Bharti Airtel is one of the leading mobile and digital TV providers. The company is not limited to India but has its operations in around 20 countries. According to the company, they are the fourth largest mobile operator around the globe. With new services introduced by the company, especially in terms of its telecommunication service domain, it is growing and increasing its market share with each day. Let’s analyze how Porter’s five forces can have an impact on Bharti Airtel.
Porter’s model analyses the impact of different forces on competition in the industry for a certain company. These forces include:
1. Threat of new entrants
2. Threat of substitute products or services
3. Bargaining power of suppliers
4. Bargaining power of buyers
5. Rivalry among existing firms
Now applying the model on Bharti Airtel and seeing their impact on competition in the telecommunication market:
Threat of New Entrants
The entry of new entrants in any industry is affected by entry barriers present in that particular industry. While considering the industry that Bharti Airtel operates in, we can see that there are certain barriers to entry for new entrants which include the government and legal regulations that the companies need to follow, huge licensing fee, existing intense competition in the industry, rapidly changing trends of the industry means that the companies have to cope with those trends which obviously can be achieved at a cost. All these act as a barrier to the entry of new entrants in the industry. However, since there is huge potential for this market to expand and grow, there is still a threat of new entrants to Bharti Airtel.
Threat of Substitute Products or Services
There is a high percentage of presence of substitute products and services in the market and these substitutes are also easy to have access to, so this is a huge threat to Bharti Airtel. The cost of switching is very low for consumers which pose a threat to service providers and most of the consumers might switch to a substitute because of low prices, so it’s a challenge for Bharti Airtel to maintain their quality, providing low cost services as well as improving their services following the trends of the industry.
Bargaining Power of Suppliers
The suppliers for Bharti Airtel are the handset provider, tower provider, or network equipment suppliers. Considering the amount of competition in the industry, the bargaining power of suppliers is very high as they can easily negotiate with their buyers because they can switch to another buyer since there a lot of options available in the industry. Despite the availability of various options of suppliers in the market, the power is still with the suppliers and not the service providers.
Bargaining Power of Buyers
With increasing choice of substitutes in the market, the buyers have a huge bargaining power over Bharti Airtel. The factors like, low switching costs, no legal regulations, availability of various substitutes play an important role in the bargaining power being with the buyers. Moreover, the customers switch due to low price so if Bharti Airtel is not providing their services at a low cost, they will face a high bargaining power of buyers.
Rivalry Among Existing Firms
Bharti Airtel has very strong competition in the market from companies like Idea, Reliance, Vodafone, Aircel, Spice, Bpl, Tata and the competition is just increasing with each day. The presence of these competitors in the market is a huge threat to Bharti Airtel and it has a huge impact on its position in the industry. The challenge is that all these competitors are providing somewhat same services and offers so it’s important for Bharti Airtel to maintain their competitive edge in order to save their position in the market.
Considering the model used, it can be concluded that Bharti Airtel really needs to maintain its quality of services that they are providing as well as keep on introducing new services in order to compete with the competitors existing in the market. They also need to work out a proper strategy on their price so their consumers are satisfied with their offerings as well as their price.
The intensity of impact of all these five forces on Bharti Airtel can be summarized on the aforementioned diagram.’