Cellular Industry Analysis

Topics: Mobile phone, Bharti Airtel, Companies based in Mumbai Pages: 9 (2302 words) Published: March 10, 2011

Wireless Cellular Service Industry-Porters Model


Industry Competitors
* Number of competitors
* Industry Growth
* Asset Intensity
* Product Differentiation
* Exit Barriers
* Buyer Concentration
* Number of suppliers
* Switching Costs
* Substitute Products
* Threat of backward integration
* Supplier concentration
* Number of buyers
* Switching costs
* Substitute raw materials
* Threat of forward integration

* Functional Similarity
* Price performance trend
* Product Identity
Potential Markets
* Economies of Scale
* Absolute cost advantage
* Brand Identity
* Switching Costs
* Government policy

The Indian telecommunications industry is the world's fastest growing telecommunications industry, with 688.38 Million telephone (landlines and mobile) subscribers and 652.42 Million mobile phone connections as of July 2010. It is also the second largest telecommunication network in the world in terms of number of wireless connections after China. The Indian Mobile subscriber base has increased in size by a factor of more than one-hundred since 2001 when the number of subscribers in the country was approximately 5 million to 652.42 Million in July 2010. As the fastest growing telecommunications industry in the world, it is projected that India will have 1.159 billion mobile subscribers by 2013. Furthermore, projections by several leading global consultancies indicate that the total number of subscribers in India will exceed the total subscriber count in the China  by 2010.

Conceptual framework for industry analysis has been provided by Porter. He developed a five factor model for industry analysis, the model identifies five key structural features that determine the strength of the competitive forces within an industry and hence industry profitability. The intensity of competitive rivalry:

For most industries, the intensity of competitive rivalry is the major determinant of the competitiveness of the industry. It is the function of no. of competitors, industry growth, asset intensity, product differentiation, and exit barriers. Industries with high fixed costs tend to be more competitive because competing firms are forced to cut price to enable them to operate at capacity. Product differentiation however lessens rivalry. Difficulty of exit from an industry intensifies competition * Sustainable competitive advantage through innovation.

* Competition between online and offline companies.
* Level of advertising expense.
* Powerful competitive strategy.
Bargaining power of buyers refers to the ability of the industry’s customers to force the industry to reduce the prices or increase features , thus bidding away profits. The bargaining power of customers is also described as the market of outputs: the ability of customers to put the firm under pressure, which also affects the customer's sensitivity to price changes. * Buyer concentration to firm concentration ratio

* Degree of dependency upon existing channels of distribution * Bargaining leverage, particularly in industries with high fixed costs * Buyer volume
* Buyer switching costs relative to firm switching costs * Buyer information availability
* Ability to backward integrate
* Availability of existing substitute products
* Buyer price sensitivity
* Differential advantage (uniqueness) of industry products SUPPLIERS:
Bargaining power of suppliers is the degree to which suppliers of the industry ‘s raw materials have the ability to force the industry to accept higher prices or reduced service, thus affecting profits. The factors influencing supplier power are: * Supplier switching costs relative to firm switching costs * Degree of differentiation...
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