Skype Case

Recall Situation

Apply Processes, tools, + frameworks (internal/external)

Identify /explain strategic issues facing the company

Generate/evaluate alternatives for Skype + rivals

IS THE GAME GOOD?  YES.

Industry

* Projected Growth for decade between 140-150%

* Landline usage is decreasing

* VoIP currently has a minimal market share  potential for growth

* Skype has 8% of the minutes for worldwide calls

* Defined as a information services provider so they fall outside Telecommunications Act

* You do not need to be big to win...unless the net neutrality is denied

WHAT'S OUR POSITION?

What's our position?

* Strategic Group Map

*

External:

Porter 5 forces

1. Threat of new Entrants

* Very strong

* Barriers to entry low

- Low VoIp regulation

- Low set up costs

* Growing Industry

* The lack of regulation made it easier for companies to enter the VoIC industry than the telecommunications market

2. Bargaining Power of Suppliers

* Limited bargaining power b/c it is widespread (VoIP providers)

* In terms of net neutrality, if it is ruled against then suppliers have all the power, determining what ISPs get access to their information and more control of internet usage.

3. Bargaining Power of Buyers/Consumers

* Moderate bargaining power due to ease of switching to another companies VoIP network (AT&T, Facebook/Google chat, etc.)

* However, they do not purchase a large portion of Skype's output (free domestic video chat), so brand loyalty may exist.

4. Threat of Substitutes

* Google/Facebook chat

* High threat b/c of already low entry barriers  potential for new competitors

5. Intensity of Rivalry

* Lack of Differentiation and low switching costs

* Rivalry intensified because of low industry growth (refer to financial profit analysis)