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research paper about Viettel operation, marketing strategies, goals
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I. Introduction
When the domestic market has become increasingly swarming with mobile
operators, searching for a new foreign market is the demand of each telecom
enterprise to develop their business. However, it is an undeniable fact that most
Vietnamese enterprises investing in foreign market has not attained the desirable
foreign market. The case study of Viettel Telecom is the phenomenon on which
achieving the success not only in the national market but also in the overseas
market. The telecommunication services firm VIETTEL wants to expand its
activities to the international market. Aforementioned to enter an international
market, it is imperative to have a look at whether the telecommunication services
firm even has the assets and competencies indispensable for international market
entry, and whether the external milieu of that foreign market is adequately
attractive. There are two independent variables which are “entry mode choice” and
“services marketing plan” directly affect the entry strategy of Viettel. The advice
for Viettel Telecom is to focus on the relationship with its home country clients.
Through these clients it will be able to obtain projects in the foreign market. This
paper will propose a market entry strategy in which giving telecom services firms
an idea of what factors should be taken into account before international market
entry. It shows that an additional entry mode should be added: the transfer of
employees to foreign countries. Moreover, this research has examined the
opportunities and challenges for Viettel in the process of all-pervading foreign
market. Appraising the case study of Viettel in Cambodia could help other mobile
operators get the valuable lessons to develop more successful in the future.
II. The overview of Viettel in Cambodia market entry strategy
At the end of 2006, the Military Telecom Corporation (Viettel) had the first step
into Cambodia market and become the first telecommunication enterprise of
Vietnam investing into foreign market. This is the first foreign market and the most
successful market of Viettel. It will be explored the reason for the success and the
results which Viettel gained.
Viettel overseas investment, building infrastructure networks in the two
neighboring countries of Laos and Cambodia . In Cambodia , Viettel has built more
than 1000 base stations , deployed nearly 5,000 km fiber optic and become the
second business in the mobile infrastructure and business leader in fiber optic
transmission .
Viettel Cambodia since entering the market in June 2006 , after 3 years of building
and deploying networks , February 2009 Viettel has launched network called
Metfone. Currently, with more than 1100 BTS and 7000 km fiber optic cable,
Metfone become providers of telecommunications services has the best
infrastructure in Cambodia . Metfone network stretches from urban to rural areas,
with diverse products, Metfone has especially captured the hearts of the people of
Cambodia . Than 1 month after opening, Metfone has so far reached a total of
1,300,000 subscriptions activated.
In 2009, with the goal of becoming the 2nd largest mobile network in Cambodia ,
Metfone currently continue to promote strategies to dominate the market . In
addition to the special wedding packages for customers such as students and
tourists .... at the conference, they announced Metfone mobile package at a cost of
$ 14 includes 1 brand new mobile phone, the SIM and $5 in your account. At the
same time introduce some equipment with the latest technology in Cambodia as
USB GPRS / EDGE , Modem ADSL +2 Modem ...
With a total of 67 booths from 30 businesses, exhibition attracted a total of 20,000
visitors to visit in 3 days. This is considered to be one of the biggest events of
Cambodia's information technology. Metfone, as the main sponsor of the
exhibition, the desire to bring the telecommunications products and services closer
to the people of Cambodia , contributed to the development of ICT sector in the
country .
Current status of market selection - target countries – Cambodia:
In fact , Viettel Cambodia is a destination chosen for their business plans . How can
Cambodia have this business- charisma like? This section will focus on analyzing
the factors of Cambodia's business environment and the available resources of the
corporation Viettel to answer this question.
The elements of the business environment in Cambodia:
Cambodia's economy
Cambodia's economy, despite recent strides, but still suffer the legacy of decades of
war and civil war . Per capita income, though growing fast, is still low compared
with most neighboring countries. Mostly rural households depend on agriculture
and related sub- sectors. The manufacture is diverse but not large-scale and largely
conducted on informal small scale. The service sector heavily focused on the
commercial activities and services related to the supply chain. Reuters article that
has some reserves of petroleum and natural gas were discovered offshore. The
exploitation of oil and gas could potentially bring great effect on the future
economy.
Cambodia's economy is relatively stable growth over 2000 to 2005. 's GDP in 2005
was about 5.4 billion U.S. dollars, the GDP per capita of $ 375 USD (according to
IMF data ) . According to ADB estimates, Cambodia 's GDP will continue to grow
at the rate of 6-7 %
Structure of GDP : agriculture 35 % , industry 30 % Services 30 %
The exchange rate under a floating regime: the average exchange rate in 2004 :
4016 , 25 Riel / USD , up 1.1 % compared to 2003 and 2.7 % compared to 2002
2001 2002 2003 2004 2005 20060
1
2
3
4
5
6
7
GDP Growth rate in the year 2001 - 2005
Series 1
Previously, the Civil war destroyed the country’s infrastructure especially in
telecommunication network. Cambodia has been funded by the international
organizations and foreign countries in order to restore the telecommunication
network. In 1990, Cambodia received 21.5 million USD from the United Nation to
implement the project in which set up the fix-line, PABXs office, satellite earth
station. In 1996, the Government of French and Japan financed to Cambodia to
build the telecommunication infrastructure and extend the fixed line network. In
1997, the International Development Research (an organization of Canada) helped
Cambodia to develop the internet infrastructure.
Network infrastructure, Telstra Corp is one of the first foreign companies to invest
in Cambodia in the form of business cooperation contract with the
telecommunications Cambodia to the international port operators. Telstra set up a
satellite ground station using Intelsat satellites in Phnom Penh in 1990, providing
the first international connection in Cambodia. In 2000, Telstra handed over to the
Cambodian government for management and exploitation.
The situation of competitive environment of Cambodia mobile phone
market
Just now, the mobile market of Cambodia has become more and more competitive
because of the business operations of 8 mobile service providers including Viettel.
It is vital that the operators improve network infrastructure, develop the coverage
area, and enhance the service quality if they want to compete. Additionally, they
have to promote their services in order to attract more consumers and increase their
market share.
Viettel has faced with a number of issues when penetrating the Cambodia mobile
phone market. Viettel realized a number of difficulties in competitive aspect while
having a plan to invest in Cambodia in 2009. Despite the small scale of the
Cambodia market, in this market, both domestic operators and foreign operators
with their financial and international experience potentials have operated in this
market. Upon entering Cambodia market, Viettel has competed with three big
operators known as Mfone, Mobitel and TMIC Cambodia. They have entered the
mobile market of Cambodia for 10 years and consisted of 95 percents of the market
share. One more important competitor of Viettel is the joint venture of Millicom
and Cambodia Royal Group namely Mobitel.
Due to the breadth of the report I will only mention one competitor which is
Mobitel of Royal Grop
Cambodia's Mobitel of Royal Group
Strengths
Strong knowledge of Cambodian culture with over 10 years experience
There is a close relationship with the royal government of Cambodia
The only compact mobile international gateway licenses
No. 1 in the number of mobile subscribers
High profit
Nationwide coverage and are stepping up in rural areas
Weakness
Without the support of the Millicom Group
Why Viettel choose Cambodia's environmental goals
1. Cambodia is a potential market because people mainly use mobile (Only 5%
of the population use the landline). Moreover, the telecom company still
superficial when investing in this market
2. The elements of the business environment in Cambodia are considered
favorable and consistent with the ability of Viettel - mother development
facility in Vietnam with much experience of market development.
3. Cambodia had similarities in culture, ability and market knowledge gap near
advantage when building infrastructure
4. Relations of Vietnam - Cambodia has a long tradition, especially in the
military should Viettel will get more attention and direct guidance of the
leaders.
In order to analyze all aspects related to Market penetration method Cambodia
Viettel in Cambodia telecommunication market, the researcher presents SWOT
model of Viettel in Cambodia.
Strengths
Viettel method used to penetrate the Cambodian market is a form of direct
investment with 100% capital from Viettel Telecom.
Market entry method best to minimize the risk of losing the ability to control
and monitor technology in competition
The establishment of the company makes Viettel Corporation can in every
strategic initiative, tight control of operating in different markets .
Weakness:
This method is expensive because companies must invest 100 % capital
infrastructure network to serve foreign markets.
The parent company must bear all risks of overseas subsidiaries due to the
volatility of the economic conditions, political and social.
The Viettel employees have a background on technology and management
but they have not so much experience in Account and marketing. Viettel has
developed their business activities in many part of the telecommunication
sector. It required a number of various experts in different technology.
Opportunities:
More and more people choose Metfone as their mobile service providers. It
leads to the fact that the market share of Viettel in telecommunication market
has increased.
It also affects to the belief of the investors and through that, they could
increase the funds for improving the business activities.
The Cambodia telephone market has a great potential because of unexploited
areas.
Threats:
In the context of fierce competition, Viettel has to deal with not only local
providers but also international providers. It is really a great challenge for
Viettel.
In 2008, the global economic crisis affected the economy of all countries in
the world and Cambodia is no exception.
Viettel has challenged a number of issues when decided to invest in
Cambodia in 2009, which could affect to their business operations.
The Cambodia’s government role in the entry of Viettel Telecom
The government of Cambodia has continued to implement the reform on
administrative procedures and open the economy, creating the best business
environment for developing economy, trading, increasing the foreign investment in
order to create more new jobs, improve the life of the people.
The Vietnamese enterprises has considered the Cambodia market a new potential
market but had yet a number of risks by complex payment method, weak skill of
employees, incompleted infrastructure in some places of Cambodia disheartened
the investors. However, these weaknesses will create the real investment
opportunities for Vietnamese in related sectors.
When investing in Cambodia, the investors will receive a number of preferences on
tax because currently, Cambodia has received preferences for GPS on trade
preferences from more than 40 countries in the Southeast Asia and around the
world.
Proposal for Viettel’s market entry strategy
Situation selection method to penetrate the market
1. Viettel will establish a 100 % foreign investment in Cambodia named Viettel
Cambodia Pte Ltd with the aim of surveying and Cambodia market access
opportunities to be attacked in this market .
2. On this basis, Viettel will invest 100 % of the capital to build a new mobile
network using GSM technology in Cambodia
3. In Phnom Penh, Viettel will rent office , rent land to build a central machine
room where the equipment and machinery .
4. In addition, Viettel also hired six other provinces position to store
transactions, callcenter, jobs for parts information and answers to place the
BTS equipment
First, the Viettel need to do is research the market and segment customer groups
and market segments selected target group
Viettel are to ask the following questions and answer them: customers, who are
they ? Where are they? What do they seek in Metfone?
Customer Segmentation:
Viettel to segment customers according to 3 criteria: 1 is age group 2 is the actual
use of services, 3 is based on social characteristics .
Based on social characteristics, we can see groups of customers can be layered as
the following:
International Tourists
Monks
The army, police, civil servants state agencies
Enterprises and Traders
Overseas Vietnamese, Chinese. overseas
Farmers and fishermen
Students
Viettel to reach client groups where there is no coverage (If Metfone has the first
and the best coverage in the area, they will easily become the customers of Metfone
) ; group customers choose products according to price criteria ( If Metfone have
cheaper packages of other firms , they will use the Metfone ) . At the same time,
Metfone should also introduce mobile gadgets to consumer groups unknown to the
benefit of the Metfone mobile is what to use.
Research each customer group.
For example: With groups of customers are tourists, they will call a lot
internationally, over the internet to look up information not necessary to call in the
country. Taking such characteristics, Metfone can build packages with reasonable
prices for target groups.
Example 2 : The target group is farmers, fishermen , they rarely use the type of
value-added services , mainly listening to calls, messaging so rarely Metfone
should build package with cheaper on-net call time, more applied applications ,
offering on-net call time ,listen ,. With each different age, different social positions
that Metfone can build the basic information about the service pack. For example,
as opposed to groups of farmers and fishermen's group students, they mostly use
messaging, and this group has the habit of using value-added services.
Product Policy:
Goods of Metfone are mobile network, network coverage, network quality and
intelligent utility in mobile technology. Product quality was assessed with features
and the effect of telecom products that customers use. That is the speed of
information transmission, the accuracy and authenticity of news and information
recovery , the stable operation of the media . To achieve this, as soon as Viettel
invested in Cambodia, Viettel should pay attention to the construction of
infrastructure to be able to provide services with the best quality to customers
Develop mechanisms and policies for each customer group:
It is the design of products specific to the customer (rates , features bundled
services , customer care , call center explain questions )
When first built any package must clearly identify who your customers are .
Specifically: If the orientation is to build customer groups of international tourists ,
the package must be attractive international calling rates , increased service
instructions on the streets , beautiful landscapes and location package which have
limited usage time is short .
Policy package must be competitive with rival rates and customer appeal. Viettel
Cambodia should be driving the price of the service pack is cheaper from 15-20 %
to be highly competitive
Pricing policy
When penetrating a new market like Cambodia, Viettel should learn from
experience and apply the success achieved in the Vietnam market. In Cambodia,
Viettel should adopt similar policies in Vietnam:
Plans are cheap, flexible, and suitable for people; Viettel pricing strategy must be
very flexible to help the Cambodian people have more choice through diverse
package with a minimum value / moderate levels of market economy in Cambodia .
The mode of charging by the second block 1: Viettel maintain calculation
method 1 second block in Vietnam's market and brought into Cambodia ,
that is subdivided by charging more than the way of the charging other
vendors did. The method of calculating this fee will be applied to all
directions from the inter- network calls and international. This is predicted to
attract people to use Metfone network because it will reduce the cost to the
people of Cambodia to 25 %
Profit sharing policies to consumers over the number of minutes they had heard in
months ; client money will be added to the account corresponding to the number of
minutes they had listened in months both on-net and off-net . Metfone, if made
under this policy, Viettel will be the first and only network in Cambodia has the
policy which is listen to phone calls will also receive money.
III. Conclusion
The international market has countless prospective for Vietnamese enterprises in all
sectors especially for telecommunication enterprises. In the context of
globalization, the race between mobile service providers has become increasingly
harsh and the domestic market has become saturated. Investing in foreign market is
one of the best choices for all enterprises in this time especially for
telecommunication enterprises. However, it is not easy to enter a foreign market
because every country has their own barriers to protect their national enterprises.
For the case study of Viettel, the international market penetration is a great
opportunities but it also has lots of difficulties and risk during the process of doing
business in international market. In order to exist and progress in the international
market, Viettel has to try their best to understand the foreign market, their
customers’ demand, interest, custom. Proposing an international market entry
strategy of Viettel is a chance for student to understand the operations of Viettel
and make the decisions to turn Viettel in the leading telecom brand of Vietnam in
international market. International business strategy in addition to the flexibility of
international market penetration has contributed to the success of Viettel in
international market. The new position of Viettel in the heart and mind of
Cambodian has been gradually strengthened.
Reference
Thongtincongnghe.com, (2014). Viettel muốn là số 1 tại Campuchia. [online]
Available at: http://www.thongtincongnghe.com/article/9842 [Accessed 27 May.
2014].
Viettelonline.com, (2014). Viettel 3G Internet » Metfone. [online] Available at:
http://www.viettelonline.com/tag/metfone [Accessed 27 May. 2014].