T-mobile business strategy

This section of team six discuss T-mobile's business strategies.

Five forces


The five forces applied to T-Mobile gives the management team an idea of where they stand in the industry and what competitive advantage they have. As a customer of T-Mobile you are bound by a contact and have little bargaining power. T-Mobile is threatened by a few substitutions that can replace their service; prepaid phones, telephone booths, video chat, email, and instant messenger. The bargaining powers of suppliers have a lot of bargaining power over T-Mobile because they provide the company with the bandwidth and phones to then provide their service. The threat of new entrants to the industry is low because the industry is controlled by the main phone service providers. Rivalry between T-Mobile and Verizon, Sprint, and AT&T stands in the way of T-Mobile being the preferred phone service. Part of T-Mobile’s competitive strategy was to utilize entry barriers. These entry barriers include already existing contracts with the phone manufacturing companies and available bandwidth from suppliers. Another competitive strategy T-Mobile implements is the switching costs of switching to another service and leaving a contract. This holds customers in place.


Pricing strategies

T-Mobile is currently using pricing strategies to maintain a competitive advantage. They are using skimming which is a strategy that companies set high initial product prices that decrease to match lower prices from competitors. T-Mobile offer a “value” plan that includes a discounted rate on the monthly rate, which customer sigh a two year contract. However the phones are full price that T-Mobile will allow customers to put a down payment and make monthly payments to pay the rest of the phones. For example getting a discount on the phone,(HTC Mytouch 4g Slide would be 249.99 and get back 50 dollars in mail in rebate) and not the plan (which unlimited everything would be 79.99). By taking the offered value plan, the same phone will cost full price (499.99) and the plan will be just 59.99 monthly, as said before T-Mobile allows you to just put a down payment of 199.99 plus tax which will make the remain balance of 300 dollars into 20 monthly payments of 15 dollars a month, which will make the monthly bill 59.99 plus 15 for the phone.

Key business processes

The key business processes in T-mobile: Examine the structure of their industry and determine a competitive strategy, then that strategy determine value chains, which, in turn, determine the business processes.

Assess an industry structure is Porter's five forces model which include: bargaining power of customers, threat of substitutions, bargaining power of suppliers, threat of new entrants, and rivalry among existing firms. To understand this model, let is us consider the strong and weak example in T-mobile industry, " I want to pay less for my phone contact plan" ," I think about join another phone company", " I will use online resources to make calls"... T-mobile's response to explain the value delivered, to emphaize importance of keeping closely contact with family by using unlimited calls and texts. Those responses called competitive strategy. Porter's four competitive strategies can focus on being the cost leader or differentiating its products from those of the competion. Further, the organization can employ the cost of the differentiation strategy across an industry or a particular industry segment. T-mobile has chosen a focused differentiation strategy. Its focus is on every city, every urban, every town. Free shipoing on all phones and devices. T-mobile offer the largest 4G network nationwide. Browse the web faster than on home internet which encouraged every adult or child to sign up in T-mobile. T-mobile differentiates by providing a superior product with lower cost $49.99/per months line -an close relationship with people by using endless data, talk and text.

Porter's model of business activities includes linkage. For example, T-mobile manufacturing systems use linkages to reduce inventory costs such as a system uses sales forecasts to plan production, it then uses the production plan to determine how many phone needs and schedule purchases. The right amount and just in time inventory reduce costs.The margin of the business process is the value of the outputs minus the cost. Because the business processes vary in cost and effectiveness so that the streamlining of business processes is able to increase margin.

Enterprise systems

T-Mobile as one of the largest mobile phone service providers, it has been set integrated information system both inside and outside of this corporation. The enterprise system has been used in T-mobile, and it makes this company more successful. The information system makes connection in different departments and also been used in customers services, it make the employees more efficient, and easy to get information. For example, the marketing department and manufactory are using one system, that if the front-desk employees have product problem, they may can get support directly in manufactory department. As an international company, customers can call for services any time to solve their problem, because the information system may connect the call to another region of world, it makes the service 24 hours per day. The enterprise system is an process implementation, it lock in customers and buyers because it is an contract model services, once a person use this services, it is hard to change to another company if they don’t want give up whole services in T-mobile. It raised barriers to other company by it’s highly technology and well services. It also reduce cost of running whole company.