Applying the above Porter’s Model to Tejas Networks An overview to overcome the Porter’s Five Forces is: 1. Reducing the Competitive Rivalry between Existing Players Avoid price competition Differentiate your product Focus on different segments 2. Reducing the Treat of New Entrants Create a marketing / brand image Patents Tie up with suppliers Tie up with distributors Customer Loyalty 22 Tejas Networks Rivalry (Competitive) companies are Cisco, ZTE, Force10, Nortel, Orion Networks Threat of New Entrants Threat of Substitutes Suppliers Flextronics, Jabil Buyers BSNL, ITI, Airtel
3. Reducing the Bargaining Power of Suppliers Partnering Increase dependency 4. Reducing the Bargaining Power of Customers Increase loyalty Value added services 5. Reducing the Threat of Substitutes 5 Legal actions Switch costs 3.4 PRELIMINARY SCREENING Preliminary screening is required to eliminate ideas, which prima facie are not promising. For this purpose the following aspects may be looked into: Compatibility with the promoter Consistency with governmental priorities Availability of inputs Adequacy of markets Reasonableness of cost Acceptability of risk level 3.5 PROJECT RATING INDEX A preliminary evaluation may be translated into a project-rating index. The steps involved in determining the project-rating index are as follows: Identify factors relevant for project rating. Assign weights to these factors. Rate the project proposal on various factors, using a suitable rating scale. For each factor, multiply the factor rating with the factor weight to get the factor score. Add all the factor scores to get the overall project-rating index. Applying the project-rating index to Ethernet over SDH/SONET. 5 Threat of substitutes in Telecom Infrastructure Company is very rare. 23
3.6 SOURCES OF POSITIVE NET PRESENT VALUE There are six main entry barriers that result in positive NPV projects. They are as follows: Economies of scale Product differentiation Cost advantage Marketing reach Technological edge Government policy 24 Factor Factor Rating Factor Weight Score VG G A P VP 5 4 3 2 1 Input Availability 0.25 * 1.00 Technical Know-How 0.10 * 0.50 Reasonableness of Cost 0.05 * 0.20 Adequacy of market 0.15 * 0.75 Complementary relation -ship with other product 0.05 * 0.20 Stability 0.10 * 0.40 Dependence on firm’s Strength 0.20 * 1.00 Consistency with govern -Mental priorities 0.10 * 0.40 Rating Index 4.45
PART 2 ANALYSIS 4.Market and Demand Analysis 5.Technical Analysis 6.Financial Estimates and Projections Statistics may be defined as "a body of methods for making wise decisions in the face of uncertainty." W.A. Wallis 25
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