The Research Of Shanghai Telecom For Development Strategy Of Telematics

Telematics entered into Chinese market in2009as a brand newapplication. It demonstrates rapid trend of development although withoutlong history.From year2009, Shanghai Telecom entered Telematics industry assupplier of Telecom network. OnStar, the model of Telematics application,use Shanghai Telecom’s CDMA network. However, with marketdevelopment, the value of pure network channel is declining. And because ofnetwork channel’s scarcity, Unicom and other competitors launched fiercecompetition with China Telecom. Both situations urge Shanghai Telecom toreconsider Telematics’ development strategy.This article follows the opinion that enterprise’s external environment,strategic direction and internal strength function together on enterprise’sdevelopment strategy. Starting out from Telematics concept and basing onanalyzing macro environment and industry environment, the article reachesthree basic judgments of Telematics’ general environment, industrydevelopment and competitive market. Secondly, by analyzing ShanghaiTelecom’s internal resources and competences and via VRIO framework, thearticle concludes the judgment of Shanghai Telecom’s key advantages in Telematics’ industry. Thirdly, by analyzing Shanghai Telecom’s enterprisestrategic guidance and the juncture of Telematics market and the wholestrategy and also based on external environment, strategic guidance andinternal strength, the author provides Shanghai Telecom’s new position inTelematics industry, that is to become Telematics TSP operator who providescomprehensive services.The new position means that Shanghai Telecom will enter intoTelematics industry as a competitor. So, this article covers two maincompetitive strategies, which are cost priority strategy and differentiationstrategy. What’s more, based on external environment and internal strength,the article demonstrates that Shanghai Telecom should apply cost prioritystrategy and present several aspects that need to pay more attention to whencarrying out the strategy.Finally, based on cost priority strategy, the article expends to proposeprice priority strategy by analyzing and designing several business patterns todecrease price, which is a feasible option for Shanghai Telecom’s Telematicsdevelopment.