For businesses, electronic commerce implies using the internet and the web as a medium of distribution in marketing and commodity exchange to the firms customers. The sudden adoption of e-commerce by many corporate firms and businesses has created a profound impact on organizations strategies. More specifically, e-business may be defined as the electronic exchange of services, information and commodities. Payments are made electronically involving formation and continuation of Web-based interactions (Lee, 2004, 36). E-commerce basically encompasses the extranets, internet, intranet, electronic data exchange (EDE) and other electronic aspects.
O2 UK mobile company is part of the Telefonica O2 Europe Group which is made up of integrated fixedmobile businesses in the United Kingdom, Germany, Ireland, Slovakia and the Czech Republic. It was formed from the separation from the then British Telecom Company, BT Wireless. This mobile firm has also established other international joint ventures with other companies e.g. Germanys Tchibo Mobilfunk (Mintel, 2009). Presently, O2 is UKs leading provider of a wide range of services namely broadband, mobile, text, games, video music, media messaging and data connections through 3G, HSDPA, GPRS and WLAN (Mintel, 2009).
The SWOT Analysis
Most organizations, companies and businesses have adopted the SWOT analysis as a strategic method of assessing their Strengths, Weaknesses, Opportunities and Threats with reference to optimal planning (Anthony, 1998, 16). This kind of analysis helps in identifying the external and internal factors that either hinder or enhance the success of a given business. Internal factors are usually the strengths and weaknesses whereas the external factors are derived from the existing threats and opportunities (Anthony, 1998, 47-8).
Strengths
In 2008, O2 UK Mobile Company is said to have had the highest number of subscribers (Mintel, 2008) in the market share. The most probable reason behind this is its exclusivity contract with the Apple iPhone company which made the percentage of its subscribers to shoot to approximately 38 percent (Mintel, 2008) within the UK. This accord with the Apple iPhone made it possible for O2 to effectively utilise the e-business. O2 offers online shopping services and a customer can comfortably buy airtime online or top up hisher account through a similar method (Mintel, 2008).
Since O2 has already established a market niche, there is minimum threat from new entrants. Incoming players and network providers would find it difficult to out do O2 due to the high costs of operation. The exclusivity deals extensively marketed on the internet and via other forms of e-business have made it possible for the power of suppliers in the market to steadily grow.
The demand for smart phones within the cellular phone market is ever increasing (Mintel, 2008). This is beneficial to the O2 mobile company since it currently enjoys exclusive rights to the Apple iPhone in UK. These exclusive rights have the implication that any customer wishing to purchase such gadgets has to enter a contract with O2, thus increasing its profit margins. Since the smart phones have inbuilt features that facilitate online and other e-business transactions, the total revenue collected from the 3G services offered by O2 has since increased and thus proved beneficial for the firm.
The financial stability of the company is also strength to the firm since it makes it possible for it to get involved in several positive research activities. The financial power has also made the company to recruit and hire highly qualified personnel to run the business. This is a possible reason for the success of O2 in the U.K (Mintel, 2009). The huge profit margins have been employed in developing optimal marketing strategies that are appealing to young generation which offers a sizeable market share. Such strategies include the use of internet and e-business to market the companys products.
Weaknesses
An existing weakness for the O2 Company is the saturation and maturity of the mobile phone market (Mintel, 2009). The retail sector is also saturated (Mintel, 2009). In the US, it is projected that the subscriber growth will drop by approximately 2 percent in 2012 (Medford, 2008, 4). The UK is also expected to follow such trends. Excessive concentration on smart phones by O2 could be a weakness in the making since UK has an ever escalating ageing population. This population may find it difficult to adjust to the technologically advanced gadgets (Mintel, 2009). The ever dynamic trends and developments in the fields of information technology and electronics are some of the weaknesses facing the company. This is so because the company ends up spending most of its resources training its skilled manpower in order to keep updated with any slight developments in the field (Mintel, 2009).
In addition, the big size of the O2 Mobile Company may in itself be a weakness since it results in management difficulties and inefficiency in service delivery. Major priorities for the firm may be ignored in order to meet the demands and requirements of the many employees.
Opportunities
The steady rise in e-business sales in the mobile market is an open opportunity for O2 Mobile Company (Mintel, 2009). To maximize its market share, O2 utilises an internet based, direct marketing model (Volonino, et al, 2009). These online strategies partially eliminate intermediaries such as the phone retail centres and thus in turn maximize its profit margin. However, the 02 company may not be classified exclusively as an eBusiness since it still has some retail centres in across many cities in the U.K. the company utilises the subscription fees model and the sales models to tap revenue (Volonino, et al, 2009) since customers have the option of either conducting online transactions or physically entering service contracts with the service provider.
Cellular phones have proved a popular online category providing a growth opportunity for O2 due to the increasing saturation of the high street (Mintel, 2009). Since the internet culture is gradually shifting from the computer based systems to mobile gadgets (Volonino et al, 2008), this could provide an opportunity of e- business development through mobile telephone systems. With an aim of exploiting the untapped market opportunity, O2 intends to launch O2 mobile money transfer mechanisms that could be devoted to advancing payments and banking through mobile phone networks (Cardline, 2009, 29). This system coupled with Mobile- Commerce could provide the company with further growth opportunities.
Threats
Telecom consolidation is a major threat to the companys market share. The telecommunication sector has gone through unprecedented consolidation on global basis. An example is the acquisition of Telecom Italia by Tiscali (Mintel, 2009). Such actions have led to intensified competition between O2 and other European and International network providers. These competitors are licensed to operate globally in many countries (Mintel, 2009) and thus due to the already saturated market share, O2 faces the ultimate threat of reducing its profitability.
Porters Five Forces Framework
These are strategies on the dimensions of the strategic scope i.e. the market penetration and strategic strength referring to the company. In most cases, a company is impacted by five forces as discussed below.
Rivalry
In any normal economic set up, competition among rival companies has the effect of reducing the profit margins of the company. O2 mobile has put in place several strategies to counter competition. In the telecommunications industry, competition is as high as there are many rival companies (such as Vodafone and Orange) offering the same service. In pursuing the competitive advantage of the company, O2 has innovated new ways of services by embracing the e-business for sales, marketing and getting consumer feed back.
Threat of Substitutes
This can only occur when the demand of the products is affected by fluctuating prices of substitute products. In the case of O2, the industry is getting threats of substitutes from other computer network companies such as Microsoft and Google which started providing internet services way before. To wade of this threat, O2 has built a strong corporate name through E-business to retain its market share. The exclusivity rights enjoyed from the iPhone company is also a strategy aimed at eliminating threats.
Buyer and Supplier Power
Buyer power is the impact that buyers have on a specific industry. To ensure strong buyer power, O2 offers discounts to some of its products. Incentives such as free deliveries to any online purchases are also aimed at attracting more buyers to conduct online transactions.
In cases where the supplier enjoys monopoly, the cost of raw materials tends to be high and vice versa.
Barriers to entry
New entries in the mobile phone industries pose a threat to O2 and increases competition in the sector. The telecommunications industry in UK is a free and liberal market, open for any player. O2 has protected its market through the exclusivity service contract entered with Apple iPhone to ensure all smart phones purchased in UK go through O2.
E-Marketing Strategies by O2
The O2 mobile company has been successful in developing their website by embracing the technological approach. The company website is an e-marketing scheme aimed at helping the company to reach more consumers globally (Wu, 2001). It contains all the necessary information about the whole company and its broad range of products. The adoption of the e-business strategy and IT has been used as a springboard to make the company gain global recognition and thus increase its market share (Eckersley et al, 2003) since customers can get served efficiently at any time of the day or night, regardless of their location.
A common E- Marketing strategy adopted by O2 is the banner adverts (Volonino, et al, 2008). Such adverts often appear on related sites and attract the attention of a given user at a given instant. This is a better marketing tool since consumers can be reached at, on individual capacity. O2 has also embraced email marketing (O2, 2009) and mobile text messaging (Volonino, et al, 2008) whereby customers receive instant messages marketing new products, special offers and other related events. This strategy also reaches more consumers at any time. The text messages may however result in a negative impact especially when the recipients perceive the frequent messaging as a nuisance (Deakens, et al, 2005).
In order to have a competitive edge over other firms, O2 through innovativeness started providing incentives such as free deliveries in 2004 for any online purchases (Ebscohost, 2004). It also launched a social networking site with the Facebook group in early 2008 (Gareth, 2008) and a subsidized tariff promotion for university students. This e-business strategy was quite unique from all other competitors ideas and thus enhanced O2s market leadership.
Web Design Analysis
The O2 technology group offers a wide range of website services such as design and development, hosting and maintenance, marketing and analysis, and SoftwareHardware maintenance (O2, 2009). Website development and design is offered to small businesses in a tailored manner that fits specific client requirements. After designing or improving a clients website, O2 takes the initiative to conduct website marketing, analysis and testing to ensure conformity to required standards (O2, 2009). The standards may include scalability, aesthetic value, and ease of use, functionality, and major customer base.
Business to Business Analysis
The adoption of E- Business by O2 has enabled it to efficiently communicate with trading partners. The E- commerce networking hub usually connects information exchanges and business processes that the given businesses wish to support. In most cases, trading and business partners have varied characteristics, product categories, readiness and willingness, authorisation levels and cultures. Successful E-business to business analysis requires each business category to adopt a unique communication approach and strategy. E- Commerce networking channels usually simplify Business to Business cooperation and communication in all sectors by literally eliminating technological hindrances to enterprise-wide data exchange and corporate process interactions between several local and international enterprises. The e-commerce makes it possible for organizations such as O2 to instantly connect with anyone regardless of hisher geographic location, for a given cost. This makes O2 to readily survive in the competitive global market. The exchange of business strategies between O2 and any other organization is made possible and thus enhances collaboration and integration in various processes such as purchase to pay and the supply chain.
E- Commerce and Customer Service
Internet marketing for O2 is continuously advancing into various sectors with time. The most popular feature for O2 is the ability of customers to submit reviews to the webpage for most of its products any where. The unique business models incorporating e- business have made O2 to retain most of its customers.
Through E- Business and introduction of the social network, O2 has the ability to monitor customers requirements, changes in market demand, and take adequate steps. This has greatly improved its service delivery and overall sales. Electronic data exchange has the effect of improving company sales since it opens up new and unexplored markets in the global arena.
Importance of E- Business to Organizations
E-Business may be regarded as a strategic component since the internet has converted the world into a tiny global village. Through e-business, any problems may be solved just by a touch of the button anywhere within the globe. The speed and effectiveness of business transactions is highly improved. Consumers may manage their assets more effectively using online tools (Lee, et al, 2004), for instance using the various accounting software to deal with banking problems.
To individual companies, e-business and information technology may bring along several tangible and intangible benefits. the intangible benefits resulting from E-Business include customer satisfaction, enhanced business to business interactions, effective management, improved product quality and general competitive advantage (Chan, Lee, Dillon, 2001). The modifications and optimization of company operations brought about by E-Business helps in improving service delivery and the competitive edge of the organization. The tangible benefits on the other hand revolve around the monetary aspect of the organization. E Business may lead to reduced marketing costs, improved profitability and productivity of the company (Chan, Lee Dillon, 2001).
The adoption of e-business by many companies including O2 has helped them in revolutionizing their operations strategies (Chan, Lee, Dillon, 2001) for the benefit and overall growth of the companies.
The adoption of E-Business by O2 has created a profound impact on its business strategies. This has led to the redefining of competition strategies. Its projected that e-commerce will continue to develop in the coming future (Lee, et al, 2004) according to several research findings. E-Business has since developed from a high technology wonder to a business strategy it can no longer be ignored by any competitive organization (Lee et al, 2004). The several activities done through E-Business include marketing, online purchases and sales, consumer self service, among others. For a company to be successful in adopting E-Commerce, it has to scrutinise its ability to modify its business protocols, its technology and human resource, these three aspects are what can make e-business to either fail or succeed.
O2 UK mobile company is part of the Telefonica O2 Europe Group which is made up of integrated fixedmobile businesses in the United Kingdom, Germany, Ireland, Slovakia and the Czech Republic. It was formed from the separation from the then British Telecom Company, BT Wireless. This mobile firm has also established other international joint ventures with other companies e.g. Germanys Tchibo Mobilfunk (Mintel, 2009). Presently, O2 is UKs leading provider of a wide range of services namely broadband, mobile, text, games, video music, media messaging and data connections through 3G, HSDPA, GPRS and WLAN (Mintel, 2009).
The SWOT Analysis
Most organizations, companies and businesses have adopted the SWOT analysis as a strategic method of assessing their Strengths, Weaknesses, Opportunities and Threats with reference to optimal planning (Anthony, 1998, 16). This kind of analysis helps in identifying the external and internal factors that either hinder or enhance the success of a given business. Internal factors are usually the strengths and weaknesses whereas the external factors are derived from the existing threats and opportunities (Anthony, 1998, 47-8).
Strengths
In 2008, O2 UK Mobile Company is said to have had the highest number of subscribers (Mintel, 2008) in the market share. The most probable reason behind this is its exclusivity contract with the Apple iPhone company which made the percentage of its subscribers to shoot to approximately 38 percent (Mintel, 2008) within the UK. This accord with the Apple iPhone made it possible for O2 to effectively utilise the e-business. O2 offers online shopping services and a customer can comfortably buy airtime online or top up hisher account through a similar method (Mintel, 2008).
Since O2 has already established a market niche, there is minimum threat from new entrants. Incoming players and network providers would find it difficult to out do O2 due to the high costs of operation. The exclusivity deals extensively marketed on the internet and via other forms of e-business have made it possible for the power of suppliers in the market to steadily grow.
The demand for smart phones within the cellular phone market is ever increasing (Mintel, 2008). This is beneficial to the O2 mobile company since it currently enjoys exclusive rights to the Apple iPhone in UK. These exclusive rights have the implication that any customer wishing to purchase such gadgets has to enter a contract with O2, thus increasing its profit margins. Since the smart phones have inbuilt features that facilitate online and other e-business transactions, the total revenue collected from the 3G services offered by O2 has since increased and thus proved beneficial for the firm.
The financial stability of the company is also strength to the firm since it makes it possible for it to get involved in several positive research activities. The financial power has also made the company to recruit and hire highly qualified personnel to run the business. This is a possible reason for the success of O2 in the U.K (Mintel, 2009). The huge profit margins have been employed in developing optimal marketing strategies that are appealing to young generation which offers a sizeable market share. Such strategies include the use of internet and e-business to market the companys products.
Weaknesses
An existing weakness for the O2 Company is the saturation and maturity of the mobile phone market (Mintel, 2009). The retail sector is also saturated (Mintel, 2009). In the US, it is projected that the subscriber growth will drop by approximately 2 percent in 2012 (Medford, 2008, 4). The UK is also expected to follow such trends. Excessive concentration on smart phones by O2 could be a weakness in the making since UK has an ever escalating ageing population. This population may find it difficult to adjust to the technologically advanced gadgets (Mintel, 2009). The ever dynamic trends and developments in the fields of information technology and electronics are some of the weaknesses facing the company. This is so because the company ends up spending most of its resources training its skilled manpower in order to keep updated with any slight developments in the field (Mintel, 2009).
In addition, the big size of the O2 Mobile Company may in itself be a weakness since it results in management difficulties and inefficiency in service delivery. Major priorities for the firm may be ignored in order to meet the demands and requirements of the many employees.
Opportunities
The steady rise in e-business sales in the mobile market is an open opportunity for O2 Mobile Company (Mintel, 2009). To maximize its market share, O2 utilises an internet based, direct marketing model (Volonino, et al, 2009). These online strategies partially eliminate intermediaries such as the phone retail centres and thus in turn maximize its profit margin. However, the 02 company may not be classified exclusively as an eBusiness since it still has some retail centres in across many cities in the U.K. the company utilises the subscription fees model and the sales models to tap revenue (Volonino, et al, 2009) since customers have the option of either conducting online transactions or physically entering service contracts with the service provider.
Cellular phones have proved a popular online category providing a growth opportunity for O2 due to the increasing saturation of the high street (Mintel, 2009). Since the internet culture is gradually shifting from the computer based systems to mobile gadgets (Volonino et al, 2008), this could provide an opportunity of e- business development through mobile telephone systems. With an aim of exploiting the untapped market opportunity, O2 intends to launch O2 mobile money transfer mechanisms that could be devoted to advancing payments and banking through mobile phone networks (Cardline, 2009, 29). This system coupled with Mobile- Commerce could provide the company with further growth opportunities.
Threats
Telecom consolidation is a major threat to the companys market share. The telecommunication sector has gone through unprecedented consolidation on global basis. An example is the acquisition of Telecom Italia by Tiscali (Mintel, 2009). Such actions have led to intensified competition between O2 and other European and International network providers. These competitors are licensed to operate globally in many countries (Mintel, 2009) and thus due to the already saturated market share, O2 faces the ultimate threat of reducing its profitability.
Porters Five Forces Framework
These are strategies on the dimensions of the strategic scope i.e. the market penetration and strategic strength referring to the company. In most cases, a company is impacted by five forces as discussed below.
Rivalry
In any normal economic set up, competition among rival companies has the effect of reducing the profit margins of the company. O2 mobile has put in place several strategies to counter competition. In the telecommunications industry, competition is as high as there are many rival companies (such as Vodafone and Orange) offering the same service. In pursuing the competitive advantage of the company, O2 has innovated new ways of services by embracing the e-business for sales, marketing and getting consumer feed back.
Threat of Substitutes
This can only occur when the demand of the products is affected by fluctuating prices of substitute products. In the case of O2, the industry is getting threats of substitutes from other computer network companies such as Microsoft and Google which started providing internet services way before. To wade of this threat, O2 has built a strong corporate name through E-business to retain its market share. The exclusivity rights enjoyed from the iPhone company is also a strategy aimed at eliminating threats.
Buyer and Supplier Power
Buyer power is the impact that buyers have on a specific industry. To ensure strong buyer power, O2 offers discounts to some of its products. Incentives such as free deliveries to any online purchases are also aimed at attracting more buyers to conduct online transactions.
In cases where the supplier enjoys monopoly, the cost of raw materials tends to be high and vice versa.
Barriers to entry
New entries in the mobile phone industries pose a threat to O2 and increases competition in the sector. The telecommunications industry in UK is a free and liberal market, open for any player. O2 has protected its market through the exclusivity service contract entered with Apple iPhone to ensure all smart phones purchased in UK go through O2.
E-Marketing Strategies by O2
The O2 mobile company has been successful in developing their website by embracing the technological approach. The company website is an e-marketing scheme aimed at helping the company to reach more consumers globally (Wu, 2001). It contains all the necessary information about the whole company and its broad range of products. The adoption of the e-business strategy and IT has been used as a springboard to make the company gain global recognition and thus increase its market share (Eckersley et al, 2003) since customers can get served efficiently at any time of the day or night, regardless of their location.
A common E- Marketing strategy adopted by O2 is the banner adverts (Volonino, et al, 2008). Such adverts often appear on related sites and attract the attention of a given user at a given instant. This is a better marketing tool since consumers can be reached at, on individual capacity. O2 has also embraced email marketing (O2, 2009) and mobile text messaging (Volonino, et al, 2008) whereby customers receive instant messages marketing new products, special offers and other related events. This strategy also reaches more consumers at any time. The text messages may however result in a negative impact especially when the recipients perceive the frequent messaging as a nuisance (Deakens, et al, 2005).
In order to have a competitive edge over other firms, O2 through innovativeness started providing incentives such as free deliveries in 2004 for any online purchases (Ebscohost, 2004). It also launched a social networking site with the Facebook group in early 2008 (Gareth, 2008) and a subsidized tariff promotion for university students. This e-business strategy was quite unique from all other competitors ideas and thus enhanced O2s market leadership.
Web Design Analysis
The O2 technology group offers a wide range of website services such as design and development, hosting and maintenance, marketing and analysis, and SoftwareHardware maintenance (O2, 2009). Website development and design is offered to small businesses in a tailored manner that fits specific client requirements. After designing or improving a clients website, O2 takes the initiative to conduct website marketing, analysis and testing to ensure conformity to required standards (O2, 2009). The standards may include scalability, aesthetic value, and ease of use, functionality, and major customer base.
Business to Business Analysis
The adoption of E- Business by O2 has enabled it to efficiently communicate with trading partners. The E- commerce networking hub usually connects information exchanges and business processes that the given businesses wish to support. In most cases, trading and business partners have varied characteristics, product categories, readiness and willingness, authorisation levels and cultures. Successful E-business to business analysis requires each business category to adopt a unique communication approach and strategy. E- Commerce networking channels usually simplify Business to Business cooperation and communication in all sectors by literally eliminating technological hindrances to enterprise-wide data exchange and corporate process interactions between several local and international enterprises. The e-commerce makes it possible for organizations such as O2 to instantly connect with anyone regardless of hisher geographic location, for a given cost. This makes O2 to readily survive in the competitive global market. The exchange of business strategies between O2 and any other organization is made possible and thus enhances collaboration and integration in various processes such as purchase to pay and the supply chain.
E- Commerce and Customer Service
Internet marketing for O2 is continuously advancing into various sectors with time. The most popular feature for O2 is the ability of customers to submit reviews to the webpage for most of its products any where. The unique business models incorporating e- business have made O2 to retain most of its customers.
Through E- Business and introduction of the social network, O2 has the ability to monitor customers requirements, changes in market demand, and take adequate steps. This has greatly improved its service delivery and overall sales. Electronic data exchange has the effect of improving company sales since it opens up new and unexplored markets in the global arena.
Importance of E- Business to Organizations
E-Business may be regarded as a strategic component since the internet has converted the world into a tiny global village. Through e-business, any problems may be solved just by a touch of the button anywhere within the globe. The speed and effectiveness of business transactions is highly improved. Consumers may manage their assets more effectively using online tools (Lee, et al, 2004), for instance using the various accounting software to deal with banking problems.
To individual companies, e-business and information technology may bring along several tangible and intangible benefits. the intangible benefits resulting from E-Business include customer satisfaction, enhanced business to business interactions, effective management, improved product quality and general competitive advantage (Chan, Lee, Dillon, 2001). The modifications and optimization of company operations brought about by E-Business helps in improving service delivery and the competitive edge of the organization. The tangible benefits on the other hand revolve around the monetary aspect of the organization. E Business may lead to reduced marketing costs, improved profitability and productivity of the company (Chan, Lee Dillon, 2001).
The adoption of e-business by many companies including O2 has helped them in revolutionizing their operations strategies (Chan, Lee, Dillon, 2001) for the benefit and overall growth of the companies.
The adoption of E-Business by O2 has created a profound impact on its business strategies. This has led to the redefining of competition strategies. Its projected that e-commerce will continue to develop in the coming future (Lee, et al, 2004) according to several research findings. E-Business has since developed from a high technology wonder to a business strategy it can no longer be ignored by any competitive organization (Lee et al, 2004). The several activities done through E-Business include marketing, online purchases and sales, consumer self service, among others. For a company to be successful in adopting E-Commerce, it has to scrutinise its ability to modify its business protocols, its technology and human resource, these three aspects are what can make e-business to either fail or succeed.
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