TOPCIMA

Strategic Analysis - Dizz

Nick Best
Welcome

Welcome to Nick Best’s TOPCIMA strategic analysis

For those of you who don’t know me, I’m the TOPCIMA
tutor at Reed Business School, and the author of the
official CIMA learning system (published mid 2009), on
which I work with one of the TOPCIMA examiners.

In this presentation you’ll find my views on the latest

TOPCIMA case study

For details of courses which I am taking at Reed Business

School and to learn more about the exam and how to
approach it please see
www.topcima.biz.
Dizz

So, its mobile phone operators this sitting. Quite a nice

industry for most of you I suspect since I’m sure you’ve
got a mobile phone and have experience of both the
phones themselves and the various pricing plans that
are on offer.

There’s also a lot of information readily available on the

internet 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 it’s a lot better than
the last sitting which was much harder to research
Dizz

On the following pages you will find my strategic analysis

Remember that this is my view, not a definitive view of the

company (whilst I do work closely with one of the
examiners, she is not at liberty to discuss anything
about current cases with me!) You should review this in
the 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 the

exam do consider attending one of the courses at Reed
Business School, or look out for posts on
www.casestudyaide.com.
SWOT

• On the following page you’ll find my SWOT analysis.

• Remember that you MUST do a SWOT analysis as Appendix 1 in

your answer.

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

• You must update this SWOT for unseen issues (underline or bold
these in your exam script), and should aim to include ALL your top
5 issues in your SWOT.

• A recent CIMA student script review I read, also made it clear that
2-3 word points in the SWOT are NOT sufficient. Aim to write at
least 7-8 words for each point in your SWOT.

• I’ve shown my points in priority order as I see it. You don’t need to
do this in the exam!
 SWOT
STRENGTHS
1. Strong cashflow facilitates financing future
projects
2. Excellent customer service & wide network
coverage - retains existing customers,
supports brand + little future investment
3. Excellent quality and product range – retains
existing customers, supports brand
4. Strong HR – motivated, skilled staff ensures
loyalty, quality and service
5. Integrated IT systems, facilities service and
cost reduction
6. Significant, tailored, effective marketing –
enables tailored growth
OPPORTUNITIES
1. Expansion in current African/Asian markets -
which are growing quickly, and have high
profit margins
2. Greater usage from existing customers,
particularly in the mature European market
3. New products (e.g. GPS navigation, internet
services)
4. Penetrate new markets (e.g. new countries in
Europe/Asia)
WEAKNESSES
1. Limits to availability of future debt finance – may
limit future expansion plans particularly in current
markets
2. Some older masts – may need upgrading in future
3. Very ambitious growth plans - may affect future
motivation if not hit – may encourage dysfunctional
behaviour
THREATS
1. Worldwide recession – mobiles are luxury items,
with cheaper substitutes
2. Change in regulation e.g. price restrictions
3. Highly competitive market – price reductions could
hit profit margins
4. Not keeping up with technological changes or
changing customer requirements
5. Currency changes
 Mission & Objectives
Governance & Ethics

Although no mission statement is given in the pre-seen

material, there is a lot of information given about their overall
objectives, and the range of performance measures that they
use. They also have financial objectives in the 5 year plan.

Chairman’s Strategic aim = Further growth in earnings–Dividends and share price rise
Overriding strategy = 3 cores aims:
Mission • Increase European profits – revenue stimulation, cost reduction
• Innovate – new products
• Invest in Africa/Asia
Ownership of 5 year plans – accountability
Objectives/ Objectives for growth, cost reduction, CSR and quality (billing accuracy, delivery,
satisfaction, drop-off rate)
Performance Divisional objectives consistent with whole organisation’s view
Measurement Senior management – PRP based on Share price, Revenue, customer numbers,
quality – customer satisfaction, churn, new products – Good range of measures
 Governance & Ethics

Broadly, Dizz have good governance procedures (as far as we

can tell from the limited information in the pre-seen), and have
a range of CSR policies, with a lot of detail given in the
Appendix. Here are some of the details:
10 NEDS + Non-exec Chairman
Balanced board with Directors in all main functions
Governance

Good HR policies
Lower carbon emission technology installed
Good CSR programmes - Wide involvement in community projects
Ethics -Child protection, discussions on transmitter locations, flexible working, reduce costs
eg. Hospitals, waste management, Energy consumption, employee secondment to
charities, training staff and health and safety, suppllier selection, quality
Some targets not met
PEST analysis

• On the following page you’ll find my PEST analysis.

• The PEST analysis is always an optional appendix in this

exam.

• 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 script

however, and many students do not do this well. Aim for 2-3
cross references
 PEST

• Regulation – restricts price increases, compulsory investments, reduces

Political/ ability to compete
Legal • Different rules and regulation in each country operating

• Global recession – likely to affect industry, particularly In Europe – mobile

phones are a luxury
Economic • Exchange rate risk
• Credit crunch makes raising finance difficult
• Mature European markets – limits further expansion
• Growing social trend in Africa and Asia
Social • Trend towards increasing use of data services

• Regularly changing technology

Technolo – Dizz must keep up, and thus continue investment
gical
5 Forces Analysis

• The 5 forces analysis enables the analysis of the industry

according 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 industry
is 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 high

and develop strategies which may lower these.

• In the case of mobile network operators, the average of the

forces is medium to medium/low, so the industry would be
deemed relatively profitable.
 Opportunities and Threats
5 forces analysis
Factors increasing Force Factors lowering force
Easy to switch operators – few Lots of small customers – little power for
Buyer
differentiating factors any individual. Some exclusive contracts
Power with handset providers. Although its easy to
M do, people tend not to switch.

Licensing – Governments have very high 10 handset providers

Supplier power Dizz and their competitors are large so are
Power Some stronger handset providers e.g Apple valuable customers and unlikely to be
Few main mast manufacturers pressured heavily by suppliers therefore
M
Many other supplies have low sup. power
Few differentiating factors Oligopolistic market – competitors realise
Competi- there’s little to be gained from reducing
Lots of strong competitors
tors H Significant price competition prices too far (price war)

New (Some new entrants still possible in reseller Barriers to entry – High cost and low
market, but less likely in terms of operating availability of licenses, existing brands
Entrants networks) Existing links with handset providers – hard
L for a new provider to get these
Quite a few substitutes: Skype, landlines, e- Most substitutes do not have portability,
Substitu- mail, social networking, broadband internet which is the key strength - recession may
mean increase use of cheaper substitutes
tes L/M
 Product analysis and
Porter’s Generic Strategy
Products
Europe – mature
-But increasing usage
BCG matrix/
Africa/Asia – growing
Product Life
Data - growth
Cycle BCG – best to look country by
market – so hard to do well
New product areas –
Internet, data
Business customers – increasing
Strengths revenues
Many countries in which they do
not have an interest
Weaknesses
Generic Strategies
In this market, they must keep
costs low and prices
competitive, but the high levels
Cost
of service and quality mean this
leadership is not their strategy
High quality and service (but
most competitors do that too)
Exclusive contract/designs
Differentiate Lower cost business calls
Broad mostly
(Europe, Africa, Asia)
Mobile only – not land
Focus
Ansoff’s matrix and Strategic Methods

• Ansoff’s matrix helps the generation of a range of different

strategic options

• It uses four categories, based upon products and markets

(customers) and whether the strategic option under consideration
is existing or new

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

• Remember that these are simply strategic options, and not

recommendations. 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 list
of advantages and disadvantages as preparation for your exam.
 Ansoff’s Matrix

Existing Market New Market

Greater usage of data/internet with New countries not currently operating

existing customers in
Growing existing Africa/Asia customer Recycled phones in new markets
base
Existing
Horizontal - Merge/acquire competitors
Product
Sponsorship deals/partnerships

New products as technology develops Vertical integration – e.g. mast

(e.g. GPS/mapping) manufacturer, handset manufacture
Related industries – Music, SatNav Mobile software
Landlines
New
Cable/broadband
Product
TV (like BT vision)
Laptops/Broadband
 Methods of Growth

New products
Increasing customer usage
Internal Development Buying a new licence and building the underlying
infrastructure would be very expensive and time
consuming, so it unlikely in all but the least mature
markets
New countries
Acquisition New technologies (e.g. GPS/mapping)

Marketing – sponsorship deals

Joint Venture Links with mobile phone handset providers

Underperforming countries – if the unseen gives some

indication that any countries have low market share
Divest (i.e. a dog on the BCG)
Sponsorship deals (if inappropriate)
Mendelow’s Stakeholder Matrix

I like this for use in the exam! Remember to cross

reference your Mendelow’s matrix throughout your
script (people are so bad at doing this – make sure
you’re not one of them?), and to update for one or two
new stakeholders

You’ll find the Mendelow’s matrix on the following page.

The only contentious point is that customers are in the

minimal interest box. I don’t really like to do this but the
reality is that most customers aren’t really that
interested in their network operator (are you?) and as
individual customers we have no power over these
companies so that is where they must sit.
 Stakeholder Analysis
Mendelow’s Matrix

Low Interest High Interest

Minimal Effort Keep informed - Outsourcers

Environmental groups/lobbyists
Individual customers much of the time Minority shareholders
Low
Most staff Sponsor co’s
Power
Corporate customers
Other handset manufacturers
Individual customers with issues
Keep satisfied Key Players
Banks - where existing loans
Government Parent company
Media CEO/Chairman/Regional CEOs
High
Power Regulators
Contracted or powerful handset
manufacturers (eg Apple, Nokia)
Mast manufacturers
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 a

realistic, achieveable plan, based on impact of current
recession, and maturing markets

5) Continue current successful strategies on IT, marketing, HR

and CSR with significant investment in each area