Strategic Analysis

1. SWOT ANALYSIS

NO 1

2 3

STRENGHTS TM as a largest communication company in Malaysia. Telekom Malaysia Berhad (TM), Malaysias leading next generation communications provider and broadband champion TM have strong brand preference such as streamyx and HSBB TM as a GLC company which have collaboration with government in launching HSBB product. Total borrowing down to 17.6% in year 2010. Government inject capital to make TM can launch HSBB project (Unifi) in order to achieve government mission to make broadband connectivity accessible to all. Operating revenue up from 0.77% in year 2009 to 2.13% in 2010. The Increase in revenue was achieved mainly due to strong growth in broadband as well as mitigated decline in voice. Debt ratio decrease from 34% in 2009 to 27% in 2010. TM have a healthy balance sheet with low debt and high cash position and enjoy a healthy International credit rating of A-. Product offer by TM at affordable price and variety value added. Large marketing promotion trough advertisement and sponsorship. For example Sea game 2011 as a sponsorship and football advertisement in television.

WEAKNESESS TM has poor quality of customer services telephone line. Line 100 always gets busy and hard for customer to penetrating the line.

Inventory turnover fall from 34% in 2009 to 27% in 2010 Maintenance cost up to 4.47% in 2009 to 4.63% in 2010 The staff cost has rose by 9.3% in 2010. This is because TM has sent their employees for training to sharpen their skill in communicate with their customer and gives allowances to their employees. TM has poor technician skill which is less expertise. Some technician skill has no experiences and the repairing only in a short term. Sometime installation procedures take too long. Its take more than 3 days to complete the procedures.

Instability of internet services. Sometimes internet services especially broadband always have problem in instability with line. Finance cost has risen to 2.5% in 2010. This is because TM have make loan to launch new product and do marketing in order to achieve their mission.

NO

OPPOTUNITIES

THREATS

3 4

Development of HSBB. The Government has announced that TM will participate in the Public-Private Partnership (PPP) arrangement to roll out HSBB infrastructure and services. TM has increasing demand for internet communication to perform electronic business, build social network and expand business. The launching project scheme note Book 1 Malaysia. ETP (Economic transformation Program Opportunities). TM has collaboration with government under this program. Government has an initiative to do improvement in the Communication Content and Infrastructure sector. Government launched the 1NS*Net and 1NS Wireless City projects in Seremban, making Negeri Sembilan the first state to provide such comprehensive wireless broadband services. The product and services produce by TM not variety for the telecommunication competitors. Rivals have limitation territory. They only focus on rural areas.

TM has many competitors that offer telephone and internet services SUCH AS Maxis, Celcom and Digi.

The supplier of TM equipment takes advantage to increase price of the equipment. Global economic slowdown. Natural disaster can affect TM line to be worst. For example if there is an earth quake line will be worst and need time to recover.

The financial risks arising from the Groups financial assets and liabilities are comprises of foreign exchange risk, price risk and interest rate risk, credit risk and liquidity risk.

Rival firm that copy ideas, innovations and patented products. Many cases of stolen cable in rural areas where incidents of cable theft happen frequently.

2. Space Matrix

Financial Position (FP) Strong profits and net cash flow from operations from year 2009 to 2010. The dividend policy of 700 million or 90% of normalized profit after tax in year 2010. Operating revenue up from 0.77% in 2009 to 2.13% in 2010. 18.0 Industry Revenue (IP) Malaysia telecommunication industry is expected to reach US$6.7b (RM22.85b) in 2010, a growth of 4.4% over 2009. The telecommunication industry competition does not hinder profit potential. All key telecommunication players in the industry are stable financially Malaysia telecommunication operators optimized resources utilization by signing MOU to share infrastructure.

Ratings 7.0

5.0

6.0

Ratings 6.0

5.0

4.0 4.0 19.0

Stability Position (SP) Continuous technology advancement in wired and wireless Maintain in the ranking even increasing competitive pressure facing global telecommunication. TM maintains its leading role with 55% market share from 3G, HSDPA, WIMAX players. TM currently holds a 95% market share in the fixed broadband market.

Ratings -3.0 -3.0

-2.0

-2.0

-10.0

Competitive Position (CP) Competitors come with variety good product and service quality at different price bases on the unique preference of customer.

Ratings -3.0

High customer loyalty and reputation. Customers are mainly segregated according to business segments and diverse according to customer base.

-2.0 -3.0

-8.0

Conclusion FP average SP average 18.0/3 = 6.00

-10.0/4 = -2.5 4.5 Directional Vector Coordinates X -axis.

IP average CP average

19.0/4 = 4.75 -8.0/3 = -2.67 2.08 Directional Vector Coordinates Y axis.

FP Aggressive Profiles (4.5, 2.08)

CP

IP

This shows that, TM is under aggressive profiles which is have financial strong SP firm that has achieved major competitive advantage in a growing and stable industry. When a firms directional vector is located in the aggressive quadrant (upper-right quadrant) of the SPACE Matrix, an organization is in an excellent position to use its internal strength to take advantage of external opportunities, can manage and overcome internal weaknesses and ovoid external threats.

3. The BCG Matrix.

Relative market share position in the industry

High 1.0 +20 0

Medium 0.50

Low 0. 0

Stars II

39% Question marks I

Cash Cows -20 III

Dogs IV

TM Company is under Question Marks. The Divisions in quadrant I have a low relative market share position yet they compare in a high-growth industry. Generally these firm cash needs are high and their cash generation is low. These businesses are called question marks because the organization must decide whether to strengthen them by pursuing an intensive strategy. The strategy should occur under this market share position in the industry are market penetration, market development, or product development or to sell them.

4. Strategy Alternatives I. Expand coverage to the rural areas. Market Development

TM subject to increasing telecommunications and infrastructure penetration to the rural area where install fixed wireless sets to provide basic telecommunication for communities.

II.

Monopoly project launching by government.Horizontal Integration As a trusted partner with government, TM cans monopoly the project launching by the government. HSBB product is an example of the corporation with TM and Government.

III.

Add more variety value added packages.Related Diversification The product and service with the competitors are likely the same. As an alternative to improve the revenue, TM can variety their value added packages such as IPTV, video-on-demand and online gaming, thus growing their business and commercial opportunities.

IV.

Improvement in quality of customer services. TM has received complaint about poor customer services. As a result, TM has focuses on three main areas that is accessibility of the contact centre, resolution time for customers and the customer experience while interacting with agents. Other than that, new skill sets and expertise are required such as soft skill, technician skill, and send the staff to the training programs.

V.

Create forward contract with supplier. Total IT spends for telecommunication industry in 2010 grew 6.0%, driven mainly by purchases of hardware and packaged software. As a result, the supplier of TM equipment takes advantage to increase price of the equipment. TM are guided in the interactions with suppliers by the Code of Business Ethics and Procurement Rules and Guidelines, which ensure with integrity in their dealings so as to protect the Company and its reputation.