Telenor_Pakistan

Table of Contents Introduction 2 Organizational Strategic Aims and Objectives 2 Progress towards Strategic Aims and Objectives 4 Strategy Map 6 Strategic Options and Revised Strategic Position 7 PEST 7 Porters Five Forces 8 SWOT 9 Conclusion 10 References 11 Appendix 12 Introduction The Telenor Group is one of the leading companies of Norway and Telenor Pakistan is a wholly owned subsidiary of Telenor Norway. It started its business in Pakistan in March 2005 and by providing different services to its customers at high quality; it has progressed rapidly and has become the fastest growing mobile network in the country. Today its market share has increased to 24% which is second to mobilink. Telenor Pakistan has a network of 23 company owned sales and service centers, more than 200 franchisees and 100,000 retail outlets. Its coverage extends to 1252 cities and villages of Pakistan. The current strategy of Telenor includes maintaining and attracting the customer base by providing value added service to its customers that make the lives simplier. The strategic aim and objectives of Telenor or any other company must align with its core values and vision. Similar corporate, cultural and ethical values make achieving strategic objectives easy. In achieving the strategic aims it is important to analyze the external and internal environment. Various stakeholders also play a crucial part. For any organization it is necessary to constantly check these factor and ensure that the strategy that it is following is favorable according to the environment it is in and if not then search for revised options 1. Be able to review and determine the organizational strategic aims and objectives The mission and vision statements of an organization convey the direction of the organization and therefore play an important part in communicating the organizations intention to the internal and external audiences. The mission, vision statement and core values of Telenor Pakistan are provided in the Appendix. The core values give an insight about the purpose of the organization and are not merely meaningless corporate speech. In case of Telenor Pakistan the cultural, corporate and strategic values are all aligned and are actually practiced in the organization. The current strategy of Telenor is building a closer relationship with customers by providing them with value added services. The strategy focuses on winning and retaining the market share in all segments of the market. Telenor also believes in Operational Excellence and has the most efficient and the most effective processes. Telenor ensures that the customers get the best possible service. With the saturation in market and the introduction of new 3G technologies the market is expected to go into consolidation. At such stage in the industry Telenor’s strategy is valid. Telenor in order to implement its strategy is focusing on developing the right services. Telenor’s strategy is to offer the whole world to the customers and ensuring that the customers can communicate with anyone at their will. This strategy is also in line with the core values and vision of the organization. Telenor also believes in giving back to the society. It tries to attain “Social Excellence” and reaches out to the community through various outreach programs and events. It also has partnership with various NGOS like Disabled Welfare Association, Pakistan Red Cresecent, SOS and Baltistan Health and Education Foundation. This shows that Telenor believes in helping people in need and helps them in improving their living standard The cultural values also represent the vision. Telenor strive to provide the most challenging and satisfying environment to work in. It works for Cultural Excellence which means ensuring that the culture employees see around them is steeped in the vision and values that are unique to Telenor. This means having processes and policies designed to develop and enhance a high-performance culture. Telenor strive to provide opportunities to grow and shine. Telenor’s aim to give each and every one of its employee a platform from which people can hone their talents, develop leadership capabilities, expand their horizons and add value to all that their set out to do. Telenor provides a lucrative environment to work by work by providing an open work environment without bureaucracies, an open and comfortable culture, by encouraging team work, training employees and rewarding on performance. Hence it follows its values inside the organization as well. The Human Resource at Telenor Pakistan is their core competency. The reason is that the Human resource in the organization creates a culture which complements the core values. The HR department strives to encourage the employees to work with passion which will eventually contribute to the growth of Telenor Pakistan. The employees in turn are people who consistently add value to the organization and are loyal, sensitive and respectful of their colleagues and believe in “Creating Passion, Making a Difference”. According to Hamel and Prahalads (1994) five criteria the vision of Telenor has foresight as the single statement like “we’re to help” is not only robust but coherent as well. The vision statement is also homogenous and depicts the workings of the overall organization. “We’re here to help” is also actionable as the history shows that the Telenor has always been there for its customer. It also has the core competencies and on the top of that also possesses a wonderful human resource and strong financial backing from the parent company which will make this vision implementable. However the vision statement lacks breath as it does not fully cover the likely changes that may occur in the telecommunication market. Today and in future people will want more than just communication, they would need value added services from their cellular services which will make other activities way for them as well. Although Telenor in reality is providing and capitalizing on these services it has also failed to include this element of “uniqueness” in its vision statement. Thus the vision statement lacks breadth and uniqueness. Based on the above analysis the more appropriate and revised vision statement can be Telenor exists to help customers get the full benefit of value added technologically advanced communications services in their daily lives. We're here to help. The new vision statement now covers all the five element of Hamel and Prahalad's and includes the future possibilities of the telecom market. It shows that Telenor will strive to “help customers”, “provide technologically advanced value added services” which would benefit the customers in “their daily lives” The major points in the mission statement are “new solutions”, “simplify”, “customer’s workday”, “competitive power” and “value creation.” The mission statement is in accordance with the five elements described by Lynch (2006). It not only targets the customers but also reflects the core values of the organization. It also includes the competitive advantage of “value creation” which adds to its value. The statement also summarizes the strategic approach of the organization which is creating values added services for customers which makes the customers life simpler and easier. The mission statement is specific enough “simplifying our own organization and routine” is expected to have the desired effect on the people in the organization and is consistent with the core values “make is easy.” The mission is realistic and also attainable. The statement “launching new solutions” ensures the flexibility of the organization in future endeavors. 2. Be able to identify and analyze progress towards organizational strategic aims and objectives The stakeholders of Telenor include its employees, resellers, customers, suppliers, NGOs, general public, media and the owners, The Telenor Group. The employees and the owner are the internal whereas the others are the external stakeholders. In order to promote the long term success it is important that Telenor has good relationships with all of these stakeholders. The stakeholders can be divided in two groups, the primary and secondary. The primary stakeholders of Telenor include the owner, employees, customers, resellers and suppliers whereas the secondary stakeholders are the public, NGOs and the media. The biggest possible area of conflict between the stakeholders can be the issues of revenue and costs. The owners, resellers, suppliers and the employees may want their own financial success which can contradict with the expectations of customers who want low cost quality services. There may also be issues between the public and the owner due to various cultural and religious reasons. This resulted in conflict between the general public and the Telenor group during the Danish cartoon incident. The general public due to the origin of the Telenor group erupted in protest against the company. Although the top management at Telenor tried to manage the situation, this incident proved to be a huge block in the path of Telenor’s progress. This shows that all stakeholders even if secondary can have a huge affect on the organization. However it is very important to prioritize the stakeholders and for this purpose stakeholder mapping is useful the grid below provides the stakeholder mapping for Telenor. The Figure 1 shows the stakeholders on the power vs interest grid. The owners and employees are high power and high interested stakeholders. Telenor must make efforts not only to fully satisfy them but also engage with them constantly. Customers on the other hand should be kept satisfied but not bored with excessive attention. The suppliers and resellers should be adequately informed as these can be very helpful. General public, NGOs and media are low power and less interested people. It is important to monitor these stakeholders. Owners, Employees Customers Suppliers, Resellers Public, NGOs, Media Figure 1 The progress of Telenor towards the strategic aims and objectives is satisfactory. Keeping in consideration the financial, customer, internal business growth and learning perspective the strategy map of Telenor is presented in Figure 2. The strategy map of Telenor follows the core values and vision of the company. The customer, internal business processes and the learning business processes all eventually lead to the financial perspective of Telenor. | Strategy Map | Financial | Increase Shareholder Value Reduce Operating Costs Increase Revenue | Customer | Reduce Customer churn Improve Brand Image Increase diversification | Internal Business Process | Enhance distribution channel (retailers) Reduce network/site costs Improve Marketing | Figure 2 Learning & Growth | Improve Use of Current Technology/Systems/Innovation Training for Skills Development | 3. Be able to determine and evaluate strategic options to support a revised strategic position In order to evaluate the strategic options it is not only important to evaluate the current strategy but also an analysis of the external environment is required. A keen understanding of the current strategic position and the continuous analysis of the external environment can result in clear understanding of the strategic intent and mission. The external environment of Telenor includes the general environment and the industry. The general environment analysis is done with the help of PEST analysis The PEST analysis of Telenor is as follows. * Political & Legal Political and legal factors play an important role in the operation of any business in term of the regulations and the rules of the market. Pakistan has an unpredictable political scenario and the rules and regulations are changed frequently. The war against terror has created an unsecure environment in Pakistan and this uncertain environment is a threat for any business including the Telecom industry of Pakistan. The economic issues in Pakistan mainly slow economic growth and high budget deficit have led to an increase in the taxes of the telecom sector. The government has now declared the mobile phone a luxury item and increased the sales tax from 15% to 21% * Economic The economic situation of the country also influences the working of the industry. The telecom industry has been one of the best performing industry of Pakistan in the last few years and has attracted a lot of FDI. In the last quarter of 2009 alone it attracted US $ 142.7 million FDI which was 26.4% of the total FDI in the country PTA (2009)during the period. Even with this commendable performance the economic instability in Pakistan is bound to impact the industry. The inflation is constantly increasing which will further increase the cost of doing business in Pakistan. The high unemployment with the latest floods in Pakistan is bound to increase poverty and decrease the buying power of the people. * Social The socio cultural factors impact the demand supply mechanism and create various opportunities and threats for the telecom industry. The socio cultural factors have been very friendly for the telecom sector. The Pakistan is a collectivistic society and people like to remain in touch. This collectivism has also influenced the demand for the services of telecom companies. Apart from this globalization has also resulted in more awareness the people are more brand and status conscious and want to be a part of the crowd that uses the latest technology. This has enhanced the demand of the new and innovative services provided by the cellular companies. The cellular companies however should be careful about their promotion campaigns because many of them show boys and girls talking all night on phones. This kind of promotion can backfire badly because this is against the cultural values of Pakistan. * Technological The advancement in technology has a major impact on the business success. The PTA will soon be inviting applications for 3G spectrum auction. This HSPA technology will increase the operating capacity and revenues of the companies. However there are rumors about possible acquisition of Warid by Telenor because only 4 of the five companies will be given this technology. Keeping up to date with technology is a must in this industry and the companies are not only investing in new technology but also upgrading the existing ones The industry analysis is done with the help of porters five force. * Threat of entry:      The threat of entry into an industry depends on the barriers that prevent the new entrant from entering the market. If barriers are high, the threat of entry is low. Although the government of Pakistan has shown liberalism in case of telecommunication sector and opened up its policies and liberalized the sector the barriers of entry are still high. The current players are currently in the act of price wars which means that they have achieved economies of scale. A new player can easily be placed at a disadvantage due to the pricing strategies of the current players. High capital requirements also create a barrier for new entrants; the initial setup cost is in millions of dollars only a well established company with strong financial backup can enter the market at the present moment. The current players also possess huge distribution network and at least one service is available in almost all areas of Pakistan. Other advantages like brand value and brand loyalty can also keep the competition out. * Rivalry among competitions: Currently there are five competitors in the markets.(Mobilink, Warid, Ufone, Telenor, Zong) With the entry on Zong in 2007 the rivalry became intense and the market reached a point where the completion was basically on price and low rates packages. This is mainly because the firms are offering undifferentiated products with similar services, similar packages, similar prices, and similar coverage. All the competitors are roughly equal in size and power. All of the competitors have strong financial backing and are supported by big international groups. The telecom market has seen immense growth in the last few years however today the market has slow growth and is on its way to maturity. This further increases the competition. High fixed costs in telecom industry are also high, so each company in the industry is trying to generate enough revenues in order to manage costs. * Threat of Substitutes: The threat of substitutes within the industry is high however there are not many substitutes outside the industry. Within the industry the customers face low switching costs. The price rivalry is intense therefore often the competitors come up with different packages with lower prices. The coverage, quality and performance capabilities are also very similar which increase the probability of substitution. The only way to avoid this threat is to introduce new services that give a company competitive advantage. In this case Telenor has been successful by introducing innovative services like “mobile bazaar” and “easy paisa”   * Bargaining power of buyers: Buyers can compete with the industry and decrease the profitability of the industry by forcing down prices, demanding higher quality or more services, and playing competitors off against each other. In the Pakistan telecom industry the buyers exert pressure on the companies as the switching coasts are low. This bargaining power forces the companies to reduce their prices and introduce new packages and provide better services on regular basis because the buyers can easily switch to other companies if their requirement is not fulfilled. The power of buyers keeps the industry on the go and the companies follow each other’s ideas and strategies because in the end all want to gain more trust of their users. However, the other buyers, like retails, franchises and so on, do not have power all at in the industry.   * Bargaining power of suppliers: The bargaining power of suppliers in the industry is not high and not low either. The companies usually have long term agreement with the supplier which secures the interests of both the parties. Even if the suppliers exert the pressure of their power the companies can always switch to other suppliers as all of the companies have strong international financial backing. Along with the general environment and industry analysis it is also important to evaluate the strengths and weaknesses of Telenor and the opportunities and threats the environment brings. The SWOT analysis of Telenor is as follows * Strengths Telenor has the widest network coverage after Mobilink. Telenor also provides customized packages for each market segment e.g djuice for price conscious class, smart calls for routine users, Telenor persona for upper middle and elite class. Telenor also possesses state of art technology and have the latest networking underground fiber optical network. The biggest strength is that it is the only telecom network which has been the first one to offer many innovative services like “Mobile TV”, “easy paisa” and “mobile bazaar”. Telenor has also won many awards among which “the best employer” award shows that Telenor is doing its best within the organization as well. Another strength is the strong capital that it has from its parent company. * Weaknesses Like any other mobile company the one of the weakness of Telenor is that the call center performance is still not 100%. Training in this aspect is also required. Telenor also has high prices in several of its packages which may refrain the customers from using this service. The franchise distribution system is also not up to the mark and there is lack of record keeping at franchises and other distribution networks. * Opportunities The telecom sector has become so competitive that the customers cannot differentiate between the different networks. This although is a bad omen for any company but this can also be used as an opportunity. The current situation provides an opportunity and encourages Telenor to do something different. The biggest opportunity for Telenor keeping in mind its technological advancement is product innovation which will give it a competitive advantage. Apart from this product line expansion due to this innovation will also help in increasing the market share. * Threats The biggest threat to Telenor is the monopoly of PTA. The power of PTA enables it to alter the rules and facilities of the telecom sector. Another major threat is the current structure of the industry which has resulted in the cut throat competition. This price war has created an imbalance between the prices of inputs and outputs and can eventually affect the profits. Conclusion The above analysis shows that the strategy of Telenor is good and it doesn’t need a revised strategy. Telenor is currently in an industry where competition is extremely high and which is on its way to maturity. After an analysis of the current strategy, external environment and stakeholders it can be safely said that the current strategy is the only way through which Telenor can increase its profits at this stage of the industry life cycle. References: Collis, D.J., and Urckstad, M.G., April 2008,‘Can you say what your strategy is'’, Harvard Business Review, Vol 86, Issue 4, Hamel, G., and Prahalad, C.K., 1994, Competing for the Future, Harvard Business School Press Hoskisson, Hitt & Ireland. Competing for Advantage. Second Edition. South Western College Publications Lynch, R., 2006, Corporate Strategy, 4th edition, Pearson Education Mind Tools- Management Training, Leadership Training and Career Training. Available at: http://www.mindtools.com/pages/article/newPPM_07 (Accessed: 18 August 2010) Pakistan Telecommunication Authority. Available at : www.pta.gov.pk (Accessed: 16 August 2010) PTA (December 2009), Telecom quarterly review, PTA Sajjad (2010), The Express Tribune. Available at: http://tribune.com.pk/story/40007/mobile-phone-users-cross-99m-mark/ (Accessed: 18 August 2010) Telenor Pakistan . Available at: www.telenor.com.pk (Accessed: 14 August 2010) (2006) Times Online. Available at: www.timesonline.co.uk/tol/news/world/asia/article731005 (Accessed: 20 August 2010) APPENDIX: * Mission Telenor has an inspiring vision: ideas that simplify. Telenor is committed to creating, developing and launching new solutions that simplify our customer’s workday. We believe that by simplifying our own organization and routines we can achieve competitive power and value-creation * Vision Telenor exists to help customers get the full benefit of communications services in their daily lives. We're here to help. The values of an organization's drive its culture and priorities and help in providing framework in which decision are made. Core values at Telenor Pakistan are * MAKE IT EASY We're practical. We don't complicate things. Everything we produce should be easy to understand and use. Because we never forget we're trying to make customers' lives easier. * KEEP PROMISES Everything we set out to do should work, or if it doesn't, we're here to help. We're about delivery, not over promising, actions not words. * BE INSPIRING We are creative. We strive to bring energy to the things we do. Everything we produce should look good, modern and fresh. We are passionate about our business and customers. * BE RESPECTFUL We acknowledge and respect local cultures. We do not impose one formula worldwide. We want to be a part of local communities wherever we operate. We believe loyalty has to be earned.