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Porter’s Five Forces Analysis and the Hungarian Mobile phone Industry

Updated on May 30, 2013

Barriers to Entry

There are a number of barriers of entry for an organization. The first and most well known ones are legal barriers, imposed by the government. This could be done for a number of reasons, for example protect infant industries of a country. In the case of the Hungarian Mobile phone industry, in general is free of barriers, and any organization can enter as long as it fulfills the general company registration requirements. Although this might be the case in general, there is one exception, however, the 3G network; only four service providers are allowed to be on the market if HUF 55 billion is payed to the government, and the other requirements are dealt for also. Also, as in the case of the mobile service providing it requires a large capital investment to be able to enter the market; building the network is quite costly.

Threat of Substitutes

The threat of substitutes is also an important issue to consider. The word substitute refers to the means that the service or good the organization offers to its target market can be used instead of the particular service or good to achieve the same goal and satisfaction of the target market. If there are only a few potential suppliers on the market, then this even intensifies the above problem. In our case, mobile phone can be substituted in with, say e-mails. Fixed line telephones, and the traditional mail and postcard delivery are also substitutes.

Supplier Power

Suppliers in many industries can also be a threat, as without the proper supplies and amounts from them, the particular service or good may not be possible to deliver. So it is with the mobile phone industry, and the Hungarian in particular. Firstly, the three service providers without SIM cards would not be able to make their services be accessible to customers. The actual mobile phones are obviously also vital for customers to be able to use the offered services.

Buyer Power

Here the following questions have to be considered; How informed the buyers are? How price sensitive are they? How brand loyal are they? In the case of the Hungarian mobile phone industry, buyers are quite price sensitive, as Hungarians in general are. This means that the three service providers constantly have to watch and observe the pricing of different services of the different competitors, and compare it to their own. If this is not done, it might be left behind in the competition, and the buyer could threaten its service provider that it would leave unless better conditions are offered by the current provider then the best offer of the other two service providers.

Threat of Rivalry

When one is asked to name a few factors that would probably influence the performance of an organization, the first thing that would probably come to his/her mind are rivalry and competitors. How many competitors are there operating in my market? How large and strong they are? What are there philosophies and strategies? How strong their market efforts are? To be able to operate successfully in a market, all organizations have to answer these questions. In the case of the Hungarian mobile phone industry there are three existing companies, and another 3G service provider prospect. Until recently, when the market was not saturated with over 8 million contractors, the competition between the three companies has not been too rough; they focused on having more and more first-time contractors. Now, that there will not be too many new contractors, they need to convince existing mobile phone users that their service for one reason or another is better. This competition is primarily reflected in the more and more frequent reduction of prices and fees.

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