Bell Canada Enterprise is a publicly traded company working in the Telecommunication industry offering fixed-line, internet services, digital television, radio broadcasting, and mobile services in the region, including multiple subsidiaries under its umbrella. Operating in the telecom and mass media industry, the firm was founded in 1983, having its headquarters in Quebec, Canada. As of 2019, the company has shown a strong revenue figure of 23.96 billion dollars and has occupied an employment figure of almost 52,100 (BCE, 2019). From the Canadian telecommunication and media industry view, the assessment of Porter’s five forces would be a helpful scheme for developing prospect strategies to better understand the business standing position.
Competitive Rivalry in the Market
The competitive rivalry in the telecom industry is high because of several service providers globally with the increase in usage of mass media and smartphones. As a result of this increase, several companies and institutions have dominated the sector to provide telecommunication services, and Bell Canada is trying to lead the market within the industry. Bell Canada generated over 23 billion Canadian dollars in revenue in 2018, with its Bell Wireline network division accounting for a significant portion of that. As of 2019, Bell Canada showed revenue of 23.96 CAD billion. The major competitors of Bell Canada are Shaw Communications, Rogers Communications, and Quebecor, with annual revenue of 5.4, 13.92, and 4.29 CAD billion, respectively (Statista, 2019). Bell Canada is considered to be the leader in the Eastern Canada region. Thus, the presence of such large firms in the market enables the industry’s environment more competitive.
Threat of Substitutes
The threat of having substitute services is noticeably high in the telecommunication industry, primarily due to the industry’s reliance on technology development. The commodities of non-traditional telecom organizations are vulnerable to replacement. Media streaming services compete with consumers as well. High-speed internet platforms with having access to residences are provided from cable channels, and broadcast connectivity can be used to meet higher consumer communication requirements. The internet is now a secure medium for higher voice service such as VOIP and Wi-Fi, which is a matter of concern for telecommunications firms. (Rajaskar and Al Raee, 2013). Therefore, the availability of substitutes in the telecom industry is considered moderate.
The Threat of New Entrants
The threat of new entrants in the telecommunication business is considered to be low because of the presence of giant firms already operating and capturing the market, making the barriers stronger to enter for a new firm. The initial and continuing high financial requirements are among the most significant deterrents to entering the telecom industry. Only potential competitors with a range of capital attempt to access this industry because of the high fixed costs. The threat of new entrants is generally proportional to the state of the financial markets. Furthermore, obtaining a radio spectrum approval may be a significant barrier to entry. As per Senyuta and Zigic (2016) In addition, existing companies enjoy a sunk cost advantage because their platforms are essentially installed, and the investment is recovered from sales from their existing customer base. Thus, keeping the threat to enter the industry low.
Bargaining Power of Buyers
The Bargaining power of consumers in the context of the telecom industry is moderate mainly because the cellular and data services are not much different which is being provided by the firms. Essential services are generally regarded as pleasant. As a result, consumers are looking for even lower rates from firms that offer satisfactory services. However, few firms have captured the market, and due to contractual and long-term contracts, Buyers would not be able to switch to another firm. But due to the increased competition and government policies, this has been reduced. Low switching costs enable the buyers to influence more in negotiating (Qalati et al, 2019). Keeping in view these patterns, the bargaining power of buyers is moderate in the telecom industry of Canada.
Bargaining Power of Suppliers
The Bargaining power of suppliers in the telecom industry is low to moderate because of the availability of several domestic and international suppliers or manufacturers. Network service providers, device makers, the state, and professional employees are among the sector’s leading suppliers. Since there are so many producers with different resources, companies’ bargaining power is limited when it comes to negotiating terms (Tanskanen, 2015). Due to their knowledge of the market and the latest technical advances, highly trained professionals are essential resource, leaving companies’ reduced bargaining power. Therefore, in context to the telecom industry, the bargaining power of suppliers is moderate.
References
BCE, 2021. annual-report. [online] Bce.ca. Available at: https://www.bce.ca/investors/AR-2019/2019-bce-annual-report.pdf.
Statista, 2019. Topic: Media companies in Canada. [online] Statista. Available at: https://www.statista.com/topics/4577/media-companies-in-canada/#dossierSummary.
Rajasekar, J. and 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.
Senyuta, O. and Žigić, K., 2016. Managing spillovers: An endogenous sunk cost approach. Information Economics and Policy, 35, pp.45-64.
Qalati, S., Yuan, L., Iqbal, S., Hussain, R. and Ali, S., 2019. Impact of Price on Customer Satisfaction; mediating role of Consumer Buying Behaviour in Telecom Sector. International Journal of Research, 6(4), pp.150-165.
Tanskanen, K., 2015. Who wins in a complex buyer-supplier relationship? A social exchange theory based dyadic study. International Journal of Operations & Production Management.