Business policy and strategic management
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Transcript of Business policy and strategic management
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Business Policy and Strategic ManagementAn analysis of ISP industry using External Analysis tools
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Discussion Outline An introduction to the ISP industry by ……. An external analysis of the ISP Industry in India
using Porter’s 5(6) forces by …… An external analysis of the ISP industry in India
using Strategic Group mapping by ….. Conclusions by …..
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Introduction to the ISP Industry Services provided by the ISP’s include:
Email(including local server based POP clients) The World Wide Web(Internet) Bulletin Boards Voice and Fax services Web Hosting services Web page design and consultancy services Bundled packages/commercial packages(e-commerce)
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Why ISP’s?
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Porter’s 5 Forces Rivalry within Industry - HIGH Threat of Substitute Products - HIGH Threat of New Entrants – HIGH Bargaining Power of Suppliers - LOW Bargaining Power of Customers - HIGH
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I- Rivalry within Industry - HIGH
Main Players
National Players
International Entrants
Local/Regional Players
OSP
Areas of Competition
Price
Quality of Service
Access/Speed
Services
Customer Service
Content
Security
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•Heavy competition.
•A standard pricing is expected by consumers.
Price
•Very important
Quality of Service
•Can the company keep up with speed of change of technology?
Access/Speed
•A lot of customers require to be online 24x7.
•Newer customers require online help.
Customer Service
•Online subscriptions or discounts at particular web-pages affect consumer decisions.
Content
•For larger businesses, security is a key issue.
Security
Areas of Competition
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Consumer Priorities in Indian Market
•HIGH
Price
•HIGH
Quality of Service
•LOW-MID
Access/Speed
•HIGH
Customer Service
•LOW
Content
•HIGH when required
Security
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II -Threat of substitute services/providers- HIGH
Telecom Companies
Cable Companies
Portal Companies
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Telecom Companies - HIGH• Telecom companies can provide the same services as
ISP’s.• They are significantly costlier and have lesser reach.
Cable Companies - LOW• They have larger reach, but have greater difficulties
upgrading their technology for the same.
Portal Companies - LOW• Companies like yahoo in some countries have tied up with
local ISP’s.
General Threat Perception
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Threat perception in IndiaTelecom Companies - HIGH• Especially after the advent of 3G services providing decent speed as
well as mobile internet services.
Cable Companies - LOW• Almost non-existent in India as of now.
Portal Companies – LOW• Sify had/has tied up with several local ISP’s to provide internet
services. No other notable mentions however.
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III- Threat of new entrants: HIGHBarriers to entry - LOW• Very Little technical know-how is actually needed to get into the industry
Capital requirement - LOW• Capital requirement is low as a lot of activity can be outsourced.
Risk - LOW• Due to frequent mergers and consolidation plans, an easy exit plan is
feasible. Therefore, risk of investment is low.
Government Regulations – LOW• There is little to no government regulation for setting up an ISP.
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III-I - Barriers to entry - LOW Since technology as well as bandwidth can be
outsourced from either of telecom or cable companies, the capital investments required to venture into ISP industry are quite low.
Lack of severe government regulations further ease an entrants journey into an industry.
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IV- Bargaining Power of Suppliers LOWGovernment - HIGH• Government is a major supplier for licenses for setting up an ISP.
Telecom companies - LOW• The telecom companies hold little bargaining power simply because
of the huge number of firms providing telecom services.
Backbone providers - HIGH• Backbone providers are few in number and therefore have high
bargaining power.
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Why did we put the bargaining power of suppliers low when two important suppliers actually have high bargaining power?
The answer is simple: The only sustain-worthy supply needed is local copper connections(wires) which are provided by telecom companies.
The Government license is obtained/renewed once in several years.
The hardware/backbone is upgraded once in several years.
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Bargaining Power of Consumers:LOW/HIGH
Consumers
Large Business Firms
Internet Cafes/Small Internet based Firms Average Consumer
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Consumer bargaining power
Large Business Firms - LOW• Large business firms have little power, once they opt for an ISP. Backward
integration of services including local hosts and inter/intra office framework is difficult. Therefore, they tend to stick on to a particular ISP.
Internet Cafes/Small Internet Firms - HIGH• They typically have contracts with local ISP’s. This probably makes them
most valued consumers since they can afford backward integration of services while also having significantly higher usage.
Average Consumer• They have low switching costs and therefore high bargaining power.
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Strategic Group Mapping
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Stats
COMPANY MARKET SHARE
BSNL 56.76 %
MTNL 14.29 %
Bharti Airtel 8.07 %
Reliance Communications 7.56%
Hathway Communications 1.94
Stats as of March 2011
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Stats
Technology Usage PercentageDSL 48.98%
Cable Modem 4.39%
Leased Line 0.19%
Ethereal LAN 3.74%
Fibre 0.22%
Radio 6.88%
Dial-Up 35.32%
Others 0.27%
Stats as of March 2011
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Strategic Mapping
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Strategic Mapping - ISP
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Conclusion Mergers and Acquisitions Additional Services Specialization Pricing Models
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Conclusion:
Rivalry within
Industry
Bargaining power of
Consumers
Threat from new entrants
Threat from substitute products
Bargaining power of suppliers
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Thank You for Attending