Strategy and global competitive environment
Table of Contents
INTRODUCTION
OVERVIEW OF INDUSTRY
THE SCENARIO DEVELOPMENT PROCESS
DRIVING FORCES (PESTLE ANALYSIS OF TELECOMMUNICATION INDUSTRY)
FIVE FORCES ANALYSIS
KEY DRIVERS IN THE TELECOM INDUSTRY
KEY TRENDS 11
MAJOR UNCERTAINTIES 11
FOUR FUTURE SCENARIOS 12
CONCLUSION 14
REFERENCES 15
INTRODUCTION
Strategic planning is the organizational process that defines the direction, strategy, decision
making on the allocation of the resources for pursuing the strategy. Businesses need to have a
strategic plan for the future viability and development in the business. Businesses must have
certainty about the future that would help in building a strategic vision for the future. As a result
of this, the term scenario planning comes for the businesses. Scenario planning is all about
making assumptions about the future scenario and activities or risks that can challenge the
future. It is also possible to argue that scenario planning will assist in identifying certain future
difficulties and uncertainties as well as a variety of realities. This method helps firms create
future-focused plans by extending their perspective four to five years into the future. Based on
the present trends in the business, this assignment will outline four likely futures for the telecom
sector and provide insights into possible projects and advancements.
OVERVIEW OF INDUSTRY
The companies in the telecommunications sector manufacture communication equipment and
use wired infrastructure, which includes computers, servers, networks, and cables, to provide a
range of broadband, voice, and data services. The several businesses that work to facilitate
international communication make up the telecommunications industry. This is accomplished via
cables, the airways, etc. The fifth-largest industry worldwide, telecom is also the one with the
greatest rate of growth. An important part of the global economy is played by this industry.
Changes in some of the elements or drivers, such as technical, economic, or regulatory
considerations, have a significant impact on this business (European commission, 2016). The
telecom sector is constantly evolving due to the emergence of new markets, fast-changing client
needs, and the presence of digital actors. Therefore, the telecom industry will have a big
influence on future customer interactions, market structure, and technology standards. The
telecom sector is changing at an accelerating rate, and there have been significant disruptive
shifts that have impacted social life, politics, and business.
THE SCENARIO DEVELOPMENT PROCESS
Identification of the driving factors, identification of important uncertainties, development of a
variety of realistic scenarios, and discussion of the ramifications are the four main phases or
parts of the process.
Finding the Motivating Factors
Finding and talking about the elements that will cause significant future changes in the fields of
politics, economics, society, and technology is the first stage in the process. It also covers the
way in which the organization or industry may be impacted.
Identification of Critical Uncertainties
It is crucial to determine the essential or major uncertainty based on their influence on the
business after deciding which are the main driving forces.
Creation of a variety of believable scenarios
In addition, after the primary motivators have been identified, a framework will be developed to
account for the effects of each uncertainty and the direction it will lead the company. Four
potential future scenarios will be created in light of this (Ole Kulet et al., 2019).
Implications
In order to reevaluate the future company strategy, numerous ramifications and repercussions
of each scenario will be examined in this penultimate and last stage.
DRIVING FORCES (PESTLE ANALYSIS OF TELECOMMUNICATION INDUSTRY)
Since the advent of the Internet, the industry most impacted and expanding is the telecom
sector. The following are some of the various causes that have affected the industry:
Political: The methods by which the government meddles in business operations and practices
are linked to political forces and circumstances. The many rules that the government has placed
on the company's products must be followed by this business. In terms of the political climate
inside the telecom sector, there is a lot of danger. These dangers stem from network licensing,
rules, etc., which have a detrimental impact on network operators. (Perera, 2017). The telecom
industry has benefited from deregulation and privatization, which are the other major forces.
Political stability, the nature of the government, trade restrictions, labor laws, etc. are the main
motivators.
Economical: Expanding the business and incurring financial charges are what propel the media
transmission sector. In the framework of the telecom business, economic variables are quite
important. The telecom business is primarily impacted by taxes, interest rates, and inflation. The
currency rates, interest rates, inflation rate, and economic growth are the main factors driving
the telecom sector. Market conditions and technological advancements play a vital role in
growth (Valdez-de-Leon, 2016). Customers and businesses rely largely on mobile devices and
the internet.
Businesses create and develop websites, media, and advertisements pages, and digital
marketing campaigns to reach customers all around the world. As a result of this jobs are
increasing in the telecommunication industry and strengthen the economy.
Social: Additionally, social considerations have a significant impact on the telecom sector's
profitability. There Businesses create and build websites, media pages, advertisement pages,
and digital marketing campaigns to reach customers all over the world. As a result, the economy
is reinforced and employment in the telecommunications industry increases.Social
considerations have a significant influence on the telecom sector. The telecom sector is shaped
and expanded in large part by society and its consumers. access, especially high-speed internet
access, and a contemporary lifestyle are the main forces behind the telecom business. The
telecom business is delivering new innovations and breakthroughs because consumer tastes,
preferences, and buying habits are always changing.
Technological: Since the telecom sector depends solely on technology, advancements in that
field primarily affect it. The telecom sector is being impacted by technological advancements
such as 5G and 6G networks, driverless vehicles, artificial intelligence, etc. Computers and
cloud computing have taken center stage in productivity. The telecom sector benefits the most
from technology advancements. Laptop, tablet, and smartphone sales continue to rise (Bigliardi
et al., 2012).
Another area that is creating significant prospects for the telecom sector is IoT. Environmental:
Smartphones are the primary source of e-waste produced annually. The telecom sector is
concentrating on waste management, carbon intensity reduction, and environmental footprint
reduction. Climate change and global warming may have an impact on how telecom goods are
delivered to consumers. Global temperature variations and alterations in the atmosphere may
have an impact on the communications sector.
Legal: Global legal compliance increases the risk for the telecoms industry. Legislation matters
to this business, especially when it comes to monopolies, customers, and the government. In
addition to employment and labor rules, the telecom business must also abide by a number of
other laws.
FIVE FORCES ANALYSIS
An study of the industry's attractiveness from the standpoint of strategic investment may be
done using the five forces model. It can also be applied to evaluate the requirement for
regulatory oversight.
Competitive Rivalry: The competitive force's intensity against the firm is reflected in this
component of the five forces model. Within the telecom sector, there is fierce and strong rivalry.
The telecom and internet services markets are very competitive. Because there are only minor
changes between the items in a few factors, there is little to no product differentiation. The high
expense of telecom infrastructure is just one of the many obstacles to leaving the telecom
sector. This element keeps people from quitting the market, which increases competitiveness
(Mavengere, 2014).
Supplier power: The power of suppliers affects the supply chain costs of the company, its
efficiency, and effectiveness. All companies in the telecom sector but their raw material from the
number of suppliers. Suppliers have less bargaining power in the industry due to high
competition. The number of supplier is also high thus suppliers have less bargaining power.
The threat of new entrants: The weakening force poses a danger from new competitors. The
possibility of a new competitor might intensify rivalry while lowering pricing and profit margins for
the company. The company has minimal switching costs.
Apart from this, the high need for capital to establish a business in the industry can weaken the
threat of new entrants in the industry (Ole Kulet et al., 2019).
Buyer's bargaining power: Customers and buyers have an impact on the company's sales, profit
margins, and overall business value. Because there are more options for telecom products and
services, purchasers have more leverage. Consumers can quickly go to a business that offers
quality services at affordable costs. Both transferring and establishing a new connection have
little expenses. As a result, the buyer has significant negotiating leverage (Grishunin & Suloeva,
2015).
Threat of substitutes: Despite being a minor concern, the threat from replacements is growing
because to the availability of more affordable alternatives, lower switching costs, and effective
backbone technology. Additionally, the companies provide bundled services. As a result, the
danger of replacements is growing.
KEY DRIVERS IN THE TELECOM INDUSTRY
usiness drivers are both external and internal elements that have the potential to positively or
negatively affect any industry. To operate in the industrial market successfully, it is crucial to
have familiarity with and an understanding of the primary drivers of the business. The telecom
sector is driven by the following factors:
[Cycles of the Economy: Economic cycles affect nearly every business, and they are one of the
main worldwide drivers of the telecommunications sector. Any industry would have both good
and bad effects from economic cycles. The telecom business is especially susceptible to
economic cycles because of its global reach (Smud et al., 2017).
Machine learning and Artificial Intelligence
Artificial intelligence and Machine learning are some of the most significant and important tech
trends of telecom. The Telecom industry uses artificial intelligence in different business aspects
like improving the customer experience, maintenance, and improving network reliability. Artificial
intelligence is such kind of tool that can boosts the customer experience digitally. The tools like
virtual assistants and chatbots are used that can support customer services. It also boosts the
quality of the network by smart impact analysis and predictive maintenance. Artificial intelligence
also aids in delivering the personalized customer engagement services.
5G
The increasing need for high-speed connection has led to a need for the next generation of
networks. A 5G connection offers a better user experience and cheaper connectivity costs. 5G
services may be implemented by service providers thanks to Open Radio Access Networks (O-
RAN). Innovation will accelerate with a 5G network (Reichert, 2016).
Intelligent Automation
Within the telecom sector, intelligent automation plays a big part. This enables companies to
set up software bots or robots to automate commercial processes. This makes it possible for
companies in the telecom sector to reduce expenses while enhancing customer satisfaction.
Virtualization of Networks
Within the telecom sector, network virtualization has great promise. Network virtualization has
created software-centric network services, which have completely changed the telecom
environment. Network function virtualization is expected to rise significantly in the future as a
result of cloud computing and virtualization, which have reduced costs and increased company
agility (Sallomi & Lee, 2017).
KEY TRENDS
The one element that is sure and certain is that network technologies will deliver better and
improved performance ten years from now. 5G network is being introduced and adopted and in
the future, there will be more updates in the networking that will ensure better efficiency for sure
in terms of the spectrum and energy usage. Regulatory trends and business models are also
predictable to some extent. The value chain will evolve with the introduction of digital products
(Forge, 2015).
MAJOR UNCERTAINTIES
Network technology will surely produce improved and greater performance in ten years. I
promise you this much. The deployment and uptake of the 5G network is only the start; other
networking improvements will come, ensuring higher energy and spectrum efficiency.
Regulation changes and business models are also quite foreseeable. The value chain will alter
as digital items become more prevalent (Forge, 2015).
FOUR FUTURE SCENARIOS
The advent of difficulties, more rivalry, and rising customer expectations are causing the
telecoms business to change more quickly. Telecommunication aims to address these sorts of
obstacles and elevated degrees of uncertainty. Two clusters have been determined to have the
most influence when the forces influencing the future of telecom are examined. These are
control over the customer relationship and ownership of the network technology layer (Sallomi &
Lee, 2017).
Scenario 1:
The engineer srikes back
The domains of network technology, infrastructure, and customer relationships are owned by
telecom corporations. Innovation in highly technologically competent networks is driven by the
telecommunications sector. They are also capable of managing and keeping up with their
resources. Telecommunications firms may also enhance client relations and concentrate on the
entire value chain process. They possess revenue control points and can reach both B2B and
B2C clients directly (Mavengere, 2014).
Scenario 2: The new wholesale truth
For a considerable amount of time, the corporations lost complete control of their assets.
Despite having complete control over network technology, telecom corporations are
nevertheless able to pursue their primary business.
Scenario 3: The Virtual telcommunication
The ownership of the core customer relationship is held by the telecommunications network,
however owing to telecom players totally transferring their domain to vendors, they are
displaced from the network layer.
Scenario Four: A vendor brand
This is the least attractive situation since the telecom players lack technological expertise and
customer connection capabilities. Here, the telecom companies concentrate primarily on the
limited competencies they still have and look for a meaningful place in the market to establish
relevance.
CONCLUSION
According to the aforementioned data, the telecom sector is the one that is expanding the
fastest. Changes in some of the elements or drivers, such as technical, economic, or regulatory
considerations, have a significant impact on this business. The telecom sector is constantly
evolving due to the emergence of new markets, fast-changing client needs, and the presence of
digital actors. As a result, the telecom industry will have a big influence on future customer
interactions, market structure, and technology standards.
The future is unclear and full of many realities, and the dynamic character of the
telecommunications business is always evolving. However, the Internet of Things, 5G networks,
artificial intelligence, and many other factors are the main forces behind the telecom sector and
have an impact on how businesses operate. The telecom industry's potential future scenarios
have been offered by this assignment, based on the major trends and uncertainties. Several
tools, including the five forces model and Pestle analysis, have been covered in this
assignment.
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