WORLDSPACE SATELLITE DIGITAL RADIO SERVICE Harvard Case Solution & Analysis

Worldspace satellite digital radio service Case Study Solution

BACKGROUND

The World space Satellite Digital Radio Service was providing services in many countries. The company decided to expand its services to India and then it launched its radio services in the year 2000. However, the company found out that it is suffering from losses from its services in India due to more competition and less technological advancement in the country.

The company also failed due to the fact that its primary service is to provide radio services whereas in India it decided to expand and provide other services too. The other services provided mainly included pay channel packages and many more services to the country. It was later found out that the cost of providing these services were quite higher than the number of subscribers from whom the company was earning revenue. This became evident from the fact that the company soon started to suffer from losses in its earnings and it soon became short of funds and this gave rise to the idea of termination of its services in India and the company announced this news later when it suffered loss continuously for three years. The subscribers of the company were decreasing dramatically and the cash was continuously in deficit with more debt being raised and a sudden increase in the current liabilities of the company. Further the company was not quite sure about its relation with the creditors and there were no rules or regulations regarding the radio services in the country.

PESTEL ANALYSIS

  • Political:

The political system of India is favorable as the country has more or less stable governments as the governments do not keep on changing. The ruling parties if elected in the election tend to complete their time period of ruling. Any president or prime minister is not made incompetent for the post during his era.

  • Economic:

The economic conditions of India seem to be favorable as the country’s GDP was estimated to be 3.965 trillion U.S. dollars and India had the third largest GDP in terms of purchasing power parity. In order to promote economic development of the country, the government takes several steps such as to reduce unemployment rate, inflation rate and other issues in the economy. The government also manipulates the interest rates and its taxation as it seems suitable at the time of recession in the country and it tries to protect the economy from damaging effects of the recession.

  • SOCIAL:

The social trends in India are that the growing old age population in the country is leading to a pressure on the pension funds given to them. Each year a lot of budget is allocated to provide medical and other free of cost services to the old age population of the country. India is second among the countries who have the highest population in the world.

  • Technological:

India is continuously trying to achieve technological advancements and there are several attempts by the country to achieve that objective. Today India is a big mobile market where 5-6 new operators are about to launch their services.

  • Ecological:

The growing industries are polluting the environment and this has given rise to many problems in the environment such as waste disposal, noise pollution and pressure groups to protest against the industries of the country and this makes it difficult for those industries to operate effectively as any production activity is more likely to damage the environment.

  • Legal:

There are several laws implemented in the country in recent years such as Employment Law, Trade and Protection restrictions, Health and Safety restrictions, EU and International laws and monopolies commission. These laws are introduced in order to make the industries and the country better and disciplined in every rule of life. (PESTLE analysis Contributor, 2014)

Porter’s five forces

  • Bargaining power of customers:

The bargaining power of customer is high due to the reason that there are many companies providing somehow similar services which makes it easier for the customers to shift to the competitor very easily. This can also be the reason why the number of subscribers of the company are decreasing.

  • Bargaining power of suppliers:

The bargaining power of suppliers seems to be high as there is a risk that the company doesn’t maintain good relations with suppliers. It was evident from the risk that there are few suppliers to Worldspace as if there were many suppliers then this risk would not have been there.

  • Threat of new entrants:

The threat of new entrants in the industry is high as there doesn’t seem to be any barrier to entry and Worldspace has got first-mover advantage (FMA) which also encourages other companies to follow on investments in the radio sector as there are no barriers to entry. However, the first-mover advantage creates a barrier for new entrants.

WORLDSPACE SATELLITE DIGITAL RADIO SERVICE Harvard Case Solution & Analysis

 

 

  • Competition:

There is low competition but there are competitors in the similar field of World space as the company has got first-mover advantage so it also encourages other companies and competition came in the form of entertainment and service options other than the Digital audio radio service (DARS).....................

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