The company that approached me is the Lebara Mobile Company of Saudi Arabia. The company main products are mobile telecommunications services. The company is, therefore, in the Telecommunications industry. The main products for the company in Saudi Arabia are the pay as you go sim cards and its main customers are usually the immigrants and the international communities. The company has been attempting to penetrate the telecommunications market in the global stage for a long time by providing customers with mobile virtual network operator services. The company has recently focused on the United States market and would like to penetrate their telecommunications market and establish itself as both as primary phone service provider, data solutions and number one go to provider for international calls.
Industry analysis- Telecommunications industry
The company has a significant presence all across Europe and Asia. However, in a bid to increase their revenue they have to find a place in the US telecommunications market. It is, therefore, necessary to conduct an analysis of the telecommunications industry and also use the Porters Five Forces model that was developed by the Harvard Business review to determine competition of the market and earnings before developing strategy of entering the US telecommunications market.
Industry and market analysis
The telecommunication industry is made up of companies that provide the services of voice and data transfer services. In the past data was transmitted over cables but recently there are boosters and receivers. The industry is a significant part of the economy as its revenues per year of the industry are more than $ 3 trillion which is more than 3% of the country’s GDP. Recently, there has been an increased share volume of data in the industry. In the industry, the voice accounts for 64% of their businesses and 30% data sharing and transfers (Ghezzi et al., 2015). In the USA, there are about 10 major telecommunications companies. Additionally, the industry allows for the companies to earn above-normal profits. In that regard, the companies are also able to offer the highest dividend rates to their shareholders. One positive side is that the Trump tax laws have proposed for the government to reduce the corporate taxes for the industry from 35 to 21 % which allows the company to invest in the R&D and infrastructure (Tyagi, 2018).
When using the five porter’s industry there are main features that we will look at. They are the threat of new entrants, the threat of substitutes, the bargaining power of the Customers, Bargaining power of suppliers and industry rivalry (Ghezzi et al., 2015).
The threat of new entrants
The telecommunication industry if the USA has a number of barriers to entries. The main barrier of entry is the large capital outlay for the infrastructure, meeting all the government requirements, economies of scale, brand awareness and expected retaliation from the big four companies. The customer in the US are loyal to their service providers already and jumping from one service provider to the next will make one incur certain costs. Additionally, the other established companies have the economies of scale that allows them to provide their services at a very reduced rate.
However, a new company can enter the market if they are able to provide something new, unique and more convenient for the market. Due to technological advancements, the new entrants are able to get a niche in the market and get a place within the industry.
Threat of substitutes
The telecommunication industry is facing the threat due to the technological advancements. For instance, due to technology most of the customer will not be able to use the internet for emails, social media and text messaging or internet calls. The industry has therefore lost a significant number of customers in their voice sector who migrate to data plans that allow more players in the industry (Ghezzi et al., 2015).
Bargaining power of the customers
Due to increased technology the customers now have other choices of the mode of communications such as the emails, social media, and the internet. The best side about telecommunication industry is that they are also among the secondary service provider of the internet bundle services. While they have other communications options, they are also still using their services in a way. However, the customers also incur switching costs when switching service suppliers.
Bargaining power of suppliers
The market inputs in the technology industry are limited, for starters, the companies in the industry are highly automated as they are technological, they do not depend on them. Before the dot-com bubble the industry suppliers who were the software maker, the infrastructure like booster suppliers and phone switches. However, since the demand for the products dropped after the bubble the suppliers were overpopulated and therefore had to reduce their prices. Therefore, the suppliers in the industries have limited bargaining power (Ghezzi et al., 2015)
The US telecommunications market is one of the most competitive industries in the world. The industry is made up of major players including T-Mobile, Verizon Inc. AT&T Inc. that are competing on the highest level by providing ultra-modern services to their customers. Recently, the industry has had some problems by but by the beginning of 2018, the company had come back on track.
Through product differentiation the companies and improved technological advancement the players are able to provide top class services and products to their customers. The telecommunications industry has witnessed rapid technological growths high-speed internet advancements, and inventive and highly competitive spaces. Additionally, the service providers are also moving to digital media and creating TV streaming services for their customers (Ghezzi et al., 2015).
The industry is also faced with insane price wars and competitive pricing. The companies in the industry provides almost similar products, therefore, each company tries to gain an advantage by pricing their products within the least affordable amount.
Current strategies of Lebara Mobile Company
The company has put in place several strategies that have so far worked so well for the company. The current strategies of the company are differentiated products, extensive marketing, partnerships and continuous innovation to stay ahead.
The analysis reveals that company strategies are clearly differentiated products and services (Al Amri and Al Shammary, 2017). From the analysis, Lebara is among the only three companies in Saudi Arabia that have rolled out the 4g plan and internet bundles. The company has also been the first company to offer online virtual mobile operation for their customers. This product differentiation has allowed the company to penetrate a huge market share in Saudi Arabia (Al Amri and Al Shammary, 2017).
The second strategy the company uses is the acquisition, mergers and partnerships. For its penetration to the Europe Market, the company has been able to partner with Vodafone in UK, Australia, Spain, partnered with sunrise for Switzerland, Telekom German, KPN Netherlands, Telenor Denmark. The partnerships have allowed the company to have an accelerated access to the Europe market, faster than any of their other competitor. This penetration has also significantly boosted the company’s revenues (Al Amri and Al Shammary, 2017).
Extensive marketing has also allowed the company to penetrate all the markets including the Saudi Arabian market. Their extensive marketing includes the companies’ ability to access even the most remote areas of the Saudi Arabia countries. The company has also spent a lot of money on mass media advertisements and online presence. The analysis highlights the company active social media presence that allows the company to increase its customer focus and customer satisfaction.
Suggested strategies for the company to Enter the USA Market
The company has expressed interest in entering the US market. The entry to the US market is possible but not easy. However, the company can follow the following strategies and product deployment strategies to enter the US market. The adoption and accurate adherence to the strategy will ensure that the company will not only successfully enter the US market but is also able to gain a significant market share.
Use of partnerships
For Lebara to enter the US market, the company will have to overcome the barriers to entry. The strongest barriers to entry in the US is the cost of entry and breaking the marketing place. The company will not be able to create its own infrastructure a since it requires a high amount of venture capital. The company will also not be able to conquer the new markets the customers are already loyal l to their products. However, the company has the opportunity to partner with the biggest market players like Verizon Inc., and AT&T. That way the company will be able to either add some of their services to be provided using the company’s infrastructures. For example, since the company has already had a virtual mobile operation and Lebara money transfers. They can offer the services, only they do it under the AT&T. That way they will not have to compete against the companies and will be able to exploit the niche available in the industry (Al Amri and Al Shammary, 2017).
When using the approach, the company will only incur a few costs of partnerships and share the revenues. However, it will have eliminated the expenses of having to develop the infrastructure from scratch which might take years or even decades to develop (Al Amri and Al Shammary, 2017).
The company strategy must also put in place an effective and practical marketing plan for their products. The industry is faced with massive price wars and extensive campaigns to get the customer to know about their products in the US. The company will also have to adopt the same approach. However, the advertising campaigns must be customer centered and product oriented. In that, the campaigns are focused on showing the intrinsic value of using the Lebara products instead of their competitor products. That way, coupled with effective distribution approach, customer care and affordable pricing, the company will be able to enter the market and gain a share (Al Amri and Al Shammary, 2017). This approach can also be applied in the emerging markets that still have not been able to receive other services. The am emerging markets will offer the company an enhanced chance of making it in the industry.
Use the lean startup approach for product development
The final step is product development. The company can use the lean startup approach when trying to penetrate the US market. The approach allows the company to conduct studies in the market and tests hypothesis for the products. The approach involves the use of a minimum viable product that allows the company to collect as much information about the customers as possible. The approach will allow feedback from the US customers that will allow the company to develop their products and services to be tailor-made (Al Amri and Al Shammary, 2017). The approach is cost effective and allows the company to provide only services and products that are needed in the market. When using the approach, it will boost the company’s innovative nature and will allow it to be able to produce a unique product for the companies’ customers. The unique product or service will allow it to gain market share.
In summary, Lebara company, a telecommunication company would like to penetrate the US market. However, after the market analysis and competitive analysis, the market is highly competitive and there is a barrier to entry. Therefore, the best approach that the company has is to try and partner with the companies already established, extensive marketing and use lean startup approach in product development.
Al-Amri, M. S., & Al Shammary, A. J. (2017). The Fairness Relationship with Trust and Trustworthiness in Mobile Sector in Saudi Arabia. International Journal of Business and Management, 12(4), 95.
Ghezzi, A., Cortimiglia, M. N., & Frank, A. G. (2015). Strategy and business model design in dynamic telecommunications industries: A study on Italian mobile network operators. Technological Forecasting and Social Change, 90, 346-354.
Tyagi, K. (2018). Four-to-Three Telecoms Mergers: Substantial Issues in EU Merger Control in the Mobile Telecommunications Sector. IIC-International Review of Intellectual Property and Competition Law, 49(2), 185-220.