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Rabia Iram Business Policy and Strategy 2nd Assignment Presented to: Sir. Nadeem Akram Allama Iqbal Open University, Islamabad
Acknowledgment
By the Grace of Almighty, the most Merciful, the most Beneficial, I'm today submitting my 2nd Assignment report, at the end of my pragmatic experience and I'm glad to have it with MOBILINK, where you come first, only if you're the customer. Thirst of learning is inside you, and whatever the environment, if you're willing to learn, you do. At Mobilink, I had a new, challenging, yet a perfect environment to learn. My parents' prayers and their teachings were always with me and hereby I will like to take this opportunity to show my gratitude to all those who made my internship an adventurous outwit. . . Here I am, from more professional and rather corporate environment of Mobilink Franchise Okara. I never knew what it all going to be. As I enter the branch, it took me a minute to realize that the person sitting in the half fortified walls is the manager. Maybe I was expecting him in a glass sheeted room. At a glance, I grasped the interesting personality of the manager and today at the end of my internship; hes one of the persons Ill always remember. Sir I learnt from you is always going to be respected, no matter whatever business field I choose. Those tips are always in my memory bag. Despite of the most hectic schedule, my teacher helped me so much. I'm really grateful to you for clarifying my concepts and making me learn from your experience. Whatever I learnt from you will definitely help me in my upcoming study and the professional life ahead. Thank you so much for being so cooperative and so helpful every time. I hope I have been up to your expectations. Rabia Iram
Table of Contents
Title Acknowledgment Table of Contents INTRODUCTION Management Planning MOBILINK About Mobilink STRATEGY FORMULATION SWOT Analysis Conclusion Recommendation References 2 3 4-6 6-7 7-13 14 14-18 18-23 23 24 25-26 26 Page No.
INTRODUCTION
It is useful to consider strategy formulation as part of a strategic management process that comprises three phases: diagnosis, formulation, and implementation. Strategic management is an ongoing process to develop and revise future-oriented strategies that allow an organization to achieve its objectives, considering its capabilities, constraints, and the environment in which it operates. There are four primary steps in this phase: * Reviewing the current key objectives and strategies of the organization, which usually would have been identified and evaluated as part of the diagnosis * Identifying a rich range of strategic alternatives to address the three levels of strategy formulation outlined below, including but not limited to dealing with the critical issues * Doing a balanced evaluation of advantages and disadvantages of the alternatives relative to their feasibility plus expected effects on the issues and contributions to the success of the organization * Deciding on the alternatives that should be implemented or recommended. Formulation of Goals: Goals are what a business unit wants to achieve. First perform a SWOT analysis Next, formulate goals with specificity as to time (by when it will be performed) and magnitude or quantity (by how much it will be changed). An organization will normally have a mixture of goals. Order your goals from broad to specific categories: for example from increasing net earnings by 20%-dansk- to increase revenues by 15% and reduce expenses by 12 % in certain areas.
Strategy Formulation: Strategy is How a business unit will achieve what it wants. Michael Porter, HBS professor and worldwide competitive strategy expert breaks types of strategy into three categories: An Overall Cost Leadership Strategy A Differentiation Strategy A Focus Strategy
Strategic Formulation: Strategic formulation means a strategy formulate to execute the business activities. Strategy formulation includes developing: Vision and Mission (The target of the business) Strength and weakness (Strong points of business and also weaknesses) Opportunities and threats (These are related with external environment for the business) Strategy formulation is also concerned with setting long term goals and objectives, generating alternative strategies to achieve that long term goals and choosing particular strategy to pursue. The considerations for the best strategy formulation should be as follows: Allocation of resources Business to enter or retain Business to divest or liquidate Joint ventures or mergers Whether to expand or not
Management
The functions of management consist of five basic activities: planning, organizing, motivating, staffing, and controlling. An overview of these activities is provided in Table.
Planning:
Planning is the: Start of the process Bridge between present and future Increases likelihood of achieving desired results
The only thing certain about the future of any organization is change, and planning is the essential bridge between the present and the future that increases the likelihood of achieving desired results. Planning is the process by which one determines whether to attempt a task, works out the most effective way of reaching desired objectives, and prepares to overcome unexpected difficulties with adequate resources. Planning is the start of the process by which an individual or business may turn empty dreams into achievements. Planning enables one to avoid the trap of working extremely hard but achieving little. Planning is an up-front investment in success. Planning helps a firm achieve maximum effect from a given effort. Planning enables a firm to take into account relevant factors and focus on the critical ones. Planning helps ensure that the firm can be prepared for all reasonable eventualities and for all changes that will be needed. Planning enables a firm to gather the resources needed and carry out tasks in the most efficient way possible. Planning enables a firm to conserve its own resources, avoid wasting ecological resources, make a fair profit, and be seen as an effective, useful firm. Planning enables a firm to identify precisely what
choosing to perform activities differently or to perform different activities than rivals to deliver a unique mix of value. (Michael E. Porter) The essence of strategy lies in creating tomorrow's competitive advantages faster than competitors mimic the ones you possess today. (Gary Hamel & C. K. Prahalad) We will consider competitive strategy by using Porter's four generic strategies (Porter 1980, 1985) as the fundamental choices, and then adding various competitive tactics. Porter's Four Generic Competitive Strategies: He argues that a business needs to make two fundamental decisions in establishing its competitive advantage: (a) whether to compete primarily on price (he says "cost," which is necessary to sustain competitive prices, but price is what the customer responds to) or to compete through providing some distinctive points of differentiation that justify higher prices, and (b) how broad a market target it will aim at (its competitive scope). choices. These two choices define the following four generic competitive strategies. which he argues cover the fundamental range of A fifth strategy alternative (best-cost provider) is added by some sources, although not by Porter, and is included below: 1. Overall Price (Cost) Leadership: appealing to a broad cross-section of the market by providing products or services at the lowest price. This requires being the overall low-cost provider of the products or services (e.g., Costco, among retail stores, and Hyundai, among automobile manufacturers). Implementing this strategy successfully requires continual, exceptional efforts to reduce costs --
offering differentiating features that make customers willing to pay premium prices, e.g., superior technology, quality, prestige, special features, service, convenience (examples are Nordstrom and Lexus). Success with this type of strategy requires differentiation features that are hard or expensive for competitors to duplicate. Sustainable differentiation usually comes from advantages in core competencies, unique company resources or capabilities, and superior management of value chain activities. Some conditions that tend to favor differentiation strategies are: * There are multiple ways to differentiate the product/service that buyers think have substantial value * Buyers have different needs or uses of the product/service * Product innovations and technological change are rapid and competition emphasizes the latest product features * Not many rivals are following a similar differentiation strategy 3. Price (Cost) Focus: a market niche strategy, concentrating on a narrow
customer segment and competing with lowest prices, which, again, requires
strategic alliances, which have been discussed to some extent under Corporate Level growth strategies. These involve an agreement or alliance between two or more businesses formed to achieve strategically significant objectives that are mutually beneficial. Some are very short-term; others are longer-term and may be the first stage of an eventual merger between the companies. Some of the reasons for strategic alliances are to: obtain/share technology, share manufacturing capabilities and facilities, share access to specific markets, reduce financial/political/market risks, and achieve other competitive advantages
strategic alliances, ranging from: (a) mutual service consortiums (e.g., similar companies in similar industries pool their resources to develop something that is too expensive alone), (b) licensing arrangements, (c) joint ventures (an independent business entity formed by two or more companies to accomplish certain things, with allocated ownership, operational responsibilities, and financial risks and rewards), (d) value-chain partnerships (e.g., just-in-time supplier relationships, and out-sourcing of major value-chain functions). FUNCTIONAL STRATEGIES Functional strategies are relatively short-term activities that each functional area within a company will carry out to implement the broader, longer-term corporate level and business level strategies. company strategies. Three basic characteristics distinguish functional strategies from corporate level and business level strategies: shorter time horizon, greater specificity, and primary involvement of operating managers. A few examples follow of functional strategy topics for the major functional areas of marketing, finance, production/operations, research and development, and human resources management. Each area needs to deal with sourcing strategy, i.e., what should be done in-house and what should be outsourced? Each functional area has a number of strategy choices that interact with and must be consistent with the overall
MOBILINK
Introduction:
Orascom Telecom Holding S.A.E. ("Orascom Telecom") or ("OTH") was established in 1998 and has grown to become a major player in the telecommunication market in the world. OTH is considered among the largest and most diversified network operator in the Middle East, Africa and Pakistan. About Mobilink: Mobilink GSM (PMCL), a subsidiary of Orascom Telecom, is the market leader in providing state-of-the-art communications solutions to over 3.4 million people in Pakistan. They can proudly boast of being the first cellular service provider in Pakistan to operate on a 100% digital GSM technology. Mobilink GSM started operations in the year 1994, from then on it has shown enormous growth. Mobilink Coverage: Mobilink provides the most extensive network coverage footprint across Pakistan through an integrated technology infrastructure in more than 5,000 cities, towns, villages, and countless remote destinations, including International Roaming in 110 countries through 300 partner operators. Market Share:
In April 2001, when the OTH (Orascom Telecom Holding) took over management control of the company, the market share was only 40% but as of March, 2006; Mobilink served over 14 million subscribers, representing a market share of approximately 56.2% of total mobile subscribers in Pakistan. However, during the past two years the market share of Mobilink has gone down to 41% (As of March, 2007). Competition Status: Competition faced by the company is from al the operators in telecom that includes all the face SGM (Global System of mobile) operators, CDMA operators and LDI operators and land line operators. All these telecom Resource companies Human
Departments are in constant need of new employees. So there is stiff competition in the telecom market for Mobilink. Comparison with competitors in the market is shown as in the table.
Although the number of subscribers has increased over the years, the same cannot be said about the market share of Mobilink, which has gradually decreased over the year. However, although the market shares of Mobilink might have decreased over the years, but it still remains the market leader in the mobile sector. The market shares of Mobilink are as follows: Table 2: Market Shares of Mobilink from 2005-20072
1 2
ACHIEVEMENTS: ISO 9002 Quality Management System Certification for Billing, Engineering Departments and CS Contact Center Biggest Call Center in Pakistan, which is there to assist the customers 24 hours. Bilateral-roaming agreements signed with 100 countries around the world to have true roaming service operational in 151 operators of the world. Mobilink GSM Short Message Service Center allows Vehicle Tracking and Fleet Management services that are being provided by Tracker (Pvt.) Ltd. under the brand name of C-Track, a company licensed by Pakistan Telecom authority (PTA). Tracker currently operates from Karachi but can provide these facilities at all those locations where GSM coverage is available Mobilink's Values:
Customers are at the heart of our success. They have placed their trust and confidence in us. In return, we strive to anticipate their needs and deliver service, quality and value beyond their expectations. Business Excellence:
We strive for excellence in all that we do. We aspire to the highest standards and raise the bar for ourselves everyday. This commitment to delivering world-class quality translates into unmatched service and value for our customers and all stakeholders. Trust & Integrity
At Mobilink, we take pride in practicing the highest ethical standards in an open and honest environment, and by honoring our commitments. We take personal responsibility for our actions, and treat everyone fairly, and with trust and respect. Respect for People:
Our relationships drive our business. We respect and esteem our employees and all stakeholders. We believe in teamwork, empowerment and honor. Corporate Social Responsibility:
As the market leader, we recognize and fulfill our responsibility towards our country and the environment we operate in. We contribute to worthy causes and are dedicated to the development and progress of the society
STRATEGY FORMULATION
VISION
To be the leading Telecommunication Services Provider in Pakistan by offering innovative Communication solutions for our Customers while exceeding Shareholder value & Employee Expectations Mission and Objectives: Total Customer Satisfaction:
Customers are at the heart of our success. They have placed their trust and confidence in us. In return, we strive to anticipate their needs and deliver service, quality and value beyond their expectations. Business Excellence:
We strive for excellence in all that we do. We aspire to the highest standards and raise the bar for ourselves everyday. This commitment to delivering world-class quality translates into unmatched service and value for our customers and all stakeholders. Trust & Integrity:
At Mobilink, we take pride in practicing the highest ethical standards in an open and honest environment, and by honoring our commitments. We take personal responsibility for our actions, and treat everyone fairly, and with trust and respect. Respect for People:
Our relationships drive our business. We respect and esteem our employees and all stakeholders. We believe in teamwork, empowerment and honor. Corporate Social Responsibility
As the market leader, we recognize and fulfill our responsibility towards our
STRATEGIES AT MOBILINK
The findings mentioned reflect three types of major strategies employed by the organization at various levels. Namely they are: 1). Corporate level strategy 2). Business level strategy 3). Functional level strategy Corporate Level Strategy: As their corporate level strategy, they have entered into partnerships with different organizations. On the basis of findings, it appears that for the past few years (1999-2003), Mobilink had a focus on internal growth. All this is evident from the fact that since the deregulation of the mobile service industry of Pakistan, Mobilink has undertaken various efforts to ensure that it changes its stance from concentrating on its existing market to growing its market presence. The main reason for this change is mainly to keep up with the competition and to retain and increase its market share. This transition is obvious in Mobilinks repositioning itself and hitting the market with a new face with the catchphrase Reshaping communication With the threat of new entrants into the industry after the deregulation, Mobilinks strategy took a new turn. To keep abreast with the company, Mobilink took the following steps during the last 2 years: Expanded its international roaming Service scope in 14 more countries including Vietnam, Germany, Bangladesh, Ukraine, Iran, Venezuela, Nigeria, South Africa, Ethiopia, Uganda, Sudan, Bahrain, Caribbean Islands. Bilateral roaming agreements signed with 100 countries around the world to have true roaming service operational in 151 operators of the world. PROMOTIONAL CAMPAIGNS LAUNCHED JAZZ BUNDLE OFFERS: These bundles include a handset, a JAZZ connection and airtime worth Rs. 200
SWOT Analysis
Strengths:
Strong Brand Image Potential customers Highest Coverage First to introduce IR M2 Motorway coverage Biletral roaming with 50 operators Motorola Time port Tri band (TT) handsets Tracking and Fleet (VTF) Management services.
Weakness:
Currently providing not good quality service because of changing their Network from 900 MHz to 1800 MHz. Fewer advertisements now days. Most expensive telecom company both in call rates and SMS Weak customer retention Engineering department of Mobilink is not well competent
Opportunities
Can expand its networks in the uncovered areas Services in the future can be Telephone Wireless Calling Cards Can target maximum corporate Customers Lower prices
Threats:
New market players Competitors can offer packages for corporate customers in better way. Wireless local loop service providers Brand names survival. Corporate customers can shift to other companies Employee retention Loss of loyal customer
Conclusion
The mobile industry has seen phenomenal growth over the year, showing growth rate of more than 80% in 2007. This growth is not new to the industry, as previous years have shown substantial growth as well. This growth is a direct result of the increased competition in the mobile industry, resulting into better services at reduced rate. Furthermore, this has favorably affected our economy as a whole, generating revenues for the government, through direct and indirect taxation and creating employment opportunities for the people. The mobile industry of Pakistan is considered by a majority of prospective employees as the best industry for a job.
Recommendation
The problem that I identified was the lack of job rotation within department and not enacting on job advancement rules and procedures. Some of the recommendations to this problem are as follows: Firstly I would recommend that the department officially start job rotation. The major benefit of which would include even more motivated employees, with enhanced skills. One of the major arguments against job rotation is that without it, employees will perform only one task and will become specialized in that particular job. Furthermore, the argument also suggests, that with job rotation, only general information is imparted to employees, not essentially helpful in doing complex tasks. However, in todays business environment, multitasking is becoming more
Selected References:
Mobilink (mobilinkgsm.com) Pakistan Telecommunication Authority (pta.gov.pk) Porter, Michael E. (1980). Competitive Strategy: Techniques for analyzing industries and competitors. New York: Free Press.
Porter, Michael E. (1985). Competitive advantage: Creating and sustaining superior performance. New York: Free Press.