Our business- selling telecommunication infrastructure to operators in 3G industry
Our concern towards our business
1. should enter the Malaysian market especially Kuala Lumpur 2. expensive investment so it is possible to enter Malaysia market 3. our company future after 5 years
Analysis based on Porter's five-forces-model
a) Buyers (operators) –
1. Quality of product
2. Buyers power to determine quantities they need from us to operate (We don't have freedom to make decision on quantities of product to sell so we cant determine our revenue or profit)
Two types of buyer – end user and sellers(operators) of our products
1. Risk for our company
(3 license will give to operators reasonable to believe maybe 3 operators build up the telecommunication infrastructure together due to it is government will and it will be cheaper for operators to agree upon an alliance and share the cost)
low level of skills and specialization
requirement of skill too high
short product life cycle ( user require for a particular season)
c) Substitute product- 3G technology changed to 4G
d) Potential new entrants-
1. Heavy investment (set up cost)
2. New technology to the location (KL)
3. Available product to support the system
4. Skeptical market demand
5. Government expectation for the high income
e) Competitive rivalry-
1. 3 competitors
2. Supply chain management
3. High technology or service
Our conclusion: after applied Porter's five-forces-model we would like to conclude that telecommunication equipment industry in Malaysia is not suitable business. It’s clearly shows high entry barriers and few customer which tightens the competition.
Dear friends correct me if I am wrong.
Any additional info please add with explanation.
Please let me know what I should be in cap square.
See you all tomorrow.
- A multinational company - develop telco infrastructure for 3G operators. - Contract opportunity to build 3G infrastructure in Malaysia. - Only 3 licences be given to offer 3G products and services. - Only 1 insfrastructure system will be setup.
- Malaysia - towards high industrialised nation.
- Potential demand for high technological communication system. 2) Objectives
Should the company enter the market?
Tool: Porter five-forces-model - key factors to determine market potential. 3) Analysis
Threat of New Entry (Less)
- high setup cost
- new technology
- inmature demand
- limited experienced and high skilled labor
Competitive Rivalry (High)
- several high value competitors - Lucent, Nortel, Alcatel etc - reduce of spending trend over years
- lower market value, highly competitive
Buyer Power (High)
- limited operators ( only 3)
- unclear indication of market price
- unclear requirements for standards of quality
Threat of Substitution (Less)
- no clear substitute except the existing 2.5G
- future technology innovation - 4G
Supplier Power (Average)
- strategic partner with the company - order size and long term relationship. - to sustain the industry (survival).
- Less customers (only 3 operators).
- Highly competitive (several direct competitors).
- Declining industry growth (lower market value).
- Less threat of substitution (high entry cost).
Thus, the writer suggest entering into the Malaysian market is consider less attractive at the moment. What do we think?
guys, i suggest for this part, we can express our opinion on the market outlook. should we agree or disagree with the writer's opinion. this also shows that we are critical and able to analyse the market on our own. We can discuss this tomorrow when we meet. What do you guys think? :)
1. Malaysian Telecom Overview
3. Key Players
4. Demand and Supply
Malaysian Telecom Overview
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