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NTT DoCoMo is one of the largest mobile communications companies in japan that has thrived for a long period. Despite of this factor, the company faces several challenges in terms of market saturation, competition from rival companies and rivalry in the mobile phone industry. NTT DoCoMo was found in the year 1992, a period when it was spun off by NNT (Nippon Telegraph and Telephone). Looking back at NTT’s history, it is noted that the company was privatized in 1986, but still the government of japan still held some shares of 46% and part of its equities in the year 2004. As a result of this, NTT owned 58% of DoCoMo’s equities.
Though DoCoMo poses great potential in terms of innovation, the company also faces competition, especially in the technology sector. Felica (part of DoCoMo) has over the years competed with Type A and Type B contactless IC technologies, where type A technology was mostly used in Europe, and Type being utilized in Japan extensively. With this type of competition, the company was able to form alliances with other stakeholders to come up with a technology (a chip tech) that would be utilized by credit card users.
DoCoMo’s strategy to pursue the wireless internet was achieved with the launch of i-mode. This is in consideration of the fact that i-mode technology enabled users to receive an incoming call while surfing the internet. The technology mostly targeted young consumers rather than business persons, in spite of the fact that business individuals would most probable use premium services of the product. Through this aspect, the various competitive advantages of the product are realized with its market limitations on the other hand. This concept introduces porter’s generic strategy into use, where one can increase profits through the reduction of costs while at the same time charging industry’s average price. Porter’s strategy (cost reduction strategy) also facilitates the increase in market shares through the lowering of prices, while at the same time making reasonable profits from the sale of each share. In consideration of the cost reduction strategy, DoCoMo Company was able to set up small transaction fees for its chip technology to its users. These transaction fees were on an average of about 2% to 3% for EDY services. Such a strategy poses a competition to credit card companies whose transaction fee run on an average of about 3% to 5%.
Porter’s generic strategy also incorporates the focus strategy, where a company concentrates on a particular market. This is usually through the understanding of the dynamics that exist in a particular market (understanding of the customer’s needs is one of the crucial factors to consider in this strategy). The main advantage of this strategy is that, customer loyalty is usually established especially when unique services are provided in a new market. Despite the DoCoMo’s extensive marketing strategies, the company was not able to utilize the focus strategy. Though DoCoMo’s success in Japan in the initial launch of i-mode, the company did not lay a strategic focus on the Japan market. Its foreign ventures especially in the USA and other countries also faced various challenges that were not considered prior to the venture. From the study, it is evident that DoCoMo’s partners also did not adopt i-mode technology, something that contributed to its disadvantages overseas.
In porters five model, four factors are perceived to have the capability of causing market rivalry. These factors are supplier power, threat of new entrants, threat of substitutes, and the buyer’s power (Hill & Jones, 2010). Through the analysis of DoCoMo’s market, it is realized that the company faces a high supplier’s power in its market, a factor that has made it loose its influence over the Japanese market. Government policies have also affected DoCoMo’s entrant to new markets, an element that has reduced the extent of expansion of the company.
Prior to taking any risk, companies and others organizations ought to come up with a model that will enable them to project the probable risk that is prone to affect their venture hence making it unsuccessful. DoCoMo is a company that has great ideas and innovations but the only issue affecting the company’s performance was the lack of well centered risk projection pattern or model. In a risk projection model, one has to identify the risk, analyze the risk qualitatively, assess the issues at hand quantitatively and finally come up with a risk response planning. With this model, DoCoMo Company would be able to come up with a solution to its market problem especially in the Japanese market. The model would also enable the company to choose selectively, the most appropriate countries to partner with (Grey, 2004). .
Competition is one of the problems that DoCoMo is facing. This problem can be addressed effectively through the implementation of a proper differentiation strategy. Product differentiation entails making once product different and more attractive than the competitors’ products. The extent of differentiation in this case will depend on the nature of technological products being produced by other companies in the market. In consideration of this concept, DoCoMo will be obliged to produce products that have more functionality, features and durability than the competitor’s products. I relation to this; i-mode (DoCoMo’s product) would have a higher competitive edge over its rival products (Joia, 2003).
Though DoCoMo tried to diversity its market extensively, the company was unable to come up with an effective focus strategy. By having a proper focus strategy, DoCoMo would be able to dominate in its market where the product supply would remain constant. In this case a proper focus can be achieved through the development of a uniquely low-cost and well-specified product market. Such a strategy would enable the company to create dominance over its market, hence establishing customer loyalty (Joia, 2003). Cost focus differentiation would also be an important strategy for the company to implement especially when attracting new customers. In consideration of all these factors that DoCoMo should consider in coming up with a solution to its problems. The management of the company is also expected to carry out a SWOT analysis of the company in order to solve its problems. A clear and well-set SWOT analysis would enable the company come-up with a measure to manage the suppliers’ power and also the capability to reduce the buyer’s power. This would in-turn enable the company dominate its market and thrive in all its market ventures (Joia, 2003).
From the study, it is realized that DoCoMo is a company that has been extensively to produce products that are of high innovation due to its mergers with other stakeholders. The company also faces problems in terms of competitors. As a result of all this, it would be recommendable for the company to set-up a proper management program. A program, that will be able to overlook all the necessary strategies that can enable the company thrive in both domestic and foreign markets. Implementation of both SWOT and porters five model would enable the DoCoMo thrive well in providing e-money services (Joia, 2003).
Grey, S. (2004). Practical risk assessment for project management. Chichester: Wiley.
Hill, C. W., & Jones, G. R. (2010). Strategic management theory: An integrated approach. Mason, OH: South-Western/Cengage Learning.
Joia, L. A. (2003). IT-based management: Challenges and solutions. Hershey, PA: Idea Group Pub.