INTERNATIONAL BUSINESS STRATEGY

TeliaSonera's Business Strategy

TeliaSonera's Business Strategy

Question 1 - How would you characterize the competitive intensity and attractiveness of the telecom industry in Eurasia by using Porter's Five Forces?

Porter's Five Forces Model can be used effectively in order to conduct a thorough analysis of competitive intensity and attractiveness of Eurasia's telecom industry. According to the Porter's Five Forces Model, five major factors influence the operations of businesses operating within Eurasia's telecom industry. These are discussed below in detail:

Threat of new entrants

In Eurasian market, there is low penetration of telecom businesses and those locally set up businesses that are already operating in the markets have not made huge investments. The development of advanced mobile data services technology demands extensive financing and also takes much time. Moreover, without the establishment of a proper infrastructure, many mobile data services technologies cannot be offered to the consumers. The threat of new entrants is largely dependent on the available capital that a business has at its disposal to invest in the establishment of infrastructure. Therefore, the threat of new local entrants in the market is significantly low as such local businesses lack the capital required to upgrade their infrastructure and provide advanced mobile data services to compete with a multinational brand like TeliaSonera. However, there is a threat from other multinational telecom brands entering the Eurasian markets as they will also be able to reap the same benefits.

Threat of substitutes

As mentioned earlier, there is low penetration of telecom businesses in the market of Eurasia. Hence, there is a low presence of mobile data service providers in the markets. Most consumers in these markets rely on fixed service as a result. Therefore, fixed telecom services are the main substitute for mobile data services in these markets. Moreover, the number of internet providers has also grown significantly in these markets and internet-based telephony services can also be seen as a worthy substitute to mobile data services. Therefore, any business seeking to invest in the Eurasian markets must take these substitute products or services into consideration.

Buyer power

In the telecom industry, the power of the buyer is not very strong since the business does not rely at all on suppliers. However, other aspects of the buyer power theory must be taken into consideration such as the leverage that multinational businesses receive in the Eurasian markets. Owing to impressive macroeconomic development, governments of Eurasian countries have welcomed foreign investment because of the myriad benefits that multinational businesses offer to the economy, such as jobs, technological expertise, massive investment, and uplifting of infrastructure. Therefore, multinational businesses receive an added leverage when negotiating deals with Eurasia countries and they have the advantage of dictating their own terms and conditions when purchasing land and equipment, or when striking an acquisitions deal. This is the power that multinational businesses enjoy when entering the markets of Eurasia as a buyer.

Supplier power

When determining the supplier power of businesses operating in the telecom industry of Eurasian markets, it is important to keep in mind some important ...