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    Porters Five Force Model

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    krshn07
    The telecom industry in India is growing rapidly, with data usage and subscribers increasing significantly. Porter's Five Forces analysis shows the industry has high rivalry due to many competitors aggressively targeting each other. The threat of new entrants is low due to large economies of scale needed, but bargaining power of buyers is high as customers have many options. Overall the industry is only moderately attractive.

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    Porters Five Force Model

    Uploaded by

    krshn07
    149 views19 pages
    The telecom industry in India is growing rapidly, with data usage and subscribers increasing significantly. Porter's Five Forces analysis shows the industry has high rivalry due to many competitors aggressively targeting each other. The threat of new entrants is low due to large economies of scale needed, but bargaining power of buyers is high as customers have many options. Overall the industry is only moderately attractive.

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    Porter's five force model Telecom Industry Telecom industry in india

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    The telecom industry in India is growing rapidly, with data usage and subscribers increasing significantly. Porter's Five Forces analysis shows the industry has high rivalry due to many competitors aggressively targeting each other. The threat of new entrants is low due to large economies of scale needed, but bargaining power of buyers is high as customers have many options. Overall the industry is only moderately attractive.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    149 views19 pages

    Porters Five Force Model

    Uploaded by

    krshn07
    The telecom industry in India is growing rapidly, with data usage and subscribers increasing significantly. Porter's Five Forces analysis shows the industry has high rivalry due to many competitors aggressively targeting each other. The threat of new entrants is low due to large economies of scale needed, but bargaining power of buyers is high as customers have many options. Overall the industry is only moderately attractive.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 19

    Analysis of Telecom Industry through

    Porter’s Five Force Model


    TRODUCTION
    elecom Market
    Growth in Telecom Industry
     The monthly data usage per smartpho
    in India is expected to increase from 3
    GB in 2017 to 18 GB by 2023.

     Data usage on Indian telecom operato


    networks (excluding Reliance Jio),
    doubled in six months as 4G data usag
    share increased to 34 per cent by the
    end of June 2017$.

     According to a report by leading resea


    firm Market Research Store, the India
    telecommunication services market w
    likely grow by 10.3 per cent year-on-y
    to reach US$ 103.9 billion by 2020.
    reless Segment Revenue dominates Market

     In November 2017, India’s telephone subscriber


    base reached 1,185.88 million.

     In November 2017, the wireless segment (98.03 per


    cent of total telephone subscriptions) dominated
    the market.

     Urban regions accounted for 57.20 per cent share in


    the wireless telecom subscriptions in the country,
    while rural areas accounted for the remaining share.
    ey Companies
    ORTER’S FIVE FORCE MODEL
    hreat of New Entrants: Low
    • The biggest barrier to entry is access to finance.

    • When financing opportunities are less readily available, the pace of entry slows.

    • Obtain ownership of a telecom license.

    • Large economies of scale.

    • Low product differentiation.

    • Access to Optical Fiber network.

    • Unfavorable government policies.

    • Presence of 6-7
    7 players in each region dissuades new players from entering the market
    argaining Power of Buyers : High
    • Buyer power vary between different market segments.

    • Buyer in Telecom Industry divided into


    • Individual
    • Enterprise customers(IT Companies, Banks etc.)

    • Buyer’s Information regarding availability of other options has become high.

    • Low cost of switching for retail customers.

    • Service treated by the customer as a commodity.

    • Competition between Enterprise customers.

    • The bargaining power of buyers is rising.


    roduct Differentiation
    argaining Power of Suppliers : Moderate
    • Suppliers power refers to increasing price, limiting availability of raw materials,
    reducing quality.

    • It’s power is inversely proportional to No: of suppliers & directly proportional to no:
    of buyers

    Different equipment / supplies needed :


    • Mobile Towers
    • Network Equipment
    • SIM Cards
    • Hand Set

    Different Services needed:


    • Spectrum Bandwidth
    • Information Technology
    • Customer Support
    argaining Power of Supplies
    Bargaining power classification
    Entity Name Power
    Mobile Tower Low
    Network Equipment Medium
    SIM Cards Low
    Hand Set Low
    Spectrum Bandwidth High
    Information Technology Medium
    Customer Support Medium
    hreat of Substitutes : Low
    uyer Propensity to Substitute.
    • Buoyed by cheaper smartphones, faster connectivity, and affordable services, the number
    of mobile internet users in India is estimated to touch 478 million by June 2018.

    Products and services from non-traditional


    traditional telecom industries pose
    serious substitution threats.

    Some Substitutes for voice communication:


    • VOIP (Skype, Messenger etc.)
    • Online Chat (WhatsApp)
    • Email
    • Satellite phones
    hreat of Substitutes
    ative Prices

    • Previously Airtel would lead the telecom industry and now as we know that JIO is
    the main substitute for Airtel and most of the telecom industry.
    industry

    • with the advent of Jio which combines both the services and charges the client only
    for data and not for voice calls, which is a master stroke by Jio which separates Jio
    and others like Airtel with a complete distinction.

    • This was the major scheme that Jio implemented that compelled the customers
    from Airtel or other telecom industry to switch to a substitute (Jio)
    (
    ndustry Rivalry: High
    Industry rivalry can be categorised into high intensity and low intensity.

    • High intensity of competitors are aggressively targeting each other’s markets


    and aggressively pricing products.

    • Low intensity of competitive rivalry makes an industry less competitive and


    increases profit potential for the existing firms.
    firms

    • The industry is highly fragmented with 15 players, such that there are as many as
    five-six players in one region.
    ndustry Rivalry

    • With low product and service differentiation, lower prices and innovative services
    are means of attracting new customers.

    • This tends to drive the margins and profits down.

    • In addition the high exit barriers in form of regulations and specialized equipment
    have increased the overall competition.

    • Merger & Acquisitions


    dustry Rivalry
    Current Market Share

    Aircel
    7%

    BSNL + MTNL
    10%

    Airtel + Telenor + Tata


    Teleservices
    Jio + Rcom 32%
    15%

    Vodafone + Idea
    36%
    inal Conclusion
    Factors of an Attractive industry:

    •Threat of entrants is low.


    •Threat of substitute products is low.
    •Bargaining power of buyers is low.
    •Bargaining power of suppliers is low.
    •Intensity of rivalry among existing firms is low.

    Telecom Industry in India has limited players as


    requires huge investment in infrastructu
    development and its profitability depends
    number of subscribers and pan India de
    penetration network. Although Threats
    substitution is low and bargaining power of suppl
    is moderate, with high Industry Rivalry and h
    bargaining power of customer make it a modera
    attractive industry.

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