The threat of potential new entrants (High)
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 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 one of the supplier for this industry, they offer various kinds of products compatible with Nokia, Samsung, Ericsson, etc. They might integrate forward and undertake the value added process undertaken by this industry, which might pose a threat to the survival to the mobile industry. Since there are many mobile companies, suppliers will use this opportunities to increase their prices, hence, leading to price increase in mobile products.
Mobile industry has to look into the local communities and decide which product is suitable for different segments market. With so many new substitutes and new competitors emerging in the market, they have to be efficient in their innovations and adopting the right strategy in order to retain their existing customers. Today people are allowed to retain their current phone numbers when switching cellular carriers, however, this will lead to a significant increase of mobile phone being disposed and many could not be recycled. Therefore government decided to impose a new rule for phone makers to eliminate lead, mercury and brominated flame retardants from new products.
Rivalry Among Existing Firms (High)
The rivalry among the existing mobile companies in this industry is high, existing competitors compete strongly for position and market share to expand their sales due to slow industry growth. They adopt strategies such as price competition which are likely to affect the average profitability of the industry. Advertising battles expand overall demand or enhance the level of product differentiation for the benefit of all companies in the industry. This will leads to high fixed costs for companies to increase capacity.