STRATEGIC PLAN

INDUSTRY ANALYSIS
A. Industry Definition
Globe is a major provider of telecommunication in the Philippines which operates one of the largest
mobile, fixed line, and broadband networks, in the country. They provide digital mobile communication
and internet-on-the-go services nationwide using a full digital network based on different technologies. It
provides voice, SMS, data and value-added services to its mobile subscribers through three major brands:
Globe Postpaid, Globe Prepaid, and TM.

Globe Postpaid is the leading brand in the postpaid market, with various plan offerings. These plans have
evolved in order to cater the changing needs, lifestyles and demands of their customers.

Globe Prepaid and TM are the prepaid brands of Globe. Globe prepaid is focused on the mainstream
market while TM caters to the value-conscious segment of the market. Each brand is positioned at
different market segments to address the needs of the subscribers by offering affordable innovative
products and services.

Mobile SMS includes local and international SMS offerings. They also offer various bucket and unlimited
SMS packages to cater to the different needs and lifestyles of its postpaid and prepaid subscribers.

Mobile Data services allow subscribers to access the internet using their internet-capable devices. There
are volume-based consumable plans geared towards improving the mobile data experience of its
subscribers and ensures the most appropriate pricing of data.

Globe also offers a full range of fixed line communication services, wired and wireless broadband access,
and end-to-end connectivity solutions customized for consumers, SMEs (Small & Medium Enterprises),
large corporations and businesses.

Globe currently has 76.6 million mobile subscribers (including fully mobile broadband), and 3.8
million Home Broadband customers, and 1.6 million landline subscribers. Globe is one of the largest
companies in the country, and has been consistently recognized both locally and internationally for its
corporate governance practices. It is listed on the Philippine Stock Exchange under the ticker symbol GLO
and had a market capitalization of US$5.6 billion as of the end of December 2020.

Sustainability at Globe is anchored on The Globe Purpose, “In everything we do, we treat people right
to do a Globe of Good.” As a purpose-led organization, the Company aims to contribute to the UN
Sustainable Development Goals by promoting innovation and technology for greater social impact.
Together with business growth, Globe actively participates in nation-building through an engaged and
empowered workforce that strives to achieve inclusive and sustainable development for all. In 2019, Globe
became a signatory to the United Nations Global Compact, committed to implement universal
sustainability principles.

B. Industry Structure
The Globe Telecommunications market has evolved into an oligopoly, with just three significant firms
remaining: PLDT, Globe, and BayanTel. Globe and PLDT subsidiary Smart, on the other hand, have
monopolized cellular phone services.
 The telephone business has always been a monopoly and a money maker for its owners, as well
as top government officials who conduct full-fledged bureaucrat capitalism. The telecom monopolies
are among the most generous supporters to presidential, senatorial, and congressional campaigns. 
In fact, together with the telecommunications sector, the leading telecommunications business has
emerged as the new wave of global monopoly capitalism. It has the potential to equal the power and
riches of the world's old monopolies in oil, energy, and mining. Our market and competitive analysis of the
industry points to fierce competition between Globe and PLDT, and the earnings by the incumbents over
the long run are not too high as to attract new players in less populated “last-mile” areas whose
infrastructure deployment cost is far higher compared to dense urban areas.

Competition exists in the present Philippine telecommunications industry which is described as a two–
player market. The valuable role played by Globe in the industry is to gradually gain operational and
financial viability in the long run, and then provide an effective constraint against the exercise of market
power by PLDT. The ability to exercise market power by raising prices and reducing the quantity of
service is not apparent. On the contrary, fierce price competition and competition to install and upgrade
facilities are equally intense.

Although most telecommunications markets have three to four competitors globally, a third player may
struggle to achieve financial viability in the short term due to its delayed disadvantage and the need to
penetrate undeveloped areas with higher deployment costs than the almost saturated urban markets
monopolized by existing players. The government is the only realistic third actor, but its social value lies
inside its cost-insensitive ability to spend in "average over the past" and high-cost areas, as well as to
develop "last-mile" connections that support current networks. However, there has been cases of poor
governance in the direct provision and operation of utility services in the past.
C. Porters Five Forces Analysis

GLOBE TELECOM PORTER’S FIVE FORCES ANALYSIS

Globe Telecom can exhibit the nature of competition of the market industry by using Porter's five
forces of analysis. This study is a strategic tool for preventing and minimizing the risk of losing a
company's competitive advantage to competitors, as well as ensuring the long-term viability of its
product or service. The organization may keep its vision by orienting its ideas in terms of investment
and strategy decisions using Porter's five forces of analysis. Competitive rivalry, threat of new entrants,
threat of new entry, bargaining power of suppliers, and bargaining power of consumers are all factors that
influence market profitability in the market industry.

Here is the pictorial presentation of the Porter Five (5) Forces Model.

1. Competitive Rivalry. (High)

The competition amongst other established businesses highlights the wide range of dangers that Globe
Telecom faces. The study of brands, products, their strengths and weaknesses, as well as strategies and
market share, is the competitive competition. High rivalry indicates that Globe Telecom will be under a lot
of pressure from its primary competitors, such as PLDT, Sun Cellular, Smart, and TNT, which will limit
the company's development potential. Profitability is low in these industries because firms compete against
one another in the targeting and pricing sectors. This indicates that the market is very competitive, and
producers with superior style and advancement skills, as well as production expertise, may have a stronger
negotiating position. The degree or the competitive of rivalry for Globe Telecom is marked as high
because:

 They have a low product differentiation against their competitors who are also well known in this
telecommunication industry or field.
 Another thing is the local and the foreign competitors of Globe Telecom.

To stay on top of the competition and achieve a competitive edge, Globe Telecom must strengthen the
basis of differentiation. Globe Telecom should focus on the underlying needs and desires of its customers.
One of the elements that may boost switching costs is the development of long-term client connections.
Globe Telecom should also spend in research and development operations in order to recognize customer
segments.

2. Threat of New Entrants. (Low)

The threat of new entrants to current market players is reflected by how the entry of new market
players in the industry imposes threats to existing market players. If a sector is profitable and entry barriers
are low, it will attract more competitors, increasing the risk of new entrants. Furthermore, entrance fees,
availability to raw materials, cultural barriers, and technology needs all play a part in new entrants to the
market business and can affect or influence their decisions. There are some factors that minimize the
danger of Globe Telecom’s new entrants:

 Entering the industry needs considerable access to finance or to the expenditure of capital and energy.
Another thing is that, if the product differentiation is high and clients attach high importance to the specific
experience, this force often loses strength.

 If the current regulatory structure imposes such challenges on new companies that are interested in
entering the market, Globe Telecom will be faced with low danger of new entrants because it would be
important for the new entrants to comply with the stringent, time-consuming regulatory criteria that will
deter such players from entering into the market.

 The psychological switching costs also play an important role, if the costs are high for the customers and
existing brands have built a loyal customer reputation, then the risk in the entry of new entrants would also
become low.

Globe Telecom can handle this struggles by focusing on client relationship management and
creating brand loyalty among its target customers, given the minimal risk of new players joining the
sector. In order to get access to their target market and develop a long-term contractual relationship
with distributors, as well as the psychological switching costs, will be increased. Globe Telecom can
also invest in research and development efforts, gain significant consumer data, and apply unique
goods or services to establish a solid basis of difference.

3. Threat of Substitute. (High)

The availability of alternative products or services makes the business environment difficult for Globe
Telecom and other established enterprises. Consumers may utilize alternative products or services from
other industries to suit their demands if the risk of substitution is high. Several variables influence the
intensity of this danger to Globe Telecom. Globe Telecom's substitute goods or services are alternatives
that are available on the market at lower pricing. And as a result of this technological and creative
advancement, the product or service will win. As a consequence, items made by firms that are already on
the market and use the same technology are being replaced by goods made by other companies that are
comparably superior in terms of price and quality and are produced by industries that generate significant
revenue. A threat of substitute in a product or service increases when:

 There is a cheaper alternative product or service available from another industry or business.
 The replacement product or service provides the same or say even better efficiency and quality as the
product offered by Globe Telecom.

However, Globe Telecom can handle and reduce the threat of substitute of product or service by
specifically highlighting how their product or service provided is better than the available
alternatives, by also providing a better experience to its customers, and by enhancing its efficiency
and optimize value for money and create a strong base for the differentiation to refrain the target
customers from using other substitute product or service.

4. Bargaining Power of Suppliers. (Low)

Supplier bargaining power refers to the leverage suppliers have on corporate entities in order to
adopt different strategies such as limiting the supply of goods or services given, lowering quality, or
raising costs. Recognizing the sources of competitive forces is critical to developing a competitive strategy
design. It is also advantageous to support in adapting the firm's strategy to suit the economic outlook and
to optimize potential benefits. It is critical to adopt product development approaches if present
market growth is moderate and the industry is saturated. Furthermore, a high percentage of
supplier bargaining power might boost Globe Telecom's market competitiveness while lowering its
profit and development potential. Poor supplier power, on the other hand, might make the business
more appealing owing to its high profitability and expansion potential. The bargaining power of the
supplier is low in Globe Telecom because:

 The suppliers are not centered.

 The switching costs are low.

 The product or service lacks distinction.

 There are available replacements of products or services.

 Globe Telecom is extremely price sensitive and has ample awareness of the market.

 Forward integration by the suppliers is not a threat to the business.

Globe Telecom can enhance its position against suppliers and boost its sensitivity costs by
minimizing its reliance on one or a few sources. The formation of long-term contractual ties with suppliers
in various countries would not only reduce their negotiating strength, but will also allow Globe Telecom to
improve the quality of its business and supply chain. Finally, if demand is strong enough and the firm has
the requisite skills and expertise, Globe Telecom may discover a different way to manufacture the product
or service in order to assess its feasibility, but this would require a complete examination. Product redesign
and line diversity may also assist the company in reducing the suppliers' market domination.

5. Bargaining Power of Customers. (High)

Customers or buyers with considerable negotiation power can have a substantial impact on the
profitability of market providers by enforcing conditions that are not particularly advantageous to them in
terms of price, quality, or service. Businesses must carefully pick their target clients in order to avoid
becoming overly reliant on purchasers. They are given more or less authority according on the degree
of buyer demand and concentration in their product. By demanding price reductions and mandating
good quality and services, and by generating a price and quantity rivalry amongst industry players,
powerful customers might turn the tables on dominant suppliers. If they can expressly integrate
negotiating leverage in the industry, the price will be sensitive; Globe Telecom customers are seen as
reliable buyers who drive suppliers for further price reductions. Globe Telecom has a high level of
bargaining power of customers, in which it increases because of these factors:

 If the numbers of buyers are limited, each of the buyers purchases a large quantity relative to the size of
the suppliers.

 Having products or services that are standardized or undifferentiated.

 The price sensitivity of customers are high in industry knowledge and the procurement of standardized
products or services is in large quantities that often improve the negotiating power of its buyers.

Globe Telecom can influence the buyers' negotiation strength by expanding and diversifying
their client base. This can be accomplished by introducing new products or services, focusing on new
market sectors, and employing product or service diversification techniques. In this situation, the
company's marketing and promotional effort may also be advantageous. Building loyalty by
combining inventiveness and providing exceptional customer service will enhance cost switching,
effectively diminishing the bargaining power of customers.

REFERENCES

 (GLOBE TELECOM, INC., 2020)

https://www.globe.com.ph/about-us/corporate-governance.html

 pdfcoffee.com_firm-analysis-of-globe-telecom-incorporation--pdf-free.pdf (Giganto, 2021)

 Patalinghug, Epictetus and Manuela Jr., Wilfred Sebastian and Manuela Jr., Assessment of the
Structure, Conduct, and Performance of the Philippine Telecommunications Industry (January 31,
2017). https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2912238

 (Porter’s 5 forces analysis – Global Telecom Industry)

 (Globe Telecom Porter's Five Forces Analysis)