Strategy Analysis of GP

Strategy Analysis of GPDecember 25, 2013Executive Summary

The Telecom industry is nowadays not only by means of millions, but by means of billions. Actors in this industry are seeking the most profitable markets throughout the world. Grameenphone pioneered the initiative of mobile to mobile telephony in Bangladesh and became the first and only operator to cover 98% of the countrys people with network. Grameenphone has little ability to trends and events of general environment. So to understand the external environment, GP must have to aware enough of his surroundings forces. Porters five forces model ensures us that the Telecom industry in Bangladesh is an attractive industry for good profit potential. In 2007, Bangladesh Telecommunication Regulatory Commission (BTRC) declared that they are not going to issue new license for mobile operator. The elements of internal environments in GP are resources, capabilities, core competencies, SWOT analysis, competitive advantage, strategic competitiveness. Grameenphone needs to be aware of its strengths and of the opportunities for exploiting its competitive advantage. Grameenphone needs to be aware of current weaknesses and threats in order to improve and save its position. Grameenphone has a clear advantage over the competitors. Important thing is that, Grameenphone implemented its strategy in such a way which gives them the superiority in the market. For Grameen Phone, the core competency are excellent in network, branding and market position, innovative products and services, better customer service and the top management. Users are mostly satisfied with the initial price of Grameenphone connections and handsets. Grameenphone subscribers are very happy with the network that GP provides. Now, exploring 3G network among the subscribers of GP will make the difference between GP and other operators in the industry. When its matter to design the promotion, the company should give the proper information in the promotions that a consumer can easily understand. Besides the promotion, the company should also be consider the quality and price of the service to satisfy the consumers. To sustain in the market for long run regular monitoring and thirst for improving is required for Grameenphone.

IntroductionTelecommunication is one of the major parts of life. Nowadays, the phone is not only used for making calls, among many other functions its used for communicating through text-messages and so called multi-media messages, as well as to connect us to the internet. The opportunities that lie in the telecom market seem endless and the growing demand for mobile telephony systems is creating a world-wide market. The telecom industry is nowadays not only by means of millions, but by means of billions. Actors in this industry are seeking the most profitable markets throughout the world. On March 10, 1876, Alexander Graham Bell (1847-1922) along with his assistant Thomas Watson invented the device called Telephone. On 24th February 1979, Telegraph and Telephone Board was converted to Bangladesh Telegraph and Telephone Board (BTTB) as a Government Board. When Government adopted the Telecommunication Act 2001, Bangladesh Telecommunication Regulatory Commission (BTRC) started its journey in 31st January, 2002. Government also formed high powered ICT task force and adopted ICT policy. The customers of the telecom industry in Bangladesh pretty much include everyone in the country. A large segment of the countrys population, now utilize subscription to more than one operator. Teletalk commenced its 3G mobile services in Bangladesh on 14 October, 2012. On 8 September 2013, Grameenphone, the largest mobile operator in the country, acquired 10 MHz in the 2,100 band for USD 210 million. Robi, Banglalink and Airtel each acquired 5 MHz for USD 105 million. Teletalk, the sole state-run mobile operator, will be awarded 10 MHz spectrum for USD 210 million. The BTRC sold in total 35 MHz of spectrum for USD 735 million.Directly 82,460 jobs offered by telecommunication sector as of March 2013 (BTRC) and overall about 111,700 people engaged with telecommunication industry in Bangladesh. Call rate in Bangladesh is one of the lowest in the world. Most of the operators offered less than 1:00 taka for one minutes voice call and take a minimum charge for the new connection. Major Players in the Telecom IndustryMajor Operators in Fixed Line Telecommunication(1) M/s. Bangladesh Telegraph & Telephone Board (2) M/s. Bashundhara Communication & Networks Limited (3) M/s. Ranks Telecom Limited (4) M/s. One Tel Communication Limited, etc.Major Operators in Cellular Mobile Telecommunication(1) TeleTalk (2) Grameen Phone (3) Robi (4) CityCell (5) Banglalink (6) AirtelAs mobile operators also provide internet service, ISPs & Wimax service providers like Qubee & Banglalion also fall in this category.Market ShareOperatorsActive Subscribers at 2013 (BTRC 2013)

Grameen Phone Ltd. (GP)46.042

Banglalink Digital Communications Limited28.101

Robi Axiata Limited (Robi)24.829

Airtel Bangladesh Limited (Airtel)8.033

Pacific Bangladesh Telecom Limited (Citycell)1.330

Teletalk Bangladesh Ltd. (Teletalk)2.340

Total110.675

Grameen Phone Ltd. (GP): An OverviewStarting its operations on March 26, 1997, the Independence Day of Bangladesh, Grameenphone has come a long way. Grameenphone pioneered the initiative of mobile to mobile telephony and became the first and only operator to cover 98% of the countrys people with network.Since its inception Grameenphone has built the largest cellular network in the country with over 8500 base stations. Presently, nearly 99 percent of the country's population is within the coverage area of the Grameenphone network. Grameenphone has always been a pioneer in introducing new products and services in the local telecom market. GP was the first company to introduce GSM technology in Bangladesh when it launched its services in March 1997.Grameenphone was also the first telecommunication operator in Bangladesh to introduce the pre-paid service in September 1999. It established the first 24-hour Call Center, introduced value-added services such as VMS, SMS, fax and data transmission services, international roaming service, WAP, SMS-based push-pull services, EDGE, personal ring back tone and many other products and services. The entire Grameenphone network is also EDGE/GPRS enabled, allowing access to high-speed Internet and data services from anywhere within the coverage area. There are currently 7 million EDGE/GPRS users in the Grameenphone network. In October 2013 the company launched 3G services commercially.Today, Grameenphone is the leading and largest telecommunications service provider in Bangladesh with more than 46.663 million subscribers as of October 2013.In Bangladesh the major milestones of Grameen Phone Limited are given below: Grameenphone has so far invested more than BDT 23,600 crore to build the network infrastructure. Grameenphone is one of the largest taxpayers in the country, having contributed more than BDT 36,700 crore in direct and indirect taxes to the Government Exchequer over the years. There are now more than 1600 GP Service Desks across the country covering nearly all upazilas of all districts and 94 Grameenphone Centers in all the divisional cities. Grameenphone has about 5000 full and temporary employees. 300,000 people are directly dependent on Grameenphone for their livelihood, working for the Grameenphone dealers, retailers, scratch card outlets, suppliers, vendors, contractors and others. (source: http://www.grameenphone.com/about-us)Objective of the ReportIn achieving business excellence strategy analysis is essential. A strategy analysis of a company helps us to know how strategy, competitive moves and business approaches decides the success of an organization. So among all the options of different industries to select for the Strategy Analysis, we have selected the Grameenphone Bangladesh Limited from Telecom Industry.

Outline of the Report In the following part of the report, we tried to analyze strategies of the Grameen Phone Bangladesh Limited. For analyzing purpose, we divided our report into several parts which make this report more apparent to understand.

The Outlines are:1. Introduction1. External Analysis1. Internal Analysis1. Core Competencies1. SWOT Analysis1. Corporate Strategies1. Implementation Strategies1. CSR Policy1. Recommendations and Future ChallengesReference

External Environment Analysis

A companys external environment includes all relevant factors & influences outside the companys boundaries; by relevant, means important enough to have a bearing on the decisions the company ultimately makes about its direction, objectives, strategy, & business model (Thompson/Strickland/Gamble;2010).External environment is very important for any firm. The microenvironment forces are Social, Legal, Economical, Political and technological. These forces are continually in a state of change and the firm has no control over its external environment. A firm has little ability to trends and events of general environment. So to understand the external environment, A Company must have to aware enough of his surroundings forces.

Macro Environmental AnalysisThe Macro Environment analysis is the first step of strategic analysis. The macro environment examines the general business climate as it relates to the organization, but has nothing to do with the organization itself. The Six segment of Macro environment is described belowDemographic EnvironmentThe macro demographic analysis identifies trends in population growth at relevant ages for the industry in a particular country. Demographics are the root of many changes in society. Demographics include elements such as the aging population, rising or declining affluence, changes in ethnic composition, geographic distribution of the population, and disparities in income level (G. G. Dess & Lumpkin, 2003).

The population of Bangladesh is about 149,772,364 with an annual growth rate of 1.37%. The fertility rate fells from 6.6 births per women in 1975 to 2.4 in 2009. Bangladesh is largely ethnically homogeneous and its name derives from the Bengali ethno linguistic group which comprises 98% of the total population (Wikipedia 2012c). About 88% Bangladeshis are Muslims and the rest are Hindus & other religion. Average life expectancy is 67.2 years and 61.4% population belongs to 15-64 years range which is the potential target customers for mobile operators. The mobile telecom sector is the fastest growing sector of the country. The literacy rate of the country is 67% that indicates the country peoples have the academic depth to adopt new products and services but they are highly price sensitive and prefer low prices for their economic condition (Salam 2012). This study suggest that the demographic trends are continually diversifying, indicating why it is becoming ever so important to target specific customer groups, determine their needs and then satisfy them (Murray-1998).

Socio-cultural EnvironmentSocio-cultural environment is a collection of social factors affecting a business and includes social traditions, values and beliefs, level of literacy and education, the ethical standards and state of society, the extent of social stratification, conflict and cohesiveness, and so forth.[http://www.publishyourarticles.net/knowledge-hub/business-studies/what-is-socio-cultural-environment.html accessed on 9th April,2013] Social factors include the demographic and cultural aspects of the external macro environment. These factors affect customer needs and the size of potential markets. Social factors include health consciousness, population growth rate, age distribution, career attitudes, and emphasis on safety. The Grameenphone has definitely made an impact on the job market of the country, taking in thousands of employees and creating new career opportunities every day. The overuse of mobile phones has often triggered arguments regarding safety, but the Bangladesh market does not regard it as a threat.

Political and Legal EnvironmentPolitical factors include government regulations and legal issues and define both formal and informal rules under which the firm must operate. These include tax policy, employment laws, environmental regulations, trade restrictions and tariffs, and political stability. Political environment in Bangladesh is always unstable. Frequent changes of government and policymakers' reluctance or incapability to implement or design progress oriented policies is a major drawback for Grameenphone that is within the industry which constantly changing in terms of technology.

Economic EnvironmentEconomic forces can have a profound influence on organizational behavior and performance. Economic growth, interest rates, the availability of credit, inflation rates, foreign exchange rates, and foreign trade balances are among the most critical economic factors. Economic growth can also have a large impact on consumer demand for products and services. Consequently, organizations should consider forecasts of economic growth in determining when to make critical resource allocation decisions such as plant expansions. Grameenphone imported a large proportion of raw materials for enhancing network and capital machineries for expanding the capabilities, changes in currency exchange rates also influence the result of the Companys operations.

Technological EnvironmentDevelopments in technology lead to new products and services and improve how they are produced and delivered to the end user. Innovations can create entirely new industries and alter the boundaries of existing industries. (Thompson/Strickland/Gamble; 2010)Grameenphone Global System for Mobile or GSM technology is the most widely accepted digital system in the world, currently used by over 750 million people in 150 countries. GSM brings the most advanced development in cellular technology at a reasonable cost by spurring severe competition among manufactures and driving down the cost of equipment. Thus consumers get the best for the least. However, recent drives to automate day to day activities have been taken by a majority of telecom companies, most notable by Grameenphone with their new corporate headquarters that reportedly runs on its own power supply and is fully automated (including doors, lights etc.). While Bangladesh's policies and government processes hamper fast technological change, the telecom industry has in many ways influenced the both the public and private sector to invest and bring in new technology such as WiMax and submarine cable, although limitations have not allowed these technologies to flourish. Porters Five Forces ModelCompetitive forces are those factors that influence the competitive position of a company in an industry or market. Harvard Business Review published How Competitive Forces Shape Strategy by a young economist and associate professor, Michael E. Porter in 1979.It uses concepts developed in Industrial Organization (IO) economics to derive 5 forces that determine the competitive intensity and therefore attractiveness of a market. (http://hbr.org/2008/01/the-five-competitive-forces-that-shape-strategy/ar/1 Retrieved on 12th April, 2013)

The five forces that Porter identified shape each industry and each market. These forces determine the intensity of competition & hence the profitability & attractiveness of the industry. So the nature of the competition in the paint industry is discussed below by focusing on Porters five forces:Bargaining Power of BuyersIn Bangladesh there are six mobile operators. They offer almost same services. The switching costs between operators are very low. Offers from the mobile operators come very frequently. So the bargaining power of buyers is very high for Grameenphone.Bargaining Power of SupplierBargaining power of the suppliers is low in the market as there are a lot of telecom related suppliers available. More over some giant Swedish and Finish multinational companies have already established their business in the market. The bargaining power of supplier varies depending on the size of the suppliers and the strategic importance of them to the mobile operators. For Grameenphone this power is low.Threats of New Entrants:In Telecom industry government keeps a very close eye and not gives any new company come to the industry very easily. However, since licenses must be acquired from BTRC and BTRC reserves the right to issue licenses when and to whom they see fit, entry is relatively restricted at the moment on the government regulatory fronts. Rivalry Among competitors:Bangladesh Telecom industry is growing very fast. The six big companies are trying to grab as much market share as they can through network coverage, innovative products and quality service at low price. So we can sense rivalry among competitors is high for Grameenphone in Bangladesh.

Threats of Substitute Products:Threats of substitute are weak for Grameenphone. It is safe to say that no direct, competitive substitutes exist at the present moment that can pose a threat to the industry. The availability of substitutes product is very low.

Internal AnalysisAn internal environmental analysis is an extensive review of all aspects of a company's operations, internal guidance and mission. Aspects of operations typically reviewed are marketing strategy, production capacity, and the company's vision and leadership. All of these things are examined with a critical eye to uncover those aspects that may be problematic, yet go unnoticed in daily operations. Nonprofit organizations may also conduct a similar analysis.Company management typically initiates this internal analysis in an effort to identify areas of risk and opportunity. Top-level management conducts an inventory to assess strengths and weaknesses in the overall functioning of the organization. It is usually an exhaustive review with a goal of identifying and rectifying those internal factors that are limiting the company's growth. The internal environmental analysis is in contrast to an external analysis, which would be concerned with the macro business environment. The elements of internal environment in a organization are resources, capabilities, core competencies, SWOT analysis, competitive advantage, strategic competitiveness.Internal environment analysis is very much important to identify a firms flexibility, adaptive capability, strengths and weaknesses to exploit the opportunities and neutralize the threats.Core competenciesCore competencies are those capabilities that are critical to a business achieving competitive advantage. A competence becomes a core competence when the well-performed activity is central to a companys competitiveness and profitability. A core competence gives a company a potentially valuable competitive capability and represents a definite competitive asset.For a firm to gain a competitive advantage, it must have superior core competencies that are relevant in the marketplace (Hanson, Dowling, Hitt, Ireland, &Hoskisson, 2008). Core competencies are resources and capabilities that the firm utilizes in an exceptional manner in comparison to its competitors to gain a competitive advantage. (Hanson, Dowling, Hitt, Ireland, &Hoskisson, 2008) .For Grameen Phone we can clearly identify the following important core competencies- which make the firm a leader in its performing industry:.

Excellent in NetworkNetwork has always been a strong point for GP and seen as the best network by the mobile phone users in Bangladesh. To retain this position GP has updated its entire network with future proof technology (Grameenphone h). The modernized network is ready for facilitating 3G technology and broadband services. It has started 3G services with Dhaka. Grameenphone has so far invested more than BDT 23,600 crore to build the network infrastructure.

Branding and Market PositionsGP has positioned in Bangladesh with Go Beyond slogan, creating a differentiated image of the quality and reach of its network (Grameenphone h). It is the largest mobile telecom operator in Bangladesh in terms of revenue, coverage and subscriber base. Today, Grameenphone is the leading and largest telecommunications service provider in Bangladesh with more than 46.663 million subscribers as of October 2013. This brand reputation is valuable, as it provides meaningful differentiation to its competitors, and has directly contributed to higher levels of customer satisfaction.Innovative Products and ServicesInnovation in products and services is one of the core competencies of GP. In the products and services side, the company introduced My Zone, first of its kind in Bangladesh, which offers discount on call tariff depending on customers location (Grameenphone h). A number of products, diversified promotional tariff offerings and innovative Value-added Service (VAS) were launched during the year 2011, e.g. dynamic pricing, allocation based discount offer in tariff, Bangla contents in low cost handsets Grameenphone C200, modified prepaid price plans for Apon & Bondhu. In 2011, GP has partnered with Southeast Bank and Premier Bank to launch foreign remittance service. This will help the migrant workers to send money to their family in a secured and efficient way. Under the MobiCash platform, the Company has arranged several government approved M-lottery, which enabled the customers to buy lottery tickets through their mobile phones. Other innovations include Healthline, Studyline, Mobicash, Billpay, Cellbazaar etc. Grameen phone is the first in privet mobile operator which introduced 3G in Bangladesh. In October 2013 the company launched 3G services commercially.Better Customer ServiceGP always strives to provide quality services to its valued subscribers. Grameenphone established a Customer Experience Lab, which is helping the company to gain valuable customer insight about its products and services (Grameenphone h). The corporate website of the company has been revamped with many new tools and applications to make life easy for its customers. Bangla versions of the website along with WAP version were enabeled the customers to avail many services online. versions of the website has been the eCare system, which enabled the subscribers round the year through various customer touch points such as 93 Grameenphone Centers (GPC) a flagship sales and service point under one roof, especially designed to cater customers need 365 days a year. GP has expanded its distribution footprint and is serving the customers with around 342,000 retail points with increased focus in the rural markets.Top ManagementGP has a strong professional management tram which is the best in the industry and highly valued by all the stakeholders. The top management is well experienced from international mobile telecom industry as well as from multinational corporation (MNCs) and, is a core competency of the company.SWOTSWOT analysis (alternatively SWOT Matrix) is a structured planning method used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business venture. A SWOT analysis can be carried out for a product, place, industry or person. It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favorable and unfavorable to achieving that objective.

The SWOT analysis of GP is given below:Strengths1. Good Ownership Structure: Grameenphone has the finest ownership structure in the telecommunication industry in Bangladesh.2. Market Leader: Grameenphone is the first organization in Bangladesh, which has reached the general people.3. Network Availability: Grameenphone has the widest network coverage and a large number of BTS station (Tower) all over Bangladesh.4. Brand: Name of Grameen Image: Grameen Bank is well known all over the country because of its appreciable activities in financial sector for poor people in Bangladesh. So, when the name Grameen has been added with this telephone company, the organization gets a huge exposure due to this Grameen image.5. Financial Soundness: Because of effective strategic planning, Grameenphone is able to earn a healthy amount of revenue, which gives them financial soundness.6. Skilled Human Resources: All the stuff, which are related to Grameenphone are skilled and effective in their own job responsibility.7. Effective Support Organization: Grameenphone has shared the idea from the employees of Bangladesh Railway and Grameen Bank, who are experienced and able to provide precious guidelines for the operation of Grameenphone.8. Easy Access to the Widest Rural Network: Through the help of Grameen Bank, this was easier to Grameenphone to reach the rural area of Bangladesh.9. High Ethical Standard: To ensure quality of service, Grameenphone is strict to follow its ethical standard (Amanullah).

Weaknesses1.Cultural Gap: In Grameenphone management, employees from different countries are existed, e.g. CEO is a Noregian, Chief Technical Officer is Indian and many more employees come from different countries. Thats why sometimes there may be lack of understanding due to cultural gap.2. Many Men Many Minds: Sometimes different ideas may create problem as because employees are used to with previous strategy.3. Complicated Pricing Structure: The pricing of its variety of products and their billing policies are different which also difficult for a user to understand.4. Incomplete Message through Promotional Activities: Most of the time the advertisements of Grameenphone have no clear appropriate messages.5. Problem Contained Offers: Recently almost all of the new offers of Grameenphone are having some technical problems. Either they are not working at all or part of the services of those offers is disabled.6. Lack of Harmony among SBUs: Intercommunication among various departments is little bit weak. The reason behind this, there is no exchange program for employees to work among various Strategic Business Units (SBUs) (Amanullah).

Opportunities1. Economic Growth of Bangladesh: The economic growth of the country will increase the expansion of telecommunication industry. From 1995 to 2006, there is a huge change in telecommunication sector.2. New and Better Interconnect Agreement: Grameenphone is going to have agreement with T&T to have better communication from land phone. The organization has agreements with other operators like Robi, Citycell, Banglalink to have better internal connectivity.3. Increasing Demand for Telecom Services: The market of telecommunication is expanding. So, this is easy for Grameenphone to achieve the major portion of expanded market because of its leading position.4. Increased Cross Boarder Communication: As international activities increased in the country, people need the connectivity not only within the country, but also outside of the country. So, the market for outside of the country is also expanding.5. Declining Prices for Handsets: Few years ago the people from low income group could not afford mobile phone services due to the high price of handsets. Now the price of handsets has decreased and the low income people want to get connected through mobile phone.6. New International Gateway: As BTTB has established new gateway to connect internationally, this is easy for mobile phone operators to provide services of ISD call and international roaming.7. Flexibility of Mobile Phone: Communication through mobile phone is popular; because, land phone connection between intercity is relatively costly. Mobile phone is also easier to carry and because of its lower cost and easy portability, people are getting more dependent on mobile phone than land phone. So, there is a chance to achieve more subscribers and more market share (Amanullah).Threats1. More Rigid Government Regulations: Government is becoming restricted for taking away currency from the country. So, foreign companies are threatened because they may have risk to back their investment to the country. The government also put restriction for work permit of foreign employees.2. Upgraded Technology Used by Competitors: New mobile phone operators like Banglalink, Airtel are establishing their channels with latest technology, whereas Grameen Phone is using the stations which are five years old. So, this is one of the disadvantages for Grameenphone.3. Political Instability: Political instability is another threat. With the change of Government, policies are also changed. So, this is difficult for any multinational organization to cope with new policies.4. Devaluation of Taka: As the investment occurs in foreign currency, thats why the devaluation of Taka decreases profit from financial point of view.5. Risky Position of Valuable Resources: The organization has a large number of BTS stations which are spread all over the country. Anyone can make damage to these BTSs and this is also difficult to arrange proper security for these stations.6. No Cooperation from Government Agency: BTTB does not want to provide better services to other operators, because, it wishes to remain competitive.

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