Finance

The threat of the entry of new competitors

Threat of new entrants in UK telecom sector is significant. This is due to that fact that there is still potential of growth in this sector. However, following are some of the which reduce the leve of this threat (Bichta,2011)

Huge capital investment required to setup telecom operation

Economics of scale enjoyed by companies currently present in the market.

Customer loyalty of present brands

The threat of substitute products or services

The threat of substitution is very high due to presence of similar products and service, low switching costs and case of access to product’s information. However, companies make use of new and innovative technologies to gain competitive advantage over their competitors.

The bargaining power of customers

Customers are the king of UK telecom sector as they enjoy significant bargaining power. Due to regulated nature of the industry, there is cut-throat competition between rival firms. Such competition only benefits customers who are offered different products and services at relative prices

The bargaining power of suppliers

The suppliers mostly consist in form of companies which provide mobile operators with technology infrastructure needed to setup mobile operations in the country. In addition to this, mobile manufacturers are also the suppliers for this industry. Due to presence of large number of suppliers, the bargaining power of suppliers is only moderate.

The intensity of competitive rivalry

The intensity of competition is very high in this industry. Rival firms make use of both price and non-price strategies to gain competitive advantage over their rival firms. Another indicator of intense competition is the level of budgetary allocation for marketing and advertisement purposes. Another indicator is the expenditure on research and development in order to develop new technologies which could allow companies to gain advantage over their rivals.