Business consultancy project

Porter’s five forces.

Figure.11 Porter`s Five Forces

Rivalry-High

Azerbaijan Telecom market penetration constitutes 111% and competition on the marketplace is quite hectic. Despite that Azercell holds a leading position, other players possess close shares and distinguishing from rivals is hard to achieve. For gaining a competitive advantage all market participants fulfill the expansion of products’ range and services by applying competitive advanced strategy.

Buyers Power-High

Telecommunication services have transformed into commodities, and mobile operators lost the bargaining power, and recently emerged MNP simplified the switching to another mobile operator. Services and products offered by all three telecommunication companies are similar, and peculiarities are almost diminished. However, Azercell pursues the strategy of differentiation by proposing various packages based on different prices to cover the whole customer audience, the information on products and services provided by telecom operators is easily accessible by the consumers.

Suppliers power-Low

The Sim card producers, Interconnect providers, Handset resellers, and many others are Azercell suppliers. The suppliers’ power is insignificant because the range of services and prices are similar so that Azercell can switch to other providers without any difficulties.

Threat of New Entry-Low

The threat of new entry is unlikely to happen, considering the high market penetration. Moreover, the capital investment and tremendous costs of the network coverage establishment and software and hardware systems development should also be considered by the new player. Hence, return on investment (ROI) is not achievable, and losses instead of profits are foreseen for the initial period, while, the new entry will require the enormous capital investment with a long period of ROI.

Threat of Substitutes-Moderate

The threat of mobile communication can be considered OTT communication services. However, Azercell mitigated the influence of OTT communication services through the cooperation. Azercell has recently started the cooperation with OTT service providers and included the communications though social applications to its product portfolio. Now Azercell subscribers can use OTT communication tools inside their Azercell packages as complementary to traditional mobile services. Besides the usage of OTT service communication, subscribers do not pay additional fees.

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