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3.1. Power of Buyers
The power of buyers is low, due to the strong market presence in UK and internationally. Additionally, due to the complexity of the mobile market structure, products and services, it is difficult for buyers to implement backward integration. This suggests that the power of buyers is low.
3.2. Power of Suppliers
The power of suppliers is of medium strength. Vodafone has several main suppliers, with whom they tend to have long term relationships. Huawei is a one of Vodafone's official suppliers since 2005 (Huawei Official Website, 2012). However, as the market research demonstrates, there are a lot of suppliers in the mobile market, which may substitute Huawei.
3.3. Threat of New Entrants
Threat of new entrants is low. The barriers for new entrants are relatively high due to the complexity of the mobile market structure and a need for a high degree of investments. Furthermore, given the current poor economic conditions, the risk of new mobile players' entrance is decreased. It is also supported by the intense competition in UK mobile market, with such clear leaders as O2 and Vodafone (Independent, 2012).
3.4. Threat of Substitutes
Threat of substitutes is high. There are a lot of alternatives that may be utilized instead of the mobile phone, due to the rapid development of new technology, (Lane, 2010). The most popular are the landline phones and video conference. Additionally, VOIP services are quite popular now, due to the associated low costs of communication (i.e. Skype, Yahoo Messenger) (Tsai, Lo and Chou, 2009).
3.5. Degree of Rivalry
The degree of rivalry is high, since there are two mobile market leaders in UK, namely O2 and Vodafone. Additionally, the mobile companies tend to form the strategic alliances, as T-Mobile and Orange have done recently (BBC News, 2012). This, in turn, increases the competition.
The switching costs are low, especially on Pay as You Go basis, whereas the switching costs are more increased on a Pay Monthly contractual basis. It is further supported by the increased loyalty towards a particular mobile operator in case of the subscription to Pay Monthly contract.
The exit barriers are also high, due to the complexity of the mobile industry and its structure.
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