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... nys product is relevant for Kuala Lumpur and Malaysia. 3 Analysis In this section I am going to determine the external environment and how it affects the telecommunication industry in Malaysia, this is also called a country analysis. A short analysis of city issues follows and thereafter comes an analysis of the present attractiveness of the industry. 3. 1 Analysis of country issues De Wit & Meyer (1998) describes the industry's surroundings based on the four forces of the SEPT-model. They think that the external forces that affect the industry are social factors, economic factors, political factors, and technological factors. 3. 1. 1 Social factors Our potential customers, the five operators, are more or less multinational companies rather than end-user customers.
They have foreign owners and have made strategic alliances with international companies and they got business activities in several countries except for Malaysia. Therefore, I think that the social factors are looking good for a possible entrance into the Malaysian market. 3. 1. 2 Economic factors In the recent years Malaysia's economy has been correlating to the world economy and to the Asian economy. When mentioning the world economy, it is, of course, the US economy that is the most important. In particular for Malaysia due to its exporting to the US. According to the World Bank Group, the US economy appears to be in the early stage of recovery that will be sustained if global economic conditions continue to improve, web I think that the Malaysian economy will continue to perform better and better, as it has done except for setbacks in the global economy. Furthermore, I think that this is one of the most critical issues when determining whether we should enter the Malaysian market or not, because a growing economy encourages more investments, and more companies to enter the market.
Therefore, the better economical conditions the more likely the need for third generation telecommunication infrastructures in the whole of Malaysia, and not just around Kuala Lumpur. And in a longer perspective, this will also speed up the process to modernize the technology even further, i. e. 4 G. 3. 1. 3 Political factors The political development has been characterized by the relationship between the three main ethical groups. There have been some problems between the groups but in the big picture, Malaysia has succeeded in avoiding bigger conflicts. Even though the freedom of speech and the political freedom have limitations, for which the government is criticized both internationally and domestically, the country is still one of the most open-minded in the region, both politically and economically, web Though there are not any western conditions in Malaysia, I do not think the political situation in Malaysia will affect our businesses in a negative way since there have not been any major conflicts in the country. In addition, the governments concern for Malaysia to become a highly developed IT-nation puts up a high demand for good and modern telecommunication infrastructures.
The Malaysian government has a very active privatization program. Despite this, a number of major businesses are either government controlled or have government equity, web An example of this is the 3 G-industry which is controlled by the government, however I do not think that our company will be affected by this in a negative way since the political influence on the industry will fade out when the licenses have been awarded. 3. 1. 4 Technological factors Malaysia is not a high-technological country, but the main point is that it is striving to get there. Communications and information technology infrastructure is a key element in Malaysia's plans to achieve industrialized nation status by 2020 (Vision 2020), web This creates a huge demand of Information and Communication Technologies and it will make the Malaysian market and other South-east Asian markets even more attractive in the future. The company that succeeds to get the first infrastructure contract has a good opportunity to get more contracts later on when an expansion, or new technologies, will be needed. Therefore, I think that the technological factors are looking good for entering the Malaysian market. 3. 2 Analysis of city issues The most important part of Malaysia to enter is of course its capital, Kuala Lumpur. This, since it has most inhabitants per square meter but more importantly, this is the place for the Multimedia Super Corridor.
The companies in this area have high demands on working and satisfying telecommunication infrastructures and it will probably be these companies that set the level of technology demands for the whole of Malaysia. However, I do not think that our company will have that much to add to this issue; instead I think our customers, the operators, will tell us the quantities they want to buy from us and the locations for the equipment to be put up. 3. 3 Analysis of industry issues Depending on the verdict of the upcoming awards, there may be one to five customers for our company to serve. The government may decide to give licenses to every company that fulfills the demands or give it to the company that has the best offer. Furthermore, if the licenses go to several operators, there can be one or more infrastructures built up. Considering the information I found in my research, there will most probably be one to three licenses given to the operators.
Additionally, it is reasonable to believe that these operators will build up the telecommunication infrastructure together because of two reasons; (1) it is the governments will, and (2) it will be cheaper for the operators to agree upon an alliance and share the costs. Sounds pretty bad, the worst-case scenario is one customer on the market, and in addition, the customer is an alliance of several companies. This will affect the industry and the competitors in the industry. When deciding an industry's attractiveness, a useful tool is Porters five-forces-model.
Porter (1985) claims that competitive strategy must grow out of a sophisticated understanding of the rules of competition that determine an industry's attractiveness. The model consists of five forces; buyers bargaining power, suppliers bargaining power, substitute products, potential new entrants, and rivalry among competing sellers. Buyers. Probably the buyers will put up demands concerning prices and qualities, and then ask the companies in the industry to submit tenders. This together with the fact that the industry has few buyers makes the industry less attractive. Suppliers.
Suppliers may have some bargaining power in the industry concerning price, service etc, but the main point is that the suppliers are as eager as our company to get the contract because of the size of the order. Suppliers to the telecommunication industry are rather helping the companies than the other way around, which makes the industry more attractive. Substitute products. I can not see any clear threats from substitute products at the moment, except from the existing 2. 5 G infrastructure. But for this technology to maintain competitive, end-users must reject 3 G and that is not very likely to happen.
In the near future though, the technology will be changed to 4 G and the industry's prerequisites will change and become similar to todays conditions. Potential new entrants. Since the industry's characteristics are heavy investments and long-term relationships there is no real threat from new entrants. Rivalry among competing sellers.
The most important competitors are (ranked by sales): Lucent, Nortel, Alcatel, Motorola, and Ericsson. Since the telecommunications equipment segment is one of the most troubled areas in technology industry, web the competition within the industry is getting harder and harder. Additionally, total spending on telecom equipment fell by about 15 % in 2001; it is estimated to fall even for...
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Research essay sample on Telecommunication Infrastructure In Malaysia