Strategic analysis of the business environment

3.4 Porter five forces model

Porter five forces model helps to evaluate the current competitive forces in telecommunication industry.

Threat of new entrants: There is a requirement of huge investment and infrastructure for entry into the telecommunication industry that lead to limit the threat of new entrants in the industry. Besides this, there is a need of high research and development costs to be incurred by new entrants which leads to weaker the new entrants force within this industry. It is also analysed that the government policies, licensing and legal requirements also acts as a barrier for the new entrants (BuddeComm, 2017).

Bargaining power of suppliers: There is presence of large number of suppliers in the telecommunication industry which empowers Spark NZ to bargain against suppliers. It is also analysed that the company has established contractual relations and agreements that makes it easy for the company to procure resources (SparkNZ, 2020). Besides this, the product requirement of the company is standardised, less differentiated along with low cost of switching that offers bargaining power to Sparks.

Bargaining power of buyers: The organisations that offer telecommunication services are limited as compared to the number of buyers. Besides this, the product offered by the companies is almost similar which makes it difficult for the buyers to switch to other companies. Spark NZ offers quality product and the users are not able to differentiate the services and products in telecommunication industry (SparkNZ, 2019). These all factors combine and make it weaker force in the industry.

Threat of substitutes: it is analysed that very few substitutes are present in telecommunication industry because there are standardised products that are needed to offer services to the customers so this factor does not pose any threat for the company (Rothaermel, 2016). It is also observed that some of the substitute products are available at high cost whereas Spark offers quality products at affordable rates which restrict buyers from switching to substitute products.

Industry Rivalry: It is analysed that there are few telecommunication companies in the New Zealand market. Major players include Vodafone, Chorus, Spark, Brookfield, 2degrees and so on (BusinessWire, 2020). These companies are large in size and have large market share which limits the threat from industry rivals in the telecommunication industry. Besides this, the fixed costs in this industry is high which forces companies to always operate at full capacity to control the prices and attain competitive edge (SparkNZ, 2019).           

6 Corporate Level Strategies

6.1 For the attainment of the competitive advantage, Spark NZ is expansion strategy because the company is offering services to public at large and it is required to offer continuous services by improving the experiences of the customer by introducing new products, new markets or functions (Avishikta, 2020). The company is committed to improve three areas in recent period of time. These areas are increased emphasis on wireless services and investment, better serving price sensitive customers and attaining lowest operating costs in the telecommunication industry of New Zealand. Spark NZ is also transforming to a higher extent which lead to satisfy the various demands of the customers at rapid pace (SparkNZ, 2019).

6.2 The implementation of expansion strategy will helps Spark NZ to shape the business into a grown and ahead world of internet. This strategy will help the company to introduce new products and explore business to new markets to satisfy the volatile, complex, uncertain and ambiguous environment. The company is having competitive advantage of having more than 3million customers so it is planning to offer best digital services and technology platforms which will be possible with the integration of the new technology and development of the new products (SparkNZ, 2019). Besides this, expansion strategy also offers powerful opportunities to provide best customer experience in market and carve out a locally-relevant position over competitors that are local or global through more competitive products in NZ market (Rothaermel, 2016).