TATA DoCoMo

Porter’s Five-Force Analysis

Tarun Kandarpa 10DM-162Suraj Jain 10DM-163Saurabh Thadani 10FN-102Srikanth Konduri 10FN-109Tushar Gupta 10FN-115Nikhil Gupta 10FN-121Anirudh Verma 10IB-069

Inter Firm Rivalry Telecom sector is highly competitive and generally

earns low returns because the cost of competition is quite high.

A highly competitive market results from:i) Many players of about the same size; there is no dominant firmii) Little differentiation between competitors products and servicesiii) A mature industry with very little growth; companies can only grow by stealing customers away from competitors

There are majorly 3 types of players in the telecom industry:-i) State owned players. (BSNL and MTNL)ii) Private Indian players. (Reliance comm, Tata comm, Bharti Airtel)iii) Foreign invested companies. (Vodafone, Idea cellular)

Competition has intensified with the entry of new cellular players in circles leading to reduced tariffs which have hurt major operators, as they will be unable to recover their high capital investment costs.

BSNL is dedicated to performing its work as it drives India into the next league of telecom supremacy by providing technologically advanced services at an affordable cost.

On the private side, there has been a tough competition between Bharti Airtel and Vodafone each having a market share of 30 % and 24% respectively.

Idea cellular, Reliance comm and Aircel are also in the race but they lack in the infrastructure when compared with Vodafone and Bharti Airtel

Inter Firm Rivalry (2)

Fast changing technology such as 3G so bargaining power of suppliers is medium.

If the company doesn’t own tower infrastructure, then bargaining power of provider is high.

Medium cost of switching since changing the hardware would lead to additional cost in modifying the architecture

Limited pool of skilled managers and engineers especially those well versed in the latest technologies

IT Vendors’ bargaining power is high as the telecom technical support and innovation is highly dependent on such suppliers.

A lot of technical assistance provided by NTT DoCoMo.

Bargaining Power of Suppliers

Price sensitive customer Wide variety of choices available

without much differentiation Bargaining power of

wholesalers/retailers is also high. Switching cost very low Number portability to add to the

bargaining power

Bargaining Power of Consumers

Continuous entrance will make monopolistic -> perfect competition

Factors that limit entrance : High loyalty of existing customers. High fixed costs and difficult access to finance. Scarcity of resources. Already existing very low tariff rates. Government restrictions or legislation.

 New technology provides entry for foreign entrant. M&A in telecom sector are giving to new entrants.

Bharti –zain, uninor-unitech and telner, Aircel- maxis and reddy

FDI has made it third largest sector.

Threat of New Entrants

Non-Traditional Alternatives: Online Chat Email Satellite Phones VoIP – Internet Telephony Wireless land phones

All of them have a huge potential in the future

Between CDMA & GSM

Threat of Substitutes

Issue of mobility & penetration with the substitutes.

Cable TV and satellite operators now compete for buyers and internet telephony, delivered by ISPs and not telecom operators.

Price – performance trade off is very high.

Overall threat of substitutes is between Low to Moderate level.

Threat of Substitutes (2)