Essays on Strategy & Operations Management at O2 Mobile Network Case Study

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The paper 'Strategy & Operations Management at O2 Mobile Network " is a good example of a management case study. O2 mobile network is a UK-based company which as of February 2013, held 24% of the UK’ s mobile phone market share (Statista, 2013). The mobile service provider is part of Telefonica Europe, and its product portfolio includes telecommunications, financial and internet services (Global Data, 2014). Its mobile network services include voice services and non-voice services such as media messaging, text, games, music, video and data connections through WLAN, 3G, HSDPA, and GPRS (Global Data, 2014).

O2’ s major competitors (by market share) include Vodafone (17%), Orange (15%), EE and T-Mobile (at 9% market share each) and Virgin Mobile (8%) (Statista, 2013). The main stakeholder at O2 is BT Cellnet, which initially had a 60 percent stake at O2, but later purchased the remaining 40% stake from Securicor (Parker, 2010). O2 trades as a private limited company, and as of 2010, it had a £ 2.973 billion revenue. It also had 10,147 employees. To stay ahead of the competition, O2 has had to invest in new technologies that have enhanced its customer satisfaction levels, consequently helping the company to attract and retain customers.

One of such technologies is an app that enables subscribers to make calls and send text messages using Wi-Fi, hence requiring no network signal. PEST Analysis A political, economic, social and technical analysis gives a clear picture of the macro-environment in which a company operates in. The macro-environment of O2 and other telecom players in the UK is as follows: Political factors Deregulation of markets is one of the major factors facing companies in the UK and the larger European Union (Bichta, 2001).

Deregulation will open the markets to new competition, and as such, O2 can expect to face increased competition going forward. The EU roaming regulation is also another political factor, whose main aim is to reduce roaming charges for mobile phones by 70% (Dudovskiy, 2009). At the same time, the EU regulations intend to increase consumer rights for mobile phone users in the larger Europe (Falch, Henten & Tadayoni, 2009). While the current charges are capped at € 0.24 per minute for voice calls and € 0.08 for text messages, new laws propose the charges to reduce to € 0.19 and € 0.06 for voice calls per minute and text messages respectively (Gibbs, 2014).

Consequently, O2 and other telecom companies should expect reduced revenues from customers who use their networks in the larger Europe. Economic factors How the UK economy performs generally has an impact on O2 in that growth in the gross domestic product (GDP) would mean that people would have more disposable income to spend on mobile phone communication among other things. The level of inflation also has an impact in that the higher the inflation, the higher the costs of using mobile telephony would be.

Inflation also means the cost of living would be costlier hence implying that spending on mobile phone services would depend on whether consumers perceive mobile phone services as a priority. As part of the global world, the UK is also prone to occurrences at the global economic front, with issues such as global recessions or financial crises having an effect on the local economy. The level of unemployment, which stands at 7.1% (2.33 million people) (Trading Economics, 2014) is also another economic factor that affects the level of disposable incomes that the population has.

People who do not have much to spend can only use mobile phones out of necessity, and would hence refrain from making ‘ friendly’ or unnecessary phone calls. The effect of the foregoing is that the higher the unemployment rate, the lesser revenues O2 would generate from the market.

References

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Dudovskiy, J. (2012). Vodafone PEST analysis. Research Methodology. Retrieved April 10, 2014, from http://research-methodology.net/vodafone-pest-analysis/

Falch, M., Henten, A., & Tadayoni, R. (2009). Regulation of the international roaming charges – the way to cost-based prices? In Preissl, B., Haucap, J., & Curwen, P. (Eds), Telecommunications Markets. Drivers and Impediments, pp. 75-92. London: Springer

Gibbs, S. (2014). EU focus on mobile roaming charges is ‘outdated’ says EE chief. The Guardian. Retrieved April 10, 2014, from http://www.theguardian.com/technology/2014/feb/25/eu-focus-on-mobile-roaming-charges-is-outdated-says-ee-chief

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Parker,A. (2010). Everything everywhere disappoints analysts. Financial Times. Retrieved April 10, 2014 from, http://www.ft.com/intl/cms/s/0/061f46ba-cb28-11df-95c0-00144feab49a.html#axzz2ySzLWmHP

Statista. (2013). Market share held by mobile phone operators in the United Kingdom (UK) as of February 2013. The Statistics Portal. Retrieved April 10, 2014, from http://www.statista.com/statistics/279993/market-share-of-mobile-phone-operators-in-the-united-kingdom-uk/

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Trading Economics. (2014). United Kingdom unemployment rate. Retrieved April 10, 2014 from http://www.tradingeconomics.com/united-kingdom/unemployment-rate

Wayne, V., Mattten, D., Pohl, M., & Tolhurst, N. (2010). The A to Z of corporate social responsibility. London; NY: John Wiley & Sons.

Wessels, C., Azzarello, D. & Kovac, M. (2014). Can communication service providers earn their customers’ love?’ Bain & Company. Retrieved April 10, 2014, from http://www.bain.com/publications/articles/can-communications-services-providers-earn-their-customers-love-business-day.aspx

Wireless Intelligence. (2009). O2 UK scores a hit with “simplicity” tariff, extends lead in the UK. Mobile World Live. Retrieved April 10, 2014, from http://www.mobileworldlive.com/o2-uk-scores-a-hit-with-simplicity-tariff-extends-lead-in-the-uk

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