China Mobile Limited is the company along with its subsidiaries was establishes in 1997 in Hong Kong. The company has successfully listed itself in the Stock Exchange of Hong Kong Limited and New York Stock Exchange in 1997 right after its establishment. The China Mobile was also admitted as the constituent stock of Hang Seng Index in 1998 in Hong Kong. As the China Mobile in leading the telecommunication service industry in China, the Company provides all sort of communication services in 31 provinces, directly administered municipalities, and autonomous regions throughout the China and boasts the top-class telecommunication operator with the largest network of the world and consumer base (China Mobile, 2019). It faces no or very little competition from other firms in the industry as being the giant or considered as monopoly in the telecommunication industry in China has no fear from the competitors. Porter’s five forces analysis helps China Mobile in maintaining its strategies by analyzing the competitive forces in the industry and shape the strategies for the future. Here is the detailed analysis of Porter’s five forces of China Mobile;
Bargaining Power of Buyers:
The bargaining power of the buyers is very low in the case of China Mobile because of the presence of only one or very few telecommunication service providers. Prices are set according to the policies, as government intervenes to protect the rights of consumers and sellers both. China Mobile provides various offers and discounts too which attract the customer base (Reddy, 2015).
Bargaining Power of Suppliers
The bargaining power of the suppliers is very low in the case of China Mobile because the company is leading in the industry, and mainly the monopoly, so the suppliers have very limited buyers for the items. They sell on the prices set by the china Mobile and have no such control over the prices. However, the prices are set according to the policies set by the government, to avoid exploiting the right of China Mobile and suppliers (Fernfort, 2019).
Threats of New Entrants
The telecom industry across the globe is very well establishes and face the low threats from the new entrants, and for the Chinese market these threats are quite low because of the strict rules and policies set by the government. New entrants also avoid entering in this market especially in china because of the high capital requirement like manufacturing cost is too much, costs of research and development, maintenance cost, etc. the sunk cost is too high for the new entrants. Chinese market requires huge and strong distribution network because of the huge country size and presence of advanced technologies (Reddy, 2015).
Threats from the Substitute Products
There are very few substitutes available for the mobile or telecommunication services in China because of the primarily agrarian country. The country is prospering but this industry has a giant company named China Mobile and has strong customer base. China Mobile does not have to worry about the landline substitution, but internet telephony can be the threat for the company, because of the increasing trend of using internet for every purpose. But, China Mobile is also working in expanding its services in the online realm to cover the market share of there too, so that no other products, or firms, or services can take its position (Junja, 2019).
Rivalry of Existing Players
As the China Mobile is operating in the strict regulated environment where government has put limitation on the competition level, so this is considered as the weak force. Indeed, this force exerts very limited force, because of few international and domestic competitors. Moreover, China Mobile is known to be a monopoly and has large market share hence it faces very little or no competition from new entrants or existing firms. The large industry growth rate with a growth size in subscriber’s volumes means that the China Mobile should not worry about the industry rivalry. However, this is going to be change sooner because of the start-up of Chinese markets in foreign firms. But still China Mobile has to bring new and innovative strategies to maintain its leading position in the market (Juneja, 2019).
References
China Mobile, 2019. Company overview. [Online], Available at: https://www.chinamobileltd.com/en/about/overview.php, [Accessed on: 9th May, 2019].
Fernfort university, 2019. China Mobile Limited Porter Five Forces Analysis. [Online], Available at: http://fernfortuniversity.com/term-papers/porter5/analysis/3421-china-mobile-limited.php, [Accessed on: 9th May, 2019].
Juneja, P. 2019. Porters Five Forces Analysis of China Mobile. [Online], Available at: https://www.managementstudyguide.com/porters-five-forces-analysis-of-china-mobile.htm, [Accessed on: 9th May, 2019].
Reddy, G. 2015. Porters 5 forces for mobile industry. [Online], Available at: https://www.slideshare.net/gauthamreddy39/porters-5-forces-for-mobile-industry, [Accessed on: 9th May, 2019].