Bharat Sanchar Nigam Limited (BSNL) is a telecommunication company owned by the Indian state. It is known as fifth largest telecommunication service provider in India. It had been working pretty great when it started off in early 2000s but recently it has been observed that the company had faced some losses due to the increasing competition in the industry and the market. Although it is India’s oldest telecommunication service provider, the industry has flourished in the recent times and the competition is getting fierce in the industry, thus effecting the operations and profits of BSNL in India.
Porter’s five forces model is used to determine a certain industry’s attractiveness and to determine the intensity of competition in a market that the company is operating in. The model uses five forces to analyze the company from five different aspects.
Considering the current position of BSNL in the market, lets apply Porter’s five forces model on it to determine its competitive position in the industry.
Threat of New Entrants
As discussed earlier, there are huge possibilities of new entrants entering into this industry and this has been the case over the past few years. Considering how much the industry is growing, despite a large number of competitors already existing in the market, many new entrants are coming up with innovative strategies to enter in the industry and gain the market share. But it should also be kept in view that entering into this industry comes with a huge cost of setting up and maintaining. Additionally, there are many government and legal regulations in India that the companies need to follow. All these factors add up to the fact that the threat of new entrants in the industry turns out to be of moderate level for BSNL.
Threat of Substitutes
There is a presence of a large number of substitutes in the market when it comes to telecommunication industry, especially in terms of mobile network services. With the increasing number of users because of the advancements in technology, most of the competitors of BSNL, especially Bharti Airtel, Vodafone, Spice, BPL, Idea, and Tata are coming up with innovative services to offer convenience to their consumers. Most of these substitutes compete on price as well as quality. So considering these factors, we can say that BSNL has a high threat of substitutes existing in the market.
Bargaining Power of Buyers
Most of these telecommunication service providers have both individual as well as buyers that are different companies or organizations. The individual buyers, usually prefer low prices and choose to switch to a substitute service provider based on that, this means that to retain their individual customers, BSNL needs to compete on prices since buyers have high bargaining power in their case, considering the switching cost for the consumers is very low. While when we see that their customers that are different organizations, we observe that their priority is good quality. So in their case, BSNL needs to maintain their quality in order to retain their customers.
Bargaining Power of Suppliers
Suppliers for BSNL include the tower service providers, handset providers, and sim card as well as software providers. All these suppliers are essential for proper functioning of BSNL operations, but the fact of the matter is that there are a lot of options available for the telecommunication companies in terms of their suppliers which leave the suppliers with a less bargaining power.
Industry Rivalry
The telecommunication sector of India is one of the most growing industries which prove the fact that the industry is close to saturation because of the number of growing competitors in the market. These competitors in case of BSNL include Bharti Airtel, Vodafone, Spice, Tata, Aircel, MTNL, BPL Mobile, and Idea. All of these competitors are competing fiercely in the industry. They compete on their customer base, the price they offer, the services they offer, their offers that make their services attractive, and the quality of their services. Most of these competitors are offering services with same abilities, and thus this rivalry has effected the shares of BSNL in the market.
All these five factors define the competitive analysis in the telecommunication industry for BSNL and it can be summarized using the following table:
|
Forces |
Intensity |
|
Threat of new entrants |
Moderate |
|
Threat of substitutes |
High |
|
Bargaining power of buyers |
High |
|
Bargaining power of suppliers |
Low |
|
Industry Rivalry |
High |
References
Brand India. (n.d.). Retrieved June 16, 2017, from https://www.ibef.org/industry/telecommunications.aspx
Porter’s Five Forces: Assessing the Balance of Power in a Business Situation. (n.d.). Retrieved June 16, 2017, from https://www.mindtools.com/pages/article/newTMC_08.htm
ANOOPA NARAYANAN, PhD scholar at Cochin University of Science and Technology Follow. (2012, April 20). BSNL: A STRATEGIC ANALYSIS. Retrieved June 16, 2017, from https://www.slideshare.net/anubijis/bsnl-a-strategic-analysis
Variyar, M. (2017, May 17). MobiKwik creates wallet for BSNL. Retrieved June 16, 2017, from http://economictimes.indiatimes.com/small-biz/startups/mobikwik-creates-wallet-for-bsnl/articleshow/58722637.cms