suitable analytical frameworks, conduct a corporate appraisal a business organisation choice. The appraisal cover business environment organisation's strategic capabilities.
Porter's Five Forces
Strategic strengths and strategic challenges
Orange PLC is one of the leading companies in the telecommunications industry. The organization retails mobile telephones, but its main activity is that of providing telecommunications services, including primarily mobile telephone communication services, but also internet services. The company operates in a highly dynamic and competitive environment and it manages to further consolidate its competitive position. In this setting then, the current report strives to assess the features which characterize the company, the industry and the market and to propose some specific recommendation for the following period.
Orange Plc. was founded in 1990 through the merger of several organizations and the brand is now used to reflect the mobile and internet services offered by the parent company French Telecom. Today, the company employs 169,000 individuals and it operates worldwide to serve more than 130 million subscribers.
Orange is a leading telecommunications company in the overall European market, revealing some specifics in several regions, where it leads the market through mergers or in which it has created specific comparative advantages.
"In the UK, Orange is the leading carrier through a joint venture with Deutsche Telekom called Everything Everywhere. Spain and Poland are key wireless markets, and subsidiary Orange Communications serves Switzerland. Outside Europe, Orange is active in Africa, the Middle East, and the Caribbean" (Hoovers, 2011).
3. Situational analysis
The analysis of Orange Plc. is best completed through the usage of three specific frameworks -- the SWOT analysis, the PESTLE analysis and Porter's five forces analysis. Each of these three frameworks addresses the positive and negative issues related to either the company or the industry and market in which it operates.
Orange is one of the leading telecommunications companies in the world, possessing a dominant position in Europe
Orange is a strong and trusted brand, embedded in the consciousness of the general consumer
Wide array of services to serve the specific needs of various customer categories, from individual buyers to corporate solutions
Diversification of the services offered and the continuous emphasis on internet services as a core segment
Strong financial position characterized in 2010 by an array of elements, such as a decrease in the organizational debts or an increase in the dividends paid (Orange Plc. 2010 Annual Report).
Orange is a leading telecommunications company, but unlike most international corporations, it has not created scale economies. These economies of scale would decrease the operational costs and increase profitability (Sahu, 2011), but Orange has not been able to create them.
On a survey conducted in Great Britain, customers complained about the quality of the Orange internet services, as well as of the quality of the customer services. They often argued that it was difficult for them to cancel their orange services. Overall, out of the 29 companies assessed, Orange was ranked 27th, with a customer satisfaction of 42 per cent (Broadband Watchdog, 2007).
The Orange employees -- especially those in France -- have revealed low levels of performance, commitment to the firm and morale, and this was due to crises in human resource management. At the overall corporate level, France Telecom has decided to take action after 23 of its employees committed suicide (Chrisafis, 2009).
Orange is not an independent company, but a division of French Telecom, meaning as such that it shares its responsibilities, its gains and its strategic decisions with the parent company.
Orange is facing various financial shortages, materialized in 2010 by the following: decreasing revenues (from 46.1 billion euros to 45.5 billion euros), decreased organic cash flow (from 8.2 billion euros to 8.1 billion euros) or decreases in the earnings before interest and taxes, from 16.3 in 2009 to 15.6 billion euros in 2010 (Orange Plc 2010 Annual Report).
One major opportunity revealed for Orange is represented by its customers. Specifically, the organization has attracted and retained them and now its clients are loyal and they generate sustainable sales (Business Superbrands)
The business community evolves alongside with the technological field and it integrates more and more appliances and services (Iansiti, West, Teece, Chedbrough and Pisano, 1999). In this setting, it creates new opportunities for Orange to expand within this business field.
Orange has transformed the internet service line into a core segment, but the field of internet services is continually changing to raise new challenges and transformations
The penetration rates are decreasing in size as Orange and other telecommunications operators are already operating in most global regions. This virtually means that the company would not be able to base its success on the attraction of new customers, but would have to devise strategies towards the satisfaction of the already existent customers.
Continually changing external environment in terms of elements such as customer demands, technologic developments or legal frameworks, which add new pressures for Orange.
The political environments in France and other European states are rather stable and this field does not pose major challenges or opportunities for Orange and other telecommunications operators. Still, these players have to respect the legislations developed and implemented by the policy makers.
The political environment impacting Orange is also characterized by the fact that France and most of the countries in which Orange operates are part of the European Union. And the European Union makes intense efforts to integrate telecommunications services, forcing as such Orange to also integrate its service provision at the levels of quality offered, prices charged and competitive practices (Goodman, 2006).
The current economic environment is extremely challenging. The world is continually battling the impacts of the economic crisis commenced in the American real estate sector, and expended gradually throughout the rest of the word (Baily and Elliott, 2009).
This crisis generates a wide array of complexities, which can be divided into two major categories. On the one hand, there are the political complexities revealed by the sustained efforts of the EU members to reduce the impacts of the crisis in its member states. Policy regulations could as such impact Orange at specific levels, such as a decision to increase taxes on the profits of large size corporation.
On the other hand, the economic crisis has reduced the purchase power of the consumers, meaning as such that their disposable incomes have contracted. In such a context, the demand for the Orange products and services would also decrease.
At a socio-cultural level, the external environment is characterized by continually growing demands from the various stakeholder categories. Economic agents are pressured to operate in a more socially and environmentally sustainable manner and these demands impact the operational decisions, the strategic decisions and the budget allocations at the firms.
The technological environment is continually changing to create new advancements. This feature of the technological community translates into both opportunities as well as threats in the meaning that Orange can use the technologies to improve its services, but also that it has to spend increasing amounts of money to continually upgrade its technologies. Additionally, the advancing technologies foster competition within the industry.
The legal environment surrounding Orange is characterized mainly by two aspects. First of all, since Orange is an international operator, it has to simultaneously comply with the regulations in France, the legislations in the countries in which it operates, as well as the rules created and implemented by international regulatory institutions.
Second of all, the legal environment is in itself impacted by the technological advancements. In other words, the traditional legal environment was unable to regulate all of the new services and technologies and it is continually changing in order to cover the new activities (Cox, 2006). This virtually means that Orange and the rest of the players in the telecommunications sector are subjected to a continually changing legal environment.
The natural environment is continually decaying; it is affected by pollution, greenhouse gases and global warming threatens its stability. In this setting, there is immense pressure on economic agents to operate in a means in which their carbon footprint is as small and possible.
The pressures on economic agents to operate in an environmentally sustainable and responsible manner have traditionally been issued by the population, with more emphasis from specific environmental protection agencies. More recently however, policy makers are also turning their attention to environmental sustainability (Organization for Economic Co-operation and Development).
3.3. Porter's Five Forces
Threat of new entrants
The threat of new entrants is relatively low. The telecommunications industry is capital intensive and the new entrants face the barrier of insufficient financial resources. In this setting then, the threat of new entrants to compete with Orange is fairly low.
Bargaining power of buyers
The customers in the telecommunication market are presented with a wide array of products and services from which to choose those that best serve their needs. Additionally, the offers of Orange,…