Dizz Strategy

8/8/2019 Dizz Strategy

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TOPCIMA

Strategic Analysis - Dizz

Nick Best


2/19

Welcome

Welcome to Nick Bests TOPCIMA strategic analysis

For those of you who dont know me, Im the TOPCIMAtutor at Reed Business School, and the author of the

official CIMA learning system (published mid 2009), onwhich I work with one of the TOPCIMA examiners.

In this presentation youll find my views on the latestTOPCIMA case study

For details of courses which I am taking at Reed BusinessSchool and to learn more about the exam and how toapproach it please see

www.topcima.biz.


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Dizz

So, its mobile phone operators this sitting. Quite a niceindustry for most of you I suspect since Im sure youvegot a mobile phone and have experience of both the

phones themselves and the various pricing plans thatare on offer.

Theres also a lot of information readily available on theinternet on which you can do your industry research.Do take a look at my industry overview available on

www.topcima.biz as a starting point for your research.

Happy days then! Well, maybe not, but its a lot better thanthe last sitting which was much harder to research


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Dizz

On the following pages you will find my strategic analysis

Remember that this is my view, not a definitive view of thecompany (whilst I do work closely with one of the

examiners, she is not at liberty to discuss anythingabout current cases with me!) You should review this inthe context of your own analysis of the company, and

make your own conclusions.

If would like to hear more of my views on this and theexam do consider attending one of the courses at Reed

Business School, or look out for posts onwww.casestudyaide.com.


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SWOT

On the following page youll find my SWOT analysis.

Remember that you MUST do a SWOT analysis as Appendix 1 inyour answer.

You will score 1 mark in the technical section for this, and up to 3further marks in the application section - if done well.

You must update this SWOT for unseen issues (underline or boldthese in your exam script), and should aim to include ALL your top5 issues in your SWOT.

A recent CIMA student script review I read, also made it clear that2-3 word points in the SWOT are NOT sufficient. Aim to write atleast 7-8 words for each point in your SWOT.

Ive shown my points in priority order as I see it. You dont need todo this in the exam!


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SWOT

STRENGTHS

1. Strong cashflow facilitates financing futureprojects

2. Excellent customer service & wide networkcoverage - retains existing customers,supports brand + little future investment

3. Excellent quality and product range retainsexisting customers, supports brand

4. Strong HR motivated, skilled staff ensuresloyalty, quality and service

5. Integrated IT systems, facilities service andcost reduction

6. Significant, tailored, effective marketing enables tailored growth

WEAKNESSES

1. Limits to availability of future debt finance maylimit future expansion plans particularly in currentmarkets

2. Some older masts may need upgrading in future

3. Very ambitious growth plans - may affect futuremotivation if not hit may encourage dysfunctionalbehaviour

OPPORTUNITIES

1. Expansion in current African/Asian markets -

which are growing quickly, and have highprofit margins

2. Greater usage from existing customers,particularly in the mature European market

3. New products (e.g. GPS navigation, internetservices)

4. Penetrate new markets (e.g. new countries inEurope/Asia)

THREATS

1. Worldwide recession mobiles are luxury items,

with cheaper substitutes2. Change in regulation e.g. price restrictions

3. Highly competitive market price reductions couldhit profit margins

4. Not keeping up with technological changes orchanging customer requirements

5. Currency changes


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Mission & Objectives

Governance & Ethics

Mission

Chairmans Strategic aim = Further growth in earningsDividends and share price rise

Overriding strategy = 3 cores aims:

Increase European profits revenue stimulation, cost reduction Innovate new products

Invest in Africa/Asia

Objectives/

Performance

Measurement

Ownership of 5 year plans accountability

Objectives for growth, cost reduction, CSR and quality (billing accuracy, delivery,satisfaction, drop-off rate)

Divisional objectives consistent with whole organisations view

Senior management PRP based on Share price, Revenue, customer numbers,quality customer satisfaction, churn, new products Good range of measures

Although no mission statement is given in the pre-seen

material, there is a lot of information given about their overallobjectives, and the range of performance measures that they

use. They also have financial objectives in the 5 year plan.


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Governance & Ethics

Governance

10 NEDS + Non-exec Chairman

Balanced board with Directors in all main functions

Ethics

Good HR policies

Lower carbon emission technology installed

Good CSR programmes - Wide involvement in community projects

-Child protection, discussions on transmitter locations, flexible working, reduce costseg. Hospitals, waste management, Energy consumption, employee secondment tocharities, training staff and health and safety, suppllier selection, quality

Some targets not met

Broadly, Dizz have good governance procedures (as far as wecan tell from the limited information in the pre-seen), and have

a range of CSR policies, with a lot of detail given in theAppendix. Here are some of the details:


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PEST analysis

On the following page youll find my PEST analysis.

The PEST analysis is always an optional appendix in thisexam.

Do aim to add one or two additional issues from the unseen

into your PEST if you do one in the exam

You MUST cross reference your PEST in your scripthowever, and many students do not do this well. Aim for 2-3

cross references


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PEST

Political/

Legal

Regulation restricts price increases, compulsory investments, reducesability to compete

Different rules and regulation in each country operating

Economic

Global recession likely to affect industry, particularly In Europe mobilephones are a luxury

Exchange rate risk Credit crunch makes raising finance difficult

Social

Mature European markets limits further expansion Growing social trend in Africa and Asia Trend towards increasing use of data services

Technolo

gical

Regularly changing technology Dizz must keep up, and thus continue investment


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5 Forces Analysis

The 5 forces analysis enables the analysis of the industryaccording to a range of key factors affecting that industry

Each force can be given a strength(e.g. High, Medium, Low)

Where all the forces are high, the profitiability of the industryis low, and divestment may be a good strategy.

The lower the forces the more attractive the industry is.

Companies may look at the areas where forces are highand develop strategies which may lower these.

In the case of mobile network operators, the average of theforces is medium to medium/low, so the industry would bedeemed relatively profitable.


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Opportunities and Threats

5 forces analysisFactors increasing Force Factors lowering force

BuyerPower

M

Easy to switch operators fewdifferentiating factors

Lots of small customers little power forany individual. Some exclusive contractswith handset providers. Although its easy todo, people tend not to switch.

SupplierPower

M

Licensing Governments have very highpower

Some stronger handset providers e.g Apple

Few main mast manufacturers

10 handset providers

Dizz and their competitors are large so arevaluable customers and unlikely to bepressured heavily by suppliers therefore

Many other supplies have low sup. power

Competi-tors H

Few differentiating factors

Lots of strong competitors

Significant price competition

Oligopolistic market competitors realisetheres little to be gained from reducingprices too far (price war)

NewEntrants

L

(Some new entrants still possible in reseller

market, but less likely in terms of operatingnetworks)

Barriers to entry High cost and low

availability of licenses, existing brands

Existing links with handset providers hardfor a new provider to get these

Substitu-

tes L/M

Quite a few substitutes: Skype, landlines, e-mail, social networking, broadband internet

Most substitutes do not have portability,which is the key strength - recession may

mean increase use of cheaper substitutes


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Product analysis and

Porters Generic Strategy

Products Generic Strategies

BCG matrix/

Product Life

Cycle

Europe mature

-But increasing usageAfrica/Asia growing

Data - growth

BCG best to look country bymarket so hard to do well

Cost

leadership

In this market, they must keep

costs low and pricescompetitive, but the high levelsof service and quality mean thisis not their strategy

Strengths

New product areas

Internet, data

Business customers increasingrevenues Differentiate

High quality and service (butmost competitors do that too)

Exclusive contract/designs

Lower cost business calls

Weaknesses

Many countries in which they donot have an interest

Focus

Broad mostly

(Europe, Africa, Asia)

Mobile only not land


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Ansoffs matrix and Strategic Methods

Ansoffs matrix helps the generation of a range of differentstrategic options

It uses four categories, based upon products and markets(customers) and whether the strategic option under considerationis existing or new

On the following page you will find some example strategies whichthe company could follow in these four categories.

Remember that these are simply strategic options, and notrecommendations. For your exam these provide possible new

options which could form the basis of possible unseen issues.

I recommend that for each of these options, that you do a quick listof advantages and disadvantages as preparation for your exam.


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Ansoffs Matrix

Existing Market New Market

ExistingProduct

Greater usage of data/internet with

existing customersGrowing existing Africa/Asia customer

base

Horizontal - Merge/acquire competitors

Sponsorship deals/partnerships

New countries not currently operating

inRecycled phones in new markets

NewProduct

New products as technology develops(e.g. GPS/mapping)

Related industries Music, SatNavLandlines

Cable/broadband

TV (like BT vision)

Laptops/Broadband

Vertical integration e.g. mastmanufacturer, handset manufacture

Mobile software


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Methods of Growth

Internal Development

New products

Increasing customer usage

Buying a new licence and building the underlying

infrastructure would be very expensive and timeconsuming, so it unlikely in all but the least mature

markets

Acquisition

New countries

New technologies (e.g. GPS/mapping)

Joint Venture

Marketing sponsorship deals

Links with mobile phone handset providers

Divest

Underperforming countries if the unseen gives someindication that any countries have low market share

(i.e. a dog on the BCG)

Sponsorship deals (if inappropriate)


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Mendelows Stakeholder Matrix

I like this for use in the exam! Remember to crossreference your Mendelows matrix throughout yourscript (people are so bad at doing this make sure

youre not one of them?), and to update for one or twonew stakeholders

Youll find the Mendelows matrix on the following page.

The only contentious point is that customers are in theminimal interest box. I dont really like to do this but the

reality is that most customers arent really that

interested in their network operator (are you?) and asindividual customers we have no power over thesecompanies so that is where they must sit.


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Stakeholder AnalysisMendelows Matrix

Low Interest High Interest

Low

Power

Minimal Effort

Individual customers much of the time

Keep informed - Outsourcers

Environmental groups/lobbyists

Minority shareholders

Most staff Sponsor cos

Corporate customers

Other handset manufacturersIndividual customers with issues

HighPower

Keep satisfied

Government

Media

Key Players

Banks - where existing loans

Parent companyCEO/Chairman/Regional CEOs

Regulators

Contracted or powerful handset

manufacturers (eg Apple, Nokia)Mast manufacturers


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My suggested strategy going forward

1) Continue to development of new products to existing users,and encourage increasing usage

- internal development and acquisition

2) Continue development of existing Asian/African markets

3) Seek opportunities for future purchases in European, Asian,Africa countries in which currently not operating

4) Independent review of 5 year plan, and if needed produce arealistic, achieveable plan, based on impact of currentrecession, and maturing markets

5) Continue current successful strategies on IT, marketing, HRand CSR with significant investment in each area

Dizz Strategy

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