Table of Contents
- Porter's 5 Forces:
- PESTEL Analysis:
- VRIO Analysis:
- VRIO Analysis
Jio is an LTE mobile network operator in India which recently thrilled the whole telecom market in India after launching its 4G services. It’s a subsidiary of Reliance Industries Ltd owned by Mukesh Ambani. Before diving into the firm, lets first have a look at the telecom industry in India, especially the mobile network operators. India currently has about 1 billion mobile phone subscribers, which is second largest in the world. Such a big consumer market tends to attract new firms and investors. The recent rise of interest for high speed mobile internet along with increasing rate of urbanisation assures that this industry will have highly increasing growth in coming years. Jio’s launch had been in the making for about six years. Jio was established based on Ambani’s belief that mobile internet was the revolutionary technology of the 21st century. Ambani re-entered the telecom sector by acquiring a company that had bought a pan-India 4G spectrum in the 2300 MHz band in 2010. In 2010, RIL entered the broadband services market with the acquisition of Infotel Broadband Services Limited (Infotel), which was the only successful bidder for the pan-India fourth-generation (4G) spectrum auction held by the Government of India. RIL had paid Rs. 48 billion to Infotel to pick up 95% of its stake. Infotel had its name changed to Reliance Jio Infocomm Limited (RJIL) in January 2013.
Porter’s 5 Forces:
Power of new Entrants:
The bargaining power of suppliers is high in the event the buyer does not represent a big part of the provider’s sales. It cannot discover such forces as the dominant financial elements in the service that are related to managerial strategy-making. Hence huge investment is required to deal with make an impact in this industry, whereas already established firms are dealing with gaining more market share.
Power of Competitors:
There are already more than 20 network service providers in India, which means the competition is very high and achieving huge customer base and market is share is very hard and unlikely. The closure or the exits cost of the company will also be high as, this industry needs a huge investment and the devices are so costly to setup initially and not easy to resale.
Power of Buyers:
As there are already many network service providers, the customers are provided with numerous choices of plans and offers. Individual and enterprise customers like IT companies have ample number of telecom providers in the market with high product differentiation and cheaper process which gives them many options to select. Hence the customer or buyer can switch between different networks as the switching cost also favours the buyers.
Power of Suppliers:
The suppliers bargaining power has increased influence on the profitability of the company. Increase in the bargaining power of the supplier will lead to a decrease in profits or increase in the price of the end product. The suppliers in this industry are mobile tower companies, SIM cards, mobile phone handsets.
Power of Substitutes:
Online messaging and calling applications are allowing operators without a unified access license, which includes broadband and internet companies such as WhatsApp, Google, Skype to offer low price and high-quality telephony services for international calling and domestic calls as well.
Politically, Jio is following the Prime Minister’s vision of Digital Asian country. Apps, Jio cash facilitates customers to pay or transfer cash digitally. The corporate is supported by government because it falls within the ‘Make in India’ theme that has been inspired by the Government.
Economically, once the demonetisation Jio started giving out free knowledge for some months. This helped the corporate attract a lot of customers and increase value growth by one.38%.
Socially, Reliance Industries spent over Rs.750 crores in terms of company Social Responsibility supplied free web services to Indore Traffic Police and are going to offer their services to different cities. They’re going to give free services at government colleges, and hospitals.
Technologically, the VoLTE technology is that the most advanced technology within the country. This technology provides higher decision quality over its competitors as voice calls are uneven into packets of data.
Environmentally, Jio has put in safe and setting friendly towers that don’t emit nonparticulate radiation.
Legally, Jio has faced many issues from its competitors for their low pricing strategy and also for increasing the ringing timeout time.
Here in VRIO analysis of Jio, the following parameters are taken into account:
- Financial resources
- Customer loyalty
- Network Quality
From the VRIO analysis, it is evident that the Financial Resources, Pricing, Customer loyalty all have sustained competitive advantage while the Network quality has Competitive parity. Their pricing strategy was so crazy during their launch, and now they have made their competitors to reduce the price as well. Hence, the suggestion for Jio would be to differentiate in the quality of the network service that they are providing and retain or increase their customer base.