Porter’s Five force model includes 4 forces:
* Potential Entrants(Threat Of Mobility)
* Buyers(Buyer Power)
* Substitutes(Threat Of Substitutes)
* Suppliers(Supplier Power)
* Industry Rivalry
Application on the Telecom Industry:
The forces that affect the Telecom Industry:-
INDUSTRY RIVALRY: The above shows the different market share of the different firms such as Airtel which holds 28% of the total share being the highest , Vodaphone – 23%, Idea -15% , Rcom-8.2% , Tata – 8.8% , BSNL/MTNL – 609%, Aircel -4.8% , Uninor-2.4%, Others – 2.3%.The rivalry among the different companies is high and the cost difference is not much so the customers have options in choosing their connection. POTENTIAL ENTRANTS: Telecom sector is one of the fastest growing sectors. This is due to strong competition that has brought down tariffs and simplification of policy environment that has promoted healthy competition amongst various players. Average revenue per user for big players is around Rs. 110 – Rs. 120 – Reliance has lesser ARPU because major of its subscribers are low end customers Revenue Market Consumer Market ARPU share share AIRTEL 29.1% 19.8% 114.2 Reliance 8.2 % 16.7% 45.2 IDEA 15% 12.3% 114.9 Market leader AIRTEL Market Challenger Reliance, Vodafone, BSNL Maket Follower TATA, IDEA. Existing telecom companies are coming up with continuous growth strategy due to high competition. Future Prospects AIRTEL Airtel plans to set up 3000 more towers to enhance their rural coverage and will now focus on rural and semi-urban areas RCOM Peak investment phase is over. RCOM continues to be free cash flow positive and this trend to continue in succeeding years.
BUYERS: The individual buyers don’t have any competition among themselves but enterprise customers like IT or banks do have. Enterprise customers generate major part of the revenues for any telecom companies like Reliance, Airtel or Idea which means higher buyer...