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Porters Five Forces Analysis for Sri Lanka Telecom Mobitel

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by

Laksith Liyanage

on 2 January 2013

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Transcript of Porters Five Forces Analysis for Sri Lanka Telecom Mobitel

A fundamental analytical tool which is widely used to identify and understand the industry in better context

This will direct to determine where the power of the company lies in the business and thereby find and develop an edge over the rivals in the industry. Porters Five Forces Analysis To experience high profit edges: Bargaining Power of Suppliers (Supplier Power) •Bargaining Power of Customers 1.
Weak supplier and customer bargaining power:

will direct the company to experience higher level of industrial power as customers and suppliers are not in a position to influence and make a high impact on company’s business process.

2.
Higher entry barriers and few opportunities for substitute products:
will direct the company to experience lower level of rivalry and this will cause to stabilise in the market with higher density of customer base. Bargaining Power of Customers: Their revenue for the first 9 months of time period in 2012 grew by 14% from 15.9 billion LKR to 18.2 billion LKR in comparison with same duration in year 2011 due to augmentation in company’s subscriber base cause of enhanced level of customer experience Mobitel has to depend on local providers such as SLT (Sri Lanka Telecom) The supremacy of customer is considered as a crucial factor since this cause to

drive the prices down by exerting pressure over the organisation

or uplifting the quality of the service for the same charge, and therefore decrease the profitability of the business process. High degree of Brand Identity Mobitel GSM is fixed to low price elasticity due to higher number of industry rivals and the rate regulations of Telecommunication Regulatory Commission of Sri Lanka (TRCSL), which makes the customer’s bargaining power into high over the company.

Though the GSM process is fixed to low price elasticity

when it comes to broadband market Mobitel’s price elasticity is considerably in a higher level as it has a fully fledge high speed broadband networking technology in the country specially with better coverage than other service providers in the industry, which reduces or mitigates the bargaining power of customers up to considerable stage. Price elasticity factor Innovative Brand of the Year 2011 – Gold

Excellence in Engineering – 2011

E Swabhimani Winner – 2011

CNCI Achiever of Industrial Excellence 2011 – Gold

National Business Excellence Awards 2011 – Infrastructure and Utilities Sector Winner

Brand of the Year 2011

Service Brand of the Year 2011 – Gold

National Business Excellence Awards – 2011 Best Tech – Savvy Company Winner Recent Achievements uplifted Company Image •Bargaining Power of Suppliers (Supplier Power) The ability of suppliers of the company to influence the setting of prices to capture more industry profit, and the company should able to control its suppliers to wield more power against the market rivalry. since Mobitel doesn’t own one which are authorized to have the direct access to the national telecommunication backbone Local Telecommunication Providers: Therefore, the above mentioned suppliers have an upper hand and they are having more supplier bargaining power over the company

Mobitel is concerned as a subsidiary of Sri Lanka Telecom (SLT) supplier bargaining power is comparatively in a lower level than other market rivals.

The industry perspective factor: comparatively with other countries, the amount of users who are using data/voice is in a lower level in Sri Lanka, hence low traffic generated.

incremental factor of supplier bargaining power as the suppliers such as ISPs, content providers for value added services and the peering partners are in a position to influence the company business process. •Threats of New Entrants Telecommunication industry due to higher amount of industrial profitability, the probability of attracting new business firms for the industry is comparatively high.

That directly impacts to all the current telecommunication operators in the market by making their business profitability in to risk as they may have to experience profit reductions with newer firm introductions The industry perspective factor: Strategic use of Information in Mobitel (PVT).Ltd. Threats of New Entrants LankaJournal (2009, p1) stated that Bharti Airtel could able to achieve one million of customer base in Sri Lanka within 171 days of the launch of its services in Sri Lanka. Numerous level of value added services plus low price package introductions for different age categories Airtel could able to grab the customer base of other mobile telecommunication operators’ in the industry aggressively However currently the rivalry caused by new entrance with attractive lower service charges was controlled by Tariff Regulation policy of Telecommunication Regulatory Commission of Sri Lanka (TRCSL) as in its Proposed Ten Year Development Plan 2006 – 2016 •Threats of New Substitutes A crucial factor which affects a company’s stability in the market by significantly influencing to the profit acquiring process of the company.

This factor activates when the price fluctuations of substitute products which may leads to degrade the customer base of the company by allowing customers to move for substitutes.

More substitute opportunities in the telecommunication industry will diminish the demand for the Mobitel as some services of which it provides become inflexible for the customers due to more customer perspective flexible opportunities in substitute service. Threats of New Substitutes Skype technology Sri Lanka Telecom (SLT), Lankabel, and Suntel who were awarded with CDMA technological license Figure 1: Predicted analysis of 2008 Skype Subscriber Base (Evalueserve, 2005) The prevailing Skype technology not only captured the roaming telecommunication segment


but it also made;

a high impact on local and business telecommunication fields too by providing seamless technological advancement such as free video conferencing plus capturing mobility technological advancements as well by using upgraded solutions such as by introducing flexible Skype solutions for mobile platforms. While concerning on fixed line operators awarded with CDMA technology’s targeted market segment is;

to serve companies and home usages without serving advance mobility.

this will not make higher level of impact on Mobitel’s telecommunication process comparatively to Skype technology. • Rivalry among Competing Firms Due to higher amount of competency in Sri Lankan mobile service industry each and every operator has to experience, maximum level of industry rivalry to stabilize in the market. Rivalry among Competing Firms VAS gives Mobitel the edge they need to overtake their rivals While Mobitel compete on the VAS and the other services, most other operators tend to compete only on the coverage and the rates in mobile service industry The above articulated industry rival analysis arguments can be directly backup with earlier mentioned;

industry achievements which they have made recently stated under “Bargaining Power of Customer” analysis,
as it clearly accentuates Mobitel is on the track to success by being a massive competitor to its rivals with successful strategic implementations."
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