PTCL five forces analysis by Suleman rasheed

1. PTCL
Project of strategic
business management
Student name:
Suleman Rasheed
Teacher name:
Sir, Ahmad Shehzad
Registration no:
MCM05121029
Class:
M.com 4th semester
porter five forces, SOWT
analysis, TOWS matrix analysis
Topics:
Date:
26th Dec, 2013
University of Lahore
PTCL

2. I verify that I personally conducted the research reported herein, and that this paper is an
accurate reflection of my financings. I understand that falsifying or fabricating information is
fraud. I understand that misrepresenting another person’s material as my own is plagiarism. I
further realize that either fraud or plagiarism will result in failing this class, and subsequently can
lead to formal charges. Moreover, I verify that this paper was solely researched, prepared and
written exclusively for this class by:
(Student signature)
Page 2

3. Table of Contents
1. 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 ……………………………………………………………………………………..26
6. References ……………………………………………………………………………………………27
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4. 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.
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5. Porter five forces analysis of PTCL
Company
The 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
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6. 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:
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7. 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.
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8. 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
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9. 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.
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10. 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
Threat from
Substitutes
(Companies)
(Growth rate)
2011
2012
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%)
7,458,760
7,244,466
(2.9%)
PTCL
Source: Pakistan telecommunication authority 20011-12
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11. 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
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12. Bargaining power of customer
There 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
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13. 
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.
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14. 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
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15. 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.
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16. 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
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17. 
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).
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18. SWOT Analysis of PTCL
Strength
Opportunities
Profit taking growth of
Largest operational network
subsidiaries
Monopoly
Scope for cost efficient
Oldest and experienced
operations
Market leader
Adopt lasted technology
High speed of internet
Weakness
Threats
Flat organizational structure
New entrants in market
Bureaucratic environment
Political instability
Political intervention
Rapid increase in the govt. tax
Extra employee overhead due to
rate
extra hiring
Energy crises
Switching cost is too high
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19. 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.
Strength
Largest operational network
Monopoly
Oldest and experienced
Market leader
High speed of internet
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20. Weakness
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.
Weakness
Flat organizational structure
Bureaucratic environment
Political intervention
Extra employee overhead due to
extra hiring
Switching cost is too high
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21. Opportunities
Profit taking growth of subsidiaries.
Scope for cost efficient operations.
Joint venture with other telecom companies for introducing new technology.
Improvement in customer services through hiring educated staff.
Adopt latest technology.
Opportunities
Profit taking growth of
subsidiaries
Scope for cost efficient
operations
Adopt lasted technology
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22. 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.
New entrants in market.
Political instability.
Increasing number of competitors like (Mobilink, Warid, Telenor, Zong and etc.)
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.
Threats
New entrants in market
Political instability
Rapid increase in the govt. tax
rate
Energy crises
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23. TOWS MATRIX Analysis of PTCL
EXTERNAL FACTORS (opportunities and threats)
SO
SI
Use strength to maximize
opportunities (maxi – maxi
strategy)
Use strength to minimize
threat (maxi – mini
strategy)
WO
WT
Minimize weakness by taking
advantage of opportunities
(mini – maxi strategy)
Minimize weakness and
avoid threat (mini – mini
strategy)
INTERNAL FACTORS
(Strength and weakness)
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24. 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)
Page 24

25. 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)
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26. 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
Minimize weakness by taking
advantage of opportunities
(mini – maxi strategy)
Page 26

27. 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.
WO
Minimize weakness by taking
advantage of opportunities
(mini – maxi strategy)
Page 27

28. 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.
Page 28

29. 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.
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30. Reference
www.slideshare.com
www.ptcl.com
www.wekipedia.com
www.pta.com
www.scribed.com
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