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8/8/2019 Presentation of Sfm
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A PRESENTATION ON EXTERNAL ANALYSIS OF INDIAN
TELECOMMUNICATION INDUSTRY
Presented By:
Rajalaxmi Pradhan (9202134)
Nisant Ray (9202159)Purnendu Gope (9202163)
Aparna Mohanty (9202166)
Rajani Verma( 9202168)
Mukesh Joshi (9202189)
Jathariti Mohanty( 9202173)Arup Mohanty(9202175)
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INDUSTRY INTERFACE
' Indian Telecom Industry' is the fifth largest and fastest growing in the world.
According to the Telecom Regulatory Authority of India (TRAI), the number of
telephone subscriber base in the country reached 653.92 million as on May 31,
2010, an increase of 2.49 per cent from 638.05 million in April 2010
The wireless subscriber base has increased to 617.53 million at the end of May
2010 from 601.22 million in April 2010, registering a growth of 2.71 per cent.
It is also the second largest telecommunication network in the world in terms of
number of wireless connections after China.
Three types of players exists in ' Telecom Industry India ' community
State owned companies like - BSNL and MTNL.
Private Indian owned companies like - Reliance Infocomm and TataTeleservices.
Foreign invested companies like - Hutchison-Essar, Bharti Tele-Ventures,Escotel, Idea Cellular, BPL Mobile, Spice Communications etc.
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INDUSTRY ATTRACTIVENESS
EVA ANALYSIS== -20691.18446
From the above table it is clearly shown that the major companies are havingloss. Market leader Airtel also having minimal profit. Due to many barriers theprofit in the industry is gradually coming down. So we can say that the industry is not so attractive.
Company Name Profit
Idea Cellular Ltd. -43.15
Bharat Sanchar Nigam Ltd. -2434.54
Bharti Airtel Ltd. 1499.65
Reliance Telecom Ltd. -221.11
Vodafone Essar Cellular Ltd. 152.97
Tata Teleservices Ltd. -0.55
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INTENSITY OF RIVALRY (IOR)
ITEM KEY IOR
Exit Barriers High-low High
Industry Concentration High-low High
Industry Growth High-low High
Product Differences High-low High
Switching Costs High-low High
Brand Identity High-low High
Fixed Costs/Value Added High-low High
Over the past year, competition in the mobile services sector has scaled new heights with
operators engaging in price wars to grab subscriber market share and to get rid of its
overcapacity problem.
Downward pressure on tariffs would harm profitability and in turn adversely impact cash
flows, coupled with factors like scarcity of 2G spectrum, auction of 3G licenses and
implementation of MNP (Mobile Number Portability)
Overall, the rivalry among competitors is high.
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POWER OF BUYERS (POB)
ITEM KEY POB
Bargaining leverage High-low High
Buyer volume High-low Low
Buyer information High-low High
Price sensitivity High-low High
Brand identity High-low Low
Product differentiation High-low High
With increased choice of telecom products and services, the bargaining power of
buyers is rising
telephone and data services do not vary much, regardless of which companies areselling them
switching costs are relatively low for residential telecom customers, they can get
higher for larger business customers, especially those that rely more on customized
products and services.
Overall, the Power of Buyer is medium.
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POWER OF SUPPLIERS(POS)
ITEM KEY POS
Supplier Concentration High-low Low
Differentiation of inputs High-low Low
Switching Cost of firms in the industry High-low Low
Presence of substitute inputs High-low High
Importance of volume to supplier High-low High
the mobile hand set suppliers who supply directly to the operators lack any bargaining
power due to the large number of eligible suppliers and a competitive mobile manufacturingmarket.
The number of suppliers is numerous e.g. TCS, Infosys (software), Alcatel-Lucent, Ericson
(operations) which again makes the bargaining power of suppliers Low.
Overall, the bargaining power of suppliers is limited and can be rated as Low.
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THREATS TO ENTRY(TOE)
ITEM KEY TOE
Access to inputs High-low High
Economies of scale High-low Low
Government policy High-low Low
Capital requirements High-low Low
Switching costs High-low High
Access to distribution High-low High
The high capital requirement in this industry was reduced to a large extent due to the
formation of independent tower companies like Indus, Reliance Infratel, and Bharti Infrateletc. from which the towers could be leased for operation.
The product differentiation is present in the area of Value Added Services and this is a
small share of operator revenues but also the more promising one
So from the above factor we can conclude that the threat to entry in the
telecom sector is low to moderate.
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THREAT TO SUBSTITUTES (TOS)
ITEMKEY TOS
Switching costs High-low Low
Buyers inclination to substitute High-low Low
The present day substitutes for mobile telephony include VoIP and Satellite
communicationSatellite Communication systems like Iridium phones form an elite niche segment which
acts as a negligible threat to mobile network operators.
With the launch of 3G, much of data traffic is expected to shift to mobile network
operators. With these advantages Internet and in turn, VoIP, will turn into a complementary
instrument and not hinder the growth of mobile telephony.
On the whole, the threat of substitutes to this industry can be said
to be very low.
Sixth Force Complementors ± All the mobile set companies
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MACRO ENVIRONMENTAL ANALYSIS
MACRO
ENVIRONMENT
AL FACTORS
TRENDS IMPACT ON
THE INDUSTRY
OPPORTUNITY /
THREAT
SOCIALAttractive Offers
Brand Image
Good Advertisement
Brand Ambassador
Higher Sales Lead to enormous growth
of the telecom sector in
uncovered areas,
Decrease in revenue
TECHNOLOGIC AL
3G
GPRS FacilityValue Added
Services(VAS)
Increasing revenue Low bargaining power of
the customersHigher bargaining power
of the customer
POLITIC AL
Non-existence of
guidelines regarding the
installation of towers
Government rules andregulations, bidding for 3G,
M&A acquisition
Increasing in the
distribution channel,
Consolidation of the
IndianTelecommunication
Industry
Higher barrier to entry,
Threat to public life,
Increasing unhealthy
competition
ECONOMIC AL
Providing services in a lower
rate like ³Pay Per Second´
Increase in sales Unhealthy competition
resulting in decrease in
revenue
Higher customer base
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WHAT DO CUSTOMER
WANT? (ANALYSIS OF
DEMAND).
HOW DO FIRMS SURVIVE
COMPETITION?
(ANALYSIS OF
COMPETITION)
KEY SUCCESS
FACTORS.
More services Quality & product
Differentiation
Timely development of
new technology
Reasonable Tariffs Low mobile tariffs Mobile Tariffs
Demand for telecom services
in rural segment
Strong Distribution Channel Penetration in uncovered
rural markets
Get updated information
about new services
Adopting mobile advertising Brand Ambassador
High speed internet services By providing some good
features like one touch access
system for some important
websites which will help both
corporate as well as general
people.
Introduction of 3G facility ,
video conferencing and
other tech savvy services.
KEY SUCCESS FACTORS
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BIGGEST THREAT & OPPORTUNITY
ThreatMobile Number Portability(MNP)
Pay Per Second
Opportunity
3G ServiceProduct Differnciation
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STRATEGIC GROUP ANALYSIS
In the Telecom Industry the groups can be identified using two or perhaps
three set of characteristics on the basis of competition.
Extend of geographic coverage: BSNL, Airtel
No. of market segments served: Airtel, BSNL, Rim, Vodafone
Distribution Channel used: Tata Indicom
Extend of Branding: Idea, BSNL, Airtel
Marketing Effort: Tata Docomo, Idea, Airtel, Vodafone
Service Quality: Airtel, Idea, Vodafone, Tata Indicom
Pricing Quality: Tata Docomo, Idea, Airtel, Smart
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