Strategic Analysis of the Current Status of Aktel Mobile
Disclaimer: This dissertation has been submitted by a student. This is not an example of the work written by our professional dissertation writers. You can view samples of our professional work here.
Any opinions, findings, conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of UK Essays.
“Strategic Analysis of The Current Status of AKTEL Mobile Regarding Marketing & HR Division”
According to the Industry Life Cycle, the operation of TMIB in Bangladesh, as it seems, is still in the growth stage. So the investment of TMIB in the prepaid section has been speculative since the last couple of years. This survey was conducted among the current customers of AKTEL, both pre-paid and post paid. About 10 years back there was only BTTB to offer telecommunication services to the market in Bangladesh. Although there was tremendous market demand, due to the government lack of initiative in this promising sector was not invested enough and the government deprived itself of lots of revenue, which it could have earned easily. In 1990 for the first time the government allowed the private sector to invest in the telecommunication sector especially in cellular, paging, trunk radio and rural telecom services. The early operators "skimmed the cream", like City Cell in cellular services, Sheba Telecom in rural telecom and Bangladesh Telecom Ltd. in Pager services for a long time. In 1996 the govt. provided licenses to 3 companies to operate GSM service in Bangladesh. These companies TM International (BD) Ltd. (TMIB), Grameen Phone (GP) & Sheba Telecom came in the market with a very competitive tariff structure and the market accepted them very eagerly.
Since then TM International (BD) Ltd. TMIB), a joint-venture company formed between Telecom Malaysia Berhad, holding 70% of the equity capital and 30% local shareholding by A. K. Khan & Co. Limited, branding it's services on the name of AKTEL in Bangladesh. It is a company incorporated in Bangladesh with the objective of offering the state of the art and modern telecommunications services to the People of Bangladesh at competitive price. Keeping this objective in mind, the management of TMIB has been trying to achieve continuous improvement in it's product offerings and services. To accelerate this process of continuous improvement and to
Know more about the expectations of the market, the need for a research on customers' perception towards its present products and services is obvious.
By analyzing the consumer perception towards the products and services of AKTEL's various Packages of TM International Bangladesh Limited is full of complexity. In the context of a developing country like Bangladesh, the need for marketing of products through consumer perception analysis provides a very important dimension for an organization to improve their services. The policies and practices in the matter of analyzing the behavior of customers, becomes an important factor in this research. And how the employees get aware to achieve the target of AKTEL is the main objective of this report.
Thus, the customer perception towards the various packages of AKTEL is very crucial because it's a must for the authority of TMIB to know about the customers' feedback of their current market activities and its effectiveness. By carrying out this survey the organization will get the opportunity to know the customer feedback as well as how they can modify their present marketing activities. In turn they will be able to formulate some guidelines for modifying the current market mix, and if necessary to make it more effective so that they can attract more customers.
1. AKTEL: An Organizational Profile
Overview of the Company
AKTEL is a mobile operator, which concentrates on offering GSM communication services for private and corporate customers. Their intention is to promote the wireless lifestyle-the complete mobile society. TMIB is in the GSM Telephony business. With the technological development in future, TMIB will adopt cost-effective and more effective technology to provide a state of the art and comprehensive service to its customers. TMIB's vision is to continuously monitor its customer's needs, wants and to plan accordingly. It will monitor the development of the technology and update itself to meet customer needs.
TM International (Bangladesh) Limited (TMIB), a joint venture company of Telekom Malaysia Sdn. Bhd., of Malaysia and A. K. Khan & Company Ltd. of Bangladesh has started its commercial operation in Dhaka, the capital city of Bangladesh as a GSM 900 cellular phone operator on 15th November, 1997. A tremendous success in Dhaka, TMIB has started its operations in Chittagong on March 26, 1998. TMIB uses the Global System for Mobile (GSM) communications as the digital cellular system, which is fully featured with services like Basic Telephony, Data and Value Added Services, (VAS). TMIB has an integrated and fully computerized Customer Care Billing System (CCBS) which supports virtually all subscriber-related functions. The Company AKTEL of the Telekom Malaysia Bangladesh, with a full title being: Mobil Telecommunications was founded as a joint company of the Telekom Malaysia Sdn. Berhad from Malaysia and the A. K. Khan & Co. of Dhaka, Bangladesh. It operates as a Limited Liability Company, where a founder and a majority shareholder, the TMIB- member of the Telecom Malaysia, owns 70% shares, while the minority shares of 30 % are being controlled by the A. K. Khan & Co. Bangladesh. The organization is headed by its Chief Executive designated as the Managing Director entrusted with overall responsibilities of business direction of the organization and leading dynamically towards the attainment of its Vision, Mission and Goal. In attaining the above mission, the MD is assisted by 4 general managers TMIB has established a strong and formidable sales channel, which consists of direct dealers and its own sales force. TMIB is the Digital Cellular Telephony Business. With a technological development in future, TMIB will adopt any cost effective and more efficient technology to provide state of the art and comprehensive service to its customers. TMIB's vision is to continuously monitor its customer's needs and to plan accordingly. It will monitor the development of technology and updated self to meet customer demand.
2. Mission Statement Of AKTEL
To be the most preferred GSM cellular provider in Bangladesh
To provide total customer satisfaction the company strives to become the most preferred GSM cellular service provider in Bangladesh. TMIB will achieve this through developing people, products, and services of the highest quality and meeting the needs of its customers, employees, shareholders, and the nation.
3. The Marketing Strategies of TMIB
TM always wants to achieve the desired sales growth and customer base. TM wants to encourage the existing customers to use more of their services. They launched a package called "AKTEL EID DOUBLE BONUS" which was one of their successful initiatives for obtaining potential customers.
Initially TM's target was to reach the top, but other mobile operators are also targeting to the grass roots level and thus increasing their customer base. TM wants to be the leader with good quality and designing products for the middle and lower middle class range too.
¨ Continuous improvement of quality
¨ Repositioning of slow moving products to different target markets
¨ Always branding AKTEL with all packages with a GSM service
¨ Necessary changes in tariff structure, and changes and terms and conditions.
¨ Penetration pricing in the face of competition
¨ Skimming policy possible
¨ Brochures with all necessary info
¨ Press ads
¨ TV commercials (in future)
¨ Make effective use of distribution
¨ Make product service delivery system more effective and less time consuming
¨ Wider distribution network to make service more accessible.
4. The Company in Bangladesh
Chain of Command
The organization is headed by its Chief Executive designated as the Managing Director entrusted with overall responsibilities of business direction of the organization and leading dynamically towards the attainment of its Vision, Mission and Goal. In attaining the above mission, the MD is assisted by 4 general managers TMIB has established a strong and formidable sales channel, which consists of direct dealers and its own sales force.
The way TMIB Defines Business
TMIB is the Digital Cellular Telephony Business. With a technological development in future, TMIB will adopt any cost effective and more efficient technology to provide state of the art and comprehensive service to its customers. TMIB's vision is to continuously monitor its customers needs and to plan accordingly. It will monitor the development of technology and updated self to meet customer demand.
Long-Term Vision of the Company:
AKTEL strongly believes that subscribers are their most valuable assets. They have a strong Customer Service Center. To always be with their customers the AKTEL "Help Line' is there. AKTEL has successfully migrated to a new switch with higher capacities in terms of accommodating higher customer base and as well as to let them use all the basic supplementary services under GSM technology. TMIB' expertise and experience are acknowledged throughout the industry. Demand is growing all the time, not simply for the services it already provides, but for greater and more diversified services and even higher quality performance. It's pace is fast, rewards are high and work is of constant challenge. They introduced the both-way national roaming all through their network coverage. The Prepaid services with enhanced features have been commercially commenced successfully and now they are taking some projects to accumulate more advanced technological features in their network. In terms of Network Quality, the company will ensure not only the equipment are of world class standard but more importantly its size or capacity is catered to the right dimensioning of customer base, in order not to face the problems of drop calls or congestion. All these are done through proper planning, control and schedule maintenance program. They maintain the benchmark for providing the quality services. They monitor these through generating regular reports and on site survey. If there are any weak signals or a call drops, the skilled engineers are providing services round the clock to resolve the problem instantly. The most important key resource factor in TMIB is its efficient human resource. Moreover, its decisions are based on facts from market research and coverage survey. Moreover, the above objectives can only be achieved through the right people. AKTEL has put its keen eyes in developing its employees through proper training, as they believe that the most important asset for TMIB is its staff members. So they are ensuring quality services by quality people. TMIB has the plan to give opportunity to every household in using cellular service in the country at the competitive price providing unparalleled quality service and customer care. In achieving this goal, they can't wait for more interconnection facilities with the fixed network. TMIB is planing to enforce their strong efforts to create their own independent network. They have already started the Dhaka-Chittagong AKTEL backbone. The future plan is to vigorously expand the network, which was called cell to cell expansion, covering almost all the regions of Bangladesh within the year 2005.
Global Mission of the Company:
AKTEL wants to provide its customers the best quality service in terms of:
- Trusted technology around the world
- Wide coverage with digital clarity
- Digital security with peace of mind
- Various choices of value-added features
- Better customer service-not just promised, but delivered
- Competitive rate and better billing
Objectives of the Company:
- Total commitment to the needs of customers
- To follow the highest ethical standards
- Continuous improvement of all work processes
- Permanent improvement of all the employees knowledge and skills
- Securing the quality of the service to match the quality of service offered by the world's most successful companies in the field
- Preserving the company's leading position in the national market of mobile Telecommunications.
5. Mission In Bangladesh
TMIB as a Venture
TMIB is a company incorporated in Bangladesh with the objective of offering the state-of-the art and modern telecommunications services to the people of Bangladesh at competitive prices. TMIB is a joint venture company formed between Telecom Malaysia Berhad and A.K Khan & Company Ltd.
The Business Slogan -"Clearly Ahead"
The whole is the sum of parts and when the best come together the results can be truly spectacular. TMIB brings AKTEL Mobile phone service, a digital cellular phone service, which will prepare better for life in the fast lane. AKTEL GSM always keeps so near even when so far. AKTEL GSM wants to provide the following in order to ensure that they can gain potential customers as well as market share:
- The technology trusted around the world
- Wide coverage with digital clarity
- Digital security with peace of mind
- Various choices of value added features
- Better customer care not just promised, but delivered
- Competitive rate and better billing.
6. The Marketing Area of TMIB
Advertisement and Promotion:
AKTEL GSM are trying to convert non users to mobile phone users stressing the benefit of GSM services, and with the service benefit of AKTEL that will make their life easier. To serve the market more accurately their target market will be further segmented based on psychographics and business sites. The strive to develop a better product will be a continuous process. Conducting of market research will be held every 3 months. They will use their import to develop new products based on the data they will get from survey. Thus the product will be designed to meet the customers need. AKTEL has a wide variety of promotional activities. The promotional mix includes T.V., radio, newspapers, magazines, flyers, brochures, etc. AKTEL has also put up billboards at certain strategic locations in order to attract customers as well as give their products and services a boost so that they can increase their customer base. AKTEL branding has been carried in order to bring about its brand awareness. They are trying to identify AKTEL as a unique product so that it can be differentiated from it's competitors. Billboards are there to attract attention and appeal to customers so that they are aware of AKTEL's products and services. Mostly billboards have been put on main roads and some major shopping centers around Dhaka city like Eastern Plaza, where mostly the younger generation hang out. This in turn would attract that segment of customers within a specific age group, i.e. teenagers and people in their early twenties, as this generation has the urge to communicate frequently and be up-to-date on recent events. Thus, by promoting their products and services through these various media, electronic as well as press advertisements, AKTEL can well be in the way of obtaining it's vision and so resulting in a higher subscriber base and in turn a higher potential market share. The marketing division distributes leaflets or brochures so those new customers can find out information about AKTEL's various packages and choose from among them.
The Promotional Activities of AKTEL:
- Cellular phone service:
TMIB brings customers the AKTEL mobile phone service. Fully digital cellular phone services that will prepare customers better in their day-to day activities, thus making their lives easier. AKTEL has been successful in bringing together the world leaders in various technologies, giving Bangladesh world class cellular phone service.
- Better Billing:
Always keeping customers so near even when they are so far. AKTEL has been successful in bringing together the world leaders in various technologies.
- Better Switching:
AKTEL cellular switching system provides the customers the state-of-the-art GSM technology, which will give customers the winning edge all the way.
- SIM-Card Identity Number:
With the AKTEL Cellular Phone service, customers will have more than just a number. Simply because the GSM lays emphasis on the subscriber identification module (SIM) card, a key component of the whole process. It is computer chip card, which is highly secured against fraud. A microchip embedded in the plastic card stores PIN (Personal Identification Number), code personal phone directory, and details of call made. As a result, the customers can use a SIM card on any GSM 900 phone. So, even if the customer's cellular phone is not handy, the customer borrows another one, insert their SIM card and it's business as usual. This electronic smart card also contains a unique PIN just as an ATM card does in order to prevent misuse as it can fall into wrong hands.
- Consistent and High Voice:
People who listen to music on CD are aware that digitized music may result in sharper and clearer audio quality. With GSM too, digitization of voices is done, therefore maintaining high quality.
It is almost impossible for anyone to tap or listen in on a conversation in the AKTEL cellular network. Digitization encodes speech and dynamic allocation of frequency makes it impossible for outsiders to enter a call. Incidentally, the technology that makes it possible for individual to talk better also makes it for anyone to intrude on their privacy audio quality. With GSM it is also possible for digitization of voice so that high quality is maintained.
- Exciting AKTEL Service:
AKTEL offers a very comprehensive range of value added services for those on the move. Each service is designed to help the customers in specific frequently encountered solutions. Services like these will surely revolutionize the way customers communicate.
- AKTEL Itemized Billing:
This service entitles the customers to a detailed bill with an accurate breakup of the call charges, including the date, duration and numbers of incoming and outgoing calls. This is extremely handy
in cases where the customers wish to keep track of expenses, or even to find out whether their card is being misused or not.
- International Roaming:
The AKTEL mobile service will provide the customer with contractibility and the freedom to make and receive telephone calls to those GSM networks all over the world that have roaming agreements with AKTEL. So whenever a customer is within the service areas of these GSM networks, they will still be able to keep in touch with friend and family around the world.
- Choice of Handset:
The AKTEL network has a chain of outlets where all the leading models makes accessories of GSM compatible mobile phones available. However, subscribers are free to procure their GSM cellular phones from any other source within the company or abroad provided these are duly paid and would connect to the AKTEL network.
The most important key source factor of TMIB is its efficient human resource. It is using the state-of-the-art GSM technology and continuously monitoring it's network traffic to ensure network quality. Moreover, its decisions are based on facts from market research and coverage survey. The company also monitors it's competitor's activities and is proactive in marketing decisions.
7. Summary of the Case
The author had a chance to work at the Human Resources Division of TMIB. As the division has played a vital role to achieve the company's goal, it is yet to develop its role. It has many projects on hand and yet it also has been monitoring various projects that have been implemented in the past. So the task was to delve deep into the present marketing scenario and conduct an in-depth analysis of the HR activities, i.e., their recruiting process, candidate selection, organize the interviews by preparing the evaluation sheet, compile each individuals file after joining the employees, updating the database after every recruitment. About 10 years back there was only BTTB to offer telecommunication services to the market in Bangladesh. Although there was tremendous market demand, due to lack of initiative on part of the government, this promising sector was not invested enough and deprived itself of lots of revenue, which it could've earned easily. In 1990, for the first time the government allowed the private sector to invest in the telecommunication sector especially in cellular, paging, trunk radio and rural telecom services. The early operators skimmed the cream, like Citycell in cellular services, Sheba Telecom in rural telecom and Bangladesh Telecom Ltd. in Pager services for a long time. In 1996 the government. provided licenses to 3 companies to operate GSM service in Bangladesh. These companies which are Telekom Malaysia International (BD) Ltd. (TMIB), Grameen Phone (GP) & Sheba Telecom came into the market with a very competitive tariff structure and the market accepted them very eagerly. Since then TMIB, a joint-venture company formed between Telecom Malaysia Berhad, holding 70% of the equity capital and 30% local shareholding by A. K. Khan & Co. Limited, began branding it's services in the name of AKTEL in Bangladesh. It is a company incorporated in Bangladesh with the object of offering the state-of-the-art and modern telecommunications services to the people of Bangladesh at competitive prices. Keeping this objective in mind, the management of TMIB has been trying to achieve continuous improvement in it's employee selection process and providing the best services. To accelerate this process of continuous improvement and to know more about the expectations of the market, the company needs to focus its internal resources along with the external. For a research on customers' perception towards it's present marketing mix it is obvious to take the best product (employees) for providing the best services towards the customers. Taking into account the customer perception of AKTEL's various package offers as well as the existing market scenario is full of complexity. In the context of a developing country like Bangladesh, where the need for marketing of products through customer perception provides a very important dimension, the policies and practices in the matter of analyzing the behavior of customers, is a relevant part of this research. Thus, the study on the present marketing activities of AKTEL products and services is very crucial because the company should be aware about the customers feedback of their current market mix in terms of it's effectiveness by which, they will get the opportunity to know how the customers' feel about their product and service offerings and the effectiveness of the present marketing mix. In turn TMIB will be able to formulate some guidelines for modifying the existing market mix, and if the need arises if try to make it more effective. It has already been mentioned that from the very beginning TMIB has been trying continuously to ensure the effectiveness of their marketing strategies and designing a much precise and concrete marketing mix. And for all these tasks the internal activities in HR division helps a lot to meet the external demand of the customers.
Objectives of the Study:
The broad objective of this study is to find out the employee perception about the effectiveness of AKTEL's various policies and strategies as well as their present marketing activities and promotional tools. In essence the objective of this report would be to:
- To find out the Employee's perceptions and preferences of the various AKTEL packages in terms of their respective features and benefits to achieve the customers goal..
- To see whether AKTEL's Prepaid and postpaid packages offer the benefits or feature that customers want.
- To find out if the customer care center offer efficient
- To see if the promotional activities of AKTEL are gaining customer awareness
- To see whether AKTEL's Prepaid packages are easily available and affordable
Methodology of the Study:
The methodology of the study was carried out using both primary as well as secondary information. There were some interviews taken from certain personnel in the marketing division as well as the customer acre center, which provided helpful information in regard to the report. There were some telephonic interviews conducted which was very time consuming. Apart from the interviews, various books, journal, brochures, newspaper and previous marketing reports also provided valuable information
Limitation of the study:
There was certain limitation for which this report had some obstacles. The data collected was based on the HR employees' interviews, which was little more time consuming. The report had to be prepared within the daily routine of office work, which resulted in the prolonging or the data collection. Sometimes the data was really confidential for the AKTEL employees to share with the Intern. Thus, the report had to be done in accordance with the daily work activities and of course was constraint.
Importance of the subject matter:
The importance of the report is reflected in the analysis and findings part. It is very crucial for the organization to know how effective they've been and what they should launch in the future in order to gain potential customer as well as market share. By conducting this report, it should be clear to the organization whether they are heading the right way and what tactics and strategies they should implement to ensure that their promotional tools are working properly and raising customer's awareness. By putting more emphasis on their marketing activities they should be able to come up with and implement strategies that are in alignment with their vision i.e. ‘'To be the most preferred GSM cellular provider in Bangladesh''
Legal Issues: Laws and Policies in Bangladesh
There are certain laws and policies that mobile operators have to follow. The government only granted permission to mobile companies to operate in the country. At present they are not allowing any more mobile operators. So the existing mobile companies have to act in accordance with government's rule and regulations.
Scope of the Research:
The scope of the research was limited to providing a general overview of the marketing division and their present activities, i.e. what kind of promotional tools they are using and what impact id had on the media and the customers. During this -month internship program the major task was to provide an insight into the present market mix and customer perception of AKTEL's products. Thus, the scope was limited to analyzing the present market strategies.
8. Situational/Problem Analysis:
Michael Porter has provided conceptual framework for industry analysis. He developed a five-factor model for industry analysis. The model identifies five key structural features that determine the strength of the competitive forces within an industry and hence industry profitability. Though it is often used by organizations for entering new markets, it can also be used to see the competitiveness in the current market. The five-factor model includes the following:
a) Bargaining Power of Buyer
b) Bargaining Power of Seller
d) Barriers to entry
e) Substitution effect
The following diagram illustrates how Porter's five forces affect the industry:
Porter's Five Forces: A Model for Industry Analysis.
The model of pure competition implies that risk-adjusted rates of return should be constant across firms and industries. However, numerous economic studies have affirmed that different industries can sustain different levels of profitability; part of this difference is explained by industry structure.
Michael Porter provided a framework that models an industry as being influenced by five forces. The strategic business manager seeking to develop an edge over rival firms can use this model to better understand the industry context in which the firm operates.
Importance of volume to supplier
Differentiation of inputs
Impact of inputs on cost or differentiation
Switching costs of firms in the industry
Presence of substitute inputs
Threat of forward integration
Cost relative to total purchases in industry
Absolute cost advantages
Proprietary learning curve
Access to inputs
Government policy RIVALRY THREAT OF
Economies of scale Switching costs
Buyer inclination to substitute
SUBSTITUTES Price Performance Trade-off of substitute
Access to distribution
Bargaining Leverage DEGREE OF RIVALRY
Buyer volume Exit barriers
Buyer Information Industry concentration
Brand identity Fixed cost/ Value added
Price sensitivity Industry growth
Threat of Backward Integration Intermittent overcapacity
1. Rivalry: In the traditional economic model, competition among rival firms drives profits to zero. But competition is not perfect and firms are not unsophisticated passive price-takers. Rather, firms strive for a competitive advantage over their rivals. The intensity of rivalry among firms varies across industries, and strategic analysts are interested in theses differences. If rivalry among firms is low, the industry is considered to be disciplined. This discipline may result from the industry's history of competition, the role of a leading firm, or informal compliance with a generally understood code of conduct. When a rival acts in a way that elicits a response by other firms, rivalry intensifies. The intensity of rivalry commonly is referred to as being cutthroat, intense, moderate, or weak, based on the firm's aggressiveness in attempting to gain an advantage. In pursuing an advantage over it's rivals, firms can choose from several competitive moves:
- Changing prices: raising or lowering process to gain a temporary advantage
- Improve product differentiation-improving features, implementing innovations in the manufacturing process and in the product itself.
- Creatively using channels of distribution: using vertical integration or using a distribution channels that is novel to the industry.
- Exploiting relationships: with suppliers.
The intensity of rivalry is influenced by the following characteristics:
i. A larger number of firms increase rivalry because more firms must complete for the same customers and resources. The rivalry intensifies if the firms have similar market share, leading to a struggle for market leadership.
ii. Slow market growth causes firms to fight for market share. In growing market, firma are able to prove revenues simply because f the expanding market.
iii. High fixed costs result in an economy of scale that increased rivalry. When total costs are the mostly the fixed costs, the firm must produce near capacity to attain the lowest unit costs. Since the firms must sell large quantities of products, high levels of production lead to a fight for market share and results in increased rivalry.
iv. High storage costs or highly perishable products cause to sell goods as soon a s possible. If other produces art attempting to unload at the same, competition for customers intensifies.
v. Low switching costs increases rivalry. When a customer can freely switch from one product to another there is greater struggle to capture customers.
vi. A low level of product differentiation is associated with high levels of rivalry. Brand identification, on the other hand tends to constrain rivalry.
vii. Strategic stakes are high when a firm is losing market position or has potential for great gains. This intensifies rivalry.
viii. High exit barriers place a high cost on abandoning the product. The firm must compete. High exit barriers cause a firm to remain in an industry, even when the venture is not profitable.. A common exit barrier is asset specificity.
ix. A diversity of rival with different cultures, histories and philosophies make an industry unstable.
x. Industry Shakeout: a growing market and the potential for high profits induces new firms to enter a market and incumbent to
xi. Increase production: A point is reached where the industry becomes crowded with competitors and demand cannot support the new entrants and the resulting increased supply. The industry may become crowded if its growth rate slows and the market becomes saturated , creating a situation of excess capacity with too many goods chasing too few buyers. A shakeout ensues, with intense competition, price wars, and company inability.
2. Threat of substitutes: In Porter's model, substitute products refer to products in other industries. The threat of substitutes exists when a product's demand is affected by substitute products-as more substitutes become available. And the demand becomes more elastic since customers have more alternatives. A close substitute product constrains the ability of firms in an industry to raise prices. The competition is endangered by the threat of substitutes comes from outside the industry. While the threat of substitutes typically impacts an industry through price competition, there can be other concerns in assessing the threat of substitutes.
3. Buyer Power: The power of buyers is the impact that customers have on a producing industry. There is a market in which there are many suppliers and only one buyer. Under such market conditions, the buyer sets the price. In reality there are a few pure circumstances that re like this. Mostly there is asymmetry between a producing an industry and buyers. The following tables factors that determine buyer power.
4. Supplier Power: A producing industry requires raw material-labor, components, and other supplies. This requirement leads to buyer-supplier relationships between the industry and the firms that provide it the raw materials used to create products. Suppliers, if powerful can exert an influence on the producing industry, such as selling raw material at a high price to capture some of the industry's profits. The following table outlines some factors that determine supplier power:
5. Barriers to Entry/ Threat of Entry: it is not only incumbent rivals that pose a threat to firms in an industry: the possibility that new firms may enter the industry also affects competition. In theory, any firm should be able to enter or exit a market and if free entry and exit exists, then, profits should be nominal. In reality, however, industries possess characteristics that protect the high profit levels of firms in the market and inhibit additional rivals from entering the market. These are barriers to entry. Barriers to entry are more than the normal equilibrium adjustments that markets typically make. E.g. when industry profits increase customers would expect addition firms to enter the market. And take onset the advantage of the high profit levels.. When profits decrease some firms are expected to exit the market thus restoring the market equilibrium. Falling prices or the expectation that future prices will fall deters rival from entering a market. Firms also maybe reluctant to enter markets that are extremely uncertain, especially if entering involves expensive start-up costs. These are normal accommodations to market conditions. But if firms individually keep prices artificially low as a strategy to prevent potential from entering the market, such entry-deterring pricing establishes a barrier. Barriers are unique industry characteristics that define the industry. Barriers reduce the rate of a firm's thus maintaining level profits for those already in the industry. From a strategic perspective, barriers can be created or exploited to enhance a firm's competitive advantage. Barriers to entry arise from several sources:
- Government creates barriers: Although the principal role of the government in a market is to preserve competition through anti-trust actions, government also restricts competition through the granting of monopolies.
- Patents and proprietary knowledge serve to restrict entry into an industry: Ideas and knowledge that provide competitive advantages are treated as private property when patented., preventing others from using the knowledge and thus creating a barrier.
- Asset specificity inhibits entry into an industry: Asset specificity is the extent to which the firm's asset's can be utilized to produce a different product. When an industry requires highly specialized technology or plants and equipment to acquiring specialized assets that cannot be sold or converted into other uses if the venture does not work out. Asset specificity provides a barrier for reasons such as when firms already hold specialized assets they fiercely resist efforts by others from taking their market share. New entrant can anticipate aggressively.
- Organizational or Internal Economies of Scale: the most efficient level of production is termed MINIMUM EFFICIENT SCALE (MES) is the point at which unit costs for production are t a minimum i.e. the most efficient level of production. Barriers to exit work similarly to barriers to entry. Exit barriers limit the ability of a firm to leave the market and can exacerbate rivalry.-unable to leave the industry, a firm must compete. Some of an industry's entry and exit barriers can be summarized as follows:
The Dynamic Nature of Industry Rivalry:
The descriptive and analytic models of industry tend to examine the industry at a given state. The nature and fascination of business is that it is not static. Phone companies, computer firms, and entertainment are merging and forming strategic alliances that re-map the information terrain.
9. Strategic Analysis
Generic Strategies to Counter the Five Forces:
Strategy can be formulated on 3 levels:
- Corporate level
- Business unit level
- Functional or departmental level
The business unit level is the primary context of industry rivalry. Michael Porter identified 3 generic strategies i.e. cost leadership, differentiation, and focus that can be implemented at the business level to create a competitive advantage. The proper generic strategy will position the firm to leverage its strengths and defend against adverse effects of the 5 forces. If the primary determinant of a firm's profitability is the attractiveness of the industry in which it operates, an important secondary determinant is its position within that industry. Even though an industry may have below-average profitability, a firm that is optimally positioned can generate superior returns. A firm positions itself by leveraging its strengths ultimately fall into one of two headings: cost advantage and differentatiaotion. By applying these strengths in either a broad or narrow scope, three generic strategies result: cost leadership, differentiation, and focus. These strategies are applied at the business unit level. They are called generic strategies because they are not firm or industry independent. The following table illustrates Porter's generic strategies:
Cost Leadership Strategy: This generic strategy calls for being cost low producer in an industry for a given level of quality. The firm sells its products either at average industry prices to earn a profit higher than that of rivals or below the average industry to gain market share. In the event of a price war, the firm can maintain some profitability while the competition suffers losses. Even without a price are as the industry matures and process declines the firm can produce cheaply and will remain profitable for a longer period of tome. The cost leadership strategy usually targets a broad market. Some of the ways that firms acquire cost advantages are by improving process efficiencies, gaining unique across to a large source of lower cost material, making optimal outsourcing and vertical integration decisions, or avoiding some costs altogether. If competing firms are unable to sustain a competitive advantage based on cost leadership. Firms that succeed in cost leadership often have the following internal strengths:
- Access to the capital required to make a significant investment in production assets: this investment represents a barrier to entry that many firms may not overcome.
- Skill in designing products for efficient manufacturing, e.g. having a small component counts to shorten the assembly process.
- High level of expertise in manufacturing process engineering
- Efficient distribution channels
Each generic strategy has its risks, including the low-cost strategy e.g. other firms may be able to lower their costs as well. As technology improves, the composition may be to leapfrog the production capabilities, thus eliminating the competitive advantage. Additionally, several firms following a focus strategy and targeting various narrow markets may be able to achieve an even lower cost within their segments and as a group gain significant market share.
¨ Differentiation Strategy: A differentiation strategy calls for the development of a product or service that offers unique attributes that are valued by customers and that customers perceive to be better than or different from the products of the competition. The value added by the uniqueness of the product may allow the firm to charge a premium price for it. The firm hopes that the higher price will more than cover the extra costs incurred in offering the unique product. Because of the product's unique attributes, if suppliers increase their prices the firm may be able to pass along the costs to its customers who cannot find substitute products easily. Firms that succeed in a differentiation strategy often have the following internal strengths:
- Access to leading scientific research
- Highly skilled and creative product development team
- Strong sales team with the ability to successfully communicate the perceived strengths of the product
- Corporate reputation for quality and innovation
The risks associated with a differentiation strategy include imitation by competitors and changes in customer tastes. Additionally, various firms pursuing focus strategies have lower volumes and therefore less bargaining power with their suppliers. However, firms pursuing a differentiation-
Focused strategy may by able to pass higher costs on to customers since close substitute products do not exist. Firms that succeed in focus strategy are able to tailor a broad range of product development strengths to a relatively narrow segment that they know very well. Some risks of focus strategy include imitation and changes in the target segments. Furthermore, it may be fairly easy for a broad-market cost leader to adapt its products in order to compete directly. Finally, other focusers may be able to carve out sub-segments that they can serve better.
A Combination of Generic Strategies:
These generic strategies are not necessarily compatible with one another. If a firm attempts to achieve an advantage on all fronts, in this attempt it may achieve no advantage at all e.g. if a firm differentiates itself by supplying very high quality products, it risks undermining that quality if it seeks to become a cost leader. Even if the quality did not suffer, the firm would risk projecting a confusing image. That's why Michael Porter argued that to be successful over the long-term, a firm must select only one of these strategies. Otherwise, with more than one single generic strategy the firm will be ‘'stuck in the middle'' and will not achieve a competitive advantage. Porter argued that firms are able to succeed at multiple strategies often do so creating separate business units for each strategy. By separating the strategies into different units having different policies and even different cultures, a corporation is less likely to become ‘'stuck in the middle''. However, there exists a viewpoint that single generic strategy is not always best because within the same product customers often seek muli-dimensional satisfactions such as a combination of quality, style, convenience, and price. There have been cases in which high quality producers faithfully followed a single strategy and then suffered greatly when another firm entered the market with a lower quality product that better met the overall needs of the customers.
Generic Strategies and Industry Forces:
These generic strategies each have attributes that can serve to defend against competitive forces. The following table compares some characteristics of the generic strategies in the context of the Porter's five forces.
Sources of Competitive Advantage from a Global Strategy:
During the last half of the twentieth century, many barriers to international trade fell and a wave of firms began pursuing global strategies to gain a competitive advantage. However, some industries benefit more from globalization than do others, and some nations have a comparative advantage over other nations in certain industries. To create a successful global strategy, managers first must understand the nature of global industries and the dynamics of global competition. A well-designed global strategy can help a firm to gain a competitive advantage. This advantage can arise from then following sources:
- Economies of scale from access to more customers and markets
- Exploit another country's resources-labor, raw materials
- Extend the product life cycle-older products can be sold in lesser developed countries
- Operational flexibility-shift production as costs, exchange rates, etc. change over time.
- First mover advantage and only provider of a product to a market
- Cross subsidization between countries
- Transfer price
- Diversify macroeconomic risks i.e. business cycles are not perfectly correlated among countries
- Diversify operational risks i.e. labor problems, earthquakes, wars
- Broaden learning opportunities due to diversity of operating environments
- Crossover customers between markets-reputation and brand identification. A framework has been developed comprising of categories of strategic objectives and sources of advantage that can be used to achieve them.
10. SWOT Analysis (Micro Factors)
SWOT analysis is an important tool for auditing the overall strategic position of a business and its environment. Once key strategic issues have been identified, they feed into business objectives. SWOT analysis can be used in conjunction with other tools for audit and analysis. SWOT is an abbreviation for Strengths, Weaknesses, Opportunities and Threat.
We made a comparative SWOT analysis between AKTEL and CityCell Mobile Company:
Strengths of AKTEL:
- GSM Technology
- Good reputation
- Effective human resources
- Quality top management.
- Quality billing system
- Quality Customer Care System
- Expertise and experience of Parent Company
- Good liaison with foreign GSM operators
- Long range strategic planning
- Mkt. Research unit
- Strong Dealer Network
Strengths of CityCell:
Capital: CityCell has a huge amount of capital. As mentioned before, that the Pacific Group, which is a well-established local organization of $1000 million, owns 90% shares of PBTL, it was never required to borrow loans from outside or other investors.
Competitive price: Price is a big competitive advantage for CityCell. CityCell is the only organization, which is selling CDMA mobile phones with both way T&T facilities at the lowest rate. For example, lowest package rate of CityCell is Tk 6,999/= with T&T facilities. With T&T facilities the other competitors are no where near CityCell.
No ‘Busy Network': Because of enormous number of channels, excess to CityCell mobile phones is very easy. The rate of call drops is very low.
Advanced technology: CDMA technology is the best technology for telecommunication. World-class mobile operators and world-class mobile phone manufacturers are advancing to this new technology. CityCell is one of the few mobile service providers, which are using CDMA technology. Where as other GSM mobile service provider has to make huge invest or will need time for transformation.
Low Cost: CityCell follows low cot strategies. It tries to cut cost in every possible way to maximize the strengths for future battle.
Centralization: Pacific Bangladesh Telecom Limited is a centralized organization that helps in easier coordination of business activities.
Dedicated Staff: Dedicated core staffs who are willing to provide significant labor hours to accomplish targets.
Weaknesses of AKTEL:
- Poor network coverage than competitors
- Not enough channel with BTTB
- Absence of HR policies
- Shortage of HR in the helpline
- Package pricing is expensive and less attractive
Weakness of CityCell:
Fewer staff: The number of staffs working for CityCell is not enough at all. They have far fewer staff than actually required in terms of tasks to be completed.
New technology: CDMA is the latest technology but it is not widely used. Still most popular option is GSM. CityCell cannot give international roaming because of few number of CDMA operator.
Low network coverage: Though CityCell started to provide mobile telecommunication ten years back, it is still in behind the other operators from the point of nationwide coverage. Grameen phone was able to use the optical fiber network of Bangladesh Railway trough strong lobbing with past government for next twenty five years. That's why Grameen phone's expansion was huge. Where as PBTL has decided to cover fifty-two districts within June, of which eighty five percent was has been done.
Lack of education: The subscribers are not educated enough to handle sophisticated CDMA mobile handsets effectively. That's why proper knowledge is essential to handle these mobile sets.
Opportunities of AKTEL:
- Public Sector unable to meet demands
- Product with a very long life-cycle
- New technology
- Growing middle class population
- Main competitors has congested network because of it's unplanned customer growth.
Opportunities of CityCell:
Advanced technology: Since CDMA technology is the latest in the wireless telecommunication industry and most effective one, it is yet to find new potential in the short future.
Secured data transfer: Secured data transfer means CityCell has the potential to be the leading player once m-commerce took off.
Leader ship in telecommunication services: Bangladesh government has already started to provide license to private sectors to set up land phone. With full nation wide coverage and a huge capital it is possible to become the market leader for CityCell.
Threats of AKTEL:
- Unstable political culture or political unrest in the economy
- Recession in the economy
- Non-cooperative telecommunication regulatory body
- Possible health risk
Threats of CityCell:
New companies: If ‘SingTel' of Singapore and ‘Airtel' of India enter the market with full coverage and low price, ten not only CityCell but also other mobile operators would be in great trouble.
Global companies: In India global companies like ‘AT&T' of the United States and in Eastern Asia ‘Vodaphone' of the United Kingdom is working well. They might think to enter Bangladesh with higher capital. If so it will be a huge threat for CityCell.
BTTB mobile phone: BTTB may enter the mobile telecommunication industry. It might come to the business with unfair Government advantages and cause severe problems to all other mobile phone operators.
The most significant differences between AKTEL & CITYCELL are:
PBTL (City Cell Digital)
Cellular mobile or fixed communications:
Must be digital technology
Can be digital or analogue technology
Licenses valid for 15 years, thereafter renewable annually based on performance
License valid for 20 years
Assigned 10 MHz
Assigned a total of 40 MHz
Operator fee obligations:
Operator pays 15% of line rental revenues to Ministry of Post & Telecommunications and call charges at actual to BTTB. Additionally, operators pay Tk.10 million annually as license fees
PBTL has to pay 15% of line rental revenues and call charges at accruals to BTTB. No license fees are payable
Coverage of cell sites:
Coverage of each cell may not be greater than 7km in urban and 17.5km in rural areas
Coverage is not
Operators must follow performance obligations or pay fines
No such obligations
The organization is headed by its Chief Executive designated as the Managing Director entrusted with overall responsibilities of business direction of the organization and leading dynamically towards the attainment of it's Vision, Mission and Goal. In attaining the above mission, the Managing Director is assisted by 4 General Managers & 1 Director, Co-ordination. TMIB has established a strong and formidable sales channel, which consists of direct dealers and its own sales force.
11. Alternative Strategies
In regard to AKTEL's changing market demand, we would like to consider the following strategic alternatives.
q Product line extension or divestures
q Established and successful internet presence
q Provide More Value Added Services
q Create a consistent and strong brand image
As of industry structure, AKTEL can take distinctive focus measures to enhance its presence and growth of the company. Developing product awareness and recognition among young consumers can be very crucial. Maintain a strong quality control through TQM. Ability to distribute products through various distribution channels would be another success story. Consideration of the above the following may prove to be adequate.
In order to improve the customer satisfaction level TMIB should consider the following success factors:
- Setup customer care centers at strategic points
- Introduce one-stop service (Bill Print+Bill Payment+Line Unblock+Bill Adjustment)
- Expand network coverage
- Send bills to customers on time
- Introduce SMS with other operators
- Introduce web based billing system
- Ensure that the Help line operates 24 hours
- Increase the number of distribution channels
- Introduce Pre-Paid facilities with TNT incoming and outgoing
- Provide options for customers to switch from one package to another
12. Products and Services of AKTEL
AKTEL has the following categories of products:
- Post-Paid (Mobile-to-Mobile)
- Mobile Plus (Mobile-to-Mobile + BTTB incoming)
- Pre-Paid (Pure)
- Pre-Paid Plus (Mobile-to-Mobile + BTTB incoming)
- AKTEL Standard- (Local)
- AKTEL Standard-(NWD)
- AKTEL Standard -(ISD)
1. Post-Paid (Mobile-to-Mobile):
M2M connects to all AKTEL mobiles and to other mobiles, subject to interconnection agreement with other mobile operators, within AKTEL's coverage area. This product has a credit limit of Tk. 2, 000 on airtime usage with Tk. 1, 000 security deposits. There is no incoming charge.
2. Mobile Plus:
Mobile Plus is another addition of post-paid products of AKTEL. This phone can connect all mobiles within the home zone and all mobiles throughout AKTEL's coverage area. It has National Roaming facility and a flat rate airtime charge of Tk.6 (+VAT) per minute for all calls to anywhere within AKTEL's coverage. It also provides BTTB incoming facilities with first minute free and Tk. 1 per 30 sec.for subsequent period.
3. Mobile to Mobile (Pure):
Introduction of AKTEL's One prepaid service (OPPS) is another development of Mobile telephony in Bangladesh. OPPS has National Roaming facility and a flat airtime charge of Tk. 6.90 per minute. There is no incoming charge. This service helps the subscriber to control costs. It keeps free from the hassles of paying bills, security deposits and line rents to the subscriber. At the beginning, the customer has to buy the "One" Starter kit and handset. The Starter kit contains a pre-activated SIM card and a One-Pre -Paid Card.
4. Pre-Paid Plus (Mobile-to-Mobile + BTTB incoming):
Another AKTEL's new One Pre-Paid Service (OPPS) is latest version of mobile telephony in Bangladesh. OPPS has National Roaming facility and a flat airtime charge of Tk.6 (+VAT) per minute. There is no incoming charge from mobile but a charge of Tk.1.50 per 30 sec for incoming of BTTB. "One Pre-Paid Features" includes:
- No Monthly Bills
- Flat rate of tk.6 per minute
- No security deposits
- No monthly access fees
- No waiting for activation
- Instant Connection
- "One" Cards of Two Different Values and Colors
AKTEL Standard Service
Under-standard service AKTEL has 3 products. They are as follows:
LOCAL: This service allows receiving calls or message from any phone service from anywhere of the world within AKTEL coverage area. He can also make a call to BTTB number and all other mobile phones within specific zone.
NWD: Under this service one may receive a call or message from any phone service from anywhere of the world within AKTEL coverage area. He can also make a call to BTTB number and all other mobile phones in Bangladesh.
ISD: This service enjoys every facility of NWD. Besides this, one can make a call to the foreign countries with which AKTEL has International roaming agreements.
The cutting edge technology-GSM stands for Global System Mobile communications. GSM is the world's most advanced and extensively used mobile phone system. More than 20 million subscribers in almost 130 countries worldwide and AKTEL in Bangladesh use the latest GSM technology because AKTEL is committed to give the customer the very best. AKTEL subscribers enjoy the following GSM features without bearing any additional costs:
CLIP (Calling Line Identification Presentation)/ Caller ID: Display of the phone number of an incoming call in subscribers' handset before the call is answered.
Call Waiting and Holding: While talking to the first caller, subscribers will hear a special tone informing subscribers about the second call on the line. At that moment subscribers can put the first caller on hold and talk to the second caller.
Call Forwarding: Call forwarding lets subscribers redirect or reroute subscribers call to another AKTEL mobile or any other fixed (if subscriber has BTTB Connectivity) or mobile phone.
Call Barring: Enables subscribers to restrict certain types of calls to be made from subscribers mobile. This feature is especially important for security purposes.
Itemized Billing: If customers are not satisfied with his phone bill then he can collect the Itemized Bill, which describes the elaborately Incoming and Outgoing call with phone number and duration.
AKTEL's Value Added Services
The following additional services are available upon the request from the subscriber:
1. Voice Mail Service (VMS):
- VMS is a unique answering machine
- It provides subscribers with a personal electronic mail box in AKTEL voice mail center.
- It records subscribers personalized greetings as well as store subscriber's incoming voice messages.
- It records incoming voice messages if subscribers are outside AKTEL's coverage area, busy, or simply switched off their mobile
- It provides 24-hr automatic secretarial service
- Makes subscribers available to their calling party anytime.
2. Short Message Service (SMS):
- SMS in a mobile acts as an advanced pager
- An individual can send or receive text messages of upto 160 characters, directly from one AKTEL mobile to another AKTEL mobile.
- Send and receive multimedia messages such as color pictures
- Send picture to any Email address
- Download colorful logos, animations, wallpapers, screensavers, real music (MP3), polyphonic tones, video clips, and much more
- Browse WAP enabled websites on your handset
- Browse the internet using PDA handset, or on your computer using your handset as a modem
4. Friends & Family (F&F):
The Friends & Family (FnF) feature allows all customers to add at least 3 AKTEL numbers as their FnF number. The customers can talk to these 3 FnF numbers at a reduced rate (Post-Paid: Tk.1.5 and Pre-Paid: Tk.2.00 excluding VAT) at anytime of the day.
5. Night Bird Talk Plan (NBTP):
Night Bird Talk Plan or NBTP is a feature that allows subscribers to talk during the night time from 12AM (00:00Hrs) to 08:00AM the next morning at a discounted tariff or airtime rate. This facility was before only offered to all the AKTEL Post-Paid customers but now is also offered to all the AKTEL Pre-Paid customers
6. Post-Paid Bill Info:
All AKTEL Post-Paid subscribers can now check their Post-Paid bill information from their mobile handsets. There are many ways of doing this. You can call our 24-hour help line for assistance.
Bill information is also available via the automated service (under the Post-Paid menu) OR you can send an SMS to 8PST (8778) using the commands UBL (unbilled amount since the issue of your last Bill), BIL (amount in your last Bill) or BAL (balance amount yet to be paid by you) for the respective information. Standard SMS charges are applicable.
AKTEL's Current Charges
The tariffs for the following are given in the upcoming sections:
- Nightbird Talk Plan
- Durbar Package For Eid
Postpaid Tariff Structure:
Post paid Standard (Both way BTTB) Tariff Detail
Outgoing : AKTEL to AKTEL
Tk. 2/30 Sec.
Tk. 1.50/30 Sec.
Tk. 0.75/30 Sec.
Tk. 6 for 1st 30 sec and Tk. 3 for subsequent 30 sec.
Out going : AKTEL to all Pre-paid
Tk. 2/30 Sec.
Cite This Dissertation
To export a reference to this article please select a referencing stye below: