Porter paper - i am adding sample paper but need to choose different company

· The economies of scales makes weaker for new entrants

· Capital requirements are high- research & development cost

· Strict government policies

· T-Mobile can create new products

Threat of New Entrants

Threat of Substitution is low

· Product availability is of high quality

· Product is more expensive

· T-Mobile can offer a variety of products for their consumers

Threats of Existing Rivalry is low

· Not many competitors

· Fixed costs are high

· T-Mobile needs to figure out how to stand out among their competitors

Bargaining Power of Suppliers is low

· Ample number of suppliers

· Profits are closely tied with the suppliers

· T-Mobile can develop strong relationships with the supplier

Bargaining Power of Buyers is low

· Limited control over prices

· Quality of product matters

· T-Mobile can purchase lower quality products to accommodate the customers with fewer financial resources

New entrants in the wireless industry can provide new and innovative ways of becoming one of the top competitors of T-Mobile. T-Mobile is currently the second largest wireless communication carrier in the industry (Verizon is leading), it would be challenging for a new entrant to become a threat. In order for a new competitor to become a strong threat, they would have to have a strong backing of capital to help them sustain the cutting-edge technology updates and the latest research and development as well as the high investment costs . The new entrant would also need to surpass AT&T as well as Sprint PCS in order to be in considered a threat of T-Mobile. The Government has and creates strict laws and guidelines making it more challenging for new entrants to be part of the wireless industry. This gives T-Mobile an advantage against any company that attempts to enter into the wireless industry. Their biggest threat are their current competitors, Verizon, AT&T and Sprint PCS.

Bargaining Power of Suppliers

There are many suppliers within the wireless industry giving the power to the buyers allowing the bargaining opportunities to be weak. Since there are no substitutes for the products the suppliers are selling (I-Phones are exclusive to Apple, no other carrier can reproduce and or sell them) this makes it more challenging to bargain on the price. However, T-Mobile can develop strong relationships with the supplier in order to benefit from the best selling price available. Once the relationship is established. T-Mobile can become the first wireless carrier to release the product. For example, when Samsung has a new phone, T-Mobile can be the first of the wireless carriers to release it (possibly two weeks ahead of their competitors) due to the bond they formed with Samsung. This could potentially bring new customers and give T-Mobile a stronger competitive advantage against their rivals.

Bargaining Power of Buyers

The number of companies purchasing products and supplies supersedes the number of suppliers immensely. This gives buyers fewer places to buy reducing their buying power and less control over the prices. Due to the lack of selections available for their products, they have to focus on quality and demand over prices. It is challenging for the buyer to switch suppliers and find the same product (Apple example from previous paragraph) with the same quality at another supplier. This further decreases the buyers power. T-Mobile could position themselves to purchase product and supplies from a less popular supplier that offers good quality products but not as popular as their competitors. Samsung’s most popular phones are the Note, the Galaxy. However, they offer another phone called the Samsung Galaxy J7. The J7 is a lower quality of the Galaxy. While it still provides the Samsung brand, the processor of the phone is slightly slower of it’s original Galaxy. Offering products like this attracts a population and customer base that have fewer resources available financially.

Threat of Substitution

There are few substitutes available for the wireless industry. The alternative products increase a reduction of quality and standards. An example of a threat is purchasing products from multiple suppliers with different carriers. In 2017, the Samsung Galaxy Note 7 was recalled due to the batteries overheating and causing fires. Samsung purchased their batteries from two different suppliers causing the integrity of their product to be jeopardized. The best option for T-Mobile is to pay the higher price for the quality from the suppliers with the higher rating and better quality of product. T-Mobile can tackle the threat of substitution by offering a variety of products with like characteristics and features to help ease the cost for their buyers. Also, they can focus on the need of the customer through market research and promote products that help accommodate the need verses the want.

Threat of Existing Rivalry

The threat of existing rivalry is slightly high. T-Mobile is ranked the nation’s 2nd leading wireless carrier out of the four-top carriers within the industry. Each of the rivals have a large market share covering their target and expanding into their competitor’s arena. Each company has to push to their fullest potential to cover the high fees associated with the industry, as well as keep their existing customer base. Each of the companies offer unique services to the wireless population to lure customers away from their current carrier. Features such as no early termination fees or buy one phone get one for free are creative ways to attract new customers. T-Mobile and its competitors are in an industry that is growing and will continue to grow over the next few years. This means that competitors are less likely to venture to new territory. T-Mobile can focus on targeting new customers instead of luring their rivals current customers. Creating innovative ways for new customers to join, (offer college graduates a lower plan with all extremities with a shorter contract).

Conclusion

T-Mobile would benefit tremendously from Porter’s Five Forces Analysis in creating their strategic plan to help them become number one provider in the wireless industry and increase their profitability. Their biggest area of for improvement of Porter’s Five Forces is the Threat of Existing Rivalry. They should focus on attracting new customers and seek markets that are untouched by their competitors. The remaining four of the Porter’s Five Forces can be reduced and possibly eliminated if they were to take time to use their resources to research ways to improve their overall strategy.

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