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BRIEF ANALYSIS OF
“VIVO MOBILES”
the company will start with Morocco and Kenya. Later, the company is
expected to spread out to European countries as well.
Initially, Vivo outbound logistics practices were limited to the
shipment of products directly to end-users via couriers. At that stage
the company was using only online sales channels in order to save
costs and maintain its cost leadership position in the global
marketplace. However, due to increasing demand for Vivo products
and intensifying competition in the market, the electronics and
software company had to open company-operated stores as well. Vivo
has set-up its manufacturing plant in India now.
Vivo marketing and sales practices are based on its cost leadership
business strategy. The mobile company sells its products using both
online sales channels and traditional offline sales channels as well. The
company uses hunger marketing strategy and flash sales frequently.
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G. H. PATEL POST GRADUATE INSTITUTE OF BUSINESS MANAGEMET
PESTEL ANALYSIS
This is an important step for eventually devising a strategy that can effectively
manoeuvre the competition to maximize a firm's chances of sustainability and
profitability. An understanding of the overall competitive landscape will
prevent investors and entrepreneurs from partaking in any risky ventures if the
risk arises out of, say, an unstable political regime or a sudden economic
recession.
Political Factors
The political factors that may impact the profitability or chances of
survival of the company are quite diverse. The political risks vary from
sudden changes in existing political regimes to civil unrest to major
decisions taken by the government. In cases of possible multinationals,
one may also include political factors that take place/ affect not only
the host country but also all countries that contain business operations,
or that may engage in trade with Vivo. To properly appraise the extent
of the overall systematic political risk that Vivo may be exposed to, the
following factors should be considered before taking part in any
investments:
- The level of political stability that the country has in recent years.
- The integrity of the politicians and their likelihood to take part in
acts of corruption, as the resulting repercussions may lead to
possible impeachments or resignations of high level government
employees.
- The laws that the country enforces, especially with regards to
business, such as contract law, as they dictate what Vivo is and is
not allowed to do. Some countries, for example, prohibit alcohol or
have certain conditions that must be fulfilled, while some
government systems have inefficient amounts of red tape that
discourage business.
- Whether or not a company’s intellectual property (IP) is protected.
For example, a country that has no policies for IP protection would
mean that entrepreneurs may find it too risky to invest in Vivo
- The trade barriers that the host country has would protect Vivo;
however, trade barriers that countries with potential trade partners
would harm companies by preventing potential exports.
- A high level of taxation would demotivate companies like Vivo
from maximizing their profits.
- The risk of military invasion by hostile countries may cause
divestment from ventures.
- A low minimum wage would mean higher profits and, thus, higher
chances of survival for Vivo.
Economic Factors
Economic factors are all those that pertain to the economy of the
country that Vivo operates in, such as changes in the inflation rate, the
G. H. PATEL POST GRADUATE INSTITUTE OF BUSINESS MANAGEMET
foreign exchange rate, the interest rate, the gross domestic product, and
the current stage of the economic cycle. These factors, and their
resulting impact on aggregate demand, aggregate investment and the
business climate, in general, have the potential to make a company
highly profitable, or extremely likely to incur a loss. The economic
factors in the PESTEL analysis are macroeconomic. The economic
factors that Vivo may be sensitive to, and in turn should consider
before investing may include the following:
- The economic system that is currently operational in the sector in
question- whether it is a monopoly, an oligopoly, or something
similar to a perfect competition economic system.
- The rate of GDP growth in the country will affect how fast Vivo is
expected to grow in the near future.
- The interest rates in the country would affect how much individuals
are willing to borrow and invest. Higher rates would result in
greater investments that would mean more growth for Vivo.
- However efficiently the financial markets operate also impact how
well Vivo can raise capital at a fair price, keeping in mind the
demand and supply.
- The exchange rate of the country Vivo operates in would impact
the profitability of Vivo, particularly if Vivo engages in
international trade. The stability of the currency is also important-
an unstable currency discourages international investors.
- A high level of unemployment in the country would mean there is a
greater supply of jobs than demand, meaning people would be
willing to work for a lower wage, which would lower the costs of
Vivo.
Social Factors
The social factors that impact Vivo are a direct reflection of the society
that Vivo operates in, and encompasses culture, belief, attitudes and
values that the majority of the population may hold as a community.
The impact of social factors is not only important for the operational
aspect of Vivo, but also on the marketing aspect of the organization. A
thorough understanding of the customers, their lifestyle, level of
education and beliefs in a society, or segment of society, would help
design both the products and marketing messages that would lead to a
venture becoming a success. The social factors that affect Vivo and
should be included in the social aspect of the PESTEL analysis include
the following:
- The demographics of the population, meaning their respective ages
and genders, vastly impact whether or not a certain product may be
marketed to them. Smart-phones is mostly catered to teen, so
targeting a majority old and aging population would be less
G. H. PATEL POST GRADUATE INSTITUTE OF BUSINESS MANAGEMET
Environmental Factors
Different industries hold different standards of environmental
protection in their head as the norm. This norm then dictates what
every company should aim for, in the least, to prevent becoming the
target of pressure groups and boycotts due to a lack of environmental
conscientiousness. The environmental factors that may significantly
impact Vivo include:
- The current weather conditions may significantly impact the ability
of Vivo to manage the transportation of both the resources and the
finished product. This, in turn, would affect the delivery dates of
the final product in the case of, say, an unexpected monsoon.
- Those companies that produce extremely large amounts of waste
may be required by law to manage their environmental habits. This
may include pollution fines and quotas, which may place a
financial strain on Vivo
- If Vivo should (knowingly or unknowingly) contribute to the
further endangerment of an already endangered species may face
not only the consequences from the law but also face a backlash
from the general public who may then boycott Vivo in retaliation.
- While relying, in any percentage, on renewable energy may be
expensive, it often receives support not only from the government
but also from its customer base, who may be willing to pay a
premium price for the products that Vivo may produce.
Legal Factors
The government institutions and frameworks in a country while
technically also political and thus subject to whichever political party
holds the majority in a government body, are also legal and thus should
be considered in a PESTEL analysis. Often Vivo policies on their own
are not enough to efficiently protect Vivo and its workers, making
Vivo appear an undesirable place of employment that may repel
skilled, talented workers. The legal factors that deserve consideration
include the following:
- Intellectual property laws and other data protection laws are, as
mentioned earlier, in place to protect the ideas and patents of
companies who are only profiting because of that information. If
there is likelihood that the data is stolen, then Vivo will lose its
competitive edge and have a high chance of failure.
- Discrimination laws are placed by the government to protect the
employees and ensure that everyone in Vivo is treated fairly and
given the same opportunities, regardless of gender, age, disability,
ethnicity, religion or sexual orientation.
- Health and safety laws were created after witnessing the horrible
conditions that employees were forced to work in during and
directly after the industrial revolution. Implementing the proper
G. H. PATEL POST GRADUATE INSTITUTE OF BUSINESS MANAGEMET
Technology/Innovation:
Technology and innovation are advanced every year making the
industry even more competitive. Smart phone companies that design
and make evolutionary upgrades are emerging into the market to be
more competitive. Here are some new technology and innovations on
smart phones:
- Unlicensed Mobile Access (UMA) will help those who have high-
speed Wi-Fi routers overcome poor reception coverage in their
houses or apartments. This is also a way for mobile carriers to
expand without spending a lot of money on new infrastructure. It
enables lots of users who use handsets to wirelessly download
content at broadband speeds while travelling.
- Smart phone tour guides: Provides buyers with guides of places
they want to see. For example. Weaver’s and Stiller’s voices are
used as narrators in Talking Street that shows a series of smart-
phone tours from Manhattan to the World Trade Centre. The
technology is meant to be more vivid and more exciting than books
or live tours. Some in the industry believe that this new technology
saves time and money. Also, not all mobile-phone tour services
charge a fee for using the service.
- VOIP on mobile phones will help cut smart-phone bills most of all for
international users based on the assumption that if consumers are
already paying for a data plan, will route international calls over their
phone’s data connection using VOIP and can save considerable money.
Product Characteristics:
In the smart phone industry, the products and services are highly
standardized. In the past, the products differentiated in smart phones
and services. Today, with more technology enhancement, the products
in different companies are essentially similar. Since this is a smart
phone industry, there is a maximum amount of products and services
that consumers can choose from.
Vivo phones come with some special features like:
- Smart Touch
- Air Operations
- Smart Motion
- Flashlight on shake
- Rear Fingerprint Sensor
- Face Unlock
Scale Economies:
There are two types of economies of scale pertaining to the smart
phone industry. They are the internal and external economies.
1. Internal: Internal economies of scale are economies made within a
company as a result of mass production. So as a company
G. H. PATEL POST GRADUATE INSTITUTE OF BUSINESS MANAGEMET
customer satisfaction. There are more options that buyers can choose
from.
Capital Requirements:
The smart phone companies require large capital to enter and remain in
the market successfully. Companies require capital to create products
that attracts consumers and for total assets and revenues to enlist other
products and services that are featured with smart phones. Smart
phone companies work with manufacturers to create new technological
and innovative smart phones in the market today to attract consumers.
A valuable capital in the smart phone industry is the consumers
because revenue and profits depends on them who buy the companies’
smart phones.
New products are introduced continually, technology evolves on a
daily basis, and customers are eager to become part of the future of a
wireless society. This makes the market very competitive and large
companies that have big economies of scale provide a highly
automated service to a large number of customers, and have the
financial resources required in building and maintaining a large
network of communications devices. Smaller companies can also
compete, but only in small markets or by provide specialty services.
Industry Profitability:
The cell phone industry will remain a competitive market and will
increase continuously with a total of 1,200 wireless companies with
total annual revenue of $100 billion. The profitability of individual
companies is driven mainly by their ability to develop new products,
providing better service, making their products affordable for
consumers. Profitability of companies is achieved also by taking
advantage of marketing their products, have access to capital, and by
inquiring the expertise to improve the cell phones.
5. What factors are driving industry changes and what impacts will
they have?
Below are listed various factors that drive the industry change:
Changes in who buys the product and how they use it:
G. H. PATEL POST GRADUATE INSTITUTE OF BUSINESS MANAGEMET
The target market of the smart phone is young generation. There are
two parts of the young generation that are students and working class.
Students want to have smart phone, there are about 80 percent students
who own a smart phone at college in 2017, compared with 38 percent
in 2009. The 97 percent of students use messages for their primary
communication method and people who are in corporate use email to
communicate to each other. There are about 90 percent of smart phone
users that use their phone to surf the internet. About 97 percent of the
users take and upload photos and 87 percent of the owners other
applications. Vivo has taken this change in consideration and added
special features like high speed internet facility (4G), good quality
cameras, high internal and expandable memory and a long battery life.
Increasing globalization of smart phone industry:
The demand of the smart phones is growing rapidly worldwide,
because of mobile internet becomes more popular. More and more
people start to buy a smart phone, because of the trend market. Smart
phone has replaced the otherwise traditional phone. Vivo positions its
mobiles as the medium to connect to the world. With the changed basic
needs of today, i.e. to remain in constant touch with everyone,
anywhere, the 4G, video calling and the likes are the features
incorporated in the Vivo mobiles.
Changing societal concerns, attitudes, and lifestyles:
Smartphone has changed the way people used to be. First, the
communication between the people has changed. People use social
media to communicate to each other. “Facebook user base has risen to
430 million year-over-year, roughly the same increase as QQ in China.
Twitter, while sporting only 58 million users experienced a 1238%
year-over-year growth rate. Facebook now dominates in chat,
messaging, video sharing, games, VoIP and more. People want to
check the social media instead of text message and give a phone call.
Vivo smart phones can give people the latest news from the social
media anywhere and anytime. Second, the lifestyle has changed.
People used to go to the bank to make transaction and deposit the
check. Now with the Vivo’s “vivoCloud”, one can easily keep all their
data safe and secure without the worries of losing it in some accidental
action.
Industry life cycle:
There are five stages of the industry life cycle. In the embryonic stage,
the industry starts to begin and develop the product to the public. In the
growth stage, the company produces more products and increases the
market share. In the shakeout stage, some of competitors start to see
the opportunities in this market. In the maturity stage, the product price
is stable and more competition comes to market. In the decline stage,
the sale of the product decreases until the product innovation or
discontinue in the market. The Vivo smart phones have reached the
G. H. PATEL POST GRADUATE INSTITUTE OF BUSINESS MANAGEMET
growth stage like all other members of this industry. The demand for
the smart phones has stagnated; rather the customers now want an
updated version or new features. The sale of the smart phone was 174
million units in the 2009; there were 270 million units sold in 2010.
Internal Analysis:
Value Chain- The value chain is that an organization creates value by
performing a series of activities and it represents how each competitive
advantage created via an organization adds value to the service or
product for each customer. In the Vivo Mobiles, R&D, Production,
Marketing & Sales, Customers Service and Human Resource are
adding the value to their company.
Research and Development:
Vivo is extremely concerned about research and development
department. Leading smart phone manufacturer Vivo has been
recognized as having the 5th-highest shipment volume among global
smart phone manufacturers per IDC's 2017 Q1 report. This recognition
comes as Vivo has been expanding its global research and
development (R&D) capabilities, with a focus on 5G technologies and
integrating them into its cutting-edge smart phones. To drive future
breakthroughs that will take their smartphones' performance and user
experience to the next level, Vivo has established seven R&D centers
worldwide, including two in Silicon Valley and San Diego, as well as
five in Shenzhen, Dongguan, Nanjing, Hangzhou and Beijing, China,
where it will continue to develop in-house smart phone technologies
including 5G, mobile camera, and Hi-Fi music technologies that appeal
to its customers. At Vivo's Beijing R&D centre the company engages
in the research of new 5G technologies. Engineers leverage their
insights into more than 100 million of Vivo's global smartphone users'
experience to develop 5G technology that offers an upgraded user
experience. The company's Hangzhou R&D centre is responsible for
photography technology research, while the institutes in Silicon Valley
and San Diego are focused on core technologies that support Vivo's
fundamental algorithm photography technology development.
Production:
Vivo has grown very fast. Vivo has unveiled the world’s first Half-
Screen In-Display Fingerprint Scanning Technology on Vivo
APEXTM , along with Screen SoundCasting Technology and an
Elevating Front Camera. Vivo needs to make sure their suppliers to
increase productivity in order to meet the demand of the market. Vivo
needed more manufacturing plants and facilities to meet the increasing
demand of Vivo Mobiles and so it established plants at Dongguan,
Chongqing, India and Republic of Indonesia. Vivo pay attention on
their quality from each of the product that they produce.
G. H. PATEL POST GRADUATE INSTITUTE OF BUSINESS MANAGEMET