High capital required to enter into mobile industry which needed large investment on technology, distribution, service outlets and plant. Difficulty for customers in switching cost, when they are satisfied with their current product as well as difficultly for new entrants to have product differentiation because customers had already familiar with those established mobile companies, therefore new entrants have to spend a lot on branding and customer knowledge. It is difficult to obtain a telecommunication license; successful applicant has to undergo through a form of competitive evaluation, such as a comparative evaluation process.
The bargaining power of buyers (High)
Buyers easily switch cost with the increased of choices of mobile companies and furthermore their products are quite similar to each other; they will switch to those who have better offering and low cost. Buyer might backward integrate to set up its own mobile Is this essay helpful? Join OPPapers to read more and access more than 550,000 just like it! GET BETTER GRADES
company, hence, causing a threat to existing companies. Since there are few and concentrated buyers and only having a few alternative buyers in the market, the industry has no choice but to negotiate with the buyers.
The threat of substitutes (Low)
Although there is an increase popularity of the PDA, which is much lighter and enable to access to the internet, Microsoft office, and other more areas which a mobile phone does not offers, with features which is similar to a laptop. However, the majority of the population will still choose to own a mobile phone instead, due to the affordable pricing. Furthermore, PDA is more suitable for working adults. Hence, the profit margin of mobile industry will not likely to reduce.
The bargaining power of suppliers (High)
There are many suppliers for mobile industry, therefore easily to switch to alternatives. Seek International is...