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Latest posts by Mariam Peyton (see all)

    China Mobile is an investment holding company engaged in telecommunications and related businesses such as mobile businesses which offer voice, roaming and data services, wireline broadline businesses and Internet of Things. China’s telecom market is a prominent oligopoly with China Mobile accounting for over 80% of all net profit in China’s telecom market (Yoo 2017) China Mobile has over 887million customers (Statista 2018) with competitors China Unicom and China Telecom having 284.16million and 249.96million customers respectively. It accounts for 70% of China’s telecom market. Various external factors have hindered the growth of China Mobile and by using a pestle analysis, we realize how the political factors like Trump’s order to block China Mobile from operating in the US affects its profitability, the effect of unemployment on China Mobile. In addition, we look at how developments in technology and demographics like increase of consumers using smartphones can favor further growth of China Mobile. Using the swot analysis, we identify China Mobile’s major strength and weaknesses that can be improved upon.

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    China Mobile Strategy Case Study


    Key Learning Outcomes

    By the end of the case, students should be able to:
    • Analyse the mobile and telecommunications industry and how the five forces have affected China Mobile, as well as rivals and the impact on industry structure, attractiveness, and profitability.
    • Understand how China Mobile has managed to defend against intense competition from major players such China Telecom, and China Unicom and the strategies it uses to create 'blue oceans' that are defensible, helping it capture and maintain top position.
    • Analyse the various strategic business units in China Mobile's portfolio and assess which ones are the stars and cash cows generating the most value, or the question marks, and dogs that may need further investment or divesting to achieve a balance of the portfolio.
    • To apply strategy business models and frameworks such as Porters five forces, BCG matrix etc. to real company cases.

     

    1.0 INTRODUCTION


    China Mobile was founded on September 3rd, 1997 in Beijing China and is the biggest telecommunications company in China accounting for over 70% of China’s telecom market ahead of major competitors China Telecom and China Unicom with 10% and 20% market shares respectively (Chepkemoi 2017). China Mobile is engaged in telecommunications and related businesses such as mobile businesses which offer voice, roaming and data services, wire line broadband and Internet of Things, China Mobile is the world’s 3rd largest telecom behind AT& T and Verizon. However, in terms of mobile subscribers, China Mobile is the biggest mobile telecom globally with over 887million customers ahead of competitors China Unicom and China Telecom with 284.16million and 249.96million customers respectively (Ponciano 2018; Statista 2018). 
    In 2017, China Mobile recorded an annual revenue of 740billion Yuan with 114.3billion Yuan in net profit, a 5.1% increase in net profits from 108.8billion yuan in 2016 due to boost from 4G subscriber growth (Si 2018).  However, China Mobile’s growth has been affected by various macro-factors such as government policy and competition from fellow telecom companies which have hindered the growth of some of its businesses. In this report, we analyze how the five forces have impacted China Mobile and the Chinese mobile and telecommunications sector plus highlighting China Mobile's portfolio matrix.

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