Competitive strategies of mobile operators in bangladesh
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Transcript of Competitive strategies of mobile operators in bangladesh
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Welcome to our presentation
Presented to: Mohammad Aktaruzzaman Khan
Associate Professor
DBA,IIUC
Presented By: Md. Sadi Hassan (B-111120)
Mohammed Ali Azam (B-111015)
K. M. Nabil Masrur (B-113001)
Kawser Ahmed (B-111082)
Presentation on :Competitive strategies of mobile operators in
Bangladesh through the lens of Porter’s Model
Introduction Bangladesh is a country which is densely populated and also is a flat and easily extendable coverage. The infrastructure and Tele-density is low which on the other hand has made the market a perfect place for telecom business. The demand is very high and the consumer base is very large but the investment is low because of the topographic lay-out. With significant reductions in tariff levels, Bangladesh is now one of the world’s fastest growing telecommunications markets with a tele-density of approximately 30 percent.
Porter’s competitive force• A Competitive advantage is a company’s
ability to perform in one or more ways that
competitors cannot or will not match.
Michael Porter urged companies to build a
sustainable competitive advantage (Porter,
1980).A company that hopes to endure
must be in the business of continuously
inventing new advantages by strategy
innovation. Strategy innovation is shifting a
corporation’s business strategy in order to
create new value for both the customer and
the corporation . As no strategy lasts
forever so company must keep going on
initiating strategy innovation and thus gain
a competitive advantage.
History
The liberalization of Bangladesh’s telecommunications sector
began with small steps in 1989 with the issuance of a license to a
private operator for the provision of inter alia cellular mobile
services to compete with the previous monopoly provider of
telecommunications services the Bangladesh Telegraph and
Telephone Board (BTTB). Significant changes in the number of fixed
and mobile services deployed in Bangladesh occurred in the late
1990s and the number of services in operation have subsequently
grown exponentially in the past years. The incentives both from
government and public sectors have helped to grow this sector . It
is now one of the biggest sector of Bangladesh. As a populous
country, it's huge market has attracted many foreign investors to
invest in this sector .
First mobile operator got license in 1989 named Sheba
Telecom to operate telephone exchange in 199 upazillas (sub-
district). After that there were five more operators got license over
the period between 1989 and 2007 to do mobile business in
Bangladesh named Pacific Bangladesh Telephone Limited/citycell
(1989), GrameenPhone and Telecom Malaysia International
Bangladesh (1996), Government owned cellular mobile (2004) and
Warid Telecom International LLC (2007)
Competitive forces
Traditional competitors: Always nipping at heals with new products & services trying to still the customer Example: The following figure illustrates the competition of the operators with their traditional competitors
BL CC GP ROBI TT AT
-1.00%
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
Market Growth Rate
YR-08 YR-09 YR-10 YR-11 YR-12
Competitive forces New market entrants: Not constrained by traditional ways of producing goods and services; they can easily jump into market and lure customers away with cheaper or better products and services. Example: On 12 January 2010 When Bharti-Airtel announced that it had agreed to buy a 70 percent stake of Warid Telecom in a deal that could total $1 billion then on 09 February , Grameenphone , before the hype of Airtel's entry, came up with the newest thing in the industry— infrastructure sharing. It announced separate deals on infrastructure sharing with Banglalink Substitute products and services: Customers may be willing to try substitute products and services if they decide price is too high or the quality of the product & service is too low . Example : Rankstel initiated their services on 14th April 2005 which comes as a substitute of mobile operators
Competitive forces
Customers:Customers are now armed with new information resources that makes it easier to jump tocompetitors, new market entrants or substitute products
Example: Previously market call rate was 7.00 tk. But when banglalink offered 3.00tk ,the operatorcreated a mass attraction. As a result many users switched to Banglalink.
Suppliers:Number of suppliers used may determine how easy or difficult business will have in controllingsupply chain . Too few suppliers and lose a lot.
Example :During June 2005 A chaotic situation persisted in the city's mobile phone markets as vendors were charging at their wills per SIM from the customers although the operators re-fixed the new charge adding Tk-1200 as duty
Strategies to deal with the force
• Low cost leadership By using information system to lower operational costs one
can lower prices. That will make it difficult for traditional competitors & new market entrants to match the prices
Example: On 16th June 2009 Warid launched its new pre-paid package
which includes three options -‘My Favourites', ‘day talker‘ & 'super saver'along with a basic product. The new package provides minimum call rate at Tk 0.29 per minute which was lowest at that time
• Product Differentiaation A very effective use of strategic information systems is to
create products or services that are so different that they create barriers for the competition.People like to feel that they are unique individuals with their own needs and desires. One of the best strategies for dealing with competitors is to offer customers exactly what they want, when they want it, and how they want it. The internet provides a new outlet for mass customization by allowing customers to order one-of-a-kind products.
Example: On 16 June 2005 AKTEL, country's second largest mobile
operator, launched 'Club Magnate' service to reward and pamper its individual post-paid customers through its silver, gold and platinum memberships.
Strategies to deal with the force• Focus on market niche: Focusing on a very narrow segment of the market
instead of a broad general audience Example: Grameen phone initiated village phone focusing
on poor women & borrower numbers of gameen bank living in the village
• Strengthen customer & supplier intimacy: Supply chain management systems increase
supplier intimacy while customer relationship management system increase customer intimacy .
Example:
1) At first citycell SIM was inside their set because they wanted to build a tight linkage with their customers so that they can’t switch over to other
operators. 2) Robi initiated customer care centre to increase
the intimacy with customer.
Advantages
• The development of a competitive mobile phone market is expected to prompt an easing in for others.
• Cell phone tariffs going forward, after years of escalation in what was a captive market.
• Consumers will also benefit from cheaper connection and call rates.
Disadvantages
Since the market players designed their strategy with traditional armors. Therefore, the culture and practice of innovation was not appropriately nurtured in this industry. Sometimes the competition was responded in a very negative way (e.g. network jamming, price cut and so on). which was to some extent unethical, too.
Example : When Aktel planned to provide augmented
service to customers, GP created an unannounced barrier in case of calling and messaging from Aktel to GP subscribers to create an impression that Aktel’s network is not as efficient as GP. Ultimately, the innovative efforts of Aktel were not fully successful. The company (GP) used to enjoy almost a monopoly until and unless the threat was created by other competitors.
Recommendations
• Faster development of telecommunications network coupled with improved quality of service in line with the national development is a must for the fulfillment of the vision and aspiration of digital Bangladesh.
• Ensuring fair competition among mobile operators and thereby to safeguard public interest.
• Innovating and constantly finding new ways to enhance the services to its customer’s current needs and desires for the future.
• Foster the promotional activities e.g. gifting SIM with handset to Media personalities and freedom fighters
• The regulator, BTRC, must enforce a level playing field for the sake of fair competition and existence in the long run. It is because sometimes big operators in the market enjoy advantages for their size and potential anti-competitive nature.
• To enhance the bonding between the users and the company, the messages about interruption of service should be given early enough. If it fails to do so, the company should at least send messages apologizing for the interruption.
If the aforementioned recommendations can be implemented as early as possible, thecorporate image will be enhanced, customers will be satisfied, their confidence will bereinstate and ultimately there will be a healthy competition among the mobile phoneoperators in Bangladesh.
Conclusion
• The illustrations of this study makes us familiar with the telecommunication service industry of Bangladesh and the picture how it became highly competitive industry from a less competitive sector. With the growing competition, the overall customer satisfaction level is also increasing. From the above discussion we can comment that the mobile telecommunication of Bangladesh is very competitive & the rivals are facing huge competition in the market. Therefore we observe that the mobile companies are changing their strategies day to day to survive in the market. So it will be difficult for any new company to enter in this market. But we can simply say that the mobile telecom market of Bangladesh is a well balanced & fully competitive.
Thank you