suleman rasheed

PTCL

Teacher name:Sir, Ahmad Shehzad Registration no:MCM05121029Class:M.com 4th semesterTopics:porter five forces, SOWT analysis, TOWS matrix analysis

University of Lahore

Date: 26th Dec, 2013

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Table of Contents1. Porter five forces analysis of PTCL Company........................................................................................4

1.1. Threat of new entrants.....................................................................................................................6

1.1.1.Scale of economics:.................................................................................................................6

1.1.2.Product differentiation:............................................................................................................6

1.1.3.Capital requirement:................................................................................................................7

1.1.4.Knowledge requirements:........................................................................................................7

1.1.5.Switching costs:.......................................................................................................................7

1.1.6.Access of distribution channels:..............................................................................................7

1.2. Threat from substitute products:....................................................................................................10

1.3. Bargaining power of customer......................................................................................................12

1.4. Bargaining power of suppliers:.....................................................................................................14

1.5. Competitive rivalry........................................................................................................................16

2. SWOT Analysis of PTCL......................................................................................................................18

2.1. Strengths........................................................................................................................................19

2.2. Weakness.......................................................................................................................................20

2.3. Opportunities.................................................................................................................................21

2.4. Threats...........................................................................................................................................22

3. TOWS MATRIX Analysis of PTCL.....................................................................................................23

3.1. SO (strength and opportunities).....................................................................................................24

3.2. SI (strength and threats).................................................................................................................25

3.3. WO (weakness and opportunities).................................................................................................26

3.4. WT (weakness and threat).............................................................................................................27

4. conclusion..............................................................................................................................................28

5. Recommendation ……………………………………………………………………………………..266. References ……………………………………………………………………………………………27

Abstract After gathering and collecting the data from secondary source of information and making

technical analysis on them it conclude that porter five forces model is not completing

implemented on PTCL. PTCL is facing the problem of threat of new entrants, thereat of

substitutes, and threat of rivalry, but PTCL have good bargaining power of customer and

supplier. Except all of these PTCL have little high switching cost of customers which is the main

resistant of PTCL in increasing its sales. The growth rate of PTCL has been decreased in 2012 by

3% approximately. And the growth rate of Ufone has increased by 46% which is not a good

signed for PTCL future.

If we talk about the SWOT analysis of PTCL we can conclude that PTCL have many strength

and opportunities to increase its business in market. And also have some threats and weakness

which is badly facing by PTCL.

If we talk about the TOWS matrix analysis of PTCL we can conclude that PTCL can increase its

strength by using it opportunities and minimize it threats by using its strengths and also minimize

the weakness by using the opportunities.

Porter five forces analysis of PTCL CompanyThe competitive environment is prepared by five forces:

Threat of new entrants

Substitute products

The bargaining power of suppliers

The bargaining power of customer

Competitive rivalry

In discussing competition porter competitive strategy distinguishes between factors that characterize the

nature of competition. The competitive forces influence the state of competition and also influences the

collectively determine the profit potential of the industry as whole.

Threat of new entrants (and barriers to entry to keep them out)

Barriers to entry:

Scale of economics:

High fixed costs often imply a high breakeven point. And a high breakeven pint depends on a

large volume of sales. PTCL has achieved this target in Pakistan so it is very difficult to beat

PTCL due this barrier because PTCL has a large volume of sales in telecommunication

department in Pakistan.

Product differentiation:

Existing firms in industry can built up a good brand image and strong customer relationship over

a long period of time. In Pakistan PTCL is providing number of different products such as

Wire line products:

Land line/ fixed phone Broadband Smart TV

Wireless products:

Vfone EVO 3G 3.1 EVO 3G nitro 9.3 3G EVO Tab

In telecom industry there is not an other industry which have these types of products so PTCL is

completely enjoying its product differentiation.

Capital requirement:

When capital requirement is high the barrier against new entrant will be strong, so in the case of

new entrants of any firms in the telecommunication industry PTCL should have large amount of

capital to overcome to its competitors.

Knowledge requirements:

As well as high capital requirements knowledge and know how are also necessary to make a

barriers for competitors. PTCL is working in Pakistan since 1947. And it has a complete

knowledge staff of telecom sector. So it is also a barrier against its competitors.

Switching costs:

Switching cost refer to the costs of time, money, and convenience that a customer would have to

incur by switching from one supplier products to another supplier. There are some competitors of

PTCL in providing the services of internet facility. Qubee,Wateen, Witribe and Private net cable

providers. PTCL have a high cost of installation which is not a good sign as barriers to entry.

Access of distribution channels:

PTCL have a number of exchanges in all over the Pakistan. So it is another barrier for new entry.

Advantages on existing producers:

Patents rights

Experience and know how

Goodwill

Established network

Yes

(+)

No

(-)

Is PTCL has established any brand identities in telecom industry?

Does PTCL will incur any high costs in switching suppliers?

Is a high amount of capital needed to enter a new company in

industry?

Do the new companies will face difficulty in accessing distribution

channels?

Do the new companies face the problems in obtaining the necessary

materials, skilled people or supplies?

Does PTCL product or service have any basic features that give

PTCL lower costs?

Can the new coming companies expect strong retaliation on

entering the market?

7 1

Results:

The above facts and figures shows that PTCL have not huge threat from new entrance because

the new entrance will face difficulty in accessing distribution channels, new entrance need huge

amount of capital, new entrance will face difficulty obtaining the necessary materials, skilled

people or supplies, new entrance will take a lot of time to grab the market.

Threat from substitute products:

PTCL have many competitors like (warid, mobilink, wateen, witribe, qubee and etc) which are

providing the substitute products in the telecom market. The threat can be determined on the

basis of annual profit of competitors.

Annual profits

(Companies)2011 2012

Threat from Substitutes (Growth rate)

Warid 26805 29233 9.1%

Mobilink 73936 83271 12.6%

Ufone 27455 40060 46%

Telenor group 45081 51561 14.4%

Wateen (30.05) (10.5) (34.4%)

PTCL 7,458,760 7,244,466 (2.9%)

Source: Pakistan telecommunication authority 20011-12

Results:

According to the facts and figures we can say that the growth rate of PTCL is decreased by 2.9%.

This is not good sign for PTCL. In other hand all companies are going in profit and also

increasing its growth rate gradually except wateen. So there is a need to overcome on its

competitors for PTCL.

WT (weakness and threat)

PTCL can expand network coverage with the help of improved firm infrastructure and PTCL can also reduce the percentage of customers which are switching to other networks.

By using the advantage of profit taking growth of subsidiaries PTCL can minimize its flat organizational structure and PTCL can also reduce the price wars among competitors

By taking the advantage of scope for cost efficient operations PTCL can minimize the extra employee overhead cost to extra hiring’s and PTCL can also make barriers against new entrance.

By using the advantage of joint venture with other telecom companies for introducing new technology PTCL poor coverage of wireless and line services and PTCL can also easily beat to its competitors.

By using the advantage of adopt lasted technology PTCL can reduce the poor customer services especially in call centre PTCL can also decrease its energy crises.

All the telecommunication companies operating

All the telecommunication companies operating

Bargaining power of customerThere is high bargaining power of customer in telecommunication sector. There are many

competitors in market and they are offering the different packages at different prices to

customers and situation of price war is running very hardly. Customer has a power of buying any

package which is suited to them. Charge of switching from one company package to other

company package is low. Hence power of customer is high. Bargaining power can be

represented through this table.

Questions Yes (+) No (-)

Are there a huge number of buyers related to the number of

firms in the business?

Is PTCL not charging very high switching cost from

customers?

Is number of buyers are greater than number of suppliers in

market?

Is PTCL having a large number of customers each with

comparatively small purchases?

Is the customer has complete awareness about different

market prices?

Is the customer is required a lot of important information

about PTCL?

Is there anything that prevents PTCL customer from

switching to another company?

Is PTCL customers are highly sensitive to price?

Is PTCL product is unique to some degree or has accepted

branding?

Is PTCL customers are satisfied from suppliers?

8 2

Results

The above facts and figures shows that the bargaining power of the customer is high because if

PTCL will not provide products and services at the economic rate to customers. They will be

move to other networks which results a decrease in the sales of PTCL. The switching cost which

is charged by PTCL from its customers is so high this is not a good sign for PTCL.

Bargaining power of suppliers:The power of supplier is high in case of telecommunication sector. But the reality is that

numbers of suppliers are few in the markets but they are competing in the market

to make agreement with mobile service providers. The overall aim of the suppliers is that to get

the higher prices from customers.

Yes (+) No (-)

The numbers of suppliers of PTCL are high in the market

there for bargaining power will be high of suppliers.

PTCL suppliers would find it hard and difficult to enter my

business

PTCL have a variety of potential suppliers.

PTCL business is significant to its suppliers.

PTCL cost of purchases has not major influence on PTCL

overall costs.

Is PTCL have products which is differentiated from

competitors products?

5 1

Results

According to the facts and figure PTCL have strong bargaining power of suppliers because the

huge numbers of suppliers of PTCL are working in the market, PTCL suppliers would not find it

hard and difficult to enter my business, PTCL have a variety of potential suppliers, PTCL have

products which is differentiated from competitors products.

Competitive rivalry

Currently there are many market competitors but in future they might be increased. The intensity

of competitive rivalry within an industry will affect the profitability of the industry. The

completive actions might be taken from the price competitions, advertisement, and sale

promotion campaigns, introducing new products for the market, providing guarantees or

warranties and improving after sales services.

Competition can decrease the demand of PTCL, expand the market or it can leave demand

unchanged.

There are different factors to determine the intensity of competition in the market.

Yes (+) No (-)

PTCL is growing rapidly?

In cost structure the fixed costs of the PTCL are a relatively low

portion of total costs.

Is PTCL can switch customers through suppliers easily?

There are significant product and brand difference between PTCL

and its competitors.

It would not be hard to get out of this business because there are

no specialized skills and facilities or long-term contract

commitments etc.

PTCL customers would incur significant costs in switching to a

competitor.

Is PTCL having the capacity to achieve a substantial increase in

output capacity?

If success is a prime strategic objective, then PTCL will be likely

to act very competitively to meet their targets?

This is difficult for PTCL to exit from the market?

5 4

Results

The above facts and figures shows that PTCL have strong threat of rivalry companies, because

PTCL is not growing rapidly, PTCL has decreased it profit in previous year which is the major

threat for PTCL and this is only due to PTCL competitors which decrease the PTCL profit like

(Wateen, Warid, Ufone, Mobilink, WiTribe, and Qubee).

SWOT Analysis of PTCL

Strength

Largest operational network

Monopoly

Oldest and experienced

Market leader

High speed of internet

Opportunities

Profit taking growth of subsidiaries

Scope for cost efficient operations

Adopt lasted technology

Weakness

Flat organizational structure

Bureaucratic environment

Political intervention

Extra employee overhead due to extra

hiring

Switching cost is too high

Threats

New entrants in market

Political instability

Rapid increase in the govt. tax rate

Energy crises

Strengths

Biggest operational network and infrastructure in telecommunication sector.

Enjoying an integrated monopoly.

PTCL is the oldest and experienced telecommunication company of Pakistan.

All the telecom companies operating in the directly or indirectly depending on PTCL.

Market leader in local loop and wireless local loop.

PTCL maintain the record of customer in an organized way while other private

companies have not such type of facility.

Telecommunication companies in which numbers are assigned with proper area codes.

Pakistan telecommunication can be used as back network if mobile networks are

shutdown due to any reason.

PTCL is offering a high speed of internet to its customers naming as DSL. And also

providing concession to students.

PTCL is offering low call rate rates in all over the world.

It is also offering the wireless USB’s for high speed internet.

Weakness

Strength

Largest operational network Monopoly Oldest and experienced Market leader High speed of internet

Flat organizational structure.

Complicated environment.

Political interference in decision making.

Extra employee overhead dues to extra hiring.

Customer services are very poor specially in providing internet services.

Wireless coverage and services is also poor.

Functional units are not well organized.

To high bad debts due to non payments of billing.

Switching cost is too high.

Lack of technical staff in the department of DSL internet providing servers.

Not quick response.

Opportunities Profit taking growth of subsidiaries.

Scope for cost efficient operations.

Weakness

Flat organizational structure Bureaucratic environment Political intervention Extra employee overhead due to extra

hiring Switching cost is too high

Joint venture with other telecom companies for introducing new technology.

Improvement in customer services through hiring educated staff.

Adopt latest technology.

Threats Inflation in country may increase the cost of services which will finally transferred to

customers.

Energy crises can decrease the efficiency of company.

Rapid increase in the govt. tax rate might reduce company profits.

Opportunities

Profit taking growth of subsidiaries Scope for cost efficient operations Adopt lasted technology

New entrants in market.

Political instability.

Increasing number of competitors like (Mobilink, Warid, Telenor, Zong and etc.)


PTCL can expand network coverage with the help of improved firm infrastructure and PTCL can also reduce the percentage of customers which are switching to other networks.

By using the advantage of profit taking growth of subsidiaries PTCL can minimize its flat organizational structure and PTCL can also reduce the price wars among competitors

By taking the advantage of scope for cost efficient operations PTCL can minimize the extra employee overhead cost to extra hiring’s and PTCL can also make barriers against new entrance.

By using the advantage of joint venture with other telecom companies for introducing new technology PTCL poor coverage of wireless and line services and PTCL can also easily beat to its competitors.

By using the advantage of adopt lasted technology PTCL can reduce the poor customer services especially in call centre PTCL can also decrease its energy crises.

Threats

New entrants in market Political instability Rapid increase in the govt. tax rate Energy crises

TOWS MATRIX Analysis of PTCL

EXTERNAL FACTORS (opportunities and threats)

INTERNAL FACTORS

(Strength and weakness)

SO

Use strength to maximize opportunities (maxi – maxi strategy)

SI

Use strength to minimize threat (maxi – mini strategy)

WO

Minimize weakness by taking advantage of opportunities (mini – maxi strategy)

WT

Minimize weakness and avoid threat (mini – mini strategy)

SO (strength and opportunities)

By using the largest operational network and infrastructure in telecommunication sector.

PTCL have an opportunity of earning maximum profit.

Enjoying an integrated monopoly PTCL have the opportunity of expand customers.

PTCL is the oldest and experienced telecommunication company of Pakistan has

opportunity to redesign its policies and structure.

All the telecommunication companies operating in Pakistan are directly or indirectly

depending on PTCL in this situation PTCL have this opportunity to expand network

coverage.

Market leader in local loop and wireless local loop PTCL have the opportunity to provide

more value added services and products.

PTCL maintain the record of customer in an organized way while other private

companies have not such type of facility.

Pakistan telecommunication can be used as back network if mobile networks are

shutdown due to any reason.

PTCL is offering a high speed of internet to its customers naming as DSL in this situation

PTCL have the opportunity to provide different type of packages to family, friend, and

students.

PTCL is offering low call rate rates in all over the world by using this strength PTCL

have the opportunity to lead in the market.

SO

Use strength to maximize opportunities (maxi – maxi strategy)

SI (strength and threats)

PTCL is the largest operational network and infrastructure in telecommunication sector

and by using this strength PTCL can reduce the percentage of customers which are

switching to other networks.

PTCL is the oldest and experienced telecommunication company of Pakistan by using

this strength PTCL can reduce the price wars among competitors.

All the telecommunication companies operating in the directly or indirectly depending on

PTCL by using this strength PTCL can reduce the threat of other depending companies.

Market leader in local loop and wireless local loop. By using this strength PTCL can

make barriers against new entrance.

PTCL is offering low call rate rates in all over the world by using this strength PTCL can

easily beat to its competitors.

PTCL is earning high profit in every year. By using this strength PTCL can decrease its

energy crises.

SI

Use strength to minimize threat (maxi – mini strategy)

WO (weakness and opportunities)

PTCL can expand network coverage with the help of improved firm infrastructure.

By using the advantage of profit taking growth of subsidiaries PTCL can minimize its flat

organizational structure.

By taking the advantage of scope for cost efficient operations PTCL can minimize the

extra employee overhead cost to extra hiring’s.

By using the advantage of joint venture with other telecom companies for introducing

new technology PTCL poor coverage of wireless and line services.

By using the advantage of improvement in customer services through hiring educated

staff PTCL can minimize the bad debt costs.

By using the advantage of adopt lasted technology PTCL can reduce the poor customer

services especially in call centre.

WO



PTCL can expand network coverage with the help of improved firm infrastructure and

PTCL can also reduce the percentage of customers which are switching to other

networks.

By using the advantage of profit taking growth of subsidiaries PTCL can minimize its flat

organizational structure and PTCL can also reduce the price wars among competitors.

By taking the advantage of scope for cost efficient operations PTCL can minimize the

extra employee overhead cost to extra hiring’s and PTCL can also make barriers against

new entrance.

By using the advantage of joint venture with other telecom companies for introducing

new technology PTCL poor coverage of wireless and line services and PTCL can also

easily beat to its competitors.

By using the advantage of adopt lasted technology PTCL can reduce the poor customer

services especially in call centre PTCL can also decrease its energy crises.

WO


Conclusion After gathering and collecting the data from secondary source of information and making

technical analysis on them it conclude that porter five forces model is not completing

implemented on PTCL. PTCL is facing the problem of threat of new entrants, thereat of

substitutes, and threat of rivalry, but PTCL have good bargaining power of customer and

supplier. Except all of these PTCL have little high switching cost of customers which is the main

resistant of PTCL in increasing its sales. The growth rate of PTCL has been decreased in 2012 by

3% approximately. And the growth rate of Ufone has increased by 46% which is not a good

signed for PTCL future.

If we talk about the SWOT analysis of PTCL we can conclude that PTCL have many strength

and opportunities to increase its business in market. And also have some threats and weakness

which is badly facing by PTCL.

If we talk about the TOWS matrix analysis of PTCL we can conclude that PTCL can increase its

strength by using it opportunities and minimize it threats by using its strengths and also minimize

the weakness by using the opportunities.

Recommendation It is recommended that to PTCL that it should apply porter five forces model properly in its

business. Minimize the switching cost of customer; reduce the threat of substitutes, new entrants,

and threat of rivalry.

Increase it sales by providing valuable quality both in land line products and wireless products.

And should also be focused on its internal and external environment for making quick and

efficient response to its customers.

PTCL should also focus on its strength, weakness, opportunities, and threat while making the

significant policies.

Reference

www.slideshare.com

www.ptcl.com

www.wekipedia.com

www.pta.com

www.scribed.com

http://www.scribed.com/

http://www.pta.com/

http://www.wekipedia.com/

http://www.ptcl.com/

http://www.slideshare.com/

suleman rasheed

Education