Jio operations and its dynamics

 

Reliance Jio Infocomm Limited, (Jio), is an Indian telecommunications company and a subsidiary of Jio Platforms, with it’s headquarter located in Mumbai, Maharashtra, India. It operates a national LTE network with coverage across all 22 telecom circles. The telecom industry works under the Oligopoly market structure. An oligopoly is a market form wherein a market or industry is dominated by a small group of large sellers. Oligopolies can result from various forms of collusion that reduce market competition which then leads to higher prices for consumers and lower wages for the employees of oligopolies.

Characteristics of Oligopoly Market

1. Interdependence

The interdependence in the decision-making of the few firms that make the industry is the most important characteristic of an oligopolistic market. This is important because, when the competitors are few, if a firm makes a small change in price, output, etc., it can have a direct impact on its rivals.

In retaliation, the competitors might change their own prices, output, etc. too. Hence, it is important for firms to consider the impact of the major decisions they take on the market as well as the other firms in the industry.

2. Importance of advertising and selling costs

Due to interdependence, firms have to employ aggressive and defensive marketing techniques to gain a bigger share of the market. Hence, firms incur a lot of costs in marketing and promotional activities. Therefore, in an oligopolistic market, advertising and selling costs have great importance.

Usually, firms from such a market avoid price cutting and try to compete on the non-price factors. If they start under-cutting one another, soon a price-war can emerge, driving some firms out of the market.

3. Group Behavior

The crux of oligopoly is group behavior. If an oligopolistic assumes profit-maximizing behavior, then he goes against the fundamentals of an oligopolistic market.

Jio operations and its dynamics

'Jio-triggered shake-up to make telecom industry an oligopoly”

"Game-changing, redefining and transformational". That was the view of Former Airtel CEO Sanjay Kapoor when he was asked about the launch announcement of Reliance Jio. . Reliance Industries is strong parent company backed up by Mukesh Ambani has helped Jio to get a strong hold in the telecom industry with its various dynamics. Reliance Jio a name which works as a game changer for the entire telecom industry. The news, press and all areas of communications got a positive review for such a transformation in the telecom sector. The company took such bold and innovative steps that led to eliminate competition at the greatest extent possible. The telecom sector as an oligopoly form of market is only dominated by few players like Idea, Bharti Airtel , Tata etc. The evolution of Reliance Jio has affected players such as Airtel, Vodafone, Idea and BSNL. We can discuss the various dynamics which lead Jio to be a Game changer in the telecom segment as follows:

 

Transformation in the Telecom Industry: Reliance Jio entry has resulted in creating a transformation of the entire telecommunication industry of the country. Reliance Jio is also considered as the game changer in the whole market, and its entry has adversely affected the sales, profits, market share and customer base of the existing market players such as Airtel, Idea, Vodafone and BSNL.

Innovative services & competitive low pricing strategy: The 4 services offered by Reliance Jio are innovative, high satisfactory and at the same time, the brand has employed a low price strategy.

Deep penetration in short span of time: The result of this is that Reliance Jio has been able to penetrate the Indian telecommunication industry within a short span of time.

Dominant player: The first and foremost impact of Reliance Jio on existing market players in Indian telecom industry was that brands such as Airtel, Vodafone, Idea and BSNL started losing their customers.

We can also consider the various dynamics of operations backed by the SWOT Analysis of Reliance Jio

 Strengths:

·         Strong financial background

·         Strong brand imag

·         Brand ambassadors like Shahrukh Khan and Amitabh Bachchan

·         Technological advantages

·         Strong national network with investment of around $20 billion

·         Large coverage

·         Wide range of features like movies, shopping, chat, cloud, games etc. under one umbrella.

 

Weaknesses

 

·         Advertisement controversies.

·         Mobile number portability is not very smooth

·         Jio made late entry would make difficult to increase market share.

·         Earlier company’s telecom venture CDMA was unsuccessful

·         Company has inadequate fide optic capacity.

 

Opportunities

·         Competitive rates

·         Huge market for telecom services

·         Huge opportunity in many developing countries.

·         Attract advertisement industry with option of e-marketing.

 

Threat

      ·         People would not like to use Jio after free services are over.

·         The initial phase of rapid increase it is very difficult to maintain a large consumer base to cross breakeven point.

·         Existing strong competitors having broader and loyal consumer base which would be tough to compete.

·         Indian telecom market is very competitive due to existing big players like Vodafone, Idea etc.

·         Changing government policies would also create uncertainty in market. 6. Fast upgrading technology from 2G to 3G, 3G to 4G and next generation 5G approaching shortly, needs huge investment plan to remain in market.

 

Summing up: We can conclude from the above discussion that Reliance Jio has evolved as a Dominant market player with its various innovative marketing and pricing strategies. The company being the first mover in 5G network services along with very economical rates for the customers always becomes the first choice in internet and voice calling than that of its competitors. The various strategies adopted by the company helped it to acquire most of the market share and also snatched the shares of other players like Airtel, Idea etc. The different dynamics like the companies operational strength’s, weakness, opportunities and threats impacted its performance in an overall performance.