Sri Lanka adopted the liberalization policy in 1977. After the year of liberalization Sri Lanka become a very positive acceptor in matter of foreign investment policy it creates a favorable response to the telecom industry. But as Sri Lanka is developing country and other reasons there is a direct involvement of many political leaders which unnecessary this father leads to the poor governance in the country. Because of this undue involvement of political leaders it resulted into the underdevelopment of many important sectors and industries. After 20 years also, because of the terrorists activities have remained same as it was in the past.
Economical environment
Economical environment of Sri Lanka is very unstable in nature. Though after liberalization it created favorable impact on many sectors but the basic trade policy regime crated a very negative impact on the sector. The exchange rate of the Sri Lankan currency is falling gradually. Though foreign investment approach is accepted by the Sri Lanka still lots of improvement can be done.
Socio-culture environment
Though Sri Lanka falls under developing country the social condition of the Sri Lankan person is
Better than a person living any other developing country.
The literacy rate is high
The mortalility rate is low as compared to other developing countries
The workforce is educated and trainable in nature so huge development scope for human resources management.
Undue importance to leader leads to the bureaucratic attitude
Technological environment:
Technological development depends on the transfer of the foreign investment.
Govt institutions encourages for the research and development if the matter is concern with the technology.
If we consider time factor than the adaptability to accept the technological changes is less which is very risky in nature and which could be affected the telecom industry.
Legal environment
Rules and regulation regarding telecom industry is regulated by the Tele communications Regulatory Commission of Sri Lanka. (TRCSL)
Government and other institutions ensure a fair application of policy.
TRCSL addresses the consumer issues.
PORTER'S FIVE FORCE MODEL:
The five competitive forces that determine industry profitability:
SUBSTITUES
BUYERS
POTENITAL ENTRY
INDUSTRY COMPETITION
SUPPLIERS:
PORTER'S FIVE MODEL IN CONTEXT OF DIALOG TELECOM COMPANY:
Entry of new threat:
Sri Lankan telecom regulatory authority decides to not issue further licenses to any other telecom industry other than the existing company the reduces the threat of new competition. By following this policy the entry of new threat is almost negligible to dialog telecom.
Bargaining power of the buyers:
Western customers are very strong as compared to Sri Lankan customers. The various customer groups are protecting themselves none exists. This gives an evident from the demanding nature of customers which are in western countries. Because of the fewer users than the western countries the quality and standards and the support are not in the concern very much this time because whole process is at very primary stage. Sri Lankan citizen are very cost conscious because of the financial conditions and standard of living the switching cost are very less and in this kind of environment the customer are to go for lowest rates. The main four operators who operate majorly the telecom industry and the switching cost are almost negligible. As a result of this the power of bargaining of buyers will definitely increase. Dialog telecom provides the increasing number of value added services (vas) to the customers because of this strategy they retained the certain segment of buyers tied to them.
Bargaining power of supplier:
Dialog telecom has wide range of suppliers at both local and international level. From the case I noticed that dialog doesn't own a national support of connectivity in the matter of network. Dialog take helps of local providers for support in the connectivity matter. In Sri Lanka telecom industry there are very few operators who have direct access to the national connectivity matter, operators like SLT, and MTT and others VSAT operators are involved in this matter. By considering this situation we came to across that the suppliers are very powerful. Many suppliers are indirectly competitor to the dialog. To avoid this dialog telecom recently acquired MTT. Because of this MTT is own official subsidiary of dialog telecom and it operates the branch of the broadband net work which is known as dialog broadband network. Sri Lanka have comparatively less number of data and voice users, because of this the generated traffic is low compared to other developed nations. As a result of this the bargaining power of main providers which are upstream providers are high.
Rivalry among competing firms:
There are many factors because of which dialog telecom is superior to the other Sri Lankan mobile company. The services characteristics are much different from the other mobile operators. These features are very much popular among the users and operators which are going for the expansion with the matter of the coverage area and high capacity network. The diversity of the rivals in the industry is another factor of concern but with the dialog telecom it reacts as a differentiator. Dialog telecom competes with it rival on the basis of the value addition while other competing companies in market adjust with the rates and coverage matters. Because of this strategy adoption dialog gets more subscribers than other telecom company.
Micro environment: swot analysis:
Strength:
Dialog is the first telecom company in Sri Lanka who introduce the gsm technology.
Dialogs have a very strong infrastructure along with the global connections and business relation.
They adopted a very strong marketing pricing strategy which leads them to the stable brand equity.
Development of strong public relationship as a result of which high involvement in csr activities.
Positivity in strong and wide distribution network
Various kinds of product range through diversification
Strong management team.
Weakness:
Compare to the other telecom companies dialog fails to focus on the larger and wider market adoption.
To maintain the differentiation strategy the pricing innovations are lacking in nature
Employment turnover is very high in dialog telecom
Opportunities:
Sri Lankan telecom sector is booming
Huge technological development scope in the telecom industry
Many customers accepted the value added services term which can be profitable for the dialog telecom if they continue with the value added service innovations
Advancements in new technology like 3d will give scope of development
Threats:
Other main three competitors in gsm providers are threat of dialog as because of continues development.
The mobile fixed line telecom giant slt is now a day's focusing on the cost leadership competitive advantage. This strategy is designed on the prepaid product which is targeted for the mass market whereas more than 80% of dialog subscribers are prepaid customers.
Changes and development in technologies
Threat of the terrorist campaign as dialog had to turn off their activities in the north area because of military operations.
Strategic intent of Dialog telecom:
High delivery of the best return on investment to the share holders as it is a highest value operator.
To deliver a best product through ledership in thecustomer statisfaction quality delivered to them and adaption of new technology.
Achievements of leadership in terms of economy.
Porters value chain analysis
Firm infrastructure
Human resource management
Technology development
Procurement
Margin
Service
Marketing and sales
Outbound logistics
L
Operation
Inbound logistics
Porters value chain in context of dialog telecom:
Firm infrastructure:
They have one of the best infrastructures in Sri Lanka.
Human resource management:
Human capital of 2500 employees
Annual planning of human manpower in form of recruitment
Huge investment in human resource management. Out of total investment 7% is invested on training of employees.
Technological development:
Technological advancement
Use of various technical system like sap and ERP process which determines key process of the company
Use of customer care billing system.
Use of HRIS used in human resource management system where all day to day activity is planned and carried out by this system.
Operations:
All operations are planned and executive at different level. But the strategic management is responsible for all strategic decisions.
Marketing and sales:
Marketing strategies designed on the basis of mass marketing which will target the different groups and tariff plans are designed by according to the target market segments. Low cost pricing is the basic idea behind all strategies.
Service:
High importance to the customer satisfaction.
Easy bill payments and value added services are provided on the continuous basis because of which it is very popular among the customers
Competitive Strategic groups and routes taken by them ;
Competitive strategic group is a group of those companies in the industry who are competing at the same level in the market for a particular product. The members of this group compete with the strength of their competitor with different strategies.
In telecom industry of Sri Lanka the competitive strategic groups consist of the following companies:-
Sri Lanka telecommunication [ SLT ]
SUNTEL
Lanka Bell and MTL [Dialog]
Cell tell
Mobitel
Lanka cellular service [LCSL]
THE STRATEGIC ROUTES TAKEN BY THE INDUSTRY
To trace the strategic routes taken by the telecom industry in Sri Lanka it is important to understand how this industry evolved in this country.
Developing countries like Sri Lanka depend on foreign investments for growth , this has a positive approach as the country can improve their balance of payment through exports and consumer can benefit from low cost due to increase in competition. Hence the country has shaped its economic policies like lowering the tariffs ,devaluation of currency, removal of import export restrictions, etc, these policies has brought fundamental changes in the telecom industry. Human capital development, technology transfer and increased international trade are some positive impacts of foreign investments on the industry.
In 1980 when the Sri Lankan government adopted for the partial liberalization of the industry it was a turning point for it. Nine years after the formation of the industry a private company named central entered the market which was later transformed into Sri Lanka telecom in the year 1991, later In 1997, SLT was partially privatized by sale of a 35% stake to NTT of Japan and Sri Lanka Telecom Ltd (SLTL) was formalized [which is now a member of the strategic group of the industry]. The liberalization process was not only initiated by the Sri Lankan government but also the international body's like the IMF and the world trade center helped in its growth so that they can attain a normal market. For example in 2002, investments by private operators exceeded that of SLTL for the first time indicating the start of a normal market-based industry.
Although the industry opened to liberalization much before to its neighboring countries like India, its growth has been less as compared to that of India because of several internal governing policies.
However to keep the competition positive in the market the industry follows the following strategies:-
Keeping competition high amongst the operators in the telecom market.
Introduction of affordable initial price i.e. prepaid system
Constant improvement in mobile phone technology.
Quick supply and expansion of coverage.
Opening up of new market segments.
Declining the number of public pay phones.
Building shortage of fixed line supply.
Part 4: competitive advantage:
Dialog is leading company in the telecommunication in Sri Lanka. To attain the competitive advantage in the market the strategy adopted by the dialog is very different in nature. Considering the lifestyle and other accepts of the Sri Lankan person dialog adopted the pricing strategy. While reading the case it is understood that the dialog company keep their cost of charging very constant in nature. They hardly changes their pricing policy the prices charges for the services is comparatively very low than the other competitors. To retain in the market the introduced the value added services which are creating a favorable response among the customers.
The second positive approach would be continues adaption and innovation of technologies. Dialog gave a high importance to the research and development by which they are gaining high competitive advantage. The achievements can be discussed below resulted only because of the research and development.
Service provided
Remarks
Introduction of gsm technology
1st in south Asia
Short messaging service
1st in south Asia
Automatic international roaming
1st in south Asia
WAP(mobile internet)
1st in south Asia
Central pack radio services
1st in south Asia
Location based services
1st in Sri Lanka
Missed call alert
1st in south Asia
MMS service
1st in Sri Lanka
Trail of 3g services
1st in Sri Lanka
Edge services
1st in Sri Lanka
The third positive approach in gaining the competitive advantage will be the segmentation and target marketing. Dialog doesn't focus its cost based approach on any particular target area. Basically they deal with the low cost based pricing with the mass and the various groups along with the different value and services packages.
Conclusions and recommendations:
Conclusion:
From the above case study we understood the internal and external environment of the dialog Telkom which is the leading telecommunication in the Sri Lanka . we also understood the application of the porter's value chain analysis in context of the dialog Telkom . porter's 5 model is also studied in context of the same telekom company.
Recommendations:
Corporate strategy: considering the present performance of the company, the company is now focusing on its growth. Keeping the current product line in mind the company feels that concentration of resources is the ideal way for the growth of the company. For the concentration of resources vertical growth strategy can be followed to take the benefit of the value chain convergence opportunity that is present now in the country.
The second corporate strategy that the company can follow is stability strategy. The company can use this strategy to overcome the negative changes that took place due to multiple strategies it adopted earlier.
If the company strictly follows the first business strategy then it will help the company in setting up a monopoly for itself in the market and the second business strategy will help in stabilizing the company and its employs.
FUNCTIONAL STRATEGY
Keeping the current marketing strategy followed by dialog telecom the company now focuses on cost based marketing. There should be new packages offered to attract new customers and to keep the existing customers intact. The company should follow the pull market method.
The R&D technology used by the company is very critical as dialog is a leading telecommunication company. The company is further improving its R&D capabilities by having strategic alliance with their major technologic vendor. This serves as mutual benefit to both the parties.
Since the company has recently expanded its business it needs to streamline its operational strategies so that it has more effective and efficient operational flow with all business units.
