Case: The Hong Kong mobile telecom industry
Charlotte Baettig, Karin Bonvin, Marc Burkhalter, Margarita Esguerra, Adrian Sauter, Du Xiao Xiao

Table of contents
1. Summary of the case 2. The industry

2.3 General alternatives for competitors 3. New World (NW) 3.1 SWOT-Analyse 3.2 Strategy
3.2.1 Option n°1 3.2.2 Option n°2 3.2.3 Option n°3

2.1 Porter‘s five forces 2.2 Industry attractiveness

4. Recommendation to the CEO

1. Summary of the case
Situation (mid-2000s):

• Entry of new firms in the market and development of new segments due to:
 Deregulation of the market  New technologies: 3G

• Digital system: higher capacity, email delivery and text messaging • 6 2G operators:

• Industry regulated by the OFTA (Office of Telecommunication Authority)
 Grants licenses  Allows resellers to participate  Promotes mobile number portability

2. The industry
2.1 Porter‘s five forces*
THREAT OF ENTRY



Possible future entrants: PCCW (an operator for fixed lines), China Mobile, and China Unicom

BARGAINING POWER OF SUPPLIERS

/

RIVALRY



OFTA: regulation power; Large number of equipment suppliers like Nokia, Motorola, and Samsung

Keen competition emerges from a high number of competitors: SUNDAY, People, Smartphone, CSL, New World, Hutchison

BARGAINING POWER OF BUYERS



The bigger the pool of mobile operators, the higher the bargaining power of buyers. Buyers have very low switching costs.

SUBSTITUTES



The only possible substitutes are: fixed phones and Internet (e.g. Skype)
* Porter, M., “How competitive forces shape strategy“, Harvard Business Review, 1997

2. The industry
2.2 Industry attractiveness
Conclusion drawn from Porter’s five forces: • The market is fragmented with severe cut-throat competition • Possible entrants like China Mobile and China Unicom increase competition awareness and uncertainty for future incidents • Even though OFTA regulates the market, the large number of