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CASE: TELIASONERA, A NORDIC INVESTOR IN EURASIA
1. How would you characterize the competitive intensity and attractiveness of the telecom industry in Eurasia by using Porter`s Five Forces?
Intensity of Rivalry among Competitors
The maturity stage of Eurasia market is at the early stage according to TeliaSonera’s research
data. TeliaSonera was able to successfully expand into Eurasia and become a major player
due to low network penetration in Eurasia. At present, TeliaSonera is the leading telecom
company in Eurasia’s telecom industry and there are fewer competitors. Eurasia is a potential
market for telecommunication industry. If the world competitors come forward to join this
developing market in Eurasia, the intensity of Rivalry among competitors will arise.
Threat of Potential Entry
There are great barriers in the Eurasian telecommunication industry due to the strict
regulation and policy by its government; the system is still highly bureaucratic and risky, the
industrial institutions are having ambiguous setting leading to high cost of investment. But
TeliaSonera has built and utilized its strong business and government in Eurasia, so the
company could successfully expand its market share. In addition to this, capital requirement
is another issue when considering the entrance into Eurasian market. TeliaSonera has already
highly technology and better quality network facilities, those became a leading edge in
comparison to TeliaSonera’s competitors. It takes a lot of time to acquire the above two
assets, good ties with government and the huge capital investment. As a result, the threat of
potential entry seems to be weak.
Bargaining Power of Suppliers
The suppliers are powerful only when there are many other buyers or their supplies are
differentiated. High competitive environment causes existing competitors need to invest in
the modernized technologies to enable the companies to compete in the Eurasian
telecommunication industry.
Bargaining Power of Buyers
Eurasia has a lot of young people. This means there are a huge sales opportunity and more
demanding of high quality at the same time. When consumers’ needs for high quality services
at affordable price increase, it can result in high competition among the competitors; the
consumer can enjoy the lower price service, and therefore, buyers will get the strong
bargaining power. Threat of Substitutes In current Eurasian market, fixed networks are not as developed compared to developed
European countries and Eurasia people rely more on mobile networks. But if the number of
internet providers grows, internet-based telephone services due to a relatively low price can
be substitute to mobile data services. Moreover, the development of internet infrastructure
can transform the existing fixed network into more useful things by convergence.
2. Many multinational companies fail in their expansion in emerging economies. What
are the main capabilities and resources that drive TeliaSonera’ successful growth in
Eurasian markets?
First of all, TeliaSonera understood Eurasian market condition perfectly and seized the sales
opportunity promptly. Eurasia mobile telecommunication market is not still matured and
there are few competitors. Moreover, many Eurasia countries welcome foreign direct
investments for economic development, TeliaSnera took these points consideration into its
expansion strategies. The company invested a lot of money in Eurasia and can extend its
business boundaries.
In addition to the effective market strategies, TeliaSonera also has high level of service
competitiveness in Eurasian telecommunication market. TeliaSonera utilized its know-how
specifically in infrastructure investments in the region. This high cost investment led to larger
and more satisfied customer base, this greatly helped TeliaSnera was a leading positon in
most Eurasian counties.
Finally, TeliaSonera has built a good relationship with government when doing business in
each region. TeliaSienra has contributed to economic development in Eurasia market by FDI
and creating jobs for local people. Through this good relationship with government,
TeliaSonera could decrease risk of increasing the costs of investment.
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Copyright © McGraw-Hill Education. Permission is granted to reproduce for classroom use.
NAME
DATE
CLASS
Math Practice for Economics
Comparing Prices among Competitors
networks
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compete against one another? This is primarily done through price.
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makers, big and small. Read the table below. Then, answer the following questions using the
information in the table.
110 ct bag $18.12
= 16 cents each
Walmart
Amazon
Hershey's
215 ct. bag $13.88
= 6 cents each
100 ct. bag $12.81
= 13 cents each
Mars
230 ct. bag $13.88
= 6 cents each
Nestle
70 ct. bag $8.98
= 13 cents each
55 pc. Bag $17.96
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