In order to maintain a more stable environment the players in the industry need to adopt a viable long term strategy. This will alleviate consumer frustrations with the “chaotic” market and change their perceptions. The strategy recommended to Colt can also be used for other companies. Colt has to examine exactly where it is going to position itself within the European networking environment and according to its gaols for penetrating more of the DQ sector
The longer-term strategic options for Colt The type of strategic behaviour reflected within the framework by Colt is derived from the nature of the interaction between the changes in the external environment and of the resources/capabilities available to the enterprise (Kay, 1995).
Consequently, for a change in strategic behaviour to occur, either the environment has to change or there is an alteration in the nature of the resources at the disposal of the business.
If market growth becomes subdued, result is that the defensive stance of Colt is likely to be sustained into the near future.
Based on this assumption, it is evident that the survival of Colt and other alternative operators depends on going for scale to compete more effectively alongside larger incumbents by adhering to the processes discussed in the analysis. Consequently, given the position that Colt is seeking to secure in the market place, a number of options are available:
Adopting a policy of “sit and wait” while maintaining its defensive strategy. This would enable it to achieve scale through its ability to attract customers and purchasing (at vastly reduced prices) the networks of failed operators.
Thus, a reduction in competition within a framework of low growth could see Colt move to the offensive, picking up market share at minimal cost. This is based on Colt’s short-term advantage of being relatively secured financially if it can demonstrate security and continuity to its parent company.
However, if market conditions improve and an aggressive acquisition emerges, Fidelity may decide to minimise its losses on its investment in Colt. It also relies on a gamble that others will leave and that Colt will pick up sufficient market share to increase its scale. While Colt has been picking up customers from failed rivals, the rate defection has not been sufficient to radically change the fortunes of the company. In what remains a subdued market, this suggests that Colt’s larger incumbents are also seeking this method to generate traffic for their own networks.
Colt could seek to attain scale through merging with a rival. A key influence on this potential option will revolve around the patience of the parent and how long it ill be prepared to support Colt. Colt would be an attractive partner for BT or Cable &Wireless who are both seeking to expand their presence in Europe. Third, Colt could scale down it operations and focus on gaining scale in micro segments within its target group, and going on the offensive in this more narrowly defined niche. This can be achieved by acquiring strategic alliances with firms to benefit from scale areas such as sales or marketing and will reduce the threat of new entrants.
For Colt, although it is a strong contestant amongst other alternative operators, cannot compete with incumbents who have an advantage of enjoying economies of scale, brand image and reasonable revenues. Incumbents can take advantage of market uncertainty and their offensive strategic actions will only put alternative companies like Colt under severe competitive pressure. For alternative operators, there is an apparent need to go for scale if they are going to compete effectively with the much larger incumbents. The options specified for Colt could well be applied to any operator seeking to preserve its position within the European marketplace. Thus, if alternative operators are going to go on the offensive and effectively challenge incumbents, they need to be larger and there needs to be fewer of them.
It is suggested that Ofcom needs to advise all companies within the market as to what guidelines they should follow. A guideline, such as that distinguished above would eradicate some of the erratic performance in the market, improve consumer confidence and create a viable market for competition. Actions Most importantly, Colt needs to develop a brand name that is widely recognised as a mark of quality; this can be achieved by deploying the following methods: By embracing the emergence of new and innovative technologies, providers should aim to move on to internet-based services like Yell.com and 192.com. as long as they can attract high usage, they will be able to attract sponsorship form businesses.
This is the way forward for Colt WAP technology is also a prospective niche as is two-way SMS services. The provision of services in other languages will be very attractive particularly as the UK is becoming increasingly multicultural. As the boom of mobile technology has occurred, Colt could capitalise on mobile technologies by offering differentiated services that mobile phone users could use. This effectively would add value to their services. Two-way SMS is an opportunity to gain a niche of the market.
Finally, Colt should aim for an ultra intelligent marketing campaign that would stir intrigue and mystique amongst consumers, e.g., posting cards via direct mail. The cards could be simple with just their name, number or web site address this would be good enough to attract prospective clients and consumers. All these recommendations will reduce competitive rivalry and the threat of substitutes as the objective is to develop a brand name that symbolises quality and efficiency and people will feel satisfied using.
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