1.

Explain the five forces driving industry competition with suitable

examples.

Answer: Porter’s Five Forces are:

a) Competition in the industry

b) New entrants threat

c) Power of suppliers

d) Power of customers

e) Threat of substitute products

Competition in the industry: Competition keeps companies on their toes. It

motivates them to perform better. Before buying a stock, you must understand the
position of the company in its industry. The larger the number of competitors, the
lesser is the power of a company. Conversely, low competition means that the
company has greater pricing power. It gives them the power to set the terms of deals
to achieve higher profits.
For example, India is the third-largest domestic aviation market in the world. The
switching costs for customers are also very low. Hence there is cut-throat
competition in the Indian aviation sector.

Threat of New Entrants: This refers to the difficulties a company faces when a new
player enters the industry. New entrants face many barriers while starting up a new
business. These include setting up a distribution network, huge capital, infrastructure
requirements, patents, etc. Industries with high entry barriers have few competitors.
While industries with low entry barriers have lots of players and thus don’t have a
high-profit margin.

For example, assume that a company is about to launch a new product in a market.
If the barriers to entry are low, then a new start-up can easily try to replicate the
product. This would lead to an increase in competition and a further rise in expenses.
The stock price would see no huge impact despite a new product launch. In the
airline industry, new entrant’s threats can be considered as low to medium. The
Indian government has approved 100% Foreign Direct Investment (FDI). However,
new entrants need licenses and huge upfront investment. Plus, the existing airline
players have built up a large base of experience over the years. Thus, a new entrant
would have a competitive disadvantage right from the start.
Power of Suppliers: It addresses how suppliers influence and affect profitability.
Fewer the suppliers, the more dependent a company becomes. As a result, suppliers
have more power and can drive up input costs to take undue advantage. When there
are many suppliers, the switching costs are low.

For example, the airline industry majorly depends on fuel and aircrafts. The prices of
fuel are subject to fluctuations in the global market. The industry has very little
control over these factors. Very few aircraft suppliers exist which gives them
bargaining power. Suppliers can raise the prices which can impact the entire industry

Power of Customers: You cannot run a business without customers. They have the
power to force sellers for better price deals and services. The bargaining power of
buyers is their ability to influence and drives down the prices of goods and
services. The force largely depends on how many customers a company has and
how significant each customer is.

For example, the bargaining power of customers in the airline industry is considered
to be high. Customers have various tools to compare different prices and offers.
They will always prefer to go with the least expensive option. Plus, they do not incur
any switching costs to change airways

Threat of Substitutes: Availability of substitute goods and services is also a major

threat. Products with no close substitutes have high pricing power. When close
substitutes are available, customers have the option to switch to a cheaper product.
Substitution can be within the industry or outside the industry.

For example, a customer can decide to travel by road instead of booking a flight.
Various factors like cost, safety, time, etc. contribute to making a decision. Air travel
is relatedly costlier in India which makes railway a feasible substitute. In India, the
railway connects remote cities making travel cheaper and accessible.

2. Describe the value chain analysis with a neat diagram.

Answer: Value chain analysis is a way to visually analyse a company's business

activities to see how the company can create a competitive advantage for itself.
Value chain analysis helps a company understands how it adds value to something
and subsequently how it can sell its product or service for more than the cost of
adding the value, thereby generating a profit margin. In other words, if they are run
efficiently the value obtained should exceed the costs of running them i.e.
customers should return to the organisation and transact freely and willingly.
Originated in the 1980s by Michael Porter, value chain analysis is the conceptual
notion of value-added in the form of a value chain. He suggested that an
organisation is split into 'primary activities' and 'support activities'. The figure below
divides activities into primary and support activities as suggested by Porter's Value
Chain Analysis model:

Porter suggested that activities within an organisation add value to the service and
products that the organisation produces, and all these activities should be run at
optimum level if the organisation is to gain any real competitive advantage.
Competitive Advantage is the ability for a firm to put "generic strategy" into
practice, generic strategy includes:
1. Cost Leadership: offer the lowest price to customers
2. Differentiation: selecting the important attributes that buyers want so the
company can get a premium price
3. Focus: doing each strategy according to each market segment
A value chain concentrates on the activities starting with raw materials till the
conversion into final goods or services. The sources of the competitive advantage of
a firm can be seen from its discrete activities and how they interact with one another.
The ultimate goals in performing value chain analysis are to maximize value creation
while also monitoring and minimizing costs. These discrete activities involve the
acquisition and consumption of resources - money, labour, materials, equipment,
buildings, land, administration and management. How value chain activities are
carried out determines costs and affects profits.
Most organizations engage in hundreds, even thousands, of activities in the process
of converting inputs to outputs. These activities can be classified generally as either
primary or support activities that all businesses must undertake in some form.

Primary Activities: Primary activities are directly concerned with creating and
delivering a product. They can be grouped into five main areas: inbound logistics,
operations, outbound logistics, marketing and sales, and service. Each of these
primary activities is linked to support activities which help to improve their
effectiveness or efficiency; and According to Porter (1985), the primary activities are:
 Inbound logistics: Refers to goods being obtained from the organisation's
suppliers and to be used for producing the end product.
 Operations: Raw materials and goods are manufactured into the final
product. Value is added to the product at this stage as it moves through the
production line.
 Outbound logistics: Once the products have been manufactured they are
ready to be distributed to distribution centres, wholesalers, retailers or
customers. Distribution of finished goods is known as outbound logistics.
 Marketing and Sales: Marketing must make sure that the product is targeted
towards the correct customer group. The marketing mix is used to establish
an effective strategy; any competitive advantage is clearly communicated to
the target group through the promotional mix.
 Services: After the product/service has been sold what support services does
the organisation offer customers, this may come in the form of after sales
training, guarantees and warranties.

With the above activities, any or a combination of them are essential if the firm
are to develop the "competitive advantage".

Support Activities: Support activities assist the primary activities in helping the
organisation achieve its competitive advantage. There are four main areas of
support activities: procurement, technology development (including R&D), human
resource management, and infrastructure (systems for planning, finance, quality,
information management etc.). They include:

 Firm infrastructure: Every organisation needs to ensure that their

finances, legal structure and management structure work efficiently and
helps drive the organisation forward. Inefficient infrastructures waste
resources, could affect the firm's reputation and even leave it open to fines
and sanctions.
 Human resource management: The organisation will have to recruit,
train and develop the correct people for the organisation to be successful.
Staff will have to be motivated and paid the 'market rate' if they are to stay
with the organisation and add value. Within the service sector such as the
airline industry, employees are the competitive advantage as customers
are purchasing a service, which is provided by employees; there isn't a
product for the customer to take away with them.
 Technology development: The use of technology to obtain a competitive
advantage is very important in today's technological driven environment.
Technology can be used in many ways including production to reduce cost
thus add value, research and development to develop new products and
the internet so customers have 24/7 access to the firm.
 Procurement: This department must source raw materials for the
business and obtain the best price for doing so. The challenge for
 procurement is to obtain the best possible quality available (on the market)
for their budget.
4. Do a SWOT analysis for Reliance Jio 4G services in Indian Market and
analyse the strategic approach for reliance communication in this
regard.

Answer: Strengths of Reliance Jio-

 Strongest strategy for customer acquisition-Dependence Jio is expected to have the
best strategy for customer acquisition to date. The company offered all its customers
their services free for 3-6 months. This resulted in millions of consumers using
Dependency Jio and has resulted in one of the best strategy to acquire customers in
telecom history.
 Huge customer base – In 170 days of its launch Reliance Jio has reached to a
subscriber base of 100 million customers this was a record that no other company
has been able to reach. This has also made it the most preferred 4G Internet service
provider for Reliance Jio India.
 Technology – Jio is now using the new 4 G LTE technology and is one of the best
technologies for the future in the world. Voice over LTE embraces this, making it
flexible and inclusive of 5 G and 6 G technologies which are considered to be the
future of wireless communication.
 Reliance Industries parent company’s strong backing: Reliance Industries is a
reputable brand that reflects Indian feelings and has high consumer trust. Jio’s
connexion with Dependency is serving as a core power..
 Quick and large network: Reliance Jio is considered to be a stable and efficient
network with zero connectivity issues in all 22 telecom circles in India.
 Attractive Offers: Reliance Jio offers a wide range of facilities such as movies,
shopping, sports, messenger and chats etc. that give them a lot of choices to
customers.
 Lightning Fast Internet Access: Reliance Jio offers Lightening fast internet access. It
is the first telecom service provider to offer free voice calling over high speed internet
in India.
 Attractive Free Data Offers: Reliance Offers free data for its customers.
 Free Apps: Free Apps with Reliance Jio are JioBrowser, JioChat, JioCinema,
JioCloud, JioHealth, JioNews, JioMeet, JioMoney, JioSaavn, JioSecurity, JioTV,
JioVoice and MyJio app. JioTV is the most popular app of Reliance Jio because it
offers free TV Channels.
 Trained labour force: Reliance Jio has invested heavily in educating its employees,
which has resulted in recruiting a large amount of inspired and skilled staff.
 Reliance Jio has a well-established IT framework which ensures the performance of
both its internal and external operations.

Weaknesses of Reliance Jio –

 Pricing controversies – Reliance Jio was criticised for lowering its rates beyond what
was acceptable to enter the market and this sparked charges against them such as
collusion and money laundering.
  Too many freebies – Reliance Jio currently provides many services free of charge
and that was one of the reasons for increased market share. However, the company
might not be able to afford them all in the long run which could have a negative effect
on the sector.
 Blocking Installation of Apps in the JioGiga Fiber Set Top Box is the major weakness
of the company.

Opportunities of Reliance Jio-

 Future powered technology: Dependence Jio uses VoLTE 4 G network that can be
adapted
 5G and 6G technologies: This gives Jio various avenues or potential bandwidth
expansion.
 Apps: Reliance Jio has VoLTE that has a lot of flexibility in terms of bandwidth. This
means they can sell apps to consumers that are initially chargeable or even free and
pay later for use.
 Competitive strategy for pricing: Reliance Jio takes pride in becoming a low-cost
Internet service provider and mobile operator. This can be seen as a strategy for
targeting more customers and growing their market share because most of their
rivals are unable to afford rates.
 Expansion to other countries: Dependency Jio currently only operates in India. But at
least in the surrounding regions there is plenty of space for expansion to foreign
countries

Threats of reliance Jio-

 Customer loss risk: Consumers choose Jio largely due to the low prices they deliver.
A loss of customers may occur at a point where the company is increasing its price.
 Removal of Free Services: Jio is currently associated with lots of Freebies. If these
are withdrawn, the business will experience a drop in revenue.
 Criticism and negative image – From the time it was launched, Reliance Jio has been
entangled in many controversies. This led the company to have a negative brand
picture.
 Weak Code of Ethics – Many of Reliance Jio’s tactics such as low pricing, free
bandwidth, and market expansion strategies have been found to be unethical, and
this could have an effect on the long-term credibility of the company.
 TRAI Regulations: TRAI Regulations for Mobile Networks and Tariffs may directly
affect the business of Reliance Jio.
 Government Policies and Health policies regarding Radio Frequencies can also
affect the business of Reliance Jio.

Strategies of Reliance communications-

 Price: One of the most attractive strategies, Jio adapts, is pricing strategies. Not only the
company offered a satisfying price to their various products for individuals but it also
leads the in-vogue telecom market. Rival companies also modified their pricing
strategies when Jio introduced premium 4G services at cheap prices. However, Jio has
revised its latest tariff plans.
 Products: Jio is providing telecom products and assistance with high-speed internet
services and exclusive offers.
 Place: By the various broadly spread circulatory channels, Jio products, and other digital
items are sold out at various Jio stores located in several cities in India. Reliance Jio
stores have evolved into India’s largest supply chain in a short period of time that turns
out to be an augmented platform for distribution, incorporating a huge number of national
and international personal brands.
 Promotion: When it comes to making positive brand consciousness, Reliance Jio has
adopted a bit aggressive marketing strategy including launching ad campaigns on
television, radio, newspapers, magazines, and social media platforms like Instagram,
Facebook, Twitter, and YouTube. They also have used film industry stars and celebrities’
power to do acting in their commercials ads and become joined with their brand.

6. Choose any two cellular phone manufacturing companies and compare their
competitive advantages with example.
Answer: Samsung and Apple are the two world’s largest producers of Smartphones. These
companies have adopted operational strategies that are different from each other. They operate
at the international level with branches in numerous countries.
Competitive Advantage:
Samsung and Apple are leading companies in telecommunications, however; both companies
have certain competitive advantages over the other. Apple is not concerned with their
competitors. In this comparison, the competitor is Samsung. Apple has different marketing
styles and a different approach to launching products that has thus far worked for them. Apple
has led Samsung in sales for the past four years. Samsung today is still a company with
several different avenues, but they have reached the top in the smart phone world. Samsung
is a Korean company that manufactures many of their own parts to their phones and other
devices. They also manufacture parts for their competition. Recently Samsung has had more
success with overall profits. Samsung relies on being a fast follower to compete effectively with
rival companies. the company is great at learning from its competitors .This approach has led
Samsung into trouble in the past days, losing the case to Apple where it was accused of stealing
the latter company’s design. Samsung adapts quickly to market changes, producing products
even faster, an approach that has enabled the giant company to release a high supply of its
products in the market while demand is still high. The rapid release of Galaxy mobile phones, for
instance, enabled the company to maintain its position in the market, even increasing sales and
profits. Samsung has also been described as an avid spender. The company is usually willing to
invest colossal amounts of money in marketing a new product. This case is slightly contrasted
from rival companies who are seen as cautious when investing in new technologies.

Apple’s brand strength, innovation, supply chain management and premium pricing strategy as key
factors in the company’s competitive advantage. Brand strength gives Apple great visibility in the
marketplace and helps build consumer loyalty. The company’s strong branding, and the
interrelationships between its products, encourage customers who buy one Apple product to try
another. Products such as the iPhone, iPad, apple watch and MacBook share the same software and
applications, and operate in a similar way, making Apple a natural choice when customers are
considering another device. Apple has a long-established reputation for innovation and a
commitment to developing new products. A key competitive advantage for the company is its
ability to develop innovative products that share the same operating system, software and
applications. This minimizes the risk, timescale and costs of product development, enabling the
company to introduce a stream of new products and stay ahead of competitors. Apple’s innovative
strategy of developing products that complement each other strengthens customer loyalty and
helps build a barrier to competition, according to the website Innovation Excellence. An ecosystem
of suppliers, developers and business partners provides Apple with a strong competitive
advantage. The company owns chip manufacturers, controls manufacturing, follows extremely
strict software standards and operates its own stores. Deals with leading music and entertainment
companies provide a vast source of media for all the company’s products. It also has a community
of more than 6 million independent software developers creating applications for Apple products.
This gives Apple control over the entire process of product development, manufacturing and
marketing – an advantage that competitors find difficult to match. Apple sets premium prices for
its products and minimizes discounts to wholesalers to keep prices consistent across the market.
The company aims to offer customers a high-quality product with unique features and uses high
prices to reinforce the perception of added value and maintain profitability. The high-pricing
strategy also sets a benchmark for competitors, which must offer equivalent features to match
Apple’s perceived value without losing money.