SoftBank Group is a multinational conglomerate incorporated in 1986 and based in Tokyo, Japan. The revenues of the company for the year 2018 are 197 billion yen with subsidiaries of 66 in total. There are around 17,300 employees of a company with more than 33 million subscribers for communication services in 2018. The aim of the company is to provide innovative service across different industries to improve the living standard of people (Softbank, 2019). To be successful in this vision, the company has to carefully asses the industrial environment to find out the industry attractiveness. The company majorly offers mobile phones, telecommunication services, and cloud computing. Porter’s five forces analysis for Softbank is provided to give Softbank an analysis of telecommunication industry of Japan.
Competitive Rivalry
The telecommunication industry of Japan is considered as one of the most profitable and highly advanced markets in the world. Despite such high profits, competitive rivalry is not intense due to the involvement of the exceptional level of innovation and technology. There are three major players in the industry that are keeping the maximum market share. The leader in the telecommunication industry of Japan is NTT Docomo with a market share of 45.3%. The market share of au (Mobile phone Company) is 31% while it is 23.6% for the Softbank for the year 2018(Statista, 2019). The competition between these three players is high but the overall competition of the market is below average due to lack of presence of a large number of competitors making it the most profitable telecommunication industry in the world. Therefore, the competitive rivalry in the telecommunication industry of Japan is low.
Bargaining Power of Suppliers
The number of suppliers in the telecom industry of Japan is more than the number of buyers for their services. There are three major companies in the industry and the suppliers have to sell everything to those three major players. The companies understand the importance of their existence for the suppliers and bargain by being in a dominant position (Eurotechnology, 2015). The experts of the telecommunication industry especially from the context of Japan are not available on hand but they need special training skills. The individual with those skills bargain by being at the dominant position and the companies offer what they want. Therefore, the overall bargaining power of supplier in the telecom industry of Japan is moderate.
Bargaining Power of Buyers
Due to low competition and options in the market for buyers, the companies in the telecommunication market of Japan is enjoying the weak bargaining power of the buyer. The buyers do not have a large number of options to choose from and the number of buyers is much excessive.The high technology and innovation is another factor that contributes towards the strength of companies and further weakens the bargaining power of the buyer (Eurotechnology, 2015). The contribution of these factors is so massive that Japan’s telecom industry is ranked number one in terms of profit percentage all across the world in the telecom industry. Therefore, the bargaining power of buyers is low.
Threat of Substitutes
The threat of substitutes is low for the telecom industry of Japan. The technology is continuously evolving and the means of communication are always expected to change but it seems difficult that the telecom services are going to be replaced by a substitute. The landlines are replaced by signal based telecommunication system but the industry remained there with the evolution of innovative products to provide a better lifestyle. The products are evolved but not the industry is replaced by some other industry or products (Rajasekar & Al Raee, 2013). The example of a substitute is that communication from letters is replaced completely by communication through telecom.
The Threat of New Entrants
The telecommunication industry is a complex business and it requires a high level of expertise as well a massive capital. The telecommunication industry of Japan is one of the complex telecom industries in the world due to the involvement of the exceptional level of technology that is not available in other developed countries. The requirement of massive capital along with such high technology and innovation in the industry put serious and difficult barriers for new entrants. They are the hurdles that most of the new entrants find it impossible to overcome (EuroTechnology, 2013). This is one of the major reasons for the lack of presence of a larger number of companies in the telecommunication industry of Japan. Therefore, the threat of new entrants in the telecommunication industry of Japan is l
References
EuroTechnology. (2013).Track record and results of our work in Japan’s telecommunications markets. Available at: https://www.eurotechnology.com/industries/telecommunications-and-mobile/
EuroTechnology. (2015).Japan telecommunications industry (66th edition) – Market analysis & tutorial. Available at: https://www.eurotechnology.com/store/jcomm/
EuroTechnology. (2019). Japan telecommunications markets are among the world’s largest, most profitable, most advanced and also most liberalized. Available at: https://www.eurotechnology.com/insights/telecom/
Rajasekar, J., & Al Raee, M. (2013). An analysis of the telecommunication industry in the Sultanate of Oman using Michael Porter’s competitive strategy model. Competitiveness Review: An International Business Journal, 23(3), 234-259.
Softbank. (2019). About us. Company Info. Available at: https://www.softbank.jp/en/corp/aboutus/
Statista. (2019). Mobile phone market subscription distribution in Japan 2018, by the provider. Available at: https://www.statista.com/statistics/892503/japan-mobile-phone-market-subscription-share-by-operator/