BUGEMA UNIVERSITY SCHOOL OF GRADUATE STUDIES KAMPALA CAMPUS RESEARCH ON WARID TELECOM GROUP STRATEGIC PLAN AN ASSIGNMENT SUBMITED IN PARTIAL FULFILMENT OF THE COURSE: STRATEGIC MANAGEMENT IN BUSINESS By Mulonda K. Moustapha 09/MBA/009 To Mr. JAJI KEHINDE July 2010 Company Background: THE DHABI GROUP IS A MULTINATIONAL COMPANY BASED IN THE UAE, WHICH OWNS AND OPERATES A WIDE RANGE OF BUSINESS CONCERNS THAT ARE SPREAD ACROSS 3 DIFFERENT CONTINENTS.
IT HAS A DIVERSIFIED BUSINESS INTEREST IN THE INSTITUTIONS THAT HAVE ENJOYED COMMERCIAL SUCCESS AS A RESULT OF ITS STRONG FINANCIAL RESOURCES AND EXTENSIVE MANAGEMENT EXPERTISE. THE ABU DHABI GROUP’S MAJOR INVESTMENTS ARE IN THE FOLLOWING SECTORS: • Telecommunications • Hospitality services • Property development • Oil exploration and supplies • Banking and financial services • Automobile industries Warid Telecom takes pride in being backed by the Abu Dhabi Group, one of the largest groups in the Middle East and in Pakistan. Warid Telecom is urrently operational in Bangladesh and Pakistan, while it is also setting pace o initiate its operation in Uganda & Congo. Within the markets Warid is already operating, it has quickly developed a large customer base and established itself as one of the leaders of telecom service sector. In Bangladesh, Warid Telecom commenced its operations under a landmark MOU agreed upon by the Dhabi Group and the Government of Bangladesh worth USD 1 billion, out of which USD 750 million was exclusively committed for investment in the telecommunication sector of the country.
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Succeeding the MOU signing, the BTRC license for telecom service provision was issued to Warid Telecom, followed by the signing of interconnectivity agreement with all the existing telecom companies of Bangladesh. In May 10th, 2007, Warid Telecom launched its commercial operations in Bangladesh 1 The Group – Dhabi Group: The Dhabi Group is a multinational company based in the UAE, which owns and operates a wide range of business concerns that are spread across 3 different continents.
It has a diversified business interest in the institutions that have enjoyed commercial Success as a result of its strong financial resources and extensive management expertise. The Abu Dhabi Group’s major investments are in the following sectors: • Telecommunications • Hospitality services • Property development • Oil exploration and supplies • Banking and financial services • Automobile industries. Warid Telecom takes pride in being backed by the Abu Dhabi Group, one of the largest Groups in the Middle East and in Pakistan.
Warid Telecom is currently operational in Bangladesh and Pakistan, while it is also setting pace o initiate its operation in Uganda & Congo. Within the markets Warid is already operating, it has quickly developed a Large customer base and established itself as one of the leaders of telecom service sector. In Bangladesh, Warid Telecom commenced its operations under a landmark MOU Agreed upon by the Dhabi Group and the Government of Bangladesh worth USD 1 Billion, out of which USD 750 million was exclusively committed for investment in the Telecommunication sector of the country.
Succeeding the MOU signing, the BTRC License for telecom service provision was issued to Warid Telecom, followed by the Signing of interconnectivity agreement with all the existing telecom companies of Bangladesh. In May 10th, 2007, Warid Telecom launched its commercial operations in Bangladesh with a network encompassing 26 districts. By November 2007, the network had been expanded to cover 61 districts and being used by 2 million customers. 1. 2 Company: Warid`s New Look:
An evolution that strengthens the Warid identity while keeping the customers in Focus Use of a more contemporary font & style to give a more approachable image This new logo encompasses the expanding reach of Warid not just in Pakistan but in an international footprint With our strengthened GPRS/EDGE network we would empower our customers to create their own life style networks Involving Businesses: International Investments: • Iranian Sanden Industries • J. C. Mc Leans & Co. • Neo Pharma • National Tele Systems and Services Al-Jazira Management Mall • Abu Dhabi Vegetable Oil Company • Nama Development Enterprises. • Le Royal Meridian Hotel, Abu Dhabi • Dhabi contracting • Union National Banking, U. A. E. • Alfalah Exchange Company, U. A. E. • Bank Alfalah Ltd. , U. A. E. Investment in Pakistan: • Bank Alfalah Ltd. • Alfalah GHP Investment Management • Alfalah Securities • United Bank Limited • Warid Telecom • Wateen Telecom • Emaar Al Bilaad Properties Warid Team: Board of Directors: 1. Mr. Bashir A. Tahir 2. Mr. Parvez a.
Shahid 3. Mr. Lim Chaon Poh 4. Mr. Quah Kung Yang Management Team: 1. Mr. Tariq Gulzar (Chief Financial Officer) 2. Mr. Shahzad Rauf (Chief Strategy and Operation Officer 3. Mr. Javed Mushtaq (Chief Information Officer) 2. Internal Analysis: 2. 1 Vision and Mission statements, goals and objectives: 2. 1. 1 Group’s Mission and Vision Statement: To be Asia Pacific’s best multimedia solutions group. Breaking Barriers, Building Bonds. We enable communication by breaking barriers and building bonds.
We help businesses and people communicate anytime, anywhere and in variousways. We make communications easier, faster, more economical and reliable by: Breaking the barriers of distance, price, time and technology, and Building strong bonds among SingTel employees, and with our shareholders, customers and business partners. We believe that creating and delivering value to our customers, employees and shareholders is fundamental to our business. 2. 1. 2 Mission and Vision statement of Warid Telecom: Ward’s Mission Statement: Our aim is to be perceived not only as a telecommunication operator of voice Services, but also as a universal provider of comprehensive communications services for both residential and business customers. Warid’s corporate identity seeks to reflect the changes in telecom sector in relation to helping customers keep pace with rapidly changing technology in the field of communication, through maximum network coverage and clear connectivity that we have committed to provide” Warid`s Vision Statement: Be a part of largest post paid cellular base in Pakistan and to become the leader in national communications arena with a strong international presence” Warid Telecom started its operation in May 2005 from Pakistan. Warid Telecom International LLC, purchased a license for operating a nationwide mobile telephony network, (WLL) and long distance international (LDI) for $291 million US dollars. Within 80 days of launch Warid attracted more than 1 million users. Currently the network has around 7. 6 million subscribers. In Warid business strategy four things are: • Competitiveness: differentiated in value added aspects Cost Leadership: by providing less price service/product • Rapid Response of company: when need identify they response to it • Customer care by providing quality service: The pre-paid segment is branded and marketed as Zem Pre-Paid. Zahi-Post-paid and Zem Pre-paid user enjoy various value added services (VAS), such as SMS, MMS, GPRS, 64K SIM and a host of other features. However International Roaming is only available to its Zahi (post-paid) users. Warid telecom is introducing two types of product in all over the Pakistan: 1. Zem Prepaid 2. Zahi Post Paid Zem Prepaid:
Zem is a prepaid connection provided by Warid telecom. Under this connection customer obtain a digital SIM and transfer this SIM to his name. Under this connect6ion there is no need of any security or payment of line rent. The customers purchase prepaid scratch cards and load it into its Warid SIM at any time during a period of one year. The customers of Zem connections are free to load balances at any time and amount of their own choice. Zahi: Zahi is a post-paid connection provided by the Warid telecom. In this connection, the customer has to pay line rent plus the charges of call every month.
In this connection customer is billed every month. In this connection Warid, telecom has four further categories: • Silver • Gold • Diamond • Platinum 2. 2 Management philosophy and attitudes, culture and leadership: The company base rests on management’s philosophy, values, vision and goals. This in turn drives the organizational culture which is composed of the formal organization, informal organization, and the social environment. The culture determines the type of leadership, communication, and group dynamics within the organization.
The final outcomes are performance, individual satisfaction, and personal growth and development. 2. 2. 1 Group: Core Values underpin our desire to create a unity of purpose across the Group. They reflect our common aspiration to foster a performance-based culture that is open and innovative, and that promotes mutual trust and engagement. Customer Focus: Our success is based upon our customer focus. We listen to, and connect with, customers and treat them with dignity and respect. By understanding and anticipating their needs, we make it easy for our customers to do business with us.
We aim to offer them value and quality services to enrich lives and enhance business success. Challenger Spirit: The creativity and innovation of our people set us apart. We look for better ways of doing business and share a passion for making a difference. When faced with challenges and opportunities, we do not say “Cannot” but ask “Why not? “. We are tenacious and we compete fairly. Teamwork: By working as one team with shared goals, we believe we can achieve great things. We value ideas and contributions from everyone. We recognize, respect and value diversity in the team.
We develop strong bonds by communicating and sharing knowledge. We encourage open discussion and commit to an agreed position. All of us have a part to play. Integrity: Our reputation is based upon our ability to fulfill promises to shareholders, customers and employees. We do so by being honest in our dealings, taking responsibility and being accountable for our actions. We treat everyone the way we would like to be treated. We are proactive in identifying issues and coming up with solutions. We ensure that the highest ethical standards guide us in making decisions. Personal Excellence:
Leadership and superior performance are achieved through the pursuit of personal excellence. We are committed to doing and being the best. We seek continuous improvement and take pride in what we do. We do things to the highest possible standards. We acknowledge the potential of the individual and create opportunities for all to grow and excel. Together, we celebrate our success and achievements. 2. 2. 2 Company: According to the seasoned management author and practitioner, Peter Drucker, “All modern businesses have two and only two functions, Marketing and Innovation; the rest is cost on business. One can imagine how important innovation is for operating in today’s business environment. Warid insists on periodic innovations in products, customer’s retention for a longer time is impossible. It is impossible for technology dependant firms to survive without consistent innovation. Innovation can be the prime reason for a firm’s success. Innovation offers a competitive advantage, but it is costly and often is easily copied by competitors. For that reason, innovation tends to be more of an advantage in highly evolving industries like Telecom, fashion, etc.
In those industries, trends change quickly, so there is less risk of innovation by one company being copied by another company 2. 3 Strategy Formulation: It is useful to consider strategy formulation as part of a strategic management process that comprises three phases: diagnosis, formulation, and implementation. Strategic management is an ongoing process to develop and revise future-oriented strategies that allow an organization to achieve its objectives, considering its capabilities, constraints, and the environment in which it operates.
Diagnosis includes: (a) performing a situation analysis (analysis of the internal environment of the organization), including identification and evaluation of current mission, strategic objectives, strategies, and results, plus major strengths and weaknesses; (b) analyzing the organization’s external environment, including major opportunities and threats; and (c) identifying the major critical issues, which are a small set, typically two to five, of major problems, threats, weaknesses, and/or opportunities that require particularly high priority attention by management.
Formulation, the second phase in the strategic management process, produces a clear set of recommendations, with supporting justification, that revise as necessary the mission and objectives of the organization, and supply the strategies for accomplishing them. In formulation, we are trying to modify the current objectives and strategies in ways to make the organization more successful.
This includes trying to create “sustainable” competitive advantages — although most competitive advantages are eroded steadily by the efforts of competitors. Three Aspects of Strategy formulation: The following three aspects or levels of strategy formulation, each with a different focus, need to be dealt with in the formulation phase of strategic management.
The three sets of recommendations must be internally consistent and fit together in a mutually supportive manner that forms an integrated hierarchy of strategy, in the order given. Corporate Level Strategy: In this aspect of strategy, we are concerned with broad decisions about the total organization’s scope and direction. Basically, we consider what changes should be made in our growth objective and strategy for achieving it, the lines of business we are in, and how these lines of business fit together.
It is useful to think of three components of corporate level strategy: (a) growth or directional strategy (what should be our growth objective, ranging from retrenchment through stability to varying degrees of growth – and how do we accomplish this), (b) portfolio strategy (what should be our portfolio of lines of business, which implicitly requires reconsidering how much concentration or diversification we should have), and (c) parenting strategy (how we allocate resources and manage capabilities and activities across the portfolio — where do we put special emphasis, and how much do we integrate our various lines of business).
Competitive Strategy (often called Business Level Strategy): This involves deciding how the company will compete within each line of business (LOB) or strategic business unit (SBU). Functional Strategy: These more localized and shorter-horizon strategies deal with how each functional area and unit will carry out its functional activities to be effective and maximize resource productivity. 2. 3. 1 List of Strategies Formulated: On account of sluggish economic growth and political instability in the country, we suggest that the company should localize its strategy in order o increase its market share and improve its financial performance Marketing Strategies: Warid Telecom has divided its segmentation and strategy division into five segments on the basis of their characteristics. Markets consist of buyers and buyers differ in one or more ways. They may differ in their wants, resources, locations, buying attitudes and buying practices. The core concept behind companies using marketing segmentation concept is to divide large homogeneous markets into smaller segments that can be reached effectively and efficiently with products and services that satisfy needs, wants, desires and trends of certain segment.
Characteristics that govern segmentation and strategy development in Telecom industry Specifically mobile services according to a certain segment are: ? Age ? Educational background ? Gender ? Income ? National, regional or other geographical areas of origin ? Social class ? Religion ? Culture ? Behaviors ? Population Tele density in area to be segmented so according to these above mentioned factors Warid divide its marketing strategy into five segments which are: ? Postpaid Segment ? Masses Segment ? Female Segment ? Youth Segment ? Corporate Segment
Postpaid Segment: Postpaid Segment is the one which includes individuals with good income and usage more than that of prepaid customers. Postpaid customers Pay bill at the end of month depending on the service used. Pay specific amount in line rent every month, no matter they use service or not. Enjoy better range of value added services than prepaid customers. Postpaid Segmentation Section designs marketing activities to better satisfy the needs of Postpaid consumers. Masses Segment: Masses Segment is the biggest segments involving most no of people.
Masses segmentation section develops marketing ideas and activities to perform, so that masses customers enjoy maximum benefits. Consumers from masses segments use relatively less: ? Masses customers ? Pay before using the service. ? Enjoy basic and VAS services ? Have less brand loyalty in most cases. ? Ready to switch to other mobile services in case of cheaper services Female Segment: Importance of role of females cannot be overlooked in this modern era. That’s why Warid Telecom has also developed females segment as a separate segment.
The role of Female segmentation section is to develop ideas that would entertain female population in Pakistan. Currently ongoing “Zem Baton ke committee Campaign” promoted by Bushra Ansari is such an example. Youth Segment: Youth drives a nation; similarly, youth is taken by cellular companies as a segment which can drive other segments as well and affect trends of customers of other segments too. If the youth is targeted in better way, lot of customers can be gained. Warid Floodlight Tape Ball tournament for youth segment is one of such examples. Corporate Segment:
Corporate segment is niche segment which can be source of great revenue for organization. Corporate Segmentation section develops idea that can provide maximum support and facilities to their most profitable segment. Ongoing “Black Berry Campaign” is one of its examples. Corporate segments are provided with: ? Best possible VAS ? Better rates ? Security and Network Solutions Product Positioning: Warid positioned itself around simplicity and subtlety, and attracted subscribers more through word of mouth about its service quality than with advertising.
Unfortunately, Warid wasn’t able to capitalize on its great start, and hasn’t been able to position itself as a premium brand in the industry; rather, its attempt to characterize itself as a service Provider that offers the best rates has led Warid to be associated with cheap affordability. Warid consider itself at its growth stage and it has 18% of market share and it can be next adoption for youth. Pricing Strategy: When warid starts it offering more value and quality rather than reducing the pricing of its products and its uses both demand-pull and demand-push strategies for penetrating the market.
Its innovative strategies like 1 second billing and 30 second billing are the strategies to capture the large share of market. Now warid focus on reducing the prices of its products to increase the market share of telecom industry. As now there is always good mouth for warid thus warid can increase its market by reducing the prices of its products. 2. 3. 2 Strategy Implementation : The Way Organizations Change To Develop Capabilities Needed To Better Implement Strategy.
The expression of the strategy in terms of functional policies also serves to highlight any practical issues that might not have been visible at higher level 2. 4 Enhancements of Efficiency, Quality, Innovation and Customer Responsiveness: 2. 4. 1 Company viz. Warid: Our study of the Pakistan telecom sector with specific reference to Warid has indicated that Warids needs to focus on customer potential markets and constant innovation by introducing new packages. 2. 4. 2 Competition: Ufone started its operations from Islamabad on 29th January 2001 as the youngest entrant in the cellular market.
Ufone, a subsidiary of PTCL, is the only Pakistani-owned cellular service operator in Pakistan. With a total current investment of over $350 Million, including a recent contract of $161 Million for expansion & capacity for 2004-05, we believe in solid commitment to growth, security & reliability. Currently, with a market share of over 24%, and an aggressive commercial plan, we have more than tripled our customer base in the last quarter to over 1. 5 million subscribers…the fastest uptake of any cellular service operator in Pakistan!
Ufone is the only GSM operator with 2. 5G GPRS service, which is the next generation Technology and offers: • High speed data service. • WAP data service. • Multimedia messaging service. • Offer real VPN system for corporate clients. • Ufone is the subsidiary of PTCL. Therefore it has better protection. • Mobilink GSM (PMCL), a subsidiary of Orascom Telecom, is the market leader in providing state-of-the-art communications solutions in Pakistan. We can proudlyboast of being the first cellular service provider in Pakistan to operate on a 100% digital GSM technology.
We offer tariff plans that are exclusively designed to cater to the communication needs f a diverse group of people, taking into account occasional users to businessmen. To chieve this objective, we offer both postpaid (Indigo) and the prepaid (JAZZ) solutions to our customers. n addition to providing advanced voice communication services, we also offer a number of value added services to our valued subscribers. Keeping in mind our customers’ onvenience, we have also bundled mobile handsets, either sold independently or undled in Get Set Go Pack
Mobilink GSM started operations in the year 1994; from then on it has shown enormous rowth. At the time when it entered the market it was a small player in the cellular arket of Pakistan it is now the market leader both in terms of growth as well as in erms of having the largest subscriber base in Pakistan ISO 9002 Quality Management System Certification for Billing, Engineering Departments and CS Contact Center Implementation of a full Intelligent Network (IN) latform from Siemens for the Prepaid platform ggest Call Center in Pakistan, which is there to assist the customers 24 hours.
Only cellular service in Pakistan to provide coverage on the M2 motorway. Bilateral roaming agreements signed with 100 countries around the world to have true oaming service operational in 151 operators of the world. MOBILINK GSM’s Short Message Service Center allows Vehicle Tracking and Fleet anagement services that are being provided by Tracker (Pvt. ) Ltd. , under the brand ame of C-Track, a company licensed by Pakistan Telecom Authority (PTA). Tracker urrently operates from Karachi but can provide these facilities at all those locations here GSM coverage is available. 2. 5 Value Chain Analysis:
A value chain is a chain of activities for a firm operating in a specific industry. The business unit is the appropriate level for construction of a value chain, not the divisional level or corporate level. Products pass through all activities of the chain in order, and at each activity the product gains some value. The chain of activities gives the products more added value than the sum of added values of all activities. It is important not to mix the concept of the value chain with the costs occurring throughout the activities. A diamond cutter can be used as an example of the difference.
The cutting activity may have a low cost, but the activity adds much of the value to the end product, since a rough diamond is significantly less valuable than a cut diamond. Typically, the described value chain and the documentation of processes, assessment and auditing of adherence to the process routines are at the core of the quality certification of the business, e. g. ISO 9001. 2. 6 Strategy Executive Process: This process empowers every employee toward a common strategy by focusing on a continual process of prioritization, improvement, and control.
In other words, it solidifies the workforce towards contributing to the development and implementation of a successful strategy via these three important parameters. The organization plans and deploys strategic objectives during prioritization, while employees and management continually fix performance gaps in the most critical areas throughout improvement, and subsequently lock-in on improvement gains during control. Activities to be implemented: Sales representatives target all the untapped markets and niches, by using WARID’s current products. Revenue objectivity should be given high attention, and it should increase by 40% every year (for the next 2 years. ) ? Product line should be extended by offering new service for the customers. ? Warid is lacking in communication with its customers so it should focus on this activity. ? More Regional Departmentalization should be there for detailed marketing analysis. ? There should be dencetrization decision making and employee should be encouraged for their opinions. ? More budget and resources should be allocated to advertisement and sales promotion. ? Role of R&D should be increased to help ) Target markets most effectively b) To get knowledge about consumer’s table and preference as. How implementation is to be done: Develop desirable skills in the employees who are assigned the basics of target implemented these skills may include. The ability of sales force, personnel in finance department, expert in R&D etc, should first understand the nature of the tasks or task’s importance foot the company. To increase the ability to put right people on right jobs . i. e. the person of finance dept. should not be given the tasks of R&D, which is highly sensitive and innovational field. Responsibilities for implementation:
Create the effectiveness of the personnel to focus on critical aspects of their job. Other remedies to enhance implementation include: Organizational Design: Organizational design should consist of multifunctional teams, including at least 1 member of each department to solve the problem or to achieve the targets. Incentives: Various rewards may help achieve successful implementation. For Example in case of WARID TELECOM, bonuses or commission should be given to members of sales force/personal selling teams who sales more than its target. Communication: Rapid and accurate movement of information should be confirmed .
To do so efficient and effective feedback systems should be introduced. Time and location of implementation: Proper time period should be given for the start and end of the task and each personnel related to that specific job should be given complete information about the geographic area of his/her sales and the volume to be sold in case o personal selling and sale promotion. (the balanced score board technique may be adopted) Evaluation and Control: For evaluation and control WARID should conducts a comprehensive audit of all the depts. By comparing the current results to that of company objectives .
They get comprehensive information from all the departments carefully and its analysis is conducted with great care. The results are analyzed with great emphasis on the company’s behalf. If there appears any deficit then revise their strategies implement them and then get the results and if there are no loopholes found they continue to implement that strategy for the specified period of time. This evaluation conduct twice a year 3External Analysis : PEST Analysis of Warid Telecom A PEST analysis is the analysis of the external macro environment that affects all the firms, P. E. S.
T is an acronym for the political, economics, social and technological factors of the external macro environment. These factors are out of control of the organization. However, changing external environment can also create new opportunities. Below is the explanation of the macro environmental factors which we have analyzed for Warid Telecom. 1) Political and legal Factors Political Instability in Pakistan: Recent political instability in Pakistan has affected almost all businesses in Pakistan. Warid’s sales and scratch cards turnover has shown a considerable decrease due to uncertain political situation in Pakistan.
The current uncertainty has its origins in a military revolution in 1999 which appointed the head of the army, General Pervez Musharraf, as president. With powers to dismiss the elected government backed by strong influence over the judiciary in Pakistan. Political Interference in Warid: High political approaches in recruitment and selection procedure in Warid are depriving Warid of getting the right and deserving truly qualified human resources. Most of the recruitments have been done on the basis of political approaches. Mr. Omer Haider, General Maneger of Warid is the cousin of President of Pakistan.
Annual increments and bonuses are under the political influences. Employees, with high political approaches get their commissions and bonuses double than their efforts. High political and social figures in Pakistan have got free postpaid connections for their business purposes, which has affected Warid in financial terms. Terrorism: Warid spent Rs. 94 million to improve network coverage in Swat. The work has been stopped due to the ongoing terrorist’s activities in Swat. Same is the case in tribal areas where Warid has wasted millions of rupees. Deregulation Policy:
Pakistan government’s deregulation policy for telecom sector in Pakistan has encouraged many investors to come and invest in Pakistan. Policy Objectives: • Increase service choice for customers of telecommunication services at competitive and affordable rates • Promote infrastructure development, especially infrastructure that will increase teledensity and the spread of telecommunication services in all market segments (Including voice, data and cellular etc) • Increase private investment in the telecommunication sector and encourage local telecom manufacturing / service industry
Policy Tenure: The Policy would be valid for five years from date of implementation and will be subject to review after this period. The licenses awarded to LL / LDI operators will be valid for 20 years. Advertising Problems: Warid mostly advertises on private cable channels; Geo, Geo Super and ARY. Government’s ban on these channels in Pakistan a few months ago, affected Warid’s advertising activities. Long Legal Formalities: Warid’s expansion strategies for installing new network boosters are sometimes affected by time wasted in fulfilling long legal formalities. ) Economic Factors: Pakistan’s economy is basically a growing economy, mostly dependant on foreign investment. Pakistan has been ranked as one of the top favorable economies in the world, states “Doing Business 2008? , a recent report released by the World Bank in 2008. Despite ups and downs and political uncertainty in the country, foreign investment has continued to flow in. It is worth mentioning that our trade with Asian countries, other than Middle East, in the year 2003-4, was US$ 8 billion. Exports were $2. 8 billion and imports accounted for US$ 5. 2 billion.
A major portion of this trade volume was with Japan and China. Trade with other East Asian countries was only around $2 billion. The trade balance with Asia is heavily tilted against us. The economy of Pakistan is primarily driven by agriculture, which accounts for the largest share of GDP, contributing about 25% to the economy. Pakistan’s per capita income per annum was about US $ 858 in 2006. The Pakistani economy throughout 2006 has continued to post strong results with inflation under control at approximately 3% per annum and GDP growth at 5%. A rise in the prices of goods represents inflation.
Inflation rate in Pakistan is rising faster than the personal income of an average individual. Inflation rate is 7. 76 and unemployment rate is 6. 50%. Pakistan’s currency is loosing its value day by day due to the uncertain political situation and security problems. A table below shows the foreign currency exchange rates in Pakistani rupee. US dollar’s buying rate was 61. 8 in March 2008 but in May, with a break of only two months it jumped to 65. 46. This is how economic fluctuations take place in Pakistan and that’s why investors are afraid of Pakistan. [pic]
Due to high inflation rate people nowadays prefer their basic needs rather than saving money for communication expenses. Therefore telecom industry as a whole is loosing its low income consumers. Telephony in Pakistan is an optional choice due to taxes. Taxation does not end at connection taxes and call taxes. An additional 10 per cent tax is levied on all prepaid scratch cards and also adjusted on postpaid numbers. Even outgoing SMS is taxed at a similar rate. New mobile connections are still heavily taxed at Rs. 800 per connection by Pakistan Telecommunication Authority. ) Social Factors: Pakistan’s Demographics: Pakistan is an ideological state, based on the concept of Islam. 98% of the Pakistan’s population is Muslims. Rest of the 2% is a mixed population of Christians and others. There are 24 different types of cultures identified in Pakistan. The westernization has a profound impact on Pakistan’s basic cultural values. Society of Pakistan is a collectivistic society. People in Pakistan like to live for collective interests of people all around. Family, relations and cultural values matters a lot for a Pakistani.
However, westernization has cast a profound impact on Pakistan’s basic cultural values. The trends and lifestyles are changing very rapidly. Mostly affected are the urban areas. Speed of diffusion in rural areas in a bit slower but unwantedly they have been affected by western culture. Pakistan has experienced sizable population growth over the last few decades. Located in the South Asia, Pakistan comes in 10 most populous countries in the world with a population base of 150 million. Its current population is expected to grow to 190 million by 2018 according to UN forecasts.
Assuming that future cellular coverage reaches 95% of all urban population and 30% of rural population and taking into account the relative geography and population density of each Province, there is a potential demand of approximately 25 million cellular subscriptions by 2018. As a whole literacy rate in Pakistan is 28%. The rate of male and female education is 61. 2% and 32. 2% respectively. Any change in people’s socio-cultural pattern, affect businesses operating in that area. All telecommunication companies including Warid is deprived of a huge segment of female consumers in rural areas of Pakistan.
A cell phone usage by females in rural areas is considered against the cultural values. Sometimes, people spread rumors about mobile phones like mobile virus, which mislead some unaware and simple people who eventually stop using cell phones. 4) Technological Factors: Technology has a tremendous impact on life style, consumption pattern and economic well being. The introduction of modern technology in the field of communication has compelled people to improve their life style and businesses. Technology affects nearly all businesses but the rate of diffusion of modern technology in communication sector is faster than any ther business sector. People in Pakistan have started realizing that time is money and if they want to save money they need to utilize quick and faster technologies available. In today’s business environment, companies operating in the communication industry have to provide the modern, up to date technology to its customers. Companies without technological considerations for its customers are surely to fail. Thus without technology telecom companies can’t survive in today’s business environment. 3. 3 Porter’s 5 forces and industry attractiveness strength of competitive pressure as an overview:
In telecommunication sectors Porter’ five forces can be better applied as compared to other businesses. Below we have discussed all those factors which directly and indirectly affect Warid Telecom. The Threat of New Entrants in Telecom Industry: Government of Pakistan is giving a friendly environment to telecommunication sectors. Now there are six competitors in telecom sectors and competition is becoming hard among these telecom sectors. It is said that although Telenor has 18% market share compared to Ufone’22% but Telenor has continued its efforts even to outdo the telecom giant in Pakistan, Mobilink.
Therefore Telenor is creating a tougher environment for Warid. Furthermore the entry of Vodafone can create unpredictable situation for Warid. So we can say that the threat of new entry in telecom sectors is very high. The Power of Buyers: There are six competitors in telecom sectors having strong competition. They are offering attractive packages at cheaper price. Buyers have the power to buy any service which suits them. Introduction of MNP (Mobile Number Portability) has given service to the customers to switch to another telecom company if they are not satisfied with their current connection.
So in Pakistan the power of buyers for telecom sector is high. All telecom companies devise their strategies and policies as per the customer’s demands. The Power of Suppliers: In telecommunication sectors the competition between suppliers is also high. As ZTE, Alcatel, Nortel, Sony Ericsson, Nokia and Huawei are the suppliers of booster equipments. Each one has contract with different telecom companies. So we can say that bargaining power of suppliers is a bit higher, but Warid having a strong financial base do not face any difficulty in contracting these suppliers.
The Threat of Substitute Product or Service: The threat of substitute product is high because government of Pakistan is giving many landline and wireless loop to different companies like PTCL wireless loop and GO CDMA. Although currently they are only providing SMS and CLI services but in future it is expected that they will offers exact services like mobile phones. 3. 3 SWOT Analysis of Telecom Sector: SWOT Analysis is a tool that identifies the strengths, weaknesses, opportunities and threats for the organization.
Specifically, SWOT is a basic, model that assesses what an organization can and cannot do as well as its potential opportunities and threats. Major difference between SWOT and PEST analysis: • PEST assesses a market, including competitors, from the standpoint of a particular proposition or a business. • SWOT is an assessment of a business or proposition, whether your own or a competitor’s. SWOT Analysis of Warid Telecom is given below: Warid like all other organizations possesses some strengths, weaknesses, threats and opportunities. Strengths of Warid Telecom:
Warid’s strengths are those features and packages which gives Warid Telecom an edge over other telecommunication services providers in Pakistan. Warid key strengths are discussed below; • Not tax charges on card loading. On loading Warid’s scratch card of 100 rupees customers get total 100 rupees. While loading any other telecom’s card 9% is deducted as government taxes. • Warid has largest postpaid subscribers base in Pakistan. • Sim capacity of Warid is 64 kb for postpaid and 3 kb for prepaid. None of the competitors of Warid gives this much facility. Warid has largest postpaid subscriber’s base in Pakistan. • Warid scratch cards can be used for making calls from PTCL. • Warid uses booster technology of Sony erricsson, which is the most modern technology used by a cellular company in Pakistan. • Warid offers Zero line rent on postpaid connection. • Warid’s network frequency is the highest of all cellular companies. i. e. 1900 mega Hz. Weaknesses of Warid Telecom: • Warid Telecom has limited network coverage. It operates in about 150 cities and towns in Pakistan. On the other hand Ufone and Mobilink have covered almost all parts of the country. Warid’s promotional activities are limited as compared to Telenor and other cellular service providers • Warid has amateur IT staff, who can’t handle customer feedback, emails and database. • Although Warid is a company backed by financially strong Abu Dhabi group, employees still complained about their salaries. • Customer care section is comparatively weaker than other cellular companies. Opportunities available to Warid Telecom: • If Warid Telecom improves its network coverage it can attract million of more customers. Warid can utilize Wateen’s gateway technology for connectivity purposes. If it did this, on one hand Warid can offer surprisingly lower call rates to its customers, since Wateen is Warid’s sister company. On the other hand it will get ride of PTCL’s heavy taxes for using PTCL’s gateway. • Warid is an Arabic brand name; millions of pro-Islam and anti-Western customers can be attracted by effective marketing strategies. • Warid should treat education sector as a separate segment because it is a huge segment, ignored by other telecom companies. Threats to Warid Telecom: Competitor’s strong and effective advertising strategies are distorting the initially developed good image of Warid Telecom • Customer’s unsatisfied state due to weak network coverage of Warid may create a weak competitive ground for Warid • Weak customer care department may affect its present customer’s satisfaction • Employees at Warid are not happy with their salaries and treatment by seniors which can lead to some drastic results for Warid in future • Call connectivity and call crossing problems may hurt customer’s loyalty • Most of the franchisees are not satisfied with companies’ strict policies regarding their rights. Their complaint is that company is not cooperating with them in marketing and advertising efforts • Specifically Ufone and Telenor’s attractive packages like Free Minute and SMS bundle packages are a serious threat to Warid. 4 Conclusion: So far looking at the Warid strategies, we have come to conclusion that to survive in the long run Warid is doing strategic partnership with Nokia and Ericson.
It’s like that they can’t manage their network by their own. Its seems they can’t do research of market so they are taking help from international companies that are already functioning in the Pakistan. Warid is increasing its customer base, but not considering quality of their network. So it will create problems for them in the future. Customer complaints are not fulfilled by the Warid. There is no rapid response to the need of the customers. Warid is not very successful globally. It is functioning in Bangladesh and Uganda, these are developing countries. And Warid is not very successful in both of the country. Warid is now unable to continue its cost leadership strategy.
It can’t low its prices any more. At the operational point Warid is not good. It seems it is going to be sold. So in the long run it is difficult for the Warid to survive. Changing of its corporate slogan gave the idea that it is not any more customer oriented company 5. References: Book Consulted: Title: Marketing Planning and Strategy Author: S. Jain Edition: 6th URLs Visited: www. knowthis. com www. answers. com www. netmba. com www. wikipedia. org Persons Contacted: Mr. Sheraz Khan Corporate Sales Manager, Warid Telecom Mr. Pervaiz Khan Corporate Placement Manager, Warid Telecom Mr. Fakhr-e-Alam Corporate Sales Manager, Warid Telecom [pic][pic]