Strategic Management - Warid Telecom

PRESENTED TO: ZARRAR ZUBAIR

STRATEGIC MANAGEMENT

Group Members

Umair Khalid Paracha (13257)Zeeshan Valliani (12543)S.M. Zeeshan (8779)Muhammad Kashif (11017)Muhammad Asim Hayat (11084)

ASIM HAYAT

ZEESHAN

VALLIANI

ALI ZEESHA

NKASHIF

UMAIR PARACH

A

About Warid Telecom

Warid Telecom is one of the cellular

service providers in Pakistan

100% owned company of the Abu Dhabi

Group

Started its operation in May 2005

Acquired license for $291 million US

dollars

Offers state-of-the-art

telecommunication services at over

7,000 destinations in Pakistan

Vision & Mission Statement

Mission and Purpose “Warid’s aim is to be perceived not only as a

telecommunication operator of voice services, but also as a universal provider of comprehensive communications services for both residential and business customers. Warid's corporate identity seeks to reflect the changes in telecom sector in relation to helping customers keep pace with rapidly changing technology in the field of communication, through maximum network coverage and clear connectivity that we have committed to provide”


Determinan

ts

Customer

s

Products

and

Service

Markets Technolog

y

Survival

Growth and

Profitability

Self

Concep

t

Concer

n for

Public

Image

Philosoph

y

Concern

for

Employee

s

Analysis of Warid’s Mission Statement


VisionThe company’s vision is to“To become the primary service provider of

all communication needs of subscribers in Pakistan‚ supported by exemplary customer care”.

Industry Overview

Annual Cellular Subscribers

Mobilink Ufone Zong Instaphone Telenor Warid Total

2003-04 3,215,989 801,160 470,021 535,738 5,022,908

2004-05 7,469,085 2,579,103 924,486 454,147 835,727 508,655 12,771,203

2005-06 17,205,555 7,487,005 1,040,503 336,696 3,573,660 4,863,138 34,506,557

2006-07 26,466,451 14,014,044 1,024,563 333,081 10,701,332 10,620,386 63,159,857

2007-08 32,032,363 18,100,440 3,950,758 351,135 18,125,189 15,489,858 88,019,812

2008-09 29,136,839 20,004,707 6,386,571 34,048 20,893,129 17,886,736 94,342,030

2009-10 32,202,548 19,549,100 6,704,288 0 23,798,221 16,931,687 99,185,844

2010-11 33,378,161 20,533,787 10,927,693 0 26,667,079 17,387,798 108,894,518

2011-12 34,703,110 22,019,458 14,423,646 0 28,470,254 14,990,190 114,606,658

May 2013 36,747,587 23,869,218 20,199,828 0 31,693,191 12,503,036 125,012,860

Porter’s Five Competitive Forces

Threat of New Entrants

Yes M No

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

Are there any established brand identities in your industry?

Does your company incur any significant costs in switching suppliers?

Is a lot of capital needed to enter your industry?

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

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

Does your product or service have any proprietary features that give you lower costs?

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

Can the newcomer expect strong retaliation on entering the market?

7 1 1


Bargaining Power of Buyers

Yes (+) M No (-)Are there a large number of buyers related to the number of firms in the business?

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

Does the buyer need a lot of important information?

Is the buyer aware of the need for additional information?

Is there anything that prevents your customer from taking your function in-house?

Your customers are not highly sensitive to price.

Your product is unique to some degree or has accepted branding,

Your customers’ businesses are profitable.

You provide incentives to the decision makers.

3 3 3


Bargaining Power of Suppliers

Yes (+) M No (-)

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

I can switch between suppliers quickly and cheaply.

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

I can substitute inputs readily.

I have many potential suppliers.

My business is important to my suppliers.

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

4 1 2


Threat of Substitutes

Yes (+) M No (-)

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

The customer will incur costs in switching to a substitute.

Your customer has no real substitute.

Your customer is not likely to substitute.

2 1 1


Rivalry Against Competitors

Yes (+) M No (-)

The industry is growing rapidly.

The industry is not cyclical with intermittent overcapacity.

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

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

The competitors are diversified rather than specialized

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.

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

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

0 4 4


Overall Industry Analysis

Overall Industry

Rating

Favourable Moderate Unfavourable Implications

1 Threat of New

Entrants

7 1 1 It is difficult for new

players to enter so the

current ones can avail

larger shares.

2 Bargaining

Power of buyers

3 3 3 The buyer power is

moderate.

3 Bargaining

power of

Suppliers

4 1 2 The suppliers cannot

impose any conditions on

the company due to less

power.

4 Threat of

Substitutes

2 1 1 There are no real

substitutes which is good

for the industry.

5 Rivalry against

competitors

0 4 4 The competition is strong

therefore; the industry is

facing tough competition

among all rivals.

Total 16 10 11

PEST ANALYSIS

Political Factors

Political instability issues Security conditions are not

stableProfits can only be generated

either through cost reductions or branding

Cost reductions are easy for this sector because the portion of variable cost in the total cost is low

Only the initial capital investment is very high

PEST Analysis

Economic Factors

InflationHigh Interest ratesPurchasing PowerPrice WarsEconomics of Scale

PEST Analysis

Social Factors

Pakistan is a very social countryThere are several FestivalsSuch as EidFamily & Friends Packages

PEST Analysis

Technological Factors

State of the art technology has to be implemented to gain a competitive edge

Must acquire 3G License

PEST Analysis

Opportunities Threats

Acquire 3G LicenseExpand Customer

baseExpand Network

coverageProvide more value

added servicesPackages for Family

& Friends

Buyers can easily switch to other networks

High initial capital investment

Price wars among competitors

Competitors can easily follow

Opportunities & Threats

External Factor Analysis

Key External Factors

Weight Rating Weighted score

Opportunities

Expand customer base

0.1 2 0.2

Expand network coverage

0.1 3 0.3

Provide more value added services

0.05 4 0.2

Packages for Family and friends

0.04 3 0.12

Acquire 3G License 0.2 4 0.8

Threats

Buyers can easily switch to other networks

0.1 3 0.3

High initial capital investment

0.12 4 0.48

Price wars among competitors

0.19 3 0.57


0.1 3 0.3

Total 1.0 3.27

Analysis

Acquire 3G license and become one of the first companies with the technology.

Warid must try to expand its customer base so that the threat of competitors is also reduced.

Providing more value added services will help the company in retaining the newly acquired customers.

Competitive Profile Matrix

Critical Success Factors

Warid Mobilink Telenor Ufone

Weigh

t

Rating Weighte

d Score

Rating Weighte

d Score

Ratin

g

Weighte

d Score

Ratin

g

Weighted

Score

Service Quality

0.15 4 0.6 3 0.45 3 0.45 3 0.45

Customer Loyalty

0.10 1 0.1 3 0.30 4 0.40 3 0.30

Human resource

0.10 2 0.2 4 0.40 3 0.30 3 0.30

Technological know-how and innovation

0.20 3 0.6 4 0.80 3 0.60 4 0.80

Pricing 0.06 2 0.12 2 0.12 2 0.12 4 0.24

Global Expansion

0.10 2 0.2 3 0.30 4 0.40 0 0

Market Share 0.12 2 0.24 4 0.48 3 0.36 3 0.36

Financial Position

0.08 2 0.16 3 0.24 3 0.24 3 0.24

After Sales Service

0.09 3 0.27 2 0.18 3 0.27 2 0.18

Total 1.00 2.49 3.27 3.14 2.87

Competitive Analysis

Warid’s positioning in comparison to its competitors is weak.

The company should improve in the area of market share, global expansion, and also in the area of after sales services.

Customer Convenience should be the focused.

Strengths Weaknesses

Roaming facilitiesPersonified packagesBetter customer

packagesCooperative work

groupsAppropriate value

against priceNot prone to price wars

Very few marketing activities for the brand

Ambiguous brand identity

Unutilized technology

Poor firm infrastructure

Strengths & Weaknesses

Internal Factor Analysis

Key External Factors Weight Rating Weighted score

STRENGTHS

Roaming facilities 0.10 3 0.30

Personified packages 0.08 3 0.24

Better customer packages 0.12 3 0.36

Cooperative work groups 0.10 4 0.4

Appropriate value against price

0.10 4 0.40

Not prone to price wars 0.05 4 0.20

WEAKNESSES

Very few marketing activities for the brand

0.15 2 0.30

Ambiguous brand identity 0.08 2 0.16

Unutilized technology 0.12 3 0.36

Poor firm infrastructure 0.10 2 0.20

Total 1 2.92

Internal Analysis

Inbound Logistics• Catalogs

Printing• Sim cards• Packages

Operations• Roaming• Network

Signals

Outbound Logistics• Calls• Sms

reservations

Marketing and Sales• Promotion

of packages• Personified

packages

Services• Query

Handling• Corporate

services for business clients

Suggested Strategies

Warid should improve its firm infrastructure and make its presence felt in the market.

The company needs to create more reminder advertising so that people know of its presence and remember that it is also there to serve to their needs.

The company will gain more attention if it comes up with more personified packages because everyone today believes in exclusivity and thus Warid will end up having higher customer traffic.

Generic Strategy

Overall Cost Leadership

Overall Differentiation

Focused Cost Leadership

Focused Differentiation• Warid Telecom

Generic Strategy

Generic Strategy

Warid is following a focused differentiation strategy.

Their packages like Zem and Glow are to differentiate the service from other competitors in the market. The reason they have a narrow audience is that they have not targeted the whole population.

Their focus is more on youth and even among youth, their focus is on A and B class of the economy which collectively forms a very small size of the entire population.

Overall Cost Leadership

Overall Differentiation

Focused Cost Leadership

Focused Differentiation•Warid Telecom

Generic Strategy

The Matching Stage

The Matching Stage

TOWS MatrixStrenghts Weaknesses

1. Roaming facilities 1. Very few marketing activities for the brand

2. Personified packages 2. Ambiguous brand identity

3. Better customer packages 3. Unutilized technology

4. Cooperative work groups 4. Poor firm infrastructure

5. Appropriate value against price

6. Not prone to price wars

Opportunities S-O Strategies W-O Strategies

Expand customer base 1. Expand customer base by coming up with better customer packages.

1. Acquire 3G license to eliminate the weakness of unutilized technology

Expand network coverage 2. Expand network coverage with the help of improved roaming facilities within the country and abroad.

2. Expand network coverage with the help of improved firm infrastructure

Provide more value added services

3. Provide more value added services in the form of personified packages

Packages for Family and friends

Acquire 3G License

The Matching Stage

Threats S-T Strategies S-T Strategies

Buyers can easily switch to other networks Play on the basis of quality services instead of prices so that competitors find it hard to imitate.

Play on the basis of quality services instead of prices so that competitors find it hard to imitate.

High initial capital investment Provide appropriate value against prices so that buyers do not switch frequently.

Provide appropriate value against prices so that buyers do not switch frequently.

Price wars among competitors Cooperative work groups can help them reduce on their fixed operating costs

Cooperative work groups can help them reduce on their fixed operating costs


BCG Matrix

Warid can be placed in the quadrant of Question Mark

The SPACE Matrix

Internal Strategic Position Rating Internal Strategic Position RatingFinancial Strength (FS)

Return on investment

Liquidity

Working Capital

Operating profit

Risk involved in business

5

5

6

5

4

Environmental Stability (ES)

Technological changes

Price range of competing products

Competitive pressure

Inflation

Barriers to entry

Ease of exit from market

-2

-1

-2

-2

-3

-2

-25 -2

Competitive Advantage (CA)

Market Share

Product Quality

Customer Loyalty

Technological updation

Control over supplier and distributor

-5

-5

-3

-3

-5

-3

Industry Strength (IS)

Growth Potential

Profit Potential

Financial Stability

Technological innovations

Resource utilization

Ease of entry into the market

6

6

6

5

5

2

-4 5

The SPACE Matrix

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

-6

-5

-4

-3

-2

-1

+0

+1

+2

+3

+4

+5

+6

Defensive Competitive

Conservative Aggressive

The Internal-External (IE) Matrix

The IFE Total Weighted Score

Strong Average Weak3.0 to 4.0 2.0 to 2.99 1.0 to 1.99

High I II III3.0 to 3.99

Warid Telecom Medium IV V VI

The EFE Total Weighted Score

2.0 to 2.99

Low VII VIII 1.0 to 1.99

Grand Strategy Matrix

RAPID MARKET GROWTH

Quadrant II Quadrant I

Target

WEAK COMPETITIVE STRONGPOSITION COMPETITIVE

POSITION

Warid Telecom

Quadrant III Quadrant IV

SLOW MARKET GROWTH

Blue Ocean Strategy

•service errors•Physical visits to outlets

•Virtual billing system through paypal or mastercard

•Provide executional options through helpline only.

•Value added services

•value for money invested

•Conventional system of recharge

•Service centre or physical outlets

Eliminate Raise

ReduceCreate

Strategy Implementation

Resource Structure Culture

High 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

Decision Stage for Warid Telecom

QSPM MatrixQUANTITATIVE STRATEGIC PLANNING MATRIX FOR Warid Telecom

Strategic Alternatives

Critical Success FactorsWeigh

t

Expanding Network Coverage

Acquiring and Introducing 3G

technology

Strengths AS TAS AS TAS

Roaming facilities 0.10 3.00 0.30 2.00 0.20

Personified packages 0.08 3.00 0.24 1.00 0.08

Better customer packages 0.12 4.00 0.48 1.00 0.12

Cooperative work groups 0.10 2.00 0.20 3.00 0.30

Appropriate value against price 0.10 1.00 0.10 3.00 0.30

Not prone to price wars 0.05 ---- ---- 2.00 0.10

0.00 ---- ---- ---- ----

0.00 ---- ---- ---- ----

0.00 ---- ---- ---- ----

0.00 ---- ---- ---- ----

Weaknesses

Very few marketing activities for the brand 0.15 4.00 0.60 1.00 0.15

Ambiguous brand identity 0.08 4.00 0.32 2.00 0.16

Unutilized technology 0.12 ---- ---- 4.00 0.48

Poor firm infrastructure 0.10 1.00 0.10 3.00 0.30

0.00 ---- ---- ---- ----

0.00 ---- ---- ---- ----

0.00 ---- ---- ---- ----

0.00 ---- ---- ---- ----

0.00 ---- ---- ---- ----

0.00 ---- ---- ---- ----

SUBTOTAL 1.00 2.34 2.19

Critical Success FactorsWeig

ht

Expanding Network Coverage

Acquiring and

Introducing 3G

technologyOpportunities AS TAS AS TASExpand customer base 0.10 4.00 0.40 2.00 0.20Expand network Coverage 0.00 4.00 ---- 3.00 ----Provide more value added services 0.05 3.00 0.15 2.00 0.10Packages for Family and friends 0.04 3.00 0.12 1.00 0.04Acquire 3G License 0.20 ---- ---- 4.00 0.80 0.00 ---- ---- ---- ---- 0.00 ---- ---- ---- ---- 0.00 ---- ---- ---- ---- 0.00 ---- ---- ---- ---- 0.00 ---- ---- ---- ----Threats Buyers can easily switch to other networks 0.10 3.00 0.30 3.00 0.30High initial capital investment 0.12 ---- ---- 2.00 0.24Price wars among competitors 0.19 3.00 0.57 2.00 0.38Competitors can easily follow 0.10 2.00 0.20 4.00 0.40 0.00 ---- ---- ---- ---- 0.00 ---- ---- ---- ---- 0.00 ---- ---- ---- ---- 0.00 ---- ---- ---- ---- 0.00 ---- ---- ---- ---- 0.00 ---- ---- ---- ----SUBTOTAL 0.90 1.74 2.46SUM TOTAL ATTRACTIVENESS SCORE 4.08 4.65

THANK YOU

Strategic Management - Warid Telecom

Business

Transcript of Strategic Management - Warid Telecom