Telecommunication 2nd presentation Professor: DR. Huang Group members:汪欣樺 許哲維 莫瑞娜

SWOT CPM SPACE

SWOT O2 SWOT analysis Strengths-S Weaknesses-W Opportunities-O 1.Wide service coverage 2.Customer centricity 3.Low churn rate Weaknesses-W 1.Decreasing ARPU 2.Complains of high prices Opportunities-O 1.Inelastic demand 2.Booming market in 3G and 4G 3.Bargaining power SO Strategies 2&3 Advertisement(Increase the value of company) 1&3 Sigh contracts(Year as unit) WO Strategies 1&1 Increase price(Increase ARPU) 3&2 Total revenue increase since demand is inelastic Threats-T 1.New competitors 2.Over competitive market ST Strategies 1&3 VIP programs(Offer bonus) 2&1 Keep up with competitors by doing survey regularly. WT Strategies 2&1 Diversification (economics of scope) 1&2 Low cost (Hire lower wages labours abroad )

S503 In modern socity,more and more people not just consider price or profit,with an eye to sustainable use they pay attation to environment,hope do harm to it as less as possible,o2 also put their idea into their industry,this is unique to their compepitor,02 is also Multi-nations corporations,they can bring their idea wordwide.changing more people.saving bad environment situation about earth.

W1T1 Solving by low cost strategy,this is in the poor time of economic cycle,people prefer low price, we can save cost by innovative method,use labor as less as possible.increasing ARPU .

CPM O2 EE Vodafone CSF WT(%) Rating Wt’d score EFE Growth of E-commerce 0.15 2 0.3 4 0.6 Increasing demand for mobile services 0.4 3 1.2 1.6 Europe debt crisis 0.9 1 New competitors 0.45 Total 2.55 3.4 2.8

Increasing demand

Impact of Euro Debt Crisis

Issued bonds

O2 EE Vodafone CSF WT(%) Rating Wt’d score IFE Customer base 0.25 2 0.5 4 1 Decline in ARPU 0.15 0.3 Market share 3 0.45 0.6 Cross-countries development Total 2.6 3.25 3.1

Decline in ARPU

Strong customer base In 2012, Telefónica UK had high commercial activity, Thanks to the ongoing success of its “On&On” smartphone rates. This has led to a solid net add in contract customers, and keep churn rate extremely low.

On&On

Cross-countries development

SPACE Matrix

SPACE Matrix- O2 INTERNAL STRATEGIC POSITION EXTERNAL STRATEGIC POSITION FINANCIAL STRENGTH FS ENVIRONMENTAL STABILITY ES Return on Investment Leverage Liquidity ARPU Working capital Cash flow Total average score: 4 3 5 3.8 Technological changes Rate of inflation Price range of competing products Barriers to entry Competitive pressure Price elasticity of demand Risk involved in business -1 -2 -3 -6 -5 -3.4 COMPETITIVE ADVANTAGE CA INDUSTRY STRENGTH IS Market share Product quality Product life cycle Customer loyalty Technological know-how -2.2 Growth potential Profit potential Financial stability Resource utilization Ease of entry into market Productivity, capacity utilization +3 +4 +2 3.4

SPACE Matrix- Results FS Average is +23 ÷ 6 = +3.83 ES Average is -24 ÷ 7 = -3.4 CA Average is -11 ÷ 5 = -2.2 IS Average is +24 ÷ 7 = +3.4 Directional Vector Coordinates: x-axis: = =3.4 – 2.2= +1.2 y-axis: 3.83 – 3.4 = +0.43

SPACE Diagram O2 should pursue AGGRESSIVE strategies

SPACE Strategies The diagram above shows a not too strong but favorable position in all four dimensions and therefore O2 can follow an aggressive strategy. Mobile accesses account for 86% of all revenue: product development for mobile services, attract new customers with innovative deals for mobile contracts. Its financial strength can be considered as the key issue to be considering when formulating a suitable strategy. Its solid financial base allows O2 to come strong in a competitive industry, where they should continue to invest in innovation and sustain the current competitive advantage and continue to build market share.

Sale of Fixed-line telephony and Broadband: opportunity to focus on mobile internet service, expansion of 4G service. Strong position in environmental stability: O2 can use its financial strength to finance growth strategies. Expand market share: explore into foreign markets to increase market share.

Reference O2 financial report 2012