Description
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Explanation & Answer
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Mobile Telecommunication Industry Report outline
General description of the Industry
PESTLE Analysis
Factors affecting PESTLE Analysis
Five-Force Analysis
suppliers bargaining power
threat of new entrance of farms
substitute product threat
the competitive rivalry.
Challenges facing the industry
conclusion
INTRODUCTION
The aim of the project is to determine the attractiveness of the Spanish telecommunication
industry. To achieve this aim, I will perform the structural analysis of industrial economics, using
PESTLE and Porter five forces as theoretical frameworks. Given the wide area in the Information
and Communication Technology (ICT) sector and its large range of activities and subsectors, I
decided to focus on the telecommunication industry. It shows a great dynamism with continuous
mergers and acquisitions, market regulations in response to company’s market power and, in
addition, it is present in the daily life of millions of people. The level of attractiveness will show
the sector´s strongest and weakest points, how convenient it would be to break into this sector and
the actual and future situation of the industry and the companies that are part of it.
PESTLE Analysis
The general environment involves all the factors that come from the socioeconomic system
that surrounds a business and cannot be avoided. It will be analysed by the PESTLE tool which
will define an environment’s limits and show which factors have more influence on the companies
that are competing in the sector. The first step for a PESTLE analysis is to define the geographic
limits, in this case the Spanish telecommunication market, and then examine six different
dimensions (Navas & Guerras, 2012)
Political dimension: The degree in which the government intervenes in the economy. It
refers to the political stability and policies such as tax policy or labour law. The Spanish
government, in an attempt to face the crisis, took many restrictive fiscal policies that affect directly
the ICT sector, therefore the telecommunication industry. Among them the tax rise could be one
of the most harmful for the sector. A tax rise means that the consumers will have less purchasing
power and taking into account that the telecommunication services are not basic need products,
the companies from the sector could suffer a severe reduction of sales. But not all policies affect
the industry in a negative way. In 2013 the government created a policy to encourage ICT
companies to improve and reach the European level of this sector. The government offers to the
actual and new companies in the sector subsidies and special funding programs. (Spain, Ministry
of industry, energy and tourism. 2013, Acción Estratégica de Economía y Sociedad Digital). It is
a good help, but knowing how high the needed investments in this sector are this help is not
enough.
Economic dimension: It is related to economy´s nature and stability and it is showed by
the economic indicators. The economic crisis set off many unfavourable situations in the Spanish
market. Among those situations the high unemployment is one of the worst. The unemployment
rate reached 25.6% on February 2014 and while the unemployment rate is growing the
unemployment helps are cutting down, creating a really hard situation for millions of families. At
the same time the salaries were reduced and thereby the savings and purchase power have
decreased in a significant way. All this generated a contraction in the consume that affected the
incomings of the businesses and worsened the Spanish economic situation. It has been shown in
the industry´s definition that the consumption of voice transmission and text messages suffered a
drop on their consumption. This drop is directly related to the diminution of the consumer´s
purchase power. (Spain. Ministry of industry, energy and tourism. 2013. El sector de las
Telecomunicaciones, las Tecnologias de la información y los contenidos en España 2012).
Social dimension: Cultural aspects that have a strong influence on the general environment.
It involves trends, population growth rate or age distribution among others. T...