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Michael Porters5 forcesModel

GROUPASSIGNMENTSUBMISSIONS ect ion A: GroupDetails:AssignmentNo.: A1 E.g.A1/A2/A3/A4Batch:

PGPE.g.ISCS

SessionDay &Time: Sun-1 E.g.SatI/SunIIGroupColour: Brown E.g.Green/Fl.Pink

S ect ion B: AssignmentDetails:AssignmentTopic: Strategy-MichaelPorter's5forcesmodel E.g.FunctionalMatricesTraining Topic&Session: Strategy E.g.Negotiation-ISubmissionDate&Time: Saturday-11:00 a.m. E.g.Tuesday-01:00

Remarks:

S ect ion C: Group Members:

No. Name Div.&Roll No. PC PN AB Grade1.

Yashvant rathore F-53 v A

2.Shubham jaiswal G-46 v A

3. Anup Verma F-12 v A

4.Ritika Khare H-21 v A

5.Amritash Kumar F-07 v A

6.Suyash F-49 v A

7.Naveen Dubey H-27 v A

8.Sandeep Tripathi H-39 v A

9.Rahul Sharma H-35 v A

10.Sourabh Sharma G-42 v A

1.Gopi Krishna F-18 v A

12.Rajendra panchal F-65 v A

13.Deepak Patel G-14 v B

14 Anshul purohit H-08 v B

15. Saurabh Singh F-68 v B

16. Anurag Sharma H-09 v B


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ANALYSIS OF FIVE FORCES IN INDIAN TELECOM INDUSTRY


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INTRODUCTION

INDIAN TELECOM INDUSTRY

FACTS

1. The Indian telecom communication industry is one of the fastest growing telecom industry.

2. It has near about 1300 million subscribers throughout the world.

3. It is the second largest telecommunication network in the world after china.

4. It is growing with the rate of 26 %.

5. It generate employement for about 10 million people.

6. In 2008-09 the overall telecom equipments revenue in India stood at 136833 crore.

7. Rural teledensity stands at 29.19%, while the urban at 97%.

8. It has 1.8 billion Internet and 7 million broadband subscribers.


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PART A


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Industry Analysis using Michael Porters 5 forces model:

1. Threat of new entrants:

Telecom industry is profitable industry with high returns and obviously attractive firms which results in many

entrance and effectively decreasing cost.

1. New entrants will increases competition which results in sharing of profitability.

2. Companies are facing cut-throat competition due to new schemes offered by new entrants.

Eg: Tata docomo, Uninor.

3. Sustainability of customers becomes difficult.

4. Company has to increase investments on promotions, R&D and for advanced technology.

5. Entry of new player forces existing players to adopt new market strategy like product differentiation .

Suggestions:

a. New advertizing campaigns.

b. Pressurizing the government for new entrance.

c. New offer for existing customer in terms of price and service.

Threat of Suppliers

Available suppliers

Bargaining power of

supplier.

Threat of

Rivalry

Rivals are more

Threat of EntryCompetition

Share of profitability

Difficult sustainability

Threat of

Substitutes

Available substitute

Threat of BuyerBuyer volume

Price sensitivity

Switching cost


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d. Keep there technology up to date.

2. Bargaining power of customer :

A wide verity of choices available to customers both in fixed as well as mobile telephone has resulted in

increased bargaining power for the customers. This is also describing as the market of output. It is the ability of

customer to put the firm under pressure and effect the customer sensitivity to price changes.

It depends upon the following:a. Buyer volume.

b. Buyer price sensitivity.

c. Buyer switching cost relative to firm switching costs.

d. Buyer information availiblity.

e. Differential advantage of industry product.

Suggestions:

1) Keeping the price according to market level.

2) Providing the highest quality of service.

3) Providing best customer service.

4) Providing different range of product and services.

5) Enhancement of research and development activities.

6) Try to make your product unique.


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3. Bargaining power of supplier:

This also described as market of input in telecom industry supplier of row materials components labour and

services to the firm can be a source of power over the firm.

The suppliers are following:-

a) Hand set supplier: There are hundreds of hand set supplier and most of them are new. They are facing high

completion from each other. Many telecom companies did collaboration with hand set supplier. Ex. Reliance with

LG, ZTE. Tata indicom with Huwai. These companies did bargaining with telecom company because of large supply.

b) There are few mobile tower companies like Indus for Airtel and Vodafone. GTL infrastructure for reliance, so their

bargaining power is sound.

c) There are many sim card manufacturing companies. Ex ACI infocom Ltd, KG data foems, Cellword, United tectsa.

d) Software assistance and solution is provided by main software solution provider companies like Wipro, TCS, Infosys.

Reliance and Tata has their own company for solution.

Suggestions:

a) Companies have to negotiate with four or five suppliers at the same time to show that they have so many options.

b) Make awareness in media of new launching products.


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4. Threats of substitutes:

Products and services from non-traditional telecom industries pose serious substitutional threats. There are

various electronic companies which may play a role of substitute.

a) Cable TV and satellite operators now compete for buyers. The cable guys, with their own direct lines into homes,

offer broadband internet services, and satellite links can substitute for high-speed business networking needs.

b) Voice calling and video calling by Skype and Google talk.

c) Notepad

d) iPad

e) Laptop

Suggestions:

a) Product innovation at regular basis.

b) Pressurizing government to make the polices unfavorable to the the substitute product.

c) Providing the facility of substitute product in the current product and service range.


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5. Threats of rivalry:

There are three type of players in telecom industry.

a) State own companies. (BSNL, MTNL)

b) Private Indian own companies.( Tata teleservices, Reliance infocom, Bharti etc)

c) Foregin invested companies. ( Vodafone, Virgin, Spice etc)

Suggestions:


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1) Always expanding the product & service range .

2) Always enhancing the customer service.

3) New ways of advertising.

4) Entry in new market segment as well as new geographic area .

5) Keeping the price of product & service according to demand & needs.

Part-B


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Industry attractiveness

1)What is the weighted average ROCE(Return on Capital Employed) in your industry over the past five years?

Score:

Years ROCE(%)

2005 15.7

2006 21.5

2007 20.9

2008 22.5

2009 23.6


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Average R .O.C.E: 104.2/5

Ans =20.84 %

2) What is the trend in R.O.C.E. over the past five years?

a) Falling

b) Erratic and no trends

c) Stable

d) Rising

Ans-Rising Points-10 points

3) How substantial are the barriers stopping new entrants to the industry?

a) Few barriers

b) Low barriers

c) Fairly high barriers

d) Very high barriers

Ans.: Few barriers Points-No points

4) What is your best estimate of the next five years average annual market growth?

a) Negative

b) 0.5 percent p.a.


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c) 5-10 percent

d) Over 10 percent

Ans-Over 10% Points-10 points

5) What is the current balance in the industry between customer demand , and the total industry capacity?

a) There is serious industry over capacity , and no plans to remove it

b) There is serious over capacity, but plans are in place to remove the excess

c) There is minor excess capacity

d) Supply is in line with demand, or is lower than demand

Ans-Supply is in line with demand or is lower than demand Points-No points

6) What is the threat from substituting products, service or technologies?

a) Serious threat

b) May be a serious threat, but uncertain

c) Only minor threats expected

d) Threat do not appear to exist and unlikely

Ans- Only minor threats expected Points-Minus 3points

7) What relative bargaining power do the industries suppliers have?

a) The suppliers are more concentrated and can dictate terms to the industry

b) The suppliers are slightly more powerful and concentrated than the industry

c) The suppliers are slightly less powerful than the industry.

d) The industry is more concentrated and more powerful than suppliers & can dictate to them.

Ans-The suppliers are slightly less powerful than the industry. Points-7 points

8) What relative bargaining power do the industries customer have ?

a) The customers are more concentrated & powerful.

b) The customers are slightly more powerful than industry.

c) There is a rough balance between power & concentration of customer &the industry.

d)The industry more concentrated than the customer & has more collective bargaining power because there are few

suppliers & little choice.

Ans- The customers are more concentrated & powerful. Points-7 points


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Interpretation of Scores

From this study we found that telecom industry is concentrated it is playing a major role in the rapid

economic development of the country and will continuing future.

From the research we have given 52 points out of 100 which shows that:

a) The Industry is slightly attractive and unattractive. Competitive position is all.

b) There are various competitors in telecom industry.

Eg- Bharti Airtel,Vodafone,Idea,Reliance,BSNL etc

c) Existing and well established leader is running their business very well and earn profitability.

d) Indian telecom industry includes players like Indian companies, foreign companies and government companies.e) In Indian telecom industry competition is very tough and customer retention is main attention for each company.


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