6.2.
PRIORITY
IMPLICATIONS
High
POLITICAL/LEGAL
It
is
important
to
maintain
strong
America Mvil.
Low
This
initiatives
to
remove
VAT
on
boost demand
permissions.
ECONOMIC
New
infrastructure
and
FDI
become
telecommunications
sector
more
SOCIAL
even
more
benefit
awareness in
client.
operators.
TECHNOLOGICAL
everyday
trend.
technology,
4G,
which
is
the
ultimate
technology
due
to
the
generation
accessibility
of
pressure
to
companies to be updated.
for
ENVIRONMENTAL
Every day the eco-trend grows which means an
The barriers to enter this sector are high due to its high cost and special legal regulations by the government.
Product differentiation plays an important role when entering this sector because a huge amount of capital would be
needed in marketing to generate market share.
Implications
Therefore, a new competitor would need economies of scale to achieve low costs and be competitive in the market.
In addition to that, every time that there is a new competitor Claros reaction is aggressive, taking advantage of their
monopoly position.
COMPETITIVE RIVALRY (HIGH)
Details
Strong rivals with almost the same technology and service. Nevertheless, Claro is the market leader with 61.9% of
subscribers in the country (MinTic, 2012).
Price competition is strong among the competitors. Though, Claros prices are the highest.
Broadest mobile network in the country. It has coverage in rural municipalities that the other providers cannot.
Implications
Rivals represent a high risk for the company, threatening its market share.
Claro has imperfect Substitutes (given that they are fixed and cannot be transported with the customer): Such as Broadband
Internet through skype for example, landlines, or calling cards.
However, the mayor threat for Claro are internet services such as whatsapp, skype or viber that offer a free or low cost
service. Even though they work as part-substitutes in the sense that they need mobile internet service to be run which is also
provided by Claro.
Implications
Imperfect Substitutes: However, as it has been explained in the company overview, Claros services includes all these, so the
risk is lower since customers can find the substitute inside the organisation.
Mobile substitutes: These internet services or apps make the company lose profitability because the client is not going to
spend more money than the basic contract due to their use.
POWER OF SUPPLIERS (LOW)
Details
Suppliers in this case are:
Mobile phones fabricants like: LG, Samsung, Nokia, Sony Ericson, Motorola and Apple.
Due to the numerous companies that produce mobile phones, none of them has a great power. However, that depends of the
technology and demand that they have.
BARGAINING POWER OF BUYERS (MEDIUM)
Details
There are two different types of buyers for Claro: Pay-as-you-go customers and post-paid customers:
Buyers are aware of quality, services and prices in the market.
Implications
The company needs to have a different
Pay-as-you-go customers do not have high switching costs because of the lack of a contract but post-paid customers have
high switching costs due to the contracts signed that are usually from 12 to 24 months.
As customers have lots of information about the market it implies a risk for switching to the competitors.
Financial muscle. America Mvil which is its parent company is a key player in the Latin-Americas mobile sector
Advanced technology. Broadest mobile network in the country. It has coverage in rural municipalities that the other
providers cannot.(semana,2013)
Know-how with 19 years of experience within the Colombian market as they were the first network operator.
WEAKNESSES
High prices
Hiring of personnel and coaching: High staff turnover and lack of proper coaching in the customer service department
New competitors emerging in the market and are moving forward quickly with innovation.
Its market share is decreasing given that its rivals are strengthening
Is the target of the government due to its dominant position (BMI, 2014)