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Vodafone Failure in Japan
Transcript of Vodafone Failure in Japan
Competitor Analysis 2 The Failures Entry Strategy Exit Strategy
Recommendations 1 3 4 5 COMPANY OVERVIEW Ranked 2nd in the world based on revenue and subscribers
Extensive experience in Europe
One of the few telecommunications carrier that had a successful global expansion strategy
Key technologies and resources
Vision of Vodafone COMPANY OVERVIEW JAPAN TELECOM INDUSTRY （Data Source: Ministry of Internal Affairs and Communications） Holly
Keerthi Market Analysis World’s most technologically advanced nation Ministry of Posts and Telecommunications (MPT) policy Mobile Tech in Japan: 2 years ahead of the world Local competitors had significant policy advantages over their foreign counterparts
Bureaucratic structure designed to deter new entrants Consumer Analysis Competitor Overview The Japanese Market has 3 major service providers *Data from fig 3.2 Mobile System subscribers, Outline of the Telecommunication industry in Japan May 2007 – prepared by Economic Department Israeli embassy, Tokyo Japan But what made Vodafone's competitors so competitive? DoCoMo was able to hold a major market share through providing quality handsets, network coverage, and brand power of i-mode.
KDDI, consisting of Au and Tu Ka lured new subscribers through 3G services, such as ringtone download, video mail, and walk navigation. * 15th Bienniel Conference International Telecommunications Society September, 2004 Berlin, Germany “EXPANDING MARKET AND COMPETITION OF 3G IN JAPN” Presentator and Author: Tatsushiro Shukunami Professor Institute for Media and Communications Research Broadband Deployment Strategy in Japan, Yasu TaniwakiOutline of the Telecommunications industry in Japan May 2007, Economic Department Israeli Embassy Tokyo Japan 2006 there is approximately 51 Million 3G subscribers 55% are phone subscribers Japanese consumers are technological savy and welcomed the other functions of a mobile phone as shown in the diagram below CAGE
Framework Entry Strategy Change in Management Vodafone sold its Japanese Operations to Softbank for £8.9B 3 4 Clamshell JSH52 mobile phone 1 1999 2007 2003 J-Phone
3G Launch 2 J-Phone rebranded
to Vodafone K.K Relaunch of 3G Network with European Handsets Vodafone Group acquisition of
J-Phone 3G License Awarded to
J-Phone NTT DoCoMo
3G Launch J-Phone <PLANNED>
3G Launch KDDI
3G Launch 1. Delayed Launch of 3G
2. Handset Strategy
3. Changes to Management ...given the relative competitive position of the business there, the reduced prospects for superior long term returns and an attractive offer from SoftBank, we decided to sell our 97.7% stake based on a value for the business of £8.9 Billion £6.0 billion returned to shareholders An additional £3.0 billion returned to shareholders Source:
http://www.vodafone.com/content/dam/vodafone/investors/annual_reports/annual_report_accounts_2006.pdf Network Infrastructure Continue to Fail Limited Edition Handsets Company Management Network Infrastructure Continue to Fail Invest in fixing infrastructure
14,000 – 25,000 network
Faster pace of deployment
Experience gained in incident resolution, brand damage control and large scale upgrades Learn to adapt to market conditions
Learn to innovate and rapidly resolve network issues
Learn from competitors and apply elsewhere
Learn to respond to ferocious competition http://www.eetimes.com/landingpage/mwc
http://phys.org/news67179257.html Limited Edition Handsets Tabuchi, H. (2008, Feb 22). Limited edition! limited edition! lim...; in japan, the young line up to 'buy now'; tower records sells out. Wall Street Journal.
http://monkeyblogmonkeydo.com/page/111/ “…many young
Japanese are obsessed with anything that says ‘limited edition.’ “ Company Management Annual Company reports describe at least 5 changes to top level management in a span of 5 years “Vodafone brought in the wrong people to manage the company and kept bringing in new teams to fix the problems created by the last management team” ...but this time it'll be different http://wweek.com/portland/article-18363-japan-why-did-vodafone-fail-in-japan.html Consumers are Tech Savvy Consumers only want top end phones with best features and functionality, Requiring state of the art technology and sophisticated services No market for low-cost phones Consumers less price sensitive to handset technology
Tech Savy Consumers with high disposable incomes meant there is no market for low cost mobile phones First to introduce Clam shell phone & Sha Mail
This was not aligned with their global strategy
Did not have enough stock
Subsidised 59% of their handsets costs to attract consumers.
Led to substantial loss Clam Shell JSH52 Mobile Phone Source:
(CASSELL BRYAN-LOW IN LONDON AND ANDREW MORSE AND MIHO INADA,IN TOKYO, 2006. Vodafone's Global Ambitions Got Hung Up in Japan; In Retreat, Wireless Giant Sells Off Its Unit There; Tripped Up by Local Quirks. Wall Street Journal, pp. A.1.) Frequent top management changes, estimated 5 top management changes
European work culture and Japanese culture are very different
European CEO brought in to manage Vodafone K.K Changes in Management Source:
Vodafone Annual reports 2005 & 2006 2006 Lack of secure coverage area
Needed more time to conform with international 3G specifications
Launch of trial service in Tokyo metropolitan area
Loss of first mover advantage
Significant loss of potential customers J-Phone's Delayed 3G Launch Source: