Business Case Studies, Leadership Case Study, Tata Group,Ratan Tata

Code : COM0042

Year : 2004

Industry : Telecommunications

Region : Japan

Teaching Note:Not Available

Structured Assignment :Not Available

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Introduction:Japan's biggest mobile services company, NTT DoCoMo, reported a reduction in profit in the first quarter of fiscal year 2004. This was due to severe price competition in the domestic market, especially from its immediate competitor KDDI. The price competition was initiated by KDDI in November 2003 when it came outwith a fixed plan offer at ¥ 4200 permonth for unlimited use of its 3G services. The plan enabled KDDI to add greater number of subscribers to its portfolio than DoCoMo. By May 2004, KDDI was having 13 million subscribers for its 3G phones against DoCoMo's 3 million.

DoCoMo reacted by a similar price cut for its 3G services from June 2004 and placed its fixed rate offer at ¥ 3900 per month, ¥ 300 lower than that of KDDI. However, as the new CEO Masao Nakamura believed that price-cutting per sewas not enough to sustain the leadership of DoCoMo, he emphasized the need for DoCoMo to come out with pioneering technologies for which the company was always known in the Japanese telecom industry. By July 2004, DoCoMo launched four new phones that consisted of a special electronic chip called 'FeliCa'. Developed in cooperation with Sony Corp., FeliCa enables its customers to use their cell phones as their mobile wallets. Masao Nakamura said, "Up until now, we've focused on entertainment. While that's still important, we want to turn the cellphone into something that is absolutely essential for daily life".