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Porter Diamond & 5 Forces for Chininsia : APPENDIX 2

2.1 Porter Diamond

Strategy, structure  Oligopolistic market structure with Big 4 controlling 82% of the
and rivalry market

Demand conditions  182% penetration with sophisticated internet service expectations
Factor conditions  Linguistic challenges as first language is not English

 Advanced Universities with the highest rate of
Telecommunications and IT graduates per person in the region

 Good landscape to mount telecommunications infrastructure
Related and  Our handset manufacturers Apple, Samsung all present
supporting industry  Our content and app producers also present

Government policy  Strong government policy support for a knowledge economy
based on their 'internet access for all' programme

2.2 Porter 5 Forces

Threat of new  Bid and pay huge capital to win mobile license to operate

entrants  The Big 4 control 82% market share almost equally between them
 Two major players, AxtonTel and Bartini play in the same spaces we
play in and likely to erect entry barriers against us (Game theory)!

Power of  Handset manufacturers Apple, Samsung, BlackBerry do not appear
Suppliers organised

Power of  Compulsory number portability allows low switching costs
Buyers  35 ISPs means customers have a high degree of choice.

Threat of  Fixed lines/other ISPs have no scale to compete
Substitutes:  Mobile phones remain the number one means of access to the internet

Competitive  A Big 4 almost even split in market share, an oligopolistic market
rivalry structure, huge advertisement budgets, falling smart phone prices.

 182% Mobile Penetration Rate and no. portability has left operators
scrambling to retain or seize market share from each other.

 CAGR being 10% last 5 years with projections pointing to a leveling by
2019 indicates a mature market (Product Life Cycle) and hence
intense rivalry.

Developed by The CharterQuest Institute for 'The CFO Business Case Study Competition 2016'
www.charterquest.co.za | Email: thecfo@charterquest.co.za