A case study of dialog telekom

Dialog Telekom Limited is the largest mobile operator in Sri Lanka with over 3 Million subscribers representing and it has more than 60% market share in the communication industry Dialog Telekom one of the largest lists company on the Colombo Stock Exchange and has a market capitalization of SL Rs 161 Billion.d.

Dialog Telekom Limited is a subsidiary of Telekom Malaysia International and a member of the Telekom Malaysia Group. In addition to its core mobile telephony business, the company provides international services, supporting an International Gateway infrastructure providing retail and wholesale international voice and data services under the brand name of Dialog Global. The company also provides Internet services through

Dialog Internet – a fully-fledged Internet Service Provider (ISP). Dialog Telekom also operates Dialog SAT, a mobile satellite service.

Macro Environment Analysis:

PESTEL

Political

Investment policies in Sri Lanka were very bright even though Sri Lanka incorporated its liberalization policies in 1977 the industry and the country did not grow as much as it was foreseen at the time of liberalization. The reasons for the hindrance to growth were the political direct intervention and poor governance. Terrorist activities have remained constant as well, during the past two decades.

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Economical

Trade policy authorities had a negative impact on the industry and unstable macroeconomic environment. The exchange rate also demised at a very slow rate. Massive reforms were planned in this sector after the inception of liberalization. The country has to implement new reforms to attract foreign direct investments (FDI).

Socio-Cultural

Sri Lanka has a very high percentage of educated and skilled work force, but however Sri Lankans autonomic nervous systems inherit a bureaucratic attitude from the colonial administration those consequences in inefficiencies and discrimination.

Technological

Sri Lanka’s technology dependencies on foreign countries are very high but it has a indigenous TRCSL which ushers development and local research.

Relatively comparing the country was not good enough to adapt to the technological changes on a given time horizon. The time taken for the shift from analog to digital and embracing the CDMA technology clearly tells the passion for technological changes.

Legal

TRCSL, the regulatory authority, is responsible for many things like addressing consumer grievances, making sure that Government policies are enforced fairly, giving feedback to the policy makers, monitoring changing industry needs etc.

TRCSL was often denounced for its inefficiency, information dissymmetry and prejudice.

Five forces

Threat of New Entrants

There are half a dozen telecom operators in the country and the new entrant would always increase the competition. The new entrant will enter the market with a differentiated product which may steal the thunder of the existing players

Bargaining Power of Buyers

In Sri Lanka customers are not very sensitive when compared in Western countries and there are naïve any consumer groups in the country.

Because the switching costs are very low the bargaining power of the consumer is high, Dialog Telekom with its VAS is able to have loyal customers.

Threat from Substitutes

Strictly speaking there are naïve any substitutes in technologies like VOIP over wireless which is very popular in Sri Lanka. Companies with CDMA licenses and companies which are already in the fixed line communication market may cause the substitution effect.

Companies that provide the substitute product are SLT, LankaBell, Suntel. Here the substitute product is the fixed line – home usage phones.

Bargaining Power of Suppliers

Dialog Telekom is dependent on many local and international suppliers for performing its various operations. Network connectivity is important for any service provider Dialog Telekom which dose not own the national backbone is dependent on local service providers. Few players have the direct access to the national back bone. Therefore suppliers in this case are very powerful and few suppliers become the indirect competitors as well. To overcome its over dependency on its suppliers Dialog Telekon has acquired MTT.

Rivalry among Competing Firms

The competition among the telecommunications service providers in Sri Lanka is high but Dialog Telekom has few factors that create a competitive edge over others. Dialog Telekon mainly concentrates on giving many Value Added Services to its customers were as its competitors concentrate on tariff rates and coverage.

Dialog Telekom did surpass other mobile operators in the subscriber base which clearly shows that Dialog Telekom has created a competence, cannot be imitated easily, for itself.

Micro Environment Analysis:

SWOT Analysis:

Strengths

Being the first player in GSM market it has a competitive advantage.

Has the widest and best coverage in Sri Lanka

Strategic relationship with other telecommunication giant in the market like Telekom Malaysia Group.

Numerous bilateral collaborations with other Telecom operators.

Strong Brand Equity and aggressive marketing strategies.

Good PR that has been built up over past many years.

Does Strategic CSR.

Well built and capable Research and Development.

Good eye for the investors.

Strong customer base.

Wide product range.

Skilled Human Resource.

Weaknesses

No high return on investment (ROI), enormous amounts of investments were made on value addition and advertising.

Failed in becoming a good Internet Service Provider.

Failed on price competition with other operators.

Poor human resource policies for employees.

With increasing customer base Quality of service also reduced.

Opportunities

Huge untapped market.

Constant growth in the telecommunication industry.

Acceptability of VAS among customers which increases the bottom line of the company.

The opportunity to leverage the strategic partnership links with Vodafone UK.

Benefits that are to be leveraged in the Value Chain.

Technology advancements which increases the market.

Threats

Many players in the small market.

Threats from existing players.

Erotic developments in the political, social and economical conditions.

Currency exchange rates and high inflation.

Rapid changes in customer preferences

Changes in technology.

Very low switching costs.

Porter’s value chain model

Inbound logistics:

Dialog Telekom manage widespread activities to Telekom business needs. Logistics service in telecom sector is mainly needed for infrastructure that is network development. Dialog Telekom has wide range of signals all over Srilanka Services provided to customers comprises of inbound logistics. Inbound logistics are several activities related with receiving, storing, and widely knowing inputs to the product, such as material handling, warehousing, inventory control, vehicle scheduling, and returns to suppliers. Supplier relationship with industry and order management, relationship with supplier and physical help in open case inspection of received material

Operations:

Dialog Telekom has achieved trail in research & development and new technology their operations are GPRS in 2001 one of the key element of dialog telecom is  2.5G GSM is a major inventory & major step towards 3G , offering data speeds which is higher than the usual, packet based data communication, MMS multimedia messaging and many value added applications. The following activities commence with transforming inputs into the final product from, such as machining, packing, equipment maintenance, testing, printing and facility operations.

Outbound logistics:

            Outbound logistics are several activities related with collecting, delivery vehicle operation, storing and physically distributing the product to buyers, such as finished goods warehousing material handling,  order processing and scheduling.

            Hub or warehouse management, pick and pack of material, BOQ audit, inventory management, IT Solutions: WMS, periodic inventory audits and freight management

Marketing and sales:

Activities associated with providing a means by which buyers can purchase the product include advertising, promotion, sales-force, quoting, channel selection, channel relations, and pricing.

Service:

            Activities associated with providing services to enhance or maintain the value of the product such as installation, repair, training, parts supply and product adjustment.

            Customer service plays key role none of the service provider in the country follows the customer service. Dialogue Telekom has dedicated staff for customer services of over 150 service professionals, the company provides 24X7 online support for all its services to its custome

Strategic Intent:

For earning opportunities and future growth Dialog Telekon has started converging technology related businesses including Broadband and Digital Television media, Fixed Line Telephony. The company also acquired many companies which like Dialog Broadband Networks, Dialog Television etc which are operating in a nascent market.

Company also introduced many products with very economical tariff rates because the company’s motto was to use technology in such a way that it produces products that gives reliable communication and great value to its customers.

This clearly shows the company’s adherence to its vision which in turn talks about the company’s strategic intent.

Competitive Strategic Groups:

The first alternative for the competitive strategy would be improve on current strategy by having unique value adding services for each of its business units like CBNSAT, DBN, Dialog Telekom. Through this customer satisfaction and thereby can charge a low price compare to the competitors.

The second alternative for the competitive strategy is cost leadership to overcome the threats of low reasonable premium charge provided by the competitors. The switching from Dialog to Mobitel is having less that uses VAS in urban areas due to less VAS in Mobitel. There is no difference between SMS/VOICE and VAS in cost and coverage. In the market segment attraction of the customer would decided on the rates. If Mobitel improves on its VASes it would become a serious threat. While the entire market is purely on SMS/VOICE in that tome Dialog Telekom has focused on VAS and cost with differentiation strategy. To gain competitive advantage Dialog Telekom should with other organizations as a corporative strategy. Currently Dialog Telekom has started with some banks and super markets; along this it is trying to include alliances with popular Food chains, Stock brokers, Insurance companies etc.

Strategic Routes:

In Sri Lanka telecommunication industry is mainly operated on two authorities; one deal with policy and other deal with public profit seeking company, where telecommunications authorities of Sri Lanka(TASL) and Sri Lanka telecom(SLT) respectively.

TASL has licensed 5 cellular operators for mobile services.

Dialog Telekom plc

Mobitel (pvt) Ltd

Tigo (pvt) Ltd

Hutchison Telecommunications Lanka (pvt) Ltd

Bharti Airtel Lanka (pvt) Ltd

TASL has licensed 3 cellular operators for land line services.

Sri Lanka telecom plc

Suntel limited

Lankabell (pvt) Ltd

In Sri Lanka an operator with voice telephone can use the voice in the country. For the past 5 years increase the wholesale volumes margins has conversely declined. This has an impact of telecoms, aggregators, single route operators and pure play wholesalers. most of the international is coming to Dialog mobile and SLT fixed Lines .

Average route statistics

CLI routes

Premium white CLI route.

Sri Lanka land line and mobile both available.

Interconnected with direct Sri Lanka providers.

Good capacity available at competitive rates.

ASR=45% / ACD=8 mins.

Competitive advantages:

For the past few years they are diversified their business. By acquiring MIT they have managed to strengthen its back bone and also acquired CBNSAT, DERANA TV, satellite TV Transmission Company. In addition to this Dialog has created many alliances to the customers. The business plan is formulated every year and is monitored the every month. Dialog has initiative the Dialog research lab for producing the latest technologies. Nokia phones with Sinhala language and Tsunami warning system for mobiles. These technology initiates can be considered as a strategy used to capture the market.

Conclusion and Recommendations:

Dailog telecom had remained as a giant in the Sri Lankan telecommunication by adopting differentiated strategy. It sustained its identity with the implementation of different strategic at all levels which overcome its competitors. It’s Mission and Vision statement provides a clear commitment to its employees and provide an equal set of attitude at all levels in the company. 

Dailog telecom adopted directional strategy which helped the company in growth, stability and retrenchment. Overall its corporate strategy placed the company as the leader in the Sri Lankan telecom market. The directional and the portfolio strategy helped the company provides competitive advantage. The wide range of portfolio provided by the company maintains loyalty among its customers. Dailog telecom builds a bridge between its customers and suppliers due to which the customers benefited and it remains as a competitive advantage to the company.    

For earning opportunities and future growth Dialog Telekon has started converging technology related businesses including Broadband and Digital Television media, Fixed Line Telephony. The company also acquired many companies which like Dialog Broadband Networks, Dialog Television etc which are operating in a nascent market. The entry for the new entrants’ had been made strictly restricted by the government which made entry barriers difficult for the new entrants. Due to this the company had to increase its financial performance and maintains long term sustainability.