Industry Life-Cycle

The unit of analysis here is the industry or the aggregate of all those organizations competing
with similar products within the same market. Example: Automobile Industry, Airlines Industry,
Banking Industry, Bus Industry, Food Industry, Hotel Industry, Mobile Telecommunications
Industry, etc. The industry life-cycle is very similar to the organization life-cycle. Its starting
point is the emergent stage, following by a growth stage, then by maturity stage, which is then
following by decline stage.

Emergent Stage

Mobile phone industry started to emerge in the Philippines during the 1990’s. PILTEL
established by the Philippine Long Distance Company (PLDT), provided the first cellular mobile
phone service in the country in 1991. It operated under the MOBILINE brand using analogue
technology.

ISLACOM introduced the first digital mobile communication service in the Philippines using
GSM (Global System for Mobile communications) world standard digital technology in 1994.
GLOBE joined the mobile phone industry in 1994 and pioneered prepaid and SMS services.
Both ISLACOM and GLOBE have agreed to combine business and operations for quite some
time. GLOBE acquired the 100% ownership of ISLACOM in 2001.

SMART started commercial operations in 1994. The network introduced inexpensive package
Plans making it more affordable to a wider range of people. The marketing strategy adopted by
SMART became very successful in the market. SMART was able to capture majority of the
market share and become the largest mobile phone network in 1997. SMART GOLD, a post-
paid GSM service, was introduced in April 1999. In October of the same year, the pre-paid
GSM service, SMART BUDDY was launched.
More consumers are encouraged to use mobile phone because it is difficult and expensive to
acquire landline phones in the Philippines. The services provided by PLDT were not competitive
enough to achieve the expectations of the people. The smaller telephone company, Bayantel, do
not have adequate resources to meet the demands of the consumers. Mobile phone which is
commonly known as cell phone in the country started its market in Metro Manila and eventually
expanded the services across the major cities in the country.

The third largest mobile phone network SUN CELLULAR was established by DIGITEL in
September 2001 and started commercial operations in 2003. It offers a lower price unlimited
texting and voice call services. The network continues to increase its share in the market at a
significant phase. More people are being attracted by the rates being offered by SUN
CELLULAR.

Growth Stage

Dominant Economic Indicators

1. Market Size:

The cell phone industry is one of the fastest growths besides the Internet. Cell phones
have gone through a huge change and its market has expanded globally. Since 1994, the cell
phone industry has increased from 24 million to about 182 million in wireless phone and related
devices operating in the United States with some 162-million mobile-phone users in the United
States alone.

The cell phone market is increasing very fast with today’s ever-emerging technology and
innovation in improving cell phones. Today, society is living with advance technology and
everyone wants to keep pace with the new technologies. Cell phone industry is growing larger
because it has become a necessity. Parents are getting mobile phones for their teens because
they want to communicate in case of an emergency and the wireless carriers have made it easy to
add users to their existing plans. And carriers are becoming successful in getting parents to
expand their plans to include their teens. This increases buyers and increases market size
worldwide.

2. Scope of Competitive Rivalry:

The cell phone industry has become increasingly larger within the last three years as a result
of more affordable cellular phones as well as lower service costs. Companies are competing in
an advance technology and communication sector in which success attracts customers to buy
their products and services. The market is very competitive because they offer the same products
and services, but has different physical attributes to the phones and different costs, which buyers
have choices to choose from. Companies want to provide the best products and services to
attract buyers by lowering cost and improving products, which makes the cell phone industry
very competitive.

Here are the main factors of competitive rivalry:

 Cell phone cost: Customers wants better services and products at a lower cost.
 Bundle functions into just one cell phone: For example E-mail, text messaging, internet
 New technology improvement: For example camera phones
 Better landline services
Maturity Stage

The cell phone industry is in the Mature Life Cycle Stage, where nearly all-potential
customers are already users of the industry’s product. The cell phone industry’s growth and
profitability depends entirely on its ability to attract new customers. By increasing and
improving the cell phones and services, it will attract more potential buyers, because technology
alone will not attract buyers, instead companies want value-added services for mobile-phone
securities.

Cell Phone companies attract buyers in two ways during the Mature Life Cycle State:

 Service: Making cell phone more affordable will attract buyers to buy more cell phones
and increase competition between companies to lower service fee.
 Innovative Phone Style: The new designs and improvement in the physical appearance
of the cell phones, and more add-on features attracts customers to buy it at a higher rate.
Extension of Life-cycle

While it appears that the decline stage at one time or another is inevitable, the pervasive
influence of the global economy has created many new opportunities for actually extending
product, business organization and industry life-cycle. Life cycle extensions have been created in
their original market but are new and in demand in the newly opened markets. Organizations and
complete industries have migrated to countries where they can start anew.

Globalization Influence

What happened to Nokia is no secret: Apple and Android crushed it. But the reasons for that
failure are a bit more mysterious. Historically, after all, Nokia had been a surprisingly adaptive
company; moving in and out of many different businesses—paper, electricity, rubber galoshes.
Recently, it successfully reinvented itself again. For years, the company had been a
conglomerate, with a number of disparate businesses operating under the Nokia umbrella; in the
early nineteen-nineties, anticipating the rise of cell phones; executives got rid of everything but
the telecom business. Even more strikingly, Nokia was hardly a technological laggard—on the
contrary; it came up with its first smart phone back in 1996, and built a prototype of a touch-
screen, Internet-enabled phone at the end of the nineties. It also spent enormous amounts of
money on research and development. What it was unable to do, though, was translate all that R.
& D. spending into products that people actually wanted to buy.

One way to explain this is to point out that Nokia was an engineering company that needed more
marketing savvy. But this isn’t quite right; in the early aught, Nokia was acclaimed for its
marketing, and was seen as the company that had best figured out how to turn mobile phones
into fashion accessories. It’s more accurate to say that Nokia was, at its heart, a hardware
company rather than a software company—that is, its engineers were expert at building physical
devices, but not the programs that make those devices work. In the end, the company profoundly
underestimated the importance of software, including the apps that run on smart phones, to the
experience of using a phone. Nokia’s development process was long dominated by hardware
engineers; software experts were marginalized. (Executives at Apple, in stark contrast, saw
hardware and software as equally important parts of a whole; they encouraged employees to
work in multidisciplinary teams to design products.)

It wasn’t just that Nokia failed to recognize the increasing importance of software, though. It also
underestimated how important the transition to smart phones would be. And this was, in
retrospect, a classic case of a company being enthralled (and, in a way, imprisoned) by its past
success. Nokia was, after all, earning more than fifty per cent of all the profits in the mobile-
phone industry in 2007, and most of those profits were not coming from smart phones. Diverting
a lot of resources into a high-end, low-volume business (which is what the touch-screen smart
phone business was in 2007) would have looked risky. In that sense, Nokia’s failure resulted at
least in part from an institutional reluctance to transition into a new era.

And there was another mistake. Nokia overestimated the strength of its brand, and believed that
even if it was late to the smart phone game it would be able to catch up quickly. Long after the
iPhone’s release, in fact, Nokia continued to insist that its superior hardware designs would win
over users. Even today, there are people who claim that if Nokia had stuck with its own
operating systems, instead of embracing the Windows Phone in 2011, it could have succeeded.
But even though the Windows Phone has been a flop, the truth is that, by 2010, Nokia had
already introduced too many disappointing phones, and its operating system had already proven
too buggy, clunky, and unintuitive to win consumers over. In 2008, Nokia was said to have one
of the most valuable brands in the world. But it failed to recognize that brands today aren’t as
resilient as they once were. The high-tech era has taught people to expect constant innovation;
when companies fall behind, consumers are quick to punish them. Late and inadequate: for
Nokia, it was a deadly combination.