Presentation of Sfm

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)



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.



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



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.



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.



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.



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.



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



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



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



BIGGEST THREAT & OPPORTUNITY

ThreatMobile Number Portability(MNP)

Pay Per Second

Opportunity

3G ServiceProduct Differnciation



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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