information about product strategies, growth prospects, opportunities, as well as challenges (Outlaw, 2019). XYZ in a mobile manufacturing industry exists in the maturity stage. The mobile product strategies involve impressive design features, software and hardware implementation. Currently, competitors have launched different mobile products that have higher definition. Hence, customers are demanding features such as customization, reconfigurability, flexibility, efficiency, continuous improvement, and wastage prevention (Alix, Benama and Perry, 2019).The company XYZ does not accomplish demands because of lack of product strategies. It is essential to increase growth prospects for the mobile manufacturing industry in different regions. If there are no prospects to share, then how will growth increase for demands. There are several opportunities through which growth, capacity and demands will be increased. For example, the development of more companies to produce mobile handsets will increase demands quickly.  However, one of the challenges is the implementation of industry Lifecycle to mobile manufacturing processes.  A, B and C and their expansion globally suppress the demands for the XYZ, and growth is decreasing.

There are five stages of this model, such as start-up, growth, shakeout, maturity and decline as per figure 4.

• Start-up stage: The first stage in which industry has started up from inception.
• Growth stage: The growth stage projects the industry demand increment. Shakeout stage: When the industry does not match higher growth as per demand, it lands into the shakeout stage.
• Maturity stage: The growth rate is abysmal in this stage and saturation appears with lack of demands, then the maturity stage arrives.
• Decline stage: This is the last stage where growth is minimal because of reasons such as geographical distance, technology and competition.

Figure 4: Industry Life Cycle Model Source (Google Images)

PESTLE Analysis

Table 2. Pestle Analysis(Own Illustration)

Competitive Advantage Internal Analysis

The competitive advantage is a crucial aspectto determine whether an organisation has positioned its place above other competitors. There are three sources through which competitive advantage is achievable. Resources identify the company assets in tangible form and intangible form. XYZ has both resources as it a global brand which maximum reach in other regions.In other words, tangible resources are those which are measurable for example, manufacturing plant, hardware, and human resources; while, intangible is not measurable such as quality, brand name, value and price.Capabilities are employee skills which could improve the productivity and profitability of XYZ. The employees are highly experienced and provide inputs in operations.Competencies are company strength that makes them different from other competitors. XYZ has various strength, such as global brand image, customer focus, massive reach, and much more.This section discusses the VRIO framework, value chain analysis and competitive analysis for other firms for XYZ organisation.

VRIO Framework

According to strategic management insight, VRIO framework is a model that is helpful to understand a company’s internal resources, and capabilities for sustainable competitive advantage in the marketplace (Jurevicius, 2013). XYZ requires to understand the potential resources and capabilities offers them a competitive advantage or not. Therefore, Table 2 identifies significant company resources and capabilities through valuable, rare, inimitable and organized parameters. The company’s major strengths are its brand image, global reach for customers, distribution network in over 80 countries, financial resources, innovation and human resources.

VRIO Analysis for XYZ Organisation

Table 3. VRIO Analysis for XYZ Resource/Capabilities (Own Illustration)

VRIO Framework Model

Figure 5: VRIO Framework Model Source (Rothaermel, 2017)

Value Chain Analysis

Figure 6: Value Chain Analysis Framework Source (Kapoor, 2018)

Value chain analysis identifies organisations’ work process when they convert raw inputs into final products and services.Several activities involve in the value chain process. Primary activities include design, creation and product delivery, while; secondary activities are helpful to support primary activities(Hill, Jones, &Schilling, 2014). Hence, analysis for XYZ and its value chain will provide whether resources and capabilities are working correctly or not.

Primary Activities

• Research and Development: The research and development demonstrate the production process and the design of the final mobile product (Hill, Jones, & Schilling, 2014). XYZ invest and spend a lot to gather the current needs of customers. Therefore, it is essential to gather design features of mobile to be effective. Several innovations will be taken into consideration so that customers will have the best quality smartphone.
• Marketing and Sales: Marketing and sales are achieved through brand positioning and promotional activities (Hill, Jones, & Schilling, 2014). XYZ is promoting new brands through television, internet and online e-commerce platforms.

Secondary Activities

• Human Resources: XYZ has several employees who help in the operations, manufacturing and development. The right combination with right skill is a critical part of employee recruitments (Hill, Jones, & Schilling, 2014).
• Infrastructure: The infrastructure is overall average and works as per company owners and CEO dictatorship.

Competitive Advantage of Other Firms

It is essential to understand other firms such as A, and C and their use of generic strategies to earn a competitive advantage in the market. Porter has introduced three generic strategies such as cost leadership, differentiation and cost focus (Figure 7). Each company has implemented a different strategy as per their need and requirements to become stable in the mobile phone manufacturing industry.

Figure 7: Competitive Advantage StrategiesSource (own Illustration)

Competitive Firm ‘A’:

Company B has implemented a cost leadership strategy for gaining competitive advantage in the marketplace. Cost leadership manipulate production cost by charging lower prices and cost reduction (Capsim Blog, 2015). A has introduced cost transformation program to cut down the operational cost of manufacturing. As per the company’s annual report 2019, transformation program produces annualized benefits of £875m with an associated cost of £386m (BT Group, 2019). This shows that the company is now focusing on saving money for future investments in technological expansion and innovation.

Performance Graph

Source (BT Group, 2019)

Competitive Firm ‘C’:

Company C has implemented a differentiation strategy which has a broader scope for attracting customers. This method concentrates on providing a unique product for customer engagement through promotions and marketing (Capsim Blog, 2015). For example, company C has its unique brand of selling phones with wireless connectivity and services related to the concept. It highlights them indifferently, and people are attracted towards the concept of wireless even more. Additionally, marketing promotions are offered to customers when they upgrade to a new mobile device after a specific portion payment plan agreement (Verizon Group, 2018). Therefore, company C is using a differentiation strategy to gain a competitive advantage over other firms.

Performance Graph

Source(Verizon Group, 2018)

Investments in R&D

XYZ is already investing much in a section of research and development to build innovations. For example, some significant investments could be seen for new technologies such as building and testing device prototype as well as the development of personalized apps in the handsets(Accountancydaily.co, 2014). Hence, investment in research and development is an important activity to develop new technologies. Whereas, on a global level, the total expenditure for 20 companies in the year 2018 was calculated as $214 billion (Figure 8). Therefore, trends to invest in new technologies is quite active in the mobile phone manufacturing industry. Some of the advantages and disadvantages of this activity are as follows:

Advantages

• It offers sustainability in the competitive atmosphere with other rivals.
• It offers a unique selling point to the customers with differentiated features in the marketplace.
• As technology improves, so invests because sponsors will see the potential to offer capital investments.
• The brand will develop and has an excellent reach to global customers through research and development.

Disadvantages

• Technology threatens companies with adverse effects such as misuse of information.

Figure 8: Global Trend of Investments in R&D Source (GSMArena.com, 2018)

Recommendation

There are three valuable recommendations for the XYZ organisation.

1. The strategyshould be differentiation, as described by porter’s generic strategies. Through this strategy, marketing and brand promotions should be done for reaching customers globally. The offers should be valid for the first time buying handset so that people can attract.
2. Secondly, investment in research and development should be minimal due to technological issues. The new technologies are not active and do not offer anything useful to a human.
3. Third, rivals should be taken into consideration so that the new market space will be made.

Conclusion

To conclude, the purpose of this report was to develop a strategic management study for the company XYZ. The Cesim was used to identify the capabilities of the company in the phone manufacturing industry. Furthermore, external analysis for done for XYZ through a PESTLE analysis, comprehensive analysis. Next, internal analysis for done through VRIO, value chain and competitive analysis of other firms. Hence, this report has successfully performed evaluations and offer three recommendations. Therefore, XYZ must consider all the factors for being sustainable in the marketplace in the next few years.

Part B: Stakeholder Analysis Report

Stakeholder Analysis

Stakeholders are an integral part of any organisation to consider. XYZ is a bigger telecommunication and phone manufacturing company. However, there are several stakeholders involved in this company.

Source (Google Image)

Internal Stakeholders

The internal stakeholders for organisation XYZ are as follows:

• Employees: The employees are provided with training and get chosen from different diversities. The company invested approximately 60 million dollars for training activities (Vodafone Group Plc, 2019).
• Managers: The managers look after the working of handset manufacturing process very closely.
• Owners: The company owners are an integral part of XYZ and his appointment as CEO.

External Stakeholders

The external stakeholders for organisation XYZ are as follows:

• Suppliers: The suppliers are foremost because they provide excellent raw material to make high-end smartphone devices. XYZ has a network of more than 15 000 direct suppliers from small and medium scale companies(Vodafone Group Plc, 2019).
• Customers: Customers are provided with a higher definition of mobile handsets across the global domain.
• Communities: The operations are in over 25 countries, and therefore, the company has to expand space in the community(Vodafone Group Plc, 2019).
• Government and NGOs: XYZ has also aligned itself with government agencies and follows standards as well as NGOs for women empowerment through mobile phone access (Vodafone Group Plc, 2019).

Stakeholder Map

Power of Stakeholders

Interest of Stakeholders

Stakeholder Management

To manage stakeholders effectively; a communication plan is introduced below, which shows stakeholder interactions.

References

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