Strategic Management-Chapter 2 - Case Studies - Updated

Chapter 2: Case Studies
SWOT Analysis
Dr.Nasim Matar
Dr.Trad Al-Malahmeh
Dr.Firas Omar
Content
1. SWOT Analysis of Starbucks
2. SWOT Analysis of Blackberry
3. SWOT Analysis of Amazon
4. SWOT Analysis of Nike
5. SWOT Analysis of Microsoft
6. China Mobile
SWOT Analysis of Starbucks
Starbucks is a globally recognized coffee and beverages brand that has rapidly made strides into all major
markets of the world. The company has a lead over its nearest competitors including Barista and other
emerging competitors. Indeed, Starbucks is so well known throughout the western hemisphere that it has
become a household name for coffee.
Inspire Presentation 3
Strengths
• The main strength of Starbucks is its strong financial performance which has resulted in the company occupying the
number one spot among coffee and beverage retailers in the world
• The company is valued at more than $4 Billion which is a key strength when compared to its competitors
• The intangible strengths of Starbucks include its top of the mind recall among consumers and by virtue of its brand,
which symbolizes excellence, and quality at an affordable rate, the company enjoys a dominant position in the worldwide
market for coffee and beverages.
• The company is the largest coffeehouse in the world and because of its size and high volumes; it can afford to price its
products in the premium as well as the middle tier range to attract more consumers.
• The company is known for its pioneering people management in an industry where people skills and soft skills make the
difference between success and failure. In other words, Starbucks has actualized a positive and welcoming workplace for
its employees, which translates into happier associates serving customers in a superior way leading to all round benefits
for the company.
Weaknesses
• The company is heavily dependent on its main and key input, which is the coffee beans and hence, is acutely dependent
on the price of coffee beans as a determinant of its profitability. This means that Starbucks is overly price sensitive to
the fluctuations in the price of coffee beans and hence, must diversify its product range to reduce the risk associated
with such dependence.
• The company has come under fire in recent times for its procurement practices with many social and environmental
activists pointing to the unethical procurement practices of coffee beans from impoverished third world farmers.
Further, the company has also been accused of violating the “Fair Coffee Trade” principles that were put in place a few
years ago to tackle this precise problem.
• The company prices its products in the premium to the middle tiers of the market segment which places its products
outside the budgets of many working consumers who prefer to frequent McDonald’s and other outlets for their coffee
instead of Starbucks.
• The company must immediately diversify its product range if it has to compete with full spectrum competitors like
McDonald’s and Burger King in the breakfast segment which is rapidly growing as a consequence of compressed
schedules of consumers who would like to grab a bite and drink something instead of making it at home.
Opportunities
• The company has an opportunity to expand its supplier network and expand the range of suppliers from whom it
sources in order to diversify its sources of inputs and not be at the mercy of whimsical suppliers. Further, this would
also help the company in becoming less sensitive to the prices of coffee beans and make it resilient against supply
chain risks.
• The company has a huge opportunity waiting for it as far as its expansion into the emerging markets is concerned.
With a billion consumers likely to join the pool of those who want instant coffee and breakfast in China and India,
the company can expand into these countries and other emerging markets, which represents a lucrative
opportunity for the taking.
• Starbucks also has the opportunity to expand its product offerings to take on the full spectrum food and beverage
retailers like McDonald’s and Burger King as the consumer segment which these retailers target is expanding leading
to more business opportunities for Starbucks to take advantage of.
• The company can significantly expand its network of retail stores in the United States as part of its push towards
greater market share and more consumer segments. This opportunity ties in with the other opportunities described
above related to the expansion into newer markets, diversifying into newer consumer segments, and increasing its
footprint across the US and globally.
Threats
• The company faces threats from the rising prices of coffee beans and is subject to supply chain risks related to
fluctuations in the prices of this key input. Further, the increase in the prices of dairy products impacts the company
adversely leading to another threat to its profitability.
• The company is beset with trademark and copyright infringements from lesser-known rivals who wish to piggyback on
its success. As with other multinational retailers in the emerging markets, Starbucks has fought litigation against those
misusing its brand and famous logo.
• The company faces intense competition from local coffeehouses and specialty stores that give the company a run for
its money as far as niche consumer segments are concerned. In other words, the company faces a tough challenge
from local stores that are patronized by a loyal clientele, which is not enamored of big brands.
• Starbucks has to expand into emerging markets as a necessity as the developed markets that it has traditionally relied
on are saturated and given the fact that the ongoing recession has made the going tough for many retailers, it faces
significant threats from this aspect.
• Finally, as mentioned earlier, Starbucks faces significant challenges because of its global supply chain and is subject to
disruptions in the supply chain because of any reason related to either global or local conditions.
SWOT Analysis of Blackberry
Introduction
Blackberry, which was the pioneer in mobile-based technologies with its best selling original Smartphones, has been
in the news for all the wrong reasons. First, the company known as Research in Motion (RIM), which made and
marketed the Blackberries, missed the emerging Smartphone revolution though it was one of the pioneers of mobile
computing. Next, the company was unable to read the market and hence, it lost market share to Apple and Samsung.
This resulted in the company nearly going bankrupt and despite changes in leadership; it could never regain its
position. In the past month, the company has been in the news again because it rejected a buyout offer and rescinded
a sale option and instead, chose to appoint a new CEO along with accepting fresh infusion of capital into the company.
This article discusses the changing strategies of Blackberry through a SWOT Analysis, which would provide clues into
how the company would position itself in the future. The key theme here is that Blackberry needs to urgently revamp
and rejuvenate itself if it has to regain market share and forget about market leadership, it has to ensure that it stays
afloat.
Strengths
• Perhaps the biggest strength of Blackberry is that it enjoys top of the mind recall and has a good reputation among
corporate users of mobiles because of its proprietary technology that scores over its competitors especially where
corporate users are concerned.
• The Blackberry devices can be used with any mobile carriers anywhere in the world and indeed, this is a key strength
for the company as it goes along its business with easy mobility and portability.
• One of the main strengths of Blackberry is that its devices are more secure than its competitors and indeed, the
security features inherent and embedded in the devices are unmatched by any other mobile maker including
Samsung and Apple. This is the reason why Blackberries are so popular with corporate users who use it to link it and
integrate it with their VPNs or Virtual Private Networks.
• These strengths have made Blackberry the Smartphone of choice for many governmental agencies in the United
States including the FBI, CIA, The White House, and the State Department. Given the fact that Blackberries come with
an encrypted military grade security platform makes it the ideal phone of choice for agencies dealing with sensitive
information.
Weaknesses
• The key weakness that Blackberry has is that it went on a single-track focus on the corporate users and enhanced its
security features as a USP or a Unique Selling Proposition. While this aspect held it in good stead as far as the
corporate clients are concerned, once Samsung and Apple came out with Smartphones for the consumers and the
everyday usage, Blackberry was unable to keep up with the competition. Indeed, both Samsung and Apple have
cornered the market share by enhancing the security features in their Smartphones.
• Given the fact that small business owners using Blackberries now had to install expensive enterprise software, they
began to switch to the rivals instead of using Blackberries. Further, the company lost ground as the proprietary
operating system used by Samsung and Apple provided more benefits to this customer segment leaving Blackberry
out of the race.
• As mentioned earlier, Blackberry was essentially a single pony trick with its obsessive focus on the corporate users.
With the large consumer base untouched by it, Samsung and Apple quickly garnered this segment and by providing
an easy to use user interface and apps that were simple and effective, these companies soon began to take away
even the corporate customers of Blackberry.
Opportunities
• The recent moves by the company are very aggressive as it has rejected a sale offer and a buyout offer as well as
accepted fresh infusion of capital from an Angel Investor. By appointing a new CEO and revamping its
organizational team and structure, Blackberry has signaled that it is serious and is going all out to reinvent itself.
• The company has a lucrative opportunity as far as leveraging its existing customer base of over 100 Million users
is concerned. Given the fact that the company can tap into this customer base for its future products, there is a
significant opportunity waiting for the company.
• By integrating the third party apps and features into its phones, the company can mimic the strategies followed
by Apple and Samsung and the increase in the business partnerships with third party providers can prove to be a
key opportunity for the company as it prepares to take on Samsung and Apple.
Threats
• Though Blackberries were the original Smartphones, both Apple and Samsung beat it to the race to build the
Smartphone of the future because they provided the flexibility and ease of use that Blackberries lacked and
hence, were able to corner market share and take away its competitors.
• Apart from the threats posed by its competitors, Blackberry has to fight the slack and the gloomy internal
environment, which because of the troubles that the company has been through in recent years has resulted in
lower employee morale and a general lack of direction. Given the fact that the Smartphone industry thrives on
innovation, Blackberry has to rejuvenate itself and reinvent itself apart from rescuing itself from the sagging
momentum and motivation of its employees.
Conclusion
the preceding discussion has highlighted the need for Blackberry and its management to take proactive steps to pull
the company from the quagmire it finds itself in. The recent strategic moves made by the new leadership are to be
seen in the light of the company’s drift away from its profit making and market leadership model to a situation where
it is no longer in the reckoning. In conclusion, Blackberry and its leadership have their task cut out as they gear
themselves to take on the challenges from the Smartphone companies like Apple and Samsung.
Steps in Preparing Personal SWOT Analysis
What to do when listing Strengths and Weaknesses
A personal SWOT Analysis is needed to understand where one stands with respect to one’s career and life path. A personal
SWOT Analysis is usually the first step towards recognizing one’s position in attempting to deal with life’s challenges and
career prospects. First, one should never overestimate or underestimate one’s strengths. Therefore, a personal SWOT
Analysis must be objective and to the point as far as delineating, one’s strengths are concerned. The reason we mentioned
not to underestimate or overestimate one’s strengths is that while many tend to overestimate their strengths, there are
some who underestimate them as well. Therefore, the identification of one’s strengths must be done by listing all the
attributes one thinks are the key assets and then penning them down to understand where one’s key personality traits would
lead them. For instance, many people have superior communication skills, people management skills, and an ability to crack
aptitude tests as strengths. On the other hand, there are many for whom these very skills are lacking and hence, listing the
components of the SWOT would help them in gaining a true picture of where one stands.
SWOT Analysis of Amazon
Introduction
Amazon is the world’s leading online retailer and its success has spurred other physical, brick, and mortar retailers
to have an online presence. It is often referred to as the online equivalent of Wal-Mart because of its reach and
global footprint as well as its aggressive pricing strategies.
Amazon can leverage on several opportunities in the emerging markets and can ensure that its global supply chain
of networked warehouses deliver substantial value for itself and its stakeholders. Further, Amazon has to rethink
its business model of operating at close to zero margins and the fact that the company has not returned a decent
profit in the last five years gives it much room for improvement.
Strengths
• Being the world’s leading online retailer, Amazon derives its strengths primarily from a three-pronged strategic thrust
on cost leadership, differentiation, and focus. This strategy has resulted in the company reaping the gains from this
course of action and has helped its shareholders derive value from the company.
• Amazon primarily derives its competitive advantage from leveraging IT (Information Technology) and its use of e-
Commerce as a scalable and an easy to ramp up platform that ensures that the company is well ahead of its
competitors.
• One of the key strengths of Amazon is that it enjoys top of the mind recall from consumers globally and this
recognition has helped it enter new markets, which were hitherto out of bounds for many e-Commerce companies.
• Using superior logistics and distribution systems, the company has been able to actualize better customer fulfillment
and this has resulted in Amazon deriving competitive advantage over its rivals.
Weaknesses
• In recent years, Amazon as part of its diversification strategy has been “spreading itself too thin” meaning that it
has allowed its focus to waver from its core competence of retailing books online and allowed itself to venture
into newer focus areas. While this might be a good strategy from the risk diversification perspective, Amazon
has to be cognizant of losing its strategic advantage as it moves away from its core competence.
• As Amazon offers free shipping to its customers, it is in the danger of losing its margins and hence, might not be
able to optimize on costs because of this strategy.
• Considering the fact that Amazon is an online only retailer, the single-minded focus on online retailing might
“come in the way” of its expansion plans particularly in emerging markets.
• One of the biggest weaknesses and something that has been oft commented upon by analysts and industry
experts is that Amazon operates in near zero margin business models that have severely dented its profitability
and even though the company has high volumes and huge revenues, this has not translated into meaningful
profits for the company.
Opportunities
• By rolling out its online payment system, Amazon has the opportunity to scale up considerably considering the
fact that concerns over online shopping as far as security and privacy are concerned are among the topmost
issues on the minds of consumers. Further, this would improve the company’s margins as it lets it reap the
advantages of using its own payment gateway.
• Another opportunity, which Amazon can capitalize on, relates to it rolling out more products under its own
brand instead of being a forwarding site for third party products. In other words, it can increase the number of
products under its own brand instead of merely selling and stocking products made by its partners.
• Amazon can increase the portfolio of its offerings wherein it stocks more products than the norm currently
which places it in a position of strength and comfort as this can translate into higher revenues.
• The fourth opportunity, which Amazon has, is in terms of expanding its global footprint and open more sites in
the emerging markets, which would certainly give it an edge in the uber-competitive online retailing market.
Threats
• One of the biggest threats to Amazon’s success is the increasing concern over online shopping because of
identity theft and hacking which leaves its consumer data exposed. Therefore, Amazon has to move quickly to
allay consumer concerns over its site and ensure that online privacy and security are guaranteed.
• Because of its aggressive pricing strategies, the company has had to face lawsuits from publishers and rivals in
the retailing industry. The obsessive focus on cost leadership that Amazon follows has become a source of
trouble for the company because of the competitors being upset with Amazon taking away the business from
them.
• Finally, Amazon faces significant competition from local online retailers who are more agile and nimble when
compared to its behemoth type of strategy. This means that the company cannot lose sight of its local market
conditions in the pursuit of its global strategy.
Conclusion
Amazon has its task cut out as far as its future strategies are concerned and this SWOT Analysis can provide a
guide and a roadmap that the company can implement going forward. The key take away from this SWOT
Analysis is that Amazon has to focus on profitability and not volumes alone if it has to be competitive in the
future where volumes and market leadership are not alone to add value to its stock.
SWOT Analysis of Nike
Strengths
• The biggest strength of Nike is that it is an extremely competitive organization with its approach of “Just Do It”
slogan for its brand epitomizing its attitude towards business. The company was founded on the principle that it
would make shoes for anyone who could walk or run and this has been the guiding philosophy behind Nike.
Coupled with its iconic “Swoosh” logo and its equally catchy tagline, Nike’s strength is that it has emerged as a
“Can Do” company.
• Strength of the company is that it has outsourced all aspects of its production to overseas facilities and thereby,
does not have any manufacturing outlet of its own. This has helped the company focus on higher value adding
activities like design and research and development and at the same time, it has saved the high labor costs that
are part of the traditional manufacturing sector.
• Apart from this, the other big strength of Nike is that it is a globally recognized brand that has top of the mind
recall among consumers and the youth in particular. Further, the Nike brand is synonymous with quality and
resilience as well as endurance and fitness, which makes it the brand of choice for athletes and anyone who
wishes to run.
• Finally, Nike stands to benefit from the current disarray among its competitors because of the fragmentation of
the market wherein Nike with its USP or Unique Selling Proposition can standalone among them.
Weaknesses
• Nike is almost exclusively driven by its footwear business and therefore, the footwear market contributes to a lion’s
share of its revenues making it dependent on this segment for its survival. In these recessionary times, it is not a
good business practice to be overly dependent on one segment and hence, Nike ought to diversify horizontally as
well as vertically and include apparel and other accessories.
• Though we have mentioned the fact that it has outsourced its manufacturing aspects completely as strength, the
negative publicity that Nike got because of labor unfriendly conditions in its overseas outlets has badly dented its
brand image. Indeed, the name “Sweatshops” is used to mockingly describe the abhorrent conditions in its overseas
manufacturing facilities.
• The company does its business through retailers who stock other brands as well. This means that the assiduously
cultivated exclusivity is sometimes sacrificed because it has not yet spread its wings to include exclusive retailer
outlets as part of its business strategy.
• Nike is perceived by some consumers as being too premium and a luxury brand. While this is necessarily not a bad
thing, the current market scenario is such that consumers are migrating to the middle tier of the luxury scale as they
are becoming price conscious and quality focused.
Opportunities
• The biggest opportunity for Nike is from the emerging markets of China and India where the Billion Plus new
consumers are now aspiring to western lifestyles which means that they would be more receptive to brands like
Nike. As the company is associated with premium branding and segmentation, it can be said that capturing the
“emerging market newly affluent consumers’ prize” could well be a game changer for the company.
• In recent years, Nike has begun to diversify into accessories and other premium products apart its signature
footwear segment. This is a step in the right direction and something, which would stand the company in good
stead as it attempts to look for revenues beyond its traditional offerings.
• The emphasis on design of higher end footwear seems to be paying off for Nike that is increasingly being seen as a
must have product for anyone who walks or runs and as the company was founded on the principle that it would
serve anyone with legs, this strategy seems to have hit the right notes.
• Nike has the unique advantage of offering value for money and this can be leveraged to the hilt as the company
begins to make inroads into the newer consumer segments, which want quality at an affordable price.
Threats
• The fact that the company has a global supply chain means that it is subject to the vicissitudes of international trade
practices including labor strikes in its overseas locations, currency fluctuations that decrease its margins, as well as
lack of control over the geopolitical events happening around the world which have the potential to disrupt its global
supply chain.
• Nike must improve on its image wherein it is being seen as resorting to exploitative business practices in its overseas
outlets. Already, it had to pay a heavy price (monetarily as well as metaphorically) because the emerging generation
of consumers are socially and environmentally conscious which means that they would not like to buy a product that
is the result of dubious business practices.
• The ongoing recession has taken a heavy toll on Nike with consumers becoming more price conscious and retailers
demanding higher margins. The combination of retailing in third party outlets and competing brands cutting prices
has made the going tough for Nike.
• Finally, Nike has to ensure that it does not dilute its focus like some of its competitors who are now in the doldrums.
For instance, Reebok that promised a lot and was intensely competitive with Nike has seen its fortunes sag and
hence, Nike must not go Reebok’s way and instead, must define its core competence and implement its strategies
accordingly.
SWOT Analysis of Microsoft
Introduction
The recent announcement of the change of leadership at the helm of Microsoft has sparked speculation about
possible strategic directional changes as well as kindled hopes that the pioneering company and its iconic founder who
appeared to be floundering in recent years may well be getting their act together. The ensuing SWOT Analysis places
these strategic moves in perspective and appraises the situation, which the company finds itself in at the moment. The
succeeding discussion must be viewed in the larger context of the match between the internal dynamics and the
external business drivers that affect Microsoft in its quest to regain its market leadership.
Strengths
• The biggest strength of Microsoft is that it has top of the mind brand recall among all the PC (personal computer)
users in the world. Indeed, Microsoft and its legendary founder, Bill Gates, are known to anyone who is remotely
acquainted with computing. This has enabled the company to forge ahead of its rivals even though as we shall
discuss later, in recent years, some of the sheen of the Microsoft brand has been lost.
• The other strength and a key driver of its business and readymade acceptance by the users of its products is that
Microsoft’s software is easy to use which has won it an increasing base of customers around the world. It can also
be said that Microsoft and Bill Gates have spawned what can be called a “Second Industrial Revolution” by making
computing available to the masses.
• The company has a worldwide network of distributors and also it indulges in co-branding with hardware makers of
computers, which enables it to have strategic depth and a breadth of user base that is unparalleled.
• Microsoft has consistently beat analyst expectations in terms of profitability and revenues though it is appearing to
be vulnerable to shifting trends like mobile computing in recent years.
Weaknesses
• The biggest weakness of Microsoft is that its fabled team did not anticipate the emergence of the internet as a
phenomenon that would take over the world in addition to reading the market signals about mobile computing. In
case of the former (internet), Microsoft was slow to respond and even when it did, it was in a manner that attracted
monopolistic charges which in earlier years were the mainstay of the company.
• As for mobile computing, Microsoft completely missed this wave and indeed, the success of the other computing
revolutionary, Late Steve Jobs and his Apple Company appeared to blindside Microsoft and Bill Gates so much that it
has even now failed to come up with a compelling Smartphone device or operating system.
• The third weakness relates to the ubiquitous security flaws in its software, which is apparent to any windows user,
and chances are that you would have probably encountered the familiar crashes of Windows no matter which
version you use.
Opportunities
• Though Microsoft failed to read the emergence of the internet and was completely taken aback by the mobile
wave, a ray of hope that is still visible to the company is in the cloud-computing paradigm, which the company is
betting big to take on the competition and regain its leadership position.
• Indeed, the recent appointment of the Indian born Satya Nadella as the CEO is in line with its aggressive push
towards cloud computing as the game changer for the company and since Nadella is thought to be a cloud-
computing wizard, it is understood that Microsoft is banking on him for it to ride the next wave.
• The company has a huge cash hoard which means that if it cannot grow organically (through normal growth) it
can still grow inorganically (through acquisitions) of smaller companies that have good business prospects.
• This is the manner in which Bill Gates made amends for misreading the internet and bought out Hotmail created
by another Indian, Sameer Bhatia that did give Microsoft some edge for a few years before Google
revolutionized personal email products.
Threats
• As can be inferred from the analysis so far, Microsoft’s biggest threat is that it’s very size which is an asset otherwise
is preventing it from being quick and nimble and seize market opportunities by proactively reading market signals.
• Further, Microsoft faces a key challenge from Open Source software, which was a force to reckon with initially
seemed to have lost some of its fizz though it is making a comeback again.
• On the commercial front, Microsoft has been exasperated with software piracy especially in Asia where the pirated
copies are more than the original products in China and India.
• Finally, Microsoft has to be both weary and wary of potential lawsuits especially in Europe where the regulators are
not taking kindly to its monopolistic business practices.
Conclusion
The preceding analysis has made it clear that Microsoft cannot afford to misread emerging trends and changing
customer preferences anymore. Instead, it must be in a position where it senses and intuits market moves and prepares
to act accordingly. A possible strategic move would be to focus more on the enterprise segment since most other
technology companies seem to be focusing exclusively on the personal customer segment. In conclusion, it remains to
be seen as to how the recent leadership changes play themselves out with regards to the future strategic moves by the
company.
SWOT Analysis of China Mobile
Introduction
China Mobile is a Chinese Telecom major that has been in the news in recent years because of its jaw dropping
growth rates as well as its ballooning subscriber base. Once considered as a protected state owned enterprise
incapable of efficiency, it has now transformed itself into a domineering company in China with global dreams and
ambitions to conquer international markets. As the succeeding SWOT Analysis indicates, the company can leverage
on its strengths and work on its weaknesses so that the threats are transformed into opportunities and it continues
to be a company to reckon with.
Strengths
• Over the last few decades, China has transformed itself into an economic powerhouse and this is the key strength
of China Mobile that was unheard of in Western capitals and for western investors until a decade ago. Indeed, the
fact that China Mobile was ranked in the Top 100 Important Brands in the World in 2007 means that it has well
and truly arrived in the global arena.
• The company boasts of an incredible number of customers (estimated to be nearly half a Billion) which is a key
strength though it must be mentioned that since it is a state owned enterprise and operates in a monopolistic
market, these figures are partly due to its domineering presence in the country.
• China mobile is growing at a scorching pace nearing 50% annually which means that in a few years time, it would
be way ahead of the global competition by any yardstick.
• Finally, the company has embarked on an international expansion to increase its global footprint and it has been
on a merger and acquisition spree especially in Africa, which is touted to be the next emerging frontier.
Weaknesses
• A key weakness of China mobile is that it is not yet ahead of the technology curve though it has the numbers
and the volumes to justify its leadership position. This is partly due to the problems that it had in shifting from
CDMA to GSM protocol because of the legacy handsets and associated problems and hence, the company was
unable to make the transition to the 3G network in a seamless manner.
• Another weakness is that China mobile so far has restricted itself largely to the domestic market. Though we had
mentioned about its international expansion, the fact that it is yet to tap into the developed west signals a
hesitation and a lack of confidence in taking on global biggies in their backyards.
• Even for the expansion into Africa, China mobile is relying heavily on its partnerships with local players, which
means that it is yet to develop an international identity of its own.
Opportunities
• As China continues to grow at a scorching pace, the company can expect a huge jump in its subscriber base though
the overheated domestic market might compel it to look outwards for its expansion in the years to come. However,
this does not detract from the fact that China mobile is poised to tap into the growing domestic market albeit in a
restrained manner unlike the previous years where it was uber aggressive in its strategies.
• As with many other SOEs or State Owned Enterprises in China, the company has recorded annualized profit growth
rates in excess of 20%, which has made western investors, look at it with excitement as such profit rates are
unheard of in the developed west.
• It can convert its weakness of being unable to transition to 3G technology into an opportunity by tapping into the
rural market in China which is still to be explored meaning that China Mobile can start afresh without any legacy
issues troubling it. Moreover, as the cities become saturated, it is only natural that China Mobile starts to look to
the rural hinterland for future growth.
Threats
• The Chinese telecom sector is still heavily regulated and screened off from international competition, which is
a threat as the Chinese government in recent years has been contemplating opening up of the sector to foreign
firms. Further, China Mobile also needs to be wary of competition from local firms and domestic players as the
industry opens up in the future.
• Another key threat to China Mobile’s profitability is that until now it has been playing the “numbers game”
wherein it added subscribers mostly in the low price, low value segment, which means that it is a volumes
player rather than a premium player. With recent technological breakthroughs like 4G and even 3G, China
Mobile faces a threat to its business model and it has to offer higher value added services to stay in the
reckoning.
• Its cozy relationship with the Chinese Government is partly because it is a SOE and this might change in the
future with the gradual opening up of the economy wherein the government would most likely asses the
tradeoff between social dividends and economic payoffs.
Conclusion
As the preceding SWOT Analysis indicates, China Mobile has its task cut out as it begins its international journey
and continues its domestic market leadership. As things stand, many western investors are eyeing its stock which
is clearly an achievement considering that its IPO (Initial Public Offering) in 1997 hardly attracted interest outside
32
Hong Kong where it started its evolution from a limited player to a market leadership position.

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Chapter 2: Case Studies

What to do when listing Strengths and Weaknesses

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