Threat of substitute products

The position of substitute products is a matter of searching for other products that can perform the same function as the product of the industry or player in the industry (Heracleous, 2004). The bargaining power of both suppliers and buyers and also the threat of substitutes; the extent to which there are products/services which are close substitutes for the product/services of the industry in question, are also considered as part of the five forces. The presence of substitutes in case of telecom industry is very moderate and the switching costs for the buyers are relatively low. In case of Bangladesh mobile telecom industry, substitutes exist in the form of government land lines and some upcoming PSTN operators. Some additional substitutes include wireless Internet providers such as WiMax based companies, Bangla Lion and Augere, which has been desperately marketing its brand Qubee since its entry to the market.

Threat of new entrants or barriers to entry

Barriers to entry, identified as one of the five forces, presents five structural determinants that affect a company’s ability to enter new markets; economies of scale, product differentiation, government as with telecom licences for example, favourable access to the distribution channels and capital requirements (Whittington and Melin, 2005). The government policies and regulations could also impose a significant barrier to entry in the telecom industry. For example, this industry is getting more concerned about the customers’ convenience, setting competitive price structure, invest in corporate social responsibilities which could be difficult to maintain by a new company.