Sm Final Report- Mobilink

Strategic Management

ACKNOWLEDGEMENT

This report has been a great learning experience- helping us to learn about the practical implications of strategic planning in an Organization.

We would like to take this opportunity to thank our instructor Mr. Javaid Ahmed who made this report possible by providing his unconditional guidance and cooperation throughout the semester.

We also wish to express our gratitude to Mr. Shahzad Majid, Account manager (team lead) sales, who generously helped us in compiling this report by sharing his expertise, knowledge and experiences, without which this report would never have been possible.

LETTER OF AUTHORIZATION

December 09, 2009

Dear Reader,


We are students of Strategic Management at IoBM and have been authorized by Mr. Javaid Ahmed to prepare a term report on “Strategic Management at Mobilink”, which is to be submitted on December 09, 2009.

The preparation of this term report required us to perform a thorough analysis of the Telecom Industry

Sincerely,

Maria Irshad

Huzaifa Mahesri

Karishma Motiani

Muhammad Umair Siddiqui

Nida Bhimani

Bela Panjwani

2Institute of Business Management


LETTER OF TRANSMITTAL

December 09, 2009

Mr. Javaid Ahmed

Instructor, Strategic Management

Institute of Business Management, Karachi.

Dear Sir,This is the term report on “Strategic Management at Mobilink”.

This report consists of the macro-environmental analysis and industry attractiveness, the company and competitor analysis, micro-environmental analysis and internal company resources, strategic analysis and recommendations and strategic implementation.

The report has been completed after the perpetual hard work, determination and devotion of past 3 months.If you have any additional questions, we would be pleased to answer them.

Thanking you.

Sincerely,

Maria Irshad

Huzaifa Mahesri

Karishma Motiani

Muhammad Umair Siddiqui

Nida Bhimani

Bela Panjwani



Section 1:

MACRO-ENVIRONMENTAL ANALYSIS AND INDUSTRY

ATTRACTIVENESS



EXTERNAL ENVIRONMENT

Porter’s Five ForcesApplying Porter’s five forces to the Pakistani telecommunication industry allows us to garner a retrospective view of the potential attractiveness in terms of profitability of the industry. We first must analyze the industry through the five-force template, which will allow us to more accurately gauge the industry in terms of its potential.

A THREAT OF NEW ENTRANTS YE

S

(+)

~ NO

(–)

1. Do large firms have a cost or performance advantage in your segment of the industry?

2. Are there any established brand identities in your industry?

3. Do your customers incur any significant costs in switching suppliers?

4. Is a lot of capital needed to enter your industry?

5. Is serviceable used equipment expensive?

6. Does the newcomer to your industry face difficulty in accessing distribution channels?

7. Does experience help you to continuously lower costs?

8. Does the newcomer have any problems in obtaining the necessary skilled people, materials or supplies?

9. Are there any licenses, insurance or qualifications that are difficult to obtain?

10. Can the newcomer expect strong retaliation on entering the market?



In this industry, the threat of new entrants is very low or in other words, the entry barriers are very high, as shown by the above template. It is very difficult and costly to acquire the needed technologies and expertise to set up operations in this industry. Large amount of capital is needed for a player to enter the market. Apart from that, to enter this industry, the new player must obtain a license from the government which is usually a huge amount. Currently to obtain this license it costs $300 million and this license needs to be renewed every 10 years. It is a very big investment that a player needs to make in order to enter this industry. Also for the new entrant, it would be very extremely difficult to come up with the capital to infiltrate the established distribution network of the current well-established players.

It is also very difficult for a new comer to enter this market because there are already big names like Mobilink, Ufone, Telenor, etc which are very well established in the market. It will be very difficult to change the perception of millions of customers and to convince them to leave their current service provider. This can be seen with the example of zong, a new entrant. Even though it has done a lot of promotions to break through the competition, it has hardly managed a reasonable share for itself. So new entrants will face very heavy resistance from the already well established brands who not only have very high brand equity, but also with their experience they can lower down their prices without considerable damage to their brands, to force the new entrant out of business. Thus this low threat of new entrants makes it a favorable point for the industry.

Vodafone and Orange5 are two international companies who have been trying to penetrate in the Pakistani telecom industry, but have been unsuccessful so far. They still have not given up and are still trying to obtain the license to operate here.


21 10


B BARGAINING POWER OF BUYERS YE

S(+)

~ NO(–)

1. Are there a large number of buyers relative to the number of firms in the business?

2. Do you have a large number of customers, each with relatively small purchases?

3. Does the customer face any significant costs in switching suppliers?

4. Does the buyer need a lot of important information?

5. Is the buyer aware of the need for additional information?

6. Your customers are not highly sensitive to price.

7. Your product is unique to some degree or has accepted branding.

8. You provide incentives to the decision makers.

Judging by the template above, the buyer power is quite high for this industry. The main reason for this are there are a lot of price sensitive customers who face no significant costs while switching to another supplier. This gives buyers considerable power over the industry. All the players in the market work to cater to the needs of the customers, trying to come up with better and more attractive packages every now and then, to broaden their consumer base and to maintain their existing one. A new SIM of any mobile service costs Rs.150 which is a quite cheap. Plus, the product itself is not


1 10

7


technical to understand so buyers can easily switch from one service provider to another, without facing any difficulty in the process. However, there are established brands in this industry and quite a few people are brand loyal customers who would switch over to other brands that easily. But the portion of such customers is very small and the majority is price sensitive. High buyer power proves to be unfavorable for cellular service providers.



C THREAT OF SUBSTITUTES

YE

S(+)

~ NO(–)

1. Substitutes have performance limitations that do not completely offset their lowest price. Or, their performance is not justified by their higher price.

2. The customer will incur costs in switching to a substitute.

3. Your customer has no real substitute.

4. Your customer is not likely to substitute.

The threat of substitutes in this industry is extremely low. It can be said to be almost negligible hence it does not affect the profitability of the industry. One thing is that the customers if want to switch to a substitute, they will then have to incur a considerably high cost to do so. Plus no real substitute exists for cell phones. The closest thing to a substitute is the CDMA phones and the wireless phones. A few years ago, the demand for CDMA technology was high, but that was attributed to poor service of PTCL connections. So the shift to CDMA was the action of eliminating landlines from homes and keeping CDMA phones instead. The use of cell phones was hardly affected by it. Hence no real substitutes for mobiles, and therefore mobile service providers, exist. This is an extremely favorable aspect of the industry.


1 10


D BARGAINING POWER OF SUPPLIERS

YE

S(+)

~ NO(–)

1. My inputs (materials, labor, supplies, services, etc.) are standard rather than unique or differentiated

2. I can switch between suppliers quickly and cheaply.

3. My suppliers would find it difficult to enter my business or my customers would find it difficult to perform my function in-house.

4. I can substitute inputs readily.

5. I have many potential suppliers.

6. My business is important to my suppliers.

7. My cost of purchases has no significant influence on my overall costs.

The main suppliers for the telecommunication industry comprise of the SIM card manufacturers and the scratch card manufacturers. Apart from them, there are suppliers who handle the labeling, packaging and printing of the packet in which the SIM card is sold.

The industry has a lot of such suppliers to choose from which gives the industry an edge over the suppliers. The SIM card manufacturers are vast in number and the companies also have the option of choosing a foreign company or a local company. The players in the industry do not have to deal with the same suppliers and they can easily switch to other suppliers, depending on their prices. For suppliers, their clients are very important to


1 10

3


them as they buy a major portion of their production and also because there is not a large clientele for them. Packaging and printing do not require any special expertise as well and for this companies can go to any supplier. There are again a large number of suppliers for this. Hence the bargaining power of the suppliers is considerably low which is favorable for the telecommunication industry.

E DETERMINANTS OF RIVALRY AMONG EXISTING COMPETITION

YE

S(+)

~ NO(–)

1. The industry is growing rapidly.

2. The fixed costs of the business are a relatively low portion of total costs.

3. There are significant product differences and brand identities between the competitors.

4. The competitors are diversified rather than specialized.

5. It would not be hard to get out of this business because there are no specialized skills and facilities or long-term contract commitments, etc.

6. My customers would incur significant costs in switching to a competitor.

7. My product is complex and requires a detailed understanding on the part of my customer.

8. My competitors are all of approximately the same size as I am.


10

81


The telecommunication industry has one of the most competitive rivalries in any industry. There are a large number of buyers and there are only few players in the industry to cater to this vast market. The price to enter the market is really high and similarly to exit is also very high. Therefore, the players in the market are there to stay. The market is extremely price sensitive and even if one service provider reduces prices, then the others will have to follow suit otherwise they will lose out on their piece of the pie and their negative churn will increase. There are significant brand differences which have created brand loyal customers, but looking at the total market, the portion of loyal customers is very small.

Currently the market leader in the industry is Mobilink with a market share of 31%. Just 2 years ago, this figure was approximately 45% which just shows that the rivalry has increased a lot in the past couple of years. The major competition that Mobilink faces is from Telenor with a market share of 22% and Ufone with a market share of 20%. After that Warid telecom comes in with 18% of the market.

Therefore the rivalry in this industry is extremely high which proves to be unfavorable for the industry.



F OVERALL INDUSTRY RATING Favorab

leModerat

e

Un-favorab

leImplications

1. Threat of new entrants.

8

1 1 Threat of new entrants is very low

2. Bargaining power of buyers.

3

0 5 Bargaining power of buyers is high

3. Threat of substitutes.

3

1 0 Threat of substitutes is very low

4. Bargaining power of suppliers. 5

1 1Bargaining power of

suppliers is considerably low

5. Intensity of rivalry among competitors.

1

2 5 Intensity or rivalry is extremely high

An over-all study of the 5 forces of porter’s model shows that the industry is fairly favorable. The threat of new entrants is very low and the threat of substitutes barely exists. And the bargaining power of the suppliers is also very low. However, the very high bargaining power of buyers and the extremely high rivalry among the competitors does give an unfavorable scenario for the industry.

By aggregating the results as well as the detailed analysis of each of porter’s 5 forces shows that the telecommunication industry is a convincingly favorable and attractive industry.




New Entrants

+ + +

Suppliers

++

Buyers

_ _

Substitutes

+ ++

Bargaining Power of Suppliers

Bargaining Power of

Customers

Threat of New Entrants

Threat of Substitute Products

or Services

THE INDUSTRY

– – –

Rivalry among


PESTPolitical Factors

De-regulation of telecommunication sector has made the sector investor friendly but due to the present instability of the political environment in the country, Pakistan is suffering a lot at the economic front. Former government provided great opportunities for foreign investors to bring in their foreign direct investment (FDI), but due to the recent security issues in the country and political major factors like Judicial issues, Pakistan’s role in war on terror, suicide attacks, energy crises, money laundering cases, food crises and bilateral issues (with India), the cellular service sector is becoming highly unattractive for the investors both; domestic as well as foreign direct investment. All these factors greatly reduce threat of new entrants in the industry.

Another important issue is of the Government Activation Tax (GAT)7. As soon as a new subscriber registers and a new SIM is registered and activated, cellular service providers must make a onetime GAT payment per SIM to the government. Since the commencement of cellular services in Pakistan in 1994, the GAT was Rs. 500 per SIM activation, which was lowered to Rs. 250 in 2001. However the current government of Pakistan is negotiating a change in their policy, charging a GAT of Rs. 750 per SIM activation. Each new SIM that is activated costs Rs. 150 to the subscriber of the SIM. The cellular service providers constitute this charge in their GAT payment, which means that based on the current GAT of Rs. 250, they pay Rs 100 from their corporate operations. If the GAT is increased to Rs. 750 per SIM activation, this would highly affect the profitability and cost of operations for the cellular service providers to a great extent. This may make the industry attractive as due to low profitability, new entrants may be discouraged to enter the industry.

The current government has enhanced the GST rate on the cellular sector from 15% to 16% in the current fiscal year. According to the projections made by the Pakistan Telecom Authority (PTA) and current analysis, this raise in GST has and will continue to have a negative impact on cell phone usage. Again this policy of the government has provided an advantage to the substitute companies (wireless phones and CDMA) as this increase in GST is an on-going expense for mobile users and since there are low costs of switching to these substitute services, this increases threat of substitutes.



The current policy of the Government has increased the licensing cost of operation in order to start a business within the cellular service industry to US$ 300 million, with additional renewal costs charged every year to the cellular service providers. This has increased the cost of operations within the industry making it very costly for the new entrants to enter the market.

Economic Factors

The global economic slump and current economic instability and recession9 in the country has drastically affected the state of cellular service industry in the Pakistan. High inflationary pressures and other unfavorable factors have resulted in low real incomes for people. This has made buyers more price-sensitive and willing to switch to any service that provides lower rates and wider range of services. This is also because cost of switching for buyers is low. This has increased rivalry within the industry as each competitor fights for a higher market share, while the growth in the industry saturates.

The total revenue of the cellular service industry is stated in terms of U.S. Dollars. Recent economic crisis in the country have devalued the foreign exchange rate of Pak Rupees against U.S. Dollars over the last year. Pak Rupee depreciated from approximately Rs.60/$ to Rs. 83/$ in 20098. The depreciation of Pakistani currency has reduced the total revenue of the sector in terms of the U.S Dollars and therefore, real earnings are declining. This makes the industry unfavorable for the new competitors to enter and make investments in the industry.

Social Factors

Due to the price sensitive nature, customers always look out for the connection that provide the best priced packages and focus on network coverage. And usually an attractive package by one firm can influence the purchase of many customers because of the multiplier effect. For instance, if one package is in demand, people would start switching over to that mobile connection in groups of families, friends and colleagues. These packages are designed in a way that users of the same mobile connections can stay in touch for a very low amount. So a switch to competing brand by one consumer may actually result in a lot of people switching over to that brand. This increases the buyer power by a large margin.

Recent trends have shown that more and more people in the society are becoming concerned about their lifestyle and how others perceive them



within the society. In the upper-middle and higher income brackets majority of the people want to be perceived as sophisticated and want to use exclusive services in order to feel as being part of the higher class and status. For such customers there is more focus on high value added service and exclusive packages. This slightly reduces rivalry in the industry, making it more attractive.

The demand for cell phones has increased in the rural areas overtime. This is due to the fact that cell phone service is a more reliable, yet affordable means of staying in touch with family members, compared to landlines, which are inoperative most part of the year because of weather problems and other related issues. With this new trend, there is demand for cell phone services in rural areas1 which is not properly catered to.

Technological Factors

The pace of technological advancements is so high in the industry that it makes the provision of services more and more complex. The existing companies are finding it difficult to match the current global technological competencies as it is very costly to provide these services. Providing its users with the latest services through their mobile connections (like GPRS, WAP and Edge services) and other facilities such easy load, credit sharing and convenient and faster billing services is very important for survival. To keep pace with these new services is very important to retain customers and target new ones as these technological services have a high potential demand and require continuous updates. This again reflects rivalry as firms copy each other’s latest innovation, even if it’s at a higher cost or loss. In other words, any update made by any company within the industry must be immediately taken into affect by all other companies in order to compete successfully with rivals. 3-Generation3 technologies in communication which include WLL, WI-FI/wireless LAN, UMTS are not provided by any telecom service providers but there is a high potential of such service requirement by the customers. Another technology called Wi-Max4 is cheaper than 3G, but is restricted only to internet service in cell phones.

Another interesting technology has evolved which has served to increase rivalry within the industry. This technology, popularly referred to as MNP6 (Mobile Number Portability), provides mobile users with the opportunity of



keeping their original numbers while switching over to other networks. This has further made it easy for mobile users to switch from one network to another, whenever a good deal is offered. This is increasing rivalry in the industry.

Another technology prevalent in the western part of the world is of account recharging services2 via the internet. This is for the convenience of users who can instantly load credit in their mobile phones by going online.



EXTERNAL FACTOR EVALUATION MATRIX

Key Factors

Weight

Rating

Weighted

Score

Opportunities1. Increasing number of users in rural

areas1 0.15 3 0.45

2. Account recharging service via internet2

0.10 1 0.1

3. Demand for 3G services3

0.15 2 0.3

4. Wi-max for internet service4 0.05 2 0.1

Threats

1. Vodafone/Orange trying to enter the

market5 0.05 1 0.05

2. Introduction of Mobile number

portability6 0.15 3 0.45

3. Political instability (negotiations for tax

rates)7 0.05 3 0.15

4. Inclement weather can be detrimental for the

service 0.05 2 0.1

5. Rising dollar exchange rate8 0.1 2 0.2



6. Economic recession9 0.15 2 0.3

Total 1.00 2.20



Analysis/Interpretation:

In the External Factor Evaluation, Mobilink scored 2.20 which depicts that the company is operating a little below the average. Mobilink is not fully taking advantage of the potential opportunities in the external environment or making efforts to defend against the potential threats.

Mobilink has been taking steps to expand into rural areas as there is an increase in the number of users in these areas. By catering telecom services to these areas, it will help them increase their customer base. On the other hand, an opportunity which Mobilink is not availing is the technology prevalent in the western part of the world that provides account recharging services via the internet, which is for the convenience of users who can instantly load credit in their mobile phones by going online. Also, 3-Generation technologies in communication which include WLL, WI-FI/wireless LAN, UMTS are not provided by any telecom service providers in Pakistan, but there is a high potential of such service requirement by the customers. Another technology called Wi-Max is cheaper than 3G, but is restricted only to internet service in cell phones. Mobilink has not yet started these services.

There are potential threats to the company that include the entry of the Vodafone company which has been trying to penetrate in the Pakistani telecom industry, but have been unsuccessful so far. It still has not given up and is trying to obtain the license to operate here. The mobile number portability attracts consumers towards cheaper connections while maintaining their old numbers, which is a threat to Mobilink, as the company holds an expensive image in the minds of the consumers. The economic recession and rising dollar exchange rate have hit the company financially and is a threat to all the telecom companies. Also, the political instability that prevails in our country is a threat to Mobilink as it is not easy to negotiate the tax rates again and again with continuously changing governments.

Market penetration: Mobilink needs to take steps to defend itself against the economic recession which has hit the company financially. The company should make the jazz rates compatible with the competitors’ rates and must focus on offering attractive packages. Also this would help in retention of customers as they can easily lose customers through mobile number portability, to their competitors.

Product development: Since the demand for 3G services is increasing in the Pakistani market, Mobilink should start investing their returns in 3G technologies and be the first one to provide this service for Indigo customers. This will give them an edge over other competitors and further enhance the image of the company.



Section 2:

Company and Competitor Analysis



COMPETITIVE PROFILE MATRIX

Critical SuccessFactors

Weights

Rating

Weighted

Score

Rating

Weighted

Score

Rating

Weighted

Score

Rating

Weighted

Score

Advertising 0.1 3 0.3 4 0.4 2 0.2 3 0.3

Product quality

0.15 4 0.6 3 0.45 2 0.3 2 0.3

Coverage 0.05 3 0.15 2 0.1 2 0.1 2 0.1

Price Competition

0.15 2 0.3 4 0.6 4 0.6 3 0.45

Management 0.05 3 0.15 2 0.1 2 0.1 4 0.2

Financial Position

0.1 3 0.3 3 0.3 3 0.3 2 0.2

Customer Loyalty

0.05 3 0.15 2 0.1 2 0.1 2 0.1

Market Share 0.2 4 0.8 3 0.6 2 0.4 2 0.4

Customer Service

0.15 3 0.45 2 0.3 2 0.3 2 0.3

TOTAL 1.00 3.20 2.95 2.40 2.35




Mobilink received a score of 3.20 in the Competitive Profile Matrix. Mobilink has scored reasonably well on mostly all critical success factors. It is the market leader having the highest market share with a customer base of more than 10million users.

Mobilink beats its competitors with a good difference in product quality. The product services it provides are relatively better than what the rest provide. Mobilink provides instant connectivity and remarkable voice clarity, with some value-added services.

Mobilink, being the oldest player in the industry, has a widespread coverage network which is more efficient compared to the rest. It has been working on its customer service and has managed to gain an edge over its competitors and has also established a separate Club Indigo department that services premium customers who have become loyal to Mobilink.

The area where Mobilink has taken a beating against Ufone is in advertising. Ufone advertises extensively and more repeatedly, especially on television. The financial position of Mobilink has always been strong because it generates revenues that are approximately three-four times than what others earn, but since it has been the biggest player and a highly leveraged company, it has been greatly hit by the recession. Also, Mobilink has not been very price competitive as the rest of the cellular companies who have increased their customer bases by offering cheaper packages.

Mobilink should work on price competition and offer cheaper prepaid packages for jazz in line with other competitors like Ufone and Warid. This will attract more customers as Mobilink is already the market leader with an established image and cheaper packages will trigger more sales and boost revenues.

Mobilink has a widespread coverage network which is more efficient compared to the rest of the cellular companies. Therefore, it should further capitalize on it to gain more advantage over other companies.



Section 3:

MICRO-ENVIRONMENTAL ANALYSIS AND INTERNAL

COMPANY RESOURCES

Internal Resources

Core Competence



Mobilink prides itself in catering to the needs of its post paid customers in the best possible way. It has exclusive services for its Indigo clients, which it has managed to maintain overtime. Mobilink has a group of employees devoted to Indigo clients, in a form of a group called ‘club indigo’. They work on providing their customers with high quality customer service which is essential to retain their clients. They focus on what their customers value and how that can be provided to them in the most efficient manner.

Value Chain

MOBILINK INDIGO (DIFFERENTIATION BUSINESS LEVEL STRATEGY):


FIRM INFRASTRUCTURE MOBILINK’S WIDELY STRECHED AND UNBEATABLE COVERAGE OF SERVICE INDUCTION OF SIEBAL

HUMAN RESOURSE MANAGEMENTTHE MOST HIGHLY PAID PERSONNELS IN THE

COMPANY AS WELL AS HIGH RELATIVELY TO THAT OF OTHER FIRMS

HIGHLY TRAINED PERSONNELS FOCUSED TO RUN THE CLUB

INDIGO

TECHNOLOGICAL DEVELOPEMENTINDUCTION OF SIEBAL AS THE STATE OF THE ART SOFTWARE

SYSTEM

CO-BRANDING WITH BLACKBERRY AND PLANNING TO BRING IN 3G AND WI-FI TECHNOLOGY. HENCE

TAPPING ON THE FIRST MOVER ADVANTAGE

PROCUREMENT STANDARDIZED RAW MATERIAL USED IN PACKAGING OF THE SIM PACK BUT A NOTICEABLE AND RELATIVELY A BIGGER PACK IN SIZE TO THE JAZZ SIM PACK



INBOUND LOGISTICSSIM PACKAGE 'S SUPPLY PROCESS SIMPACKAGEHAND BOOK/PRINTING

OPERATIONSCONSISTENT MANUFACTURING OF ATTRACTIVE PRODUCTSWIDE INTERNATIONAL ROAMINGMARITIME ROAMINGIN-FLIGHT ROAMING

OUTBOUND LOGISTICSRAPID AND TIMELY DELIVERY OF SERVICESSTOCK WATCHMOBILE BANKINGCORPORATE SMSPIA RESERVATIONS

MARKETING & SALESSTRONG CORDINATION AMONG R&D, MARKETING AND SALES FOR MANAGING CLUB INDIGOCLUB INDIGOPERSONALISED CAREPRIORITY AT CALLCENTERS

SERVICESA UNIQUE BUSINESS CLASS SERVICE


One of the features where Mobilink stands the strongest than any other cellular company in the industry is the coverage, as it covers a large number of areas and regions. Others just might need more time and expense to reach. Siebel has also added to the infrastructure efficiency of the firm as it is providing state of the art database service.

The sim pack of Indigo is provided with details of features in the form of booklets. The raw material used in the manufacturing of the sim packs is overall standardized and same for both Indigo and Jazz, it is designed in a more exclusive manner for Indigo to give it a more premium touch like the service offered by Indigo. A new cost cutting activity related to inbound logistics has been that of outsourcing the manufacturing of the sim packs to local manufacturers.

Previously sims were manufactured abroad and had to be imported at high rates. Now local manufacturers have started producing sims and mobilink and other firms in the telecom industry usually purchase them locally. The whole pack requires packaging, printing/booklets and ofcourse the sim itself. All these functions are performed by different suppliers. Mobilink lacks strategic relationship with its suppliers and keeps switching from one supplier to another.

Business services such as airline ticket booking and stocks watch are provided by the company to it corporate customers. All these related services are designed to match the needs of the target market.


FIRM INFRASTRUCTURE MOBILINK’S WIDELY STRECHED AND UNBEATABLE COVERAGE OF SERVICE INDUCTION OF SIEBAL

HUMAN RESOURSE MANAGEMENT EMPHASIS ON CREATING LOW COST SERVICES FOR A BROADER AUDIENCE

TECHNOLOGICAL DEVELOPEMENT INDUCTION OF SIEBAL AS THE STATE OF THE ART SOFTWARE SYSTEM

PROCUREMENT REDUCING THE OVERALL COST OF THE SIM PACK BY REDUCING THE SIZE OF THE PACKAGE


Among the primary services Indigo has high priorities for its Operations and Marketing & Sales which act as the primary drivers to attract customers. Technology is another area where the firm is constantly upgrading. Human Resource Management is given equal importance within the business as employees are retained for several years and are offered attractive packages in order to seek the best talent.

The firm highly intensifies its focus on a number of elements in the value chain for the differentiation strategy in Indigo’s case, the resultant of which is the core competency of Mobilink Indigo i.e. highly efficient and personalized business class treatment of the customers through its customer care service. The management of Club Indigo is a job that demands untiring commitment and rewards with lucrative returns to the office holders of the club. The users here are entertained with the topnotch services at the call centers and at all other customer related services which are carved to meet the expectations of the proposed idea of care for them.

MOBILINK JAZZ (COST LEADERSHIP BUSINESS LEVEL STRATEGY):


INBOUND LOGISTICSSIM PACKAGE 'S SUPPLY PROCESS SIM/JACKETPACKAGEHAND BOOKSCRATCH CARDSPOINT OF SALEFRANCHISESGENERAL STORESETC.

OPERATIONSSIEBAL INSTALLATION RESULTING IN REDUCTION OF OPERATION/PROCESSING TIME AND HENCE THE MONETARY COSTS ALSO

OUTBOUND LOGISTICSINTERRELATIONSHIP WITH SISTER UNITSSAME CUSTOMER CARE OFFICES FOR JAZZ AND INDIGO BOTHSAME SUPPLIERS OF SIM PACKSSIEBAL SYSTEM

MARKETING & SALESHUGE SCALE ADVERSTSING FEATURING POPULAR PUBLIC FIGURES

SERVICES




Primarily, Jazz has focused on its Inbound and Outbound logistics. The processes under these two logistics in the firm are the same for both Jazz and Indigo which effectively reduce the overall cost. The focus here is to mobilize the value chain in accordance with the cost-leadership business strategy that is targeted towards a huge audience. The main focus here is to reduce costs of the operations and to communicate the product to prospective customers. The induction of Siebel in the firm has remarkably reduced the cost of database management.

Similar to other firms, Jazz also is making its marketing and sales revolve around advertising using popular figures that attract the masses.

As for the support activities, Siebel as a part of infrastructure and technological advancement again proves more cost effective, especially for Jazz as it is focused to follow a cost-differentiation strategy.

For the target audience of jazz, the packaging does not have to be that fancy or big (like in Indigo’s case). So Jazz sims have very basic packaging and is much smaller in size.

For prepaid customers, scratch cards also need to be made available to load credit. Those are also made in a cost-effective manner and are now thin strips with Jazz written on them. The distribution of scratch cards is done by Mobilink themselves which is quite expensive.



Strategic Cost Management

Mobilink enjoys cost or performance advantage in the cellular service industry and with experience over time it has been able to manage its costs effectively.

The suppliers of Mobilink consist of SIM and scratch-card manufacturers. A proper logistics network is required for the shipment and delivery of the SIM pack and scratch cards to all the franchisees nationwide. Mobilink has outsourced this process, which has proved to be a cost-effective strategy for Mobilink. Reducing the size of the SIM pack as well as the size of the scratch cards has also helped mobilink reduce the overall costs of supplies. Also the use of standardized raw material in the production of SIM pack n scratch cards has greatly helped in reducing the costs.

Mobilink was the first cellular service provider in Pakistan to operate on a hundred percent digital GSM technology. Since its inception, it has maintained its position as the market leader due to constant technological innovation over the time. The company focuses on providing its customers with the latest technological developments worldwide, in the most cost-effective manner possible. It is obvious that Mobilink has to bear a high cost and risk in bringing the technology but Mobilink has kept up to its promise of always providing its valued customers with more than they expect. Mobilink has invested into the installation of Siebel, the state of art software system. The introduction of Siebel technology- a centralized computer system for data management has helped in the reduction of operation and processing time, hence the monetary costs. It has also enabled mobilink to stretch its network and service coverage across the country.

Mobilink invests very wisely on its human resource. It emphasizes on creating personalized and value driven services. As a result, it hires the most highly paid and the most competent personnel in the company. Unlike many other firms in the industry, mobilink follows a proper recruitment process and aims at hiring the best employees and continually providing them with training and development opportunities so that their performance is reflected by the value driven services provided to the customers. Mobilink’s strong financial position and approximately three times larger revenue generation has enabled the company to devote extensive efforts on human resource. Although the costs associated with the human resource is preferably higher but it is remunerated in the form of higher employee retention and performance of the employees focusing on value driven services.

Mobilink has fixed a sufficient budget for large scale advertising and marketing management (including research and development) which has proved to be very effective in the form of increased revenues and a stronger



customer base. As a result, Mobilink need not be very price competitive just like other companies which focus on offering cheaper packages to increase the customer base.

Mobilink has the same customer care offices for the jazz and indigo which also contributes towards efficient cost management. However, to manage its costs strategically well, Mobilink needs to manage its high cost of distribution of services in the far reach areas-rural areas.

Financial Strengths

Even though the economic recession took the telecom industry by storm, Mobilink still managed to maintain a reasonably healthy financial position. Their ROI is showing a declining trend but in spite of that, they have maintained a ROI of 20.3%, which is higher than the rest of the companies in the telecom industry.

Another financial strength that Mobilink has is its strong liquidity position. Mobilink has a current ratio of 1.2 which is very high and shows that Mobilink has a lot of cash at its disposal which it can use to capitalize on an opportunity or to counter a weakness.

One downside of Mobilink’s financial position is its leverage ratio which is around 25.7%. It shows that Mobilink has a lot of debt and that its financing is done through loans by a large amount.

INTERNAL FACTOR EVALUATION MATRIX



Key Factors

Weight

Rating

Weighted

Score

Strengths1. High Return on Investment

0.1 3 0.3

2. Siebel technology – centralized computer

system 0.1 3 0.3

3. Effective advertising leads to higher profits 0.05 4 0.2

4. A strong established brand image0.1 3 0.3

5. Club Indigo department servicing premium

customers 0.2 4 0.8

6. Extensive coverage nation-wide0.15 4 0.6

Weaknesses

1. High cost of distribution0.1 2 0.2

2. Lack of strategic relationship with suppliers0.05 1 0.05

3. Unsatisfactory call centre services for prepaid

users 0.1 2 0.2

4. Brand name associated with being expensive0.05 3 0.15

Total 1.00 3.1






Mobilink received a total score of 3.1 in the internal evaluation which delineates that the company is performing above average. This signifies that the company has a strong internal system and is able to effectively manage all of their strengths in a meaningful manner.

Mobilink has a good financial position which can be seen from the high return on investment. The high returns basically come from Indigo which is a differentiated product and offers premium services to the loyal Indigo customers. The Club Indigo department contributes to majority of the profits earned by Mobilink. Another strength Mobilink possesses is the Siebel technology, which is effective database software – it is a centralized system that keeps a track of all the operations and captures information such as credit recharge/transfers done by every user. Mobilink is the market leader and thus has a strong established brand image and extensive coverage nationwide, catering to a large number of customers. Mobilink has been spending on advertising too to make it more effective and it has successfully achieved its profit targets through extensive advertising.

However, Mobilink has some weaknesses, the biggest one being high cost of distribution. The company has in-house distribution and does not outsource, thus increasing the costs for the company. The company lacks strategic relationship with its suppliers since it has different suppliers for packaging, printing, sealing, sim cards, etc. and they keep changing suppliers from time to time according to their desired rates they are able to negotiate with them. This increases management costs as they have many different suppliers for each function and too often they switch suppliers to get raw materials at a low cost. Like their competitors, Mobilink is also criticized for its unsatisfactory call centre services for prepaid users. Another weakness that the company has is that the brand name is associated with being expensive – this is associated with Indigo, but it affects the image of Jazz which is not so expensive.

Product development: Since there is a great demand for 3G in the Pakistani market, Mobilink should start reinvesting their returns in 3G technologies and be the first one to introduce this service in the market for Indigo customers.

Mobilink needs to work on its brand image so that customers do not associate it with being very expensive. Once the image is changed, customers will prefer Jazz packages which are not too expensive compared to other telecom companies.

The company needs to build strong strategic relationship with its suppliers. Instead of having many suppliers, it can have a single vendor from whom they can buy in bulk and get cheaper rates.



To reduce the high costs of distribution, Mobilink should start outsourcing and hire an external sales force. This will reduce internal burden and also costs.



Section 4:

STRATEGIC ANALYSIS AND RECOMMENDATIONS



Generic Strategy Matrix

Mobilink Indigo:

Mobilink Indigo works with the differentiation strategy in the focused avenue. The positioning that Indigo has done is that of a highly sophisticated business class postpaid cellular service that caters to the premium needs of business customers. Co-branding with Blackberry, widely stretched roaming services, and future plans to bring in the 3G services to Pakistan are its strong credentials. The element that is highly stressed is that of utilization of human resource for the Indigo customers. Be it the customer care service or the Club Indigo’s regular functions, the HR procedures are from where Indigo derives its Core Competence.

Offering premium class value-added services Introduce 3G services Recharging account via internet


M


Mobilink Jazz:

Although Mobilink strictly works in coherence with a cost leadership strategy for its prepaid service Jazz, it has a slight inclination towards differentiation. This is where Jazz finds it difficult to be as successful as its sister division Indigo. For a prepaid service, to have a brand image of being relatively expensive can be the downside, which in Jazz’s case proves correct. For the reduction of costs for its operations, Jazz presses on its logistics. Technology here also has played its part of cutting down the costs. Innovation and investment in database technology has resulted in a centralized system that curtails the cost of data handling.

Following strategies can be implemented for Jazz:

Offer value added services Provide lower denomination scratch cards, like RS.50 cards, to further

penetrate the market Offer account recharge services via the internet


M


TOWS MATRIX:

Strengths Weaknesses

1.

High return on investment 1. High cost of distribution

2.

Siebel technology – centralized computer system

2. Lack of strategic relationship with suppliers

3.

Effective advertising leads to higher profits

3. Unsatisfactory call centre services for prepaid users

4.

A strong established brand image 4. Brand name associated with being expensive

5.

Club Indigo department servicing premium customers

6.

Extensive coverage nation-wide

Opportunities S-O Strategies W-O Strategies

1. Increasing number of users in rural areas

1.

Efficient utilization of financial resources to cater increasing demand for 3G and Wi-Max services (S1, O3, O4)

1. Outsource distribution services in rural areas to minimize distribution costs (W1, O1)

2. Account recharging service via internet 2.

Taking advantage of extensive coverage nationwide and familiarity to capture rural market (S6, S1, O1)

2. Introducing recharging services via internet to reduce distribution costs (W1, S2)

3. Demand for 3G services 3.

Provision of 3G services for the Indigo customers (S5, O3)

4. Wi-max for internet service 4.

Programming Siebel to introduce account recharging service via internet (S2, O2)

Threats S-T Strategies W-T Strategies

1. Vodafone/Orange trying to enter the market

1.

Capitalize on strong brand image to decrease of new entrants (S4, T1)

1. Altering the perceived image of Mobilink in the minds of the customers to reduce the number of MNPs (W4, T2)

2. Introduction of Mobile number portability

2.

Using brand image to retain customers (S4, T2)

3. Political instability (negotiations for tax rates)

3.

Bearing the burden of recession and increasing tax rates by utilizing the sound financial performance ( S1, T5, T6)

4.

5.

6.

Inclement weather can be detrimental for the service

High Dollar Rate

Economic recession



The TWOS matrix is an important matching tool that helps managers develops four types of strategies: SO (strengths-opportunities) Strategies, WO (weaknesses-opportunities) strategies, ST (strengths-threats) strategies and WT (weaknesses-threats) strategies. The part of making a SWOT matrix requires good judgment and is a very difficult part of the matching stage.

SO strategies use a firm’s internal strengths to capitalize on the opportunities that exist in the external environment. Every manager wants to use their strengths in such a way that would put their company in a better position.

For Mobilink, it can come up with 4 tactical measures to capitalize on opportunities using their internal strengths.

There is a great opportunity for Mobilink to introduce the 3G technology and provide Wi-max internet services which has a great demand in the market. It is a new technology and something that would generate a lot of revenue for the firm. It is a very expensive technology and therefore Mobilink can use its strong financial condition and utilize its financial resources in such a manner that they could succeed in introducing this new technology before any other competitor does.

There is a huge opportunity of entering into the rural markets. The competitors have not yet penetrated this market because they are not spread out enough. But Mobilink’s strength lies in its extensive network coverage nationwide. It could use this strength and penetrate into the rural areas and therefore further increase their spread and market share.

Since the 3G service will only be provided for the Indigo customers (as it can only be provided to billing customers), Mobilink’s club indigo can easily cater to the provision of 3G. The club indigo department will promote this service and provide extensive service for its indigo customers.

One of the biggest strengths of Mobilink lies in its Siebel technology-a centralized computer system. This technology helps in speeding up processes and facilitating operations. The company could program Siebel in such a way that customers can go on the internet and recharge their accounts whenever and with whatever amount they wish to. There will be no time limitation and recharging accounts will no more be a hassle.

WO strategies focus on improving the internal weaknesses by making use of the external opportunities. Sometimes external opportunities exist but the firm’s internal weaknesses prevent them from taking advantage of the



opportunity. These strategies focus on minimizing those weaknesses to make the most out of the opportunities.

A large opportunity exists in the form of the untapped rural areas. A lot of demand exists and it is a big market that needs to be covered. The limitation that Mobilink faces in capturing this market is that it has high distribution costs. In order to capitalize on this opportunity, they could outsource their distribution and not only cut down cost but also effectively capture this market by their distribution networks and channels. Their in-house distribution network not only limits their distribution but also makes it a burden on other functions of the company. Therefore outsourcing distribution would give them a real chance of further expanding their market share and coverage.

Another way how Mobilink can reduce their distribution costs is by capitalizing on the opportunity of recharging services via the internet. Their distribution costs mainly include providing mobile scratch cards to every small, medium or big store in every city and every area of Pakistan. It is a very difficult and expensive task of maintaining a constant supply everywhere. This cost can be reduced by taking advantage of the opportunity of starting account recharging services via the internet. The consumer can recharge their cell phone account by any amount and at any time conveniently from the comfort of their home.

ST strategies use the firm’s internal strengths to avoid or reduce the external threats. A company can face external threats head on by using their internal strengths and overcoming the problem.

The threat of new entrants entering the market is always a constant threat to the industry. There are a number of ways to deal with it and one way Mobilink can counter this threat is by using their strong established brand image. It is a very big strength that Mobilink has. They were the first ones to introduce the GSM technology and have the largest market share in the industry. They have developed a very strong brand image which can be further enhanced and used to keep minimize the threat of the new players trying to enter into the market.

The new technology of mobile number portability is a big threat to all the companies in the industry because it makes it easy for the customer to switch their respective service provider without changing their phone number. Mobilink can use its strong brand image and further market their product in such a way that it builds a stronger image so that customers are more inclined not to leave Mobilink thus reducing this external threat.

With the changing government, the tax rates that are applied on the service providers also change. The new government always usually



increases the tax rate which the service provider has to pay on activation of each SIM card. This plus the economic recession has hit all industries and all commodities very badly. These two reasons are enough for any company to shift the burden on the consumers by increasing prices so they can maintain their profit margin. But Mobilink can use its internal strengths and because of its strong financial position, it can take the burden on its own shoulders and off from the consumers’. Instead of increasing prices, they can keep the same prices and reduce their profit margins slightly. This way, their image will improve and customer retention will increase many a folds.

WT strategies are defensive tactics directed at reducing internal weakness and avoiding external threats. It focuses on minimizing internal weaknesses to minimize or avoid external threats.

One of Mobilink’s major weaknesses is that it is perceived to be as an expensive service provider. It is confused with being expensive rather than premium. Because of this brand image, customers switch from Mobilink to other networks via the mobile number portability facility. It is a big threat to all the players in the business and one way it can be reduced is if Mobilink can change its image of being expensive. This can be done through strategically marketing the product and spending more on marketing and promotions. Once people start to perceive Mobilink as not expensive, a large portion of customers will re-think about switching to another connection.



Strategic Position and Action Evaluation (SPACE) Matrix

Conservative FS Aggressive


-5 -4 -3 -2 -1 +0 +1 +2 +3 +4 +5

-6

-5

-4

-3

-2

-1

+0

+1

+2

+3

+4

+5

+6

Internal Strategic Position External Strategic Position

Financial Strength Environmental Stability

Technological changes -1

Return on Investement 4 Rate of inflation -2

Leverage 3 Demand variability -5

Liquidity 5 Barriers to entry -2

Cashflow 4 Competitive pressures -3

Inventory turnover 4 Ease of exit from Market -2

Price elasticity of demand -1

Risk -2

Average Score 4 Average Score -2.25

Competitive Advantage Industry Strength

Market share -1 Growth potential 4

Product quality -2 Profit potential 4

Customer loyalty -3 Financial stability 3

Technological Know-how

-2 Techological Know-how 5

Control over suppliers -4 Ease of entry into market 1

Average Score -2.4 Average Score 3.4

Y - Axis: X - Axis:Financial Strength 4 Competitive Advantage -2.4

Environmental Stability -2.25

Industry Strength 3.4

4 + (-2.25) = 1.75 (-2.4) + 3.4 = 1


CA IS

Defensive ES Competitive

Analysis:

Mobilink’s direction vector falls in the ‘Aggressive Quadrant’ of the SPACE matrix which reflects that it is a financially strong firm that has achieved major competitive advantages in a growing and stable industry. This means that Mobilink is in an excellent position to use its internal strengths to:

Take advantage of external opportunities, Overcome internal weaknesses, and Avoid external threats.

Thus, market penetration, market development, product development, backward/forward/horizontal integration, diversification or a combination strategy are all feasible options. However, depending on the specific circumstances, we suggest that Mobilink should pursue:

Market Development: This can be done by providing jazz services in new and unreached geographical areas within Pakistan (areas where there is market but are not being served by Mobilink as yet).

Product Development: Although Mobilink is one of the best service providers in the nation, there are certain services that it could use to improve its products and further differentiate itself.

For instance, internet in cell phones has become a necessity gradually overtime for a large number of users. Thus, they could provide Wi-max, which is a faster version of internet service – such a service is currently not provided by any of the other telecom services. Mobilink can add this feature to their services and cater both pre-paid and post-paid services.

Another strategic move that Mobilink can practice for product development is the induction of 3G services – it offers faster internet access along with


-5 -4 -3 -2 -1 +0 +1 +2 +3 +4 +5

-6

-5

-4

-3

-2

-1

+0

+1

+2

+3

+4

+5

+6


additional features such as video conferencing, data transferring/data sharing etc. This service, however, is expensive and thus can be offered to indigo users only.



BCG (BOSTON CONSULTING GROUP) MATRIX:

RELATIVE MARKET SHAREHigh Medium Low

1.0 0.5 0.0

High

{+20

Indigo Jazz

Stars Question Marks

II I

INDUSTRY

SALES Medium

GROWTH 0

RATE

Cash Cows Dogs

III IV

Low

-20



Mobilink Indigo enjoys a high relative market share due to its unique and business like service and treatment for the customers in the postpaid division. Furthermore, the industry is also benefitting from the increasing growth rate as more and more business customers are entering into the market making it attractive for the industry. Falling in the star quadrant, substantial investment should be made in this sector. There is a great demand for 3G services in the local market as it helps to turn a cell phone into a laptop. This would require a huge investment as it is an expensive technology, but it would help create more customers for Mobilink Indigo. The need for postpaid billing and priority of customer service for the business holders is increasing since it has raised the bars of ease for such demanding users. The USP in this case especially is the established brand name of Mobilink which is now geared up with the power pack Indigo’s business class service. The strategies that could be adopted for Indigo are as follows:

Market penetration by offering special discounts to corporate clients so that they buy in bulk for their employees.

Product development by bringing in 3G services for the postpaid customers.

Jazz, on the other hand, has a relatively low market share in the prepaid division. This unit of the firm seems to be struggling with brand image problem of being perceived as an expensive service, which makes it difficult to operate in the price sensitive division of the industry. For the prepaid customers, low prices stand out to be the most important features, but this is where Jazz struggles to and should continue to work on by making the customers perceive the company as a value-based service. The industry growth rate here also has an increasing here. Since the prices of the services are for public and general use, firms tend to follow a cost-leadership strategy to sustain itself in this highly price sensitive market, the resultant of which sometimes totals to price wars and cutthroat competition. The demand for prepaid services is increasing in the rural areas and Mobilink should capitalize on this opportunity.

Market development can be done by expanding further into rural areas, by reaching out to customers where no other network covers.

Market penetration can be done by selling scratch cards of lower denomination



The Internal-External (IE) Matrix

The IFE Total Weighted Score

Strong Average Weak

3.0 to 4.0 2.0 to 2.99 1.0 to 1.99

High I II III3.0 to 3.99

Medium

IVGrow and Build V VI

The EFE Total Weighted Score

2.0 to 2.99

Low VII VIII IX1.0 to 1.99

Analysis:

With an EFE score of 2.20 and an IFE score of 3.1, Mobilink falls into the fourth cell which is a part of the ‘Grow and Build’ region of this matrix. The strategies

Market Development by entering into those areas (both rural and urban) that are yet not served by Mobilink.

Product Development strengths can be built by introducing services such as

Wi-max for both pre and post paid customers 3G services for specifically postpaid customers.



The Grand Strategy Matrix

RAPID MARKET GROWTH

Quadrant II Quadrant I

Target

WEAK COMPETITIVE STRONG

POSITION COMPETITIVE

POSITION

Quadrant III Quadrant IV

SLOW MARKET GROWTH

Analysis:

Upon evaluating Mobilink on competitive position and market (industry) growth, we see that it falls into the first quadrant which means that it is in an excellent strategic position. For Mobilink, market penetration, market development and product development would be appropriate strategies to adopt.

Since it already has a well established competitive advantage in the telecom industry, therefore Mobilink should work on offering fast internet services through Wi-max to its post-paid as well as pre-paid users.

It can also build upon its competitive advantage by providing additional services of video conferencing and data transferring/data sharing along with faster internet services to its (Indigo) post-paid users through 3G services (which is comparatively more expensive than Wi-max).

Also, since telecom industry is a fast growing industry, therefore Mobilink can take advantage of it by expanding its market into those areas that it has not reached yet. Urban areas are most densely covered by several networks. It is



actually the rural areas which have shown a significant growth in demand for cellular services. These areas are surprisingly showing reasonably high profitability and several networks are already working on these areas.

Summary matrixAlternative Strategies IE SPACE GRAND BCG COUNT



Forward Integration 0

Backward Integration 0

Horizontal Integration 0

Market Penetration 2

Market Development 4

Product Development 4

Concentric Diversification 0

Conglomerate Diversification

0

Horizontal Diversification 0

Joint Venture 0

Retrenchment 0

Divestiture 0

Liquidation 0



QSPM

Strategic Alternatives

Critical Success Factors Weight Expanding into rural areas

Introducing 3G technology

Strengths AS TAS AS TAS

High return on investment 0.10 3.00 0.30 4.00 0.40

Siebel technology – centralized computer system 0.10 2.00 0.20 3.00 0.30

Effective advertising leads to higher profits 0.05 3.00 0.15 2.00 0.10

A strong established brand image 0.10 3.00 0.30 4.00 0.40

Club Indigo department servicing premium customers

0.20 1.00 0.20 4.00 0.80

Extensive coverage nation-wide 0.15 4.00 0.60 3.00 0.45

Weaknesses

High cost of distribution 0.10 1.00 0.10 2.00 0.20

Lack of strategic relationship with suppliers 0.05 1.00 0.05 2.00 0.10

Unsatisfactory call centre services for prepaid users

0.10 2.00 0.20 1.00 0.10

Brand name associated with being expensive 0.05 1.00 0.05 2.00 0.10

SUBTOTAL 1.00 2.15 2.95

Critical Success Factors Weight Expanding into rural areas

Introducing 3G technology

Opportunities AS TAS AS TAS

Increasing number of users in rural areas 0.15 4.00 0.60 2.00 0.30

Account recharging service via internet 0.10 ---- ---- ---- ----

Demand for 3G services 0.15 1.00 0.15 4.00 0.60

Wi-max for internet service 0.05 ---- ---- ---- ----

Threats

Vodafone/Orange trying to enter the market 0.05 ---- ---- ---- ----

Introduction of Mobile number portability 0.15 ---- ---- ---- ----

Political instability (negotiations for tax rates) 0.05 2.00 0.10 1.00 0.05

Inclement weather can be detrimental for the service

0.05 ---- ---- ---- ----

Rising dollar exchange rate 0.10 2.00 0.20 1.00 0.10

Economic Recession 0.15 2.00 0.30 1.00 0.15

SUBTOTAL 1.00 1.35 1.20

SUM TOTAL ATTRACTIVENESS SCORE 3.50 4.15




From our Strategic Alternatives evaluation, we see that it is more attractive for Mobilink to implement Product Development Strategy – introducing 3G technology. It has a score of 4.15, which is higher than the score of Market Development Strategy, 3.50. Introducing 3G services will fulfill the requirements of many customers and being the first company to provide this service in Pakistan where there is so much demand for it will fortify the brand image and position of Mobilink in the market. Mobilink earns high returns on investment which it can invest in working towards introducing the 3G technology. The Siebel technology will make it easier to introduce the 3G technology and services. The strong established brand image of Mobilink will assure the speed and efficiency of 3G services to the customers and that it will have no errors or breakdowns. The Club Indigo members who are loyal to Mobilink will all go for 3G services as they all are mostly corporate people who require these services all the time, wherever they go. Therefore, the introduction of 3G services seems to be an attractive strategic alternative for Mobilink.



Section 5:

Strategic Implementation



STRATEGY IMPLEMENTATION

A common misconception that we, students of business administration generally hold, is that the answer to any business problem is the development of ‘strategic alternatives’ and then the discernment of one ‘best’ strategy. In reality, we see that the ‘development’ of strategy is only just one half of the story. The other half is the actual implementation of this strategy. The translation of the proposed strategy into solid tangible actions is in fact, the ‘destination’, the ‘final objective’.

“Knowing the path is only just one half of the story,

The other more important half is ‘walking the path.”

Businesses & mankind itself, has learnt over the past few centuries that the actual enactment of the devised strategy or strategies is the primary task that must be carried out, no matter the cost, and it is in this execution, where lies the determining factor, as to whether or not the strategy will succeed.

Therefore, it stands to reason that defective enactments may very possibly make sound strategies ineffective and skilled implementation has the power to make a debatable choice successful, therefore, the business concern at hand, requires a diligent plan and vigilant execution of its implant plan.



The Eight Components of Implementing Strategy

Allocating resources

Mobilink has a good financial position so they have abundance in financial resources. They have trained personnel in both the engineering and customer service department. Moreover, they have advanced technology in every department to facilitate their process of meeting internal and external process requirements. For introducing 3G technology, Mobilink should train their existing personnel in dealing with the new technology and accordingly customer service people need to be educated as well. Financial resources should be focused towards setting up the technology and side by side advertising in such a way that it reaches the target audience in the most cost effective manner possible. Technology also needs to be updated, to make processes more efficient, especially in terms of increasing bandwidth.

Instituting Best Practices for Continuous Improvement

The PDCA (Plan-Do-Check-Action) cycle should be incorporated in the whole organization at each level. Each and every employee should be told to constantly be on the lookout for new ways to do things in the most efficient way possible, in whatever their job is. This also includes improving quality of service by improving processes employees are involved in.

Installing Support Systems

A more upgraded version of Siebel needs to be installed which not only connects the internal management, but also connects the suppliers and cell sites operators. Also it should allow a direct connection with the in-house distributors so that fast and on-time purchase and supply of scratch cards and sims can be made possible. This will further reduce inventory cost.

The one-to-one contact between each level of the Head Office and the Field Management, as well as among Field Management, renders employee empowerment since they are able to make decisions about operations in a more efficient manner. The effort towards real-time communication is also targeted at reducing time taken for decisions as employees will be constantly connected with each other and will not be required to move from their designated seats to work with others.

Tying Rewards to Achievement of Key Strategic Targets

Employees should be evaluated on a consistent basis. Those who actually do recommend good ideas and work efficiently should be rewarded. No effort



should go unrewarded as that can become a de-motivating factor. Those who perform well should be given titles like ‘employee of the month or quarter’ with bonuses.

Building a Capable Organization:

Mobilink should focus on its value chain and find out areas of improvement. Through continuous improvements, the company can provide greater value to all its stakeholders and also earn a competitive edge over its competitors. The company must train its employees regularly to keep them updated about various aspects of the telecom industry and the changing demands of the customers. They need to be trained well to deal with the technological advancements so that they can provide the best services to their customers.

Exercising Strategic Leadership:

The top-management themselves have to be completely involved in the strategy implementation, seek cost management measures, be well updated with the technological advancements, give value to employee contributions and create hype about the new strategy to gain employee commitment. The corporate culture should be flatter, with cross functional groups and a strong leadership of the CEO as it is the leader who creates power and force that constitutes strategy, so that it is implemented effectively.

Shaping Corporate Culture to fit Strategy:

To effectively execute the recommended strategy, efforts towards employee empowerment need to be made and must be targeted towards increasing employee commitment to the strategy. Mobilink needs to create a culture which can accept flexibility and move on with technological advances to keep up with the changing market demands. Also, special efforts will have to be made by the top management at Mobilink to explain the new strategy to all employees and welcome any feedback or suggestions from that front. Mobilink’s policy to employ young, creative graduates seems to be an effective policy for the company to remain innovative, creative and resourceful.

Establishing Strategy-supportive Policies:

Mobilink needs to provide training to the employees to deal with day-today operations, technical problems and customer care. Moreover, proper training also needs to be given for PDCA, explaining to employees how they will write short reports on new ways of doing things by conducting research both inside and outside the organization and also online.




Resource Structure CultureHigh quality network to support latest technological advancements

Well established technological structure should be present

High teamwork among employees

Most hi-tech infrastructure to accommodate 3G services

De-centralized structure should be kept

Very interactive culture exists with an open door policy

Heavy financing will be required as introducing 3G services is very expensive

High class business culture

Good PR should be present to jump through loopholes and avoid extra taxes and licensing issues


The Balanced Business Scorecard:

Strategic Theme:Operations Excellence

Objectives Measures Targets Initiatives

Financial Cost recovery Profitability

Increased market share in the post paid market esp. among the Corporate Clients

Increase return on investment

Recovery of costs by June 2011

Offer services at Super-Premium rates

CustomerRetain existing

customers and attract new ones

Sustain no.1 position as post-paid service (41.7% market share)

Design products (service packages) according to data usage patterns in the past and the future demands of customers

Cater to customers according to needs:o Commercialo Corporate

Market research for the purpose of usage patterns

Product Development Programs

TICSS service quality program

Internal Upgrade to 3G License

KASUMI crypto (security system)

GSM based 3G system (MAP protocols)

Increase bandwidth

Arrange for finances

Investors

Learning

Technological leader

Employee training and development

Emphasis on technicians and engineers

‘x’ employees to be hired

‘y’ employees to be trained

Senior technicians to be trained

Subordinates to be trained by the senior technicians


Profitability

Upgrade to 3G

Retain existing customers and

attract new ones

Commercial packages

Corporate packages

Technological leader


Learning Perspective: A company’s ability to learn and innovate is directly linked to its culture. The intense global competition requires from the companies to make constant advancements to bring in innovation in their products and processes. For Mobilink to adopt the strategy for 3G, it will have to stress highly on becoming the technological leader in the industry in Pakistan. For the desired returns from the implementation of this strategy, Indigo will have to strengthen its learning on technological grounds. The primary measures that are to be conformed are to train and develop employees. Special emphasis is to be given to technicians and engineers who will manage the whole system. An effective step can be that of training senior personnel of the company so that later on the learning can be passed on to the subordinate technicians.

Internal Perspective: This is catered to align the processes, decisions and actions through out the organization with the strategy to be implemented. The infrastructure of the Indigo has to be upgraded to meet the requirements. First and foremost, the acquisition of the license is obligatory. The technical prerequisites of the upgrade are the KASUMI block crypto which is the security system for user identification and a GSM based 3G network system. The targets are to increase the bandwidth according to the use of the service in the country. This requires a research that sees the usage patterns in the past and the demands in future.

Customer Perspective: To retain the relationship with customers and to make new ones, what is required is the alignment of their requirements according to their concerns of time, quality, performance & service and cost. Since the service caters premium customers, we will have to deal with the performance & service issues. For the 3G service the customers will be divided into the categories of following:

Commercial Corporate

The packages will be designed according to needs of the two different targeted consumers. The Commercial customers include small entrepreneurs and students, while the Corporate clients comprise of the professional needs of the corporations such as buying of service and equipment in bulk and etc. the usage patterns for both the customers is to be determined by a market research. More over, to enhance the professionalism in customer service, The International Customer Service Standard (TICSS) service quality programs can be initiated in the firm. TICSS runs the TICS Institute with the objective of making global standards for customer service which enables the organizations to focus their attention on enhancing their service quality.

Financial Perspective: The primary motive from the financial perspective is that of recovering the huge cost that Mobilink would incurred, while profitability and prospering comes later. For fast recovery of the costs, wise



measures can be taken related to the return on investment and market share in the Corporate clients’ division of customers of 3G. The corporations tend to purchase services in huge amounts and relatively do not hesitate in compromising over paying good price for the technological advancement for their firms. So the focus on Corporate clients can give speedy recoveries. The targeted time to recover the expenses is at the fiscal year end in June 2011. The introduction of 3G would bring in with itself an enhanced upgraded brand image for Mobilink making it feasible and justifiable for them to charge super-premium prices for the services that it will provide.



Diagnostic Survey

Diagnostic Survey of Primary and Secondary Management Practices

Strategy Inferior Average Superior

The company has a clearly articulated and widely understood strategy. 1 2 3 4

5

The company has strong external antennae and quickly anticipates external shocks, emerging opportunities, and market downturns.

1 2 3 4 5

The company has a very good understanding of its competitors and can anticipate competitors’ moves.

1 2 3 4 5

The company is focused on extending/improving its core business or businesses and is committed to growing them aggressively.

1 2 3 4 5

Subtotal of Strategy score: 14

Execution Inferior Average Superior



The company’s products and services consistently meet customer expectations. 1 2 3 4

5

The company consistently improves employee productivity. 1 2 3 4

5

The company’s programs and initiatives consistently achieve desired outcomes. 1 2 3 4

5

The company’s IT systems enhance its ability to execute its value proposition. 1 2 3 4

5

Subtotal of Execution score: 14

Culture Inferior Average Superior

The company sets demanding performance standards for all of its employees. 1 2 3 4

5

The company consistently raises the performance bar. 1 2 3 4

5

The company’s culture is exciting, engaging, and fun. 1 2 3 4

5

The company has clear values that people in the company abide by. 1 2 3 4

5



Subtotal of Culture score: 15

Organizational Structure Inferior Average Superior

The company makes decisions quickly. 1 2 3 4 5

The company minimizes bureaucracy. 1 2 3 4 5

The company’s business processes are simple. 1 2 3 4 5

The company effectively cooperates across the organization. 1 2 3 4

5

Subtotal of Organizational Structure score: 15

Talent Inferior Average Superior

The company has great “talent” and “bench strength” at each position. 1 2 3 4

5

The company successfully develops talent.2 3 4 5



1

The company designs jobs that intrigue and challenge talented employees. 1 2 3 4

5

The company’s senior management is personally involved in recruiting and developing talent. 1 2 3 4

5

Subtotal of Talent score: 16

Quality of CEO/Board Leadership Inferior Average Superior

The CEO is uncanny at spotting opportunities and problems before others. 1 2 3 4

5

People at all levels of the organization feel connected to the CEO. 1 2 3 4

5

The CEO matches words with actions (“walks the talk”). 1 2 3 4

5

The company’s board members know the business and have a significant stake in the success of the company.

1 2 3 4 5

Subtotal of CEO/Board score: 16

Innovation Capability Inferior Average Superior



The company is continually transforming or reshaping its industry. 1 2 3 4

5

The company’s products, devices, or innovations are better than those of its competitors. 1 2 3 4

5

The company does not hesitate to cannibalize its existing business or businesses. 1 2 3 4

5

People who have new ideas are respected and enjoy high status in the company. 1 2 3 4

5

Subtotal of Innovation score: 15

M&A Growth Inferior Average Superior

The company consistently identifies good M&A possibilities. 1 2 3 4

5

The company rarely overpays for mergers & acquisitions. 1 2 3 4

5

The company is consistently better than its competitors at integrating mergers and acquisitions.

1 2 3 4 5



The company’s mergers and acquisitions achieve most of their projected cost and revenue benefits. 1 2 3 4

5

Subtotal of M&A score: 11


Documents

Sm Final Report- Mobilink