Thursday, March 24, 2011

Need a long term strategy planning

Company overview: China Mobile is largest mobile telecommunication carrier in the world, which is in the 77 of the Fortune Global 500 Ranking in 2010. It plays a monopoly role in mobile communication market.

Since 2008, the main driver of the revenue growth of China Mobile transform from the voice service to value-add service. Obviously, the whole telecommunication industry faces a very big challenge of the replace of internet and terminal devices.

For voice business in mobile market, China mobile hard to pursue further development, since they already own absolute advantage and already play a monopoly role in this market.
Value-added service, obviously, is the main growth driver for China mobile in next stage competition.

What challenge they face?

The opened value-added service platform, like apple store and Google’s Android, become a biggest challenge to the traditional value-added service provider. These new business models bring a revolution of form of profit distribution. The telecommunications providers must be facing the challenge of channelize. This is means, the telecommunication providers just a channel to provide the value-add service but cannot share the profit when the customers use it. On the contrary, the value added application provider will share the profit from the telecommunication provider. And current trend is the customers are much more interested in the value added application and service rather than the voice service.

What they did wrong before?

From my perspective, they did strategy planning mistake. My bachelor degree’s graduation paper researched on this topic, the title is “the cooperation modes between the telecommunication carrier and value-added carrier”. From my investigation, they did very unfairly on the profit distribution, which is 70% for telecom carrier and 30% for the value-added carrier. But that is 4 year ago, customers do not have choices and the value –added carriers do not have choices. They must use the telecom carrier’s channel to upload and download application. Besides this, telecom carriers copy the content and idea of the small value-added carrier, which make majority small value-added carrier died very soon. Finally, only china mobile’s owned or partnership company can survived. It seems they maximize the profit from this. But, is that really right decision?

This is an improvident strategy.

The unfair competition at value-added service market via channel advantage only make benefit in short term. For China Mobile, it have chance to build a healthier value-added platform at before. If they did so, the value –added service will grow much better than now. These value added carrier can provide much better service than China mobile’s own value added companies. . The customer can have much more choices and they can cultivate the customer loyalty. China mobile can accumulate more users from this and peruse profit for long time. A good competition environment is very essential for the industry development.

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