Consider the Telecom sector in India:
1. How have external operating environment factors affected the sector’s or industry’s performance?
2. Analyse within the Porter’s five forces and define the sector’s or industry’s limitations,
3. Does the analysis show the relative favourability of the business or its unfavourability?
India's telecommunication network is the second largest in the world based on the total number of telephone users (both fixed and mobile phone). It has one of the lowest call tariffs in the world enabled by the mega telephone networks and hyper-competition among them. It has the world's third-largest Internet user-base with over 137 million as of June 2012.Major sectors of the Indian telecommunication industry are telephony, internet and television broadcasting. The total revenue of the Indian telecom sector grew by 7% to 283207 crore (US$43 billion) for 2010–11 financial year.
Reforms introduced by successive Indian governments over the last decade have dramatically changed the nature of telecommunications in the country. India has the largest middle class approx 400 million.
Poter 5 Forces Model Analysis of Indian Telecom Sector(Except Handset Industry):
Threat from new entrants:
Supply Side Economies Of Scale
* Declining ARPU
* Infrastructure tenancy costs
* Other FC like BPO
Demand Side Benefits
* Brand pull exists to some extent for brands like airtel /idea/vodafone
Customer Switching Costs
* Cost of new connection low
* Number portability
* Extremely high infrastructure setup costs
* Spectrum License is a big issue after scandals like 2G
* Established Brand Image
* Reliability of Image
Uneven Access to Distribution Channel
* Not a factor
Restrictive Govt Policy
* Spectrum and license allocation
* 74% FDI cap.
* Minimum requirement of number of towers
Power of the buyer
* Lack of differentiation among the...