Free Essay

Strategic Management

In: Business and Management

Submitted By rangakavi
Words 6511
Pages 27
STRATEGIC MANAGEMENT

Table of Contents

1.0 Introduction 4
2.0 Macro- environment Analysis 7
3.0 Industry Attractiveness Analysis 16
4.0 Core Competences 22
5.0 Business Strategy 25
6.0 Conclusion 27

1.0 Introduction
Lanka Bell is a leading telecommunications operator in Sri Lanka that provides a full range of telecommunication services to businesses and residential customers. With the introduction of the evolutionary low cost CDMA technology, company continues to expand its robust modern digital network that currently specializes in Internet, Data and Voice services. Lanka Bell is an ISO 9001: 2008 Certified Company.
Lanka Bell formed in 1997 as the single largest BOI Company in Sri Lanka. With a state of the art digital network & unmatched customer support, Lanka Bell remains firmly rooted in Sri Lanka as a telecommunications giant that continues to challenge the industry through its unparalleled portfolio of services. Lanka Bell supported by a dedicated team of professionals with international expertise & local knowledge and strategic investments in low cost cutting edge technology. Lanka Bell presents an assortment of value added high-speed broadband and voice services at unbeatable rates to its customers, with the new addition of FLAG international optical fiber network. Lanka Bell’s catchphrase is, "Start talking, start saving".
Lanka Bell having 3 subsidiaries specialized in different core areas of the ICT & Telco business.
1. Bellvantage (Pvt) Ltd.
2. Bell Solutions (Pvt) Ltd
3. Telecom Frontier (Pvt) Ltd.

Bellvantage, an ISO 9001 Certified company that deliver high performance business solutions and professional services in Sri Lanka. Primary business focus is in robust insurance solutions, Telco and financial solutions. In addition, they specialize in software quality assurance, IT consulting, project management, BPO, Call center hosting, application hosting and software development. The company vision is to deliver the customers’ aspirations through agile methods and realize their true business objectives.
Bell Solutions is continuously pursuing the challenge of providing comprehensive Information & Communication Technology (ICT) solutions to its customers/ partners. Backed by the strength, resources and positioning of the Lanka Bell group, Bell Solutions has specialized in building rewarding partnerships with customers who solicit an ‘outsourced ICT solution’ from a competent and trustworthy service provider.
Telecom frontier is a fully subsidiary company of Lanka Bell Limited. Company is continuously pursuing the challenge of providing comprehensive Information & Communication Technology (ICT) solutions to its customers/partners. Backed by the strength, resources and positioning of the parent company, Telecom Frontier has specialized in building rewarding partnerships with customers by providing State of the Art customized Enterprise class applications. Telecom Frontier is the approved partner of Siemens Enterprise Communications in Sri Lanka. In additions to the SIEMENS partnership, company is handling series of brands, such as KAREL, INFINITE & BITTEL.
The vision of Telecom Frontier is “to be the most trusted and sought after ICT Service Solutions Company in Sri Lanka”. Telecom Frontier mission is to “build professional partnerships with customers, to enhance their position in the market by improving operational performance, controlling costs and mitigating risks associated with their ICT environments”.
Propagating on the verticals of Infrastructure & Managed Services of ICT, Telecom Frontier offers immunity to its business partners from having to worry about ICT challenges, thus freeing their time and resources for improving their core business.
Company believes that, the customer to be successful, through constantly looking ways to make it easier to do business with them. It is therefore, the company aim is to provide integrated World Class Customer Support and Order Management Processes with concentration of Predictable service delivery, clear, professional and pro-active communication, Simplified interfaces and Accurate service levels.
Business Solutions provided to the customers combine the support, service, and sourcing required in meeting their business needs. Company follows an efficient procurement process and provides professional services to support the best-of-breed products and solutions in partnership with industry leaders.
Company also provides their customers, the most technically advanced voice communication solutions for various industries and intuitions such as; * Hospitality and Leisure industry * Hospitals & Medical Centers * Finance and Banking institutions * Educational institutes * Trading, Manufacturing and production plants * Call Centers / BPO’s * Public and Privet sector Institutes
Specialize services and solutions provides by the company are as follows; * Corporate Conference and AV-Solutions. * Video Conferencing solutions * IP Enabled Communication applications. * VPN and Networked Services * Structured Cabling & Network Solutions. * Front/Back office Property Management Applications. * State of the art IPTV solutions.
Telecom Frontier is continuously growing its strengths and capabilities through better products offering at competitive prices and superior after sale services to the corporate customers. Company is currently serving for over 100 corporate customers covered with annual maintenance contracts and also over 600 customers getting services when they required.
Well trained engineering staff and technically updated sales staff are ready to serve the customers at any time. Round the clock breakdown staffs are always ensure minimum interruptions to the customers by attending and recovering any nature of failures.
Company is always ensure to maintain enough stocks of backup systems and accessories to support customers, not only during the warranty period, but also at any time by allowing them to contact the staff through hotline facility. This assignment is mainly based on the operation of Telecom Frontier as Strategic Business Unit. 2.0 Macro-environment Analysis
There are many factors in the macro-environment that will effect the management decisions of the Telecom Frontier. The bellow table analyses of the macro environment in which the company operates, by using the PESTEL framework. Issue | Situation | Conclusions | Political | * Rapid infrastructure expansions in the country after end of the war. * Government tax benefit for rural communication development. * High priority for ICT and telecommunication development. * Favourable policies of the government attracting international investors and partners. * Competition among the investors. | * Vast opportunities for communication infrastructure development. | Economic | * Stable economy and new policies of the government to attract investors * Removing tax for imports of telecommunication equipment * Stable price from Telecom Frontier with range of product portfolios * Foreign investments for local companies | * Stable economy of the country encourages investors. | Social and cultural | * Global village needs interconnecting people. * Increased trend of people spending on leisure. * Questing sophisticated systems for easy lifestyles. * Highly growing mobile & data markets. * Sri Lanka to be the global communication hub in Asia. | * Strong market for communication facilities. * Extended support of the government for rural development. | Technological | * Quality products from European market copied by low cost products from the Asian market. * TRCSL control over importing & selling of electronic products. * Additional feature activation requires Licences. * New trend on IP based Intercom. | * Operators are heavily invested on expanding voice network Island-wide. * Fully controlled by the regulatory parties. * Advantage over Lanka Bell Flag Fiber network. | Environmental | * Various environmental approvals before telecom infrastructure construction and operation. * Trend of low power appliances. * Public more aware on environmental issues and effects to their day to day life. * Standards ISO 14001 and 50001 for environment protection. * Corporate Social Responsibility awareness and expectations. | * Environmental protection becomes more legislative or legal requirement than voluntary requirement. | Legal | * Control of TRCSL over almost all the activities of the Telco industry. * TRC issues new licence for new operators. * TRCSL introduced Flat tariff structure. | * Competitors create increased competition on service offerings. |

2.1 Political
After the end of the war in Sri Lanka, rapid expansion of infrastructure facilities by the government were seen in every corner of the country. In additions to the government funding, local and foreign investors were also investing for those development projects. Rapid developments of industries, such as construction, leisure, hospitality, etc can be seen now. As the telecommunication is a fundamental requirement of almost all the developments, huge market has been created for the communication business, and in the process of growing day by day. That is a high profitable business and growing market as volume of sale is increasing.
Recently, Telecommunication Regulatory Commission of Sri Lanka (TRCSL) introduces a new tax scheme for rural infrastructure developments, by removing one of the telecommunication levy and frequency charges from the operators. Those operators who have already invested lot in rural telecom infrastructures can get the investment set off from the tax amount to be paid to the government. This creates environment which most of the operators are willing to invest in rural areas. Hence, the industries located in those areas will be getting telecom facilities without much hassle. Telecom Frontier also getting more sales from industrial sectors located in rural areas, mainly in the North province.
In addition, considerable number of the telecom facilities provided by Lanka Bell to corporate customers is of subsidy type, where part of the investment agreed to be born by the company and customer, to pay the rest as installments over the next few years. Hence, volume of sales are increasing and the company will also getting more opportunities in those areas, than previous.
The Government of Sri Lanka is now stable and giving more tax facilities & flexible trading policies to foreign investors. These foreign investors are willing to invest directly or acquiring/ joint venturing with the local companies, in order to enter in to the Sri Lankan market. This has increased infrastructure developments in many industrial sectors, and telecom facilities are common requirements in all those facilities. Telecom Frontier is also having considerable sales from those sectors funded by foreign investors.
With the entering of many global giants to the telecom industry in Sri Lanka, competition among the telecom operators has increased. This resulted with the reductions in prices, especially of call tariff. As the regulatory body, Telecommunication Regulatory Commission of Sri Lanka (TRCSL) has set up lowest level of the tariff structure which gives much more benefits to the end user. At the same time, some operators has introduced special packages like, Mobitel Upahara and Dialog Blaster, which increase the call volume to most networks and they need to increase the capacities of call handling during the peak time. This create requirements to upgrade existing intercom systems to higher capacity and Telecom Frontier also getting many expansion requirements from existing customers, that gives considerable revenue too.

2.2 Economical
The economy of Sri Lanka is now stable after the three decades of civil war ended in 2009. Country is now a safe place to live and, also a stable market for investors. Government of Sri Lanka is giving highest priority for developing infrastructure, through foreign loans and with the help of local and foreign investors. This booming economy creates many opportunities to the telecom industry and definitely to Telecom Frontier too.
Recently, Government tax for the telecommunication infrastructures has been removed with special parliament approvals. With this tax benefit, government encourages more investors to invest in the infrastructure developments in the telecommunication industry and benefit to be shared among the industry and the end user. End customer will be getting considerable reduced price for communication products and investors getting more return for their investments as the volume of sales have automatically increased.
Telecom Frontier is having range of communication products from high end to low end markets, starting from high quality SIEMENS products from Germany to competitive priced KAREL, INFINITE & BITTEL products from India and China. During the recent downturn of the European economy, Siemens could provide products at discounted price to Telecom Frontier, the local partner of Siemens without passing the inverse effects of the economic changes. As Telecom Frontier is maintaining range of solutions, could cater with much stable price during the economic downturns in other counties too.
As explained early, Government of Sri Lanka is giving more incentives for developing telecom industry; Telecom Frontier could offer products at competitive price, with the help of Lanka Bell as the group company. In addition, with the removal of tax for telecommunication infrastructure, market has expanded with increased volume of sales, than previous.
New trend of entering new investors for telecom industry has seen after the removal of tax for telecommunication infrastructure. Some big companies in electronic industry, has expanded their portfolio by adding intercom as new product range. Browns, Abans and few more big group of companies has now entered to the market of intercom solutions and Telecom Frontier facing more competition than earlier.
Telecom Frontier as subsidiary company of Lanka Bell, gain more benefits of incorporating with the existing business network of Lanka Bell, in all the areas of the Island including North province. This has creates more exposure to the corporate customers of Lanka Bell to introduce intercom solutions of Telecom Frontier.
With the recent developments of economy in Sri Lanka, many small and medium investors were entered to larger projects such as tourist industry - hotels, manufacturing industry facilities, which enabled the Telecom Frontier to gain more revenue from those new investors as well.

2.3 Social
Life style of the people is rapidly changing with the global influences through the open economy policies of the government of Sri Lanka. People in every corner of the country as well as the world need to be work closer in this changing economy and that creates the need of well-established communication infrastructure to be set up at every corner from the household to multinational organizations.
Development of those telecommunication facilities to cater the changing lifestyles, not only of the individuals but also of the organizations of all categories will create much more business in the intercom industry as buying patterns of individuals to organizations are also changing.
Demand for sophisticated systems such as IP based PABX with various features will replace basic featured analog PABX and companies are freely investing for these fascinated things by going beyond the basics.
Size of the companies’ physical location of operation and interconnections with the related industries are rapidly changing and expanding of not only the large enterprises but also of the small firms operate.
While changing those factors the communication infrastructures should also change by facilitating more people to be connected across the globe, through the lowest cost routing and at better quality service levels.
Government of Sri Lanka is more empesize on spreading newest technologies such as internet data and voice communication among the nation of the country to make Sri Lanka to be the global communication hub in Asia.
Various regulatory and policy level influences have been placed to the operators in the industry while giving much more benefits to the end users.
Telecom Frontier is a company having the international quality certificate ISO 9001 2008 and all the activities are focused for the utmost satisfaction of the customers
2.4 Technological
Competing technology development is critically influence in this industry. Competition among the manufactures of intercom products have increased and various equivalent or alternative products are now in the market. Branded products from European market are copied by cheaper products from Asian market. Manufacturers from India, China and Taiwan are giving considerable low cost products such as of Bittel and Karell brands and those are much more similar to branded products such as Siemens from Germany.
Technological advancement having greater influence, products in the intercom communication industry are now competing mostly not by price but by offering various special features which most customers are much attracted by. Different industries are preferred different set of features and manufactures are positioning their products specifically to certain industries.
Technology legislation is also influenced a lot. Telecommunication Regulatory Commission of Sri Lanka (TRCSL) is the regulatory body that controls the activities of the operators’, investors and individuals related to import export and use of communication systems. Every telecommunication equipment need the prior approvals of TRCSL called “Type approvals” before selling to the end customers and ensure the systems are compatible to the life safety and environmental health in long term.
At the same time license needs to be purchased from Siemens for configuration of additional facilities by using the system and manufacturer has locked the use of technology to make more income through the licensing mechanism.
Maturity of technology create communication on IP based and hence technology of intercom systems is also now becoming more IP based where interconnecting of various systems is much easier. Lanka bell own the one and only private owned international fiber optical communication cable, connecting our country to the world through the most reliable and fastest technology at very cheap price.

2.5 Environmental
Telecommunication is a sector having much environmental legislation enforced by the regulatory commissions of the government and operators need to comply in full to proceed with their operations. Various environment type approvals from authorities like Central environmental authority, Urban development authority, Defense ministry, Forest authorities and various local authorities require during the constructions and operation of telecom facilities.
From the initial inception of reserving site for infrastructure implementation to the billing to customers for their usage, various legislations are enforced. Many of those are for protecting the environment as a direct effort and the rest also for protecting the consumer also as a part of the environment.
Public are much aware on the possible inverse effect of radio signals and possible lightning threats due to the communicational systems installed everywhere. Hence organizations need much attention on those areas as to proceed with the activities with minimal effect of the public.
Energy conservation is the recent trend of the public as well as industrial sectors where low power usage with energy efficient appliances having more demand. Various standers like ISO 14001 Environmental Management System and ISO 50001 Energy Management Systems are now popular among the industries of service and production sector. Health and safety standards are also popular as to protect people in the organizations considered as also important as same as the environment. Most of those standards are compulsory requirement for construction industries when applying for ICTAD registrations for higher grades such as M1 & M2 where those are voluntary requirement for service sectors.
Corporate Social Responsibility standards are much popular among the corporate business world and the mother company of the Lanka Bell family is now working on the same as more influence when entering to the international market.

2.6 Legal
Telecommunication Regulatory Commission of Sri Lanka (TRCSL) is the regulatory body that controls the activities of the operators’ and the investors to the telecommunication infrastructure developments. Operators need to ensure to comply with the various legislations stipulated by TRCSL during the installation, commissioning, operation, sales & marketing and expansion of the telecom infrastructure, products and services.
Before any telecommunication equipment imports from manufacturer investor need to obtain prior approvals from TRCSL called “Type approvals” and need to ensure same before selling to the end customers and ensure the systems are compatible to the life safety and environmental health in long term.
TRCS has issued new licenses recently to several mobile operators like Airtel and Reliance who are the major operators in the Indian Territory. Competition of those operators to the existing mobile and fixed line operators create drastically reduction of the tariffs and inversely affect to the profitability of the operators in short run. Lanka Bell as fixed line operator also undergone difficult time during the past and affect to the financing problems of none core activities of both the company and subsidiaries. 3.0 Industry Attractiveness Analysis

Lanka Bell is the second largest fixed line operator in Sri Lanka and Telecom Frontier as the subsidiary company of Lanka Bell family enjoy the resources and facilities hosted by the group company. Existing business network in all the areas of the island, support the deliverability of the services of the Telecom Frontier to the customers. Lanka Bell and the group of companies are capable enough to deliver superior innovative and efficient services to Sri Lankan market. However it is indeed require the company and subsidiaries to keep attention not only on their competitors but also on many other factors in the environment, which influence their competitiveness. The following “Porter’s Five Force framework” analyses the complete picture of competition that can exist in the industry.
(Low)
* Customer preference on IP based communication * Threat from wireless technologies
(Low)
* Customer preference on IP based communication * Threat from wireless technologies
Threat of Substitutes
Threat of Substitutes

(Medium) * Lot of alternatives, fewer reliable products * Buyer having minimal information
(Medium)
* Lot of alternatives, fewer reliable products * Buyer having minimal information
(Higher)
* Fentons (NEC) * KBSL (Avaya) * Metropolitan (Ericsson)
(Higher)
* Fentons (NEC) * KBSL (Avaya) * Metropolitan (Ericsson)
(Medium)
* Existing Telco operators can bring down new player. * Major players in consumer electronics can enter. * Government tax incentives attract investors.
(Medium)
* Existing Telco operators can bring down new player. * Major players in consumer electronics can enter. * Government tax incentives attract investors.

(Medium) * Higher switching cost * Forward integration by Telco operators

(Medium) * Higher switching cost * Forward integration by Telco operators

Bargaining Power of Customers
Bargaining Power of Customers
Bargaining Power of Suppliers
Bargaining Power of Suppliers
Threat of New Entrants
Threat of New Entrants
Rivalry among Existing Competitors
Rivalry among Existing Competitors
Fig: Porter’s Five Forces Model
Fig: Porter’s Five Forces Model

3.1 Threat of New Entrants
If new entrants move into an industry they will gain market share & competition will increase. The position of existing firms is stronger if there are barriers to entering the market. If barriers to entry are low then the threat of new entrants will be high, and vice versa. When it comes to entry barriers of telecom sector the first thing is the regulatory controls and capacity to invest. However, those factors for the intercom industry is slightly differ and Telecom Frontier as a subsidy of a telecom operator will gain considerable advantage over the other players.
It is possible any new firms to enter with the joint collaboration with telecom operators such as SLT, Mobitel and Dialog as their existing corporate customer base, investing capacity and influence over the customer preference are higher than any individual new investor.

Table: Market share of different Intercom products in Sri Lanka

High capital requirement is key entry barrier and only large businesses can compete. In the intercom market, highest market share over 35% is with Fentons for their NEC brand. Telecom Frontier with Siemens brand having about 13% share, next to the Fentons. Retaining in the market by investing large capital and long-term customer loyalty are the key success factors of Fentons. As a new trend, major players in the electronic consumer industry can easily enter to the intercom market as new competitor, however only very few occasions could be seen in the past.
Lower unit costs make it difficult for smaller newcomers to break into the market and compete effectively. This kind of entry barrier is not significantly affect to the intercom industry as the product cost is relatively higher and almost all the products importing from European or Asian markets.
Regulatory and legal restrictions also an entry barrier in this industry but government has create this factor negligible by removing tax, and also for importing communication equipment. Hence this has become as not as barrier but influencing factor in the Sri Lanka Market.
Existing products with strong brand increase customer loyalty and make it difficult for newcomers to gain market share. Products from European market such as Siemens will be gaining more loyalty over many years of trouble free operation.
Access to suppliers and distribution channels also entry barrier in some cases and Telecom Frontier is getting considerable advantage to access the enterprise level customers by being Subsidy Company of Lanka Bell. A lack of access will make it difficult for newcomers to enter the market in general; however no any significant barriers can be seen when analyzing the success of key players in the intercom business in Sri Lanka.
Product differentiation also an entry barrier and almost all the intercom players are coming with different set of features suit to different customer categories. Hence, they could capture specific category of customers with more focus positioning strategy. Telecom Frontier is absolutely capturing the Leisure sector with specific set of features of the Siemens products for those customer categories.
Hence the entry barriers to the intercom industry are moderate.

3.2 Threat of Substitutes
It is visible that the substitute products for existing communications solutions are moderate with the introduction of next generation technologies. To think about substitutes, first we should think about the customer needs that are served by the Telecommunication services and what is the customer expectation regarding these service.
Fixed Wired and Fixed wireless technologies have a big threat from substitution from wireless technologies. Due to many service creation capability and mobility in mobile segment, Lanka Bell‘s fixed core business churn rate has gone up. However the intercom sector has almost no substitution as a product but as a generic. Reduction of fixed line usage is directly affected to the level of usage of intercom products. In addition, basic analog products will be replaced with modern systems of digital IP based.
Hence the threat of Substitutes is minimal in the intercom industry.

3.3 Bargaining Power of Customers
Currently there are lots of choices from different operators providing Telecommunication solution and there is a huge competition among operators to attract the customers. At the same time, many competitors are also in the intercom business positioning with various brands.
Compared to Western countries, Telco customers are not very strong in their demands. Quality standards and support are comparatively not major concerns if they exist at a basic level but customers are very cost conscious when selecting basic products. However, when the large intercom products are selling, customers are more preferred to go with branded products having extended local warranty support. Most of the competitors are getting considerable low profit margin for tenders while higher margin when doing business with individual buyers.
Switching cost of intercom products is much higher and generally one time investment for small and medium level business customers. However when the technology changes or user requirements increases, existing systems to be expanded and customers will tends to switch to other brands having more features when the existing product not supports the new requirements.
Intercom products are more advanced in technology and features are different to the products to products when brand differs. Hence, buyers are having minimal information and limited power over customer bargaining.

3.4 Bargaining Power of Suppliers
If a firm’s suppliers have bargaining power, they will exercise that power to sell their products at a higher price and squeeze industry profits. However in the intercom industry, prices are much competitive and profits are not that much higher. Hence, suppliers in this industry having moderate bargaining power.
Suppliers find themselves in a powerful position when: there are only a few large suppliers, resource they supply is scarce, cost of switching to an alternative supplier is high, product is easy to distinguish and loyal customers are reluctant to switch, supplier can threaten to integrate vertically, customer is small and unimportant and there are no or few substitute resources available. When we consider the intercom industry, only few suppliers of different capacities, higher cost of switching, as well as loyal customers are reluctant to switch and various alternative products are available.
Most suppliers are in forward integration level as Telco operator is also running the intercom business. Hence, supplier position is moderately powerful.

3.5 Rivalry among Existing Competitors There are many players in the market offering communication services through different technologies and of various brands. Very high competition exists among the players and capturing different set of markets with different positioning strategies. Direct competition is common as same customers base is targeted by all the players. When the market share is concern, all the players are enjoying almost equal market share and balance in equal size in terms of resources and capabilities. However most of the players are subsidiary companies of major business leaders in consumer or service sector. Fentons and Telecom Frontier are having 35% and 13% market share respectively and hold the majority of the market. In the intercom industry, the customers are having considerable exist barriers as the systems can be expanded only with equal or compatible brands. Once installed, companies are having considerable future potentials of doing business with customers when the expansion requirements are exist. By analyzing these factors we can conclude that the industry is attractive to new entrance, however with present competition, no one can gain considerable profit unless otherwise giving extra value additions over the existing technology.

4.0 Core Competences
In order to identify the core competencies of Telecom Frontier, we have used the Resource based view and the following unique resources could be identified.

Unique Resources | Core Competencies | Network Infrastructure | Coverage, Reliability & access to huge customer base | Managed by Telco Operator | Technical & Financial backing by Lanka Bell group | Engineering Excellence | State of the art customized enterprise class applications and solutions | Loyal customer base | Rewarding partnerships with customers & retention ability. |

Telecom Frontier is having access to many pool resources of Lanka Bell, the 2nd largest fixed line telecom operator in Sri Lanka. Many of such resources giving them competitive advantage over other intercom service providers. These resources can be identified as network Infrastructure, Lanka Bell group ownership, engineering excellence and the loyal customer base.
Telecom Frontier was the only intercom service provider managed under a telecom operator and having easy access to huge corporate customer base which others are difficulty enter in to. By being in the industry for a long time gives them the advantage of owning necessary infrastructure like; huge technical staff operate all over the country, branch network island wide, in-house workshop and testing facilities, large stocks of systems and accessories, etc. At the moment Telecom Frontier’s customer service covers the whole island and they are the only service provider with joint operation with a telecom operator to cater such larger market. They are using the resources optimally by sharing and take the advantage of infrastructure by diversifying in to other related business fields, for example entering to data & voice solutions, Network cabling, CCTV & Security systems, etc. by using outsourced parties. Therefore value of these physical resources is very high. Other companies have no such ability to own these infrastructures as they have limited financing and backing by mother companies.
Telecom Frontier is a fully Sri Lankan own organization which is their other main competitive advantage over other service providers. Still in Sri Lankan culture people trust Sri Lankan own service providers over private companies due to trust and loyalty. Also being established in Sri Lanka for a long time, it positions Lanka Bell in a special place in the mind set of people. This country owned status adds a lot of value to Telecom Frontier by allowing them to present better offers for its customers and also it is rare, not imitable and not substitutable.
There are several experienced engineering staff are attached to the technical department and also to the top level management. When compared with other service providers, Telecom Frontier employs experienced and qualified engineers who contribute towards gaining competitive advantages. The intellectual capital Telecom Frontier has by having these engineers is incomparable to competitors. Their knowledge is a highly valuable asset to the company due to high technology involvement of the industry and in strategic planning of the organization. Even though others also can have many technical staff as they like, they cannot provide the conditions and job security Telecom Frontier provides, by being a subsidiary company of Lanka Bell. Especially after the economic recession, industry downturn and the consequences of that made many employees turn their trust towards organizations like Telecom Frontier as the company secures their employees job with the financial backing by Lanka Bell and the group. Such security and backings cannot be given by other competitors in the market. This combination of working conditions and job security creates a very motivational environment which gets the optimum level input from the intellectuals that any other cannot get.
Telecom Frontier is the local partner of Siemens Enterprise solutions of Germany and the reliability and quality of the products giving long-term customer satisfactions and unbreakable service to the customers. That will ensure rewarding partnerships with customers & company is having huge retention ability of the existing customers. This is competitive advantage of the company as most of the other competitors are unable to maintain such reliable and quality service to the customers and cannot be sustain in long run.
If we consider the robustness of the strategic capabilities, we should analyze whether they are satisfying the four criteria; Value, Rarity, Imitable & Substitutability.

| Value | Rarity | Imitable | Substitutability | Network Infrastructure | High | Medium | Low | Yes | Managed by Telco Operator | High | High | Low | No | Engineering Excellence | High | Medium | Low | No | Loyal customer base | High | High | Medium | Yes |

5.0 Business Strategy
We have used the “Porter’s generic model” to identify the business strategy of Telecom Frontier.

Competitive Advantage
Competitive Advantage Uniqueness
Uniqueness
Cost
Cost

Broad Target
Broad Target
Competitive Scope
Competitive Scope
Cost Leadership | Differentiation | Narrow Target
Narrow Target
Focused Cost Leadership | Focused Differentiation“Telecom Frontier” |

According to the above analysis, we have identified that the Telecom Frontier follows “Focused Differentiation” as the business strategy. Telecom Frontier targets for selected enterprise customer market and it’s not the cost leader but having unique features as the competitive advantage. Differentiation has many advantages for the firm which makes use of the strategy. It always creates loyal customers towards company and stability in the industry through brand loyalty. It is much more advantage of Telecom Frontier to be focused differentiation as the products offering is for selected market and not for the whole intercom customer category. In the implementation, Telecom Frontier should focus on the creating differentiate value to customer by their service through the selected systems, procedures and management .Systems and procedures have been design in a way that encourages protecting service’s uniqueness. When consider the business strategy, business strategy is suitable for the business at the beginning of the stage. In the long run this uniqueness in the differentiation may be imitated by other providers as well. For example, reliability and versatility are major differentiators of Telecom Frontier compared to other providers. So the others also come up with more services over their products in future as it is technically possible. And currently the fixed cost associated with the Telecom Frontier’s product is high. So when it comes to affordability, people may simply forget the reliability and can go for low cost providers as people are more cost conscious. Also due to the changing socio cultural factors with the rushing nature of lifestyle people may prefer IP based platform rather than fixed line in future. Therefore, there is no harm that Telecom Frontier is going with focused differentiation strategy, but they have to come up with different strategy to attract the customers from going to competitive brands. So Telecom Frontier can think about the strategy which is with the combination of both focused differentiation and cost leadership. If Telecom Frontier could go to the market with present differentiating factors and with the low cost, no doubt that it can attract more customers than its competitors. However the quality should not be compromised with the cost. Though we are suggesting for integrated focused differentiation/ low cost strategy, we should think about whether it is worth for Telecom Frontier to go for low cost. If we look back to our environment analysis and the industry analysis, we can say that it is worth because there are huge market potential but with low purchasing power. So by going with low cost approach and differentiated value proposition Telecom Frontier can attract more customers and thereby enjoy the benefits of economies of scale. Since Telecom Frontier is not having the IP based advantage it is wise to be the first mover and capture the market and get the customers locked in at the earliest.

6.0 Conclusion
Being the first CDMA operator and the 2nd largest fixed line operator in Sri Lanka, Lanka Bell is now over 15 years in the market with strong customer and brand loyalty. Telecom Frontier as a fully subsidiary company of Lanka Bell has an exclusive opportunities in the market.
The macro environment analysis using PESTEL framework helps to identify the environmental impacts Lanka Bell as well as Telecom Frontier faces. Political and economic stability creating in Sri Lanka is affecting positively for all the business sectors at the moment especially the telecom industry which will give better opportunities to expand their business in to new market segments demographically and geographically into North and East. Socio cultural factors also give positive market signals to Telecom Frontier to target untapped markets but Telecom Frontier has to address the issue of corporate customers moving to IP based communication platform. Lanka Bell is already taking the advantages of technological improvements happening in telecommunication industry but rapid technological changes provides challenges since there is high competition among the operators and players like Airtel and Dialog also have the potential in investing in new technologies. The implementation of regulatory commission can affects Telecom Frontier adversely since they promote completion and introduce lengthy procedures. We can conclude that at the moment macro environment provide more opportunities to Telecom Frontier.
When analyzing the industry attractiveness by using the five forces analysis we identified that telecommunication industry has high threat from rivalry among competitors, medium level of threat from new entrants, and bargaining power of customers and suppliers. But there is low level of threat from substitutes to the Intercom market and on the other hand it rate the Intercom becomes a substitute for other communication methods. By analyzing all these factors we can conclude that though the industry is not that much attractive to new entrants, there is huge potential for growth for existing Intercom service providers when we consider the PESTEL factors and the current Intercom market penetration level in Sri Lanka.
Telecom Frontier is differentiating its value proposition in the areas of versatility, reliability and also reaches when compared with other service providers that are competing in the same league. They have to improve in the areas of IP platform and customer centricity where Telecom Frontier is lacking behind because these are two areas where customers’ perceived value is placed.
According to the study we have identified that the Telecom Frontier follows “focused differentiation” as the business strategy. When we compare the opportunities and threats that come from the macro environment, the attractiveness of the intercom segment is much higher. We can come to the conclusion that the strategy Telecom Frontier is implementing at the moment is suitable for the business unit at this beginning stage. They have to come up with different strategy to attract the customers from going to competitors.
Telecom Frontier can think about the strategy which is with the combination of both focused differentiation and cost leadership. If Telecom Frontier could go to the market with present focused differentiating factors and with the low cost, no doubt that it can attract more customers than its competitors. After considering all these factors we are suggesting for integrated focused differentiation/ low cost strategy for Telecom Frontier as its future strategy.

Similar Documents

Premium Essay

Strategic-Management

...FACULTY OF BUSINESS MANAGEMENT MGT 790 STRATEGIC MANAGEMENT Course Outline 2011 Course Prescription Strategic Management is the process and practice of managerial decision making and implementation that seeks to create and maintain competitive advantage. In essence it determines the long term performance of a business and as such is the role of the senior executive members to refine but the responsibility of all to roll out. Included in the process is comprehensive environmental scanning, strategy formulation (strategic planning), strategy implementation, and monitoring. Students in this course will review how the strategic decision makers within an organisation first identify, define and analyse commercial problems and then develop practical and ethical solutions. It provides a practical guide for, and an initial experience in, strategy formulation and strategic management. Class time will be largely spent in lecture, discussion, case studies and experiential exercises. Students will learn from the theoretical literature, instructor, case studies, videos, research presentations, and from each other. The course materials explain and describe the different aspects, challenges, and stages of strategic management simply and clearly. Goals of the Course To examine and understand the nature and role of strategy, strategic management and strategic leadership within an organization. Learning Outcomes 1. To develop skills in strategic analysis,......

Words: 1985 - Pages: 8

Premium Essay

Strategic Management

...Strategic management is a field that deals with the major intended and emergent initiatives taken by general managers on behalf of owners, involving utilization of resources, to enhance the performance of firms in their external environments.[1] It entails specifying the organization's mission, vision and objectives, developing policies and plans, often in terms of projects and programs, which are designed to achieve these objectives, and then allocating resources to implement the policies and plans, projects and programs. A balanced scorecard is often used to evaluate the overall performance of the business and its progress towards objectives. Recent studies and leading management theorists have advocated that strategy needs to start with stakeholders expectations and use a modified balanced scorecard which includes all stakeholders. Strategic management is a level of managerial activity under setting goals and over Tactics. Strategic management provides overall direction to the enterprise and is closely related to the field of Organization Studies. In the field of business administration it is useful to talk about "strategic alignment" between the organization and its environment or "strategic consistency." According to Arieu (2007), "there is strategic consistency when the actions of an organization are consistent with the expectations of management, and these in turn are with the market and the context." Strategic management includes not only the management team but can...

Words: 7313 - Pages: 30

Premium Essay

Strategic Management

...1.0 WHAT ARE THE ELEMENTS OF STRATEGIC MANAGEMENT? Strategic management consists of the analyses, decisions and actions an organization undertakes in order to create and sustain competitive advantages. The strategic management process is made up of four elements: situation analysis, strategy formulation, strategy implementation, and strategy evaluation. These elements are steps that are performed, in order, when developing a new strategic management plan. Situation Analysis The situation analysis provides the information necessary to create a company mission statement. Situation analysis involves "scanning and evaluating the organizational context, the external environment, and the organizational environment" (Coulter, 2005). This analysis can be performed using several techniques. Observation and communication are two very effective methods. To begin this process, organizations should observe the internal company environment. This includes employee interaction with other employees, employee interaction with management, manager interaction with other managers, and management interaction with shareholders. In addition, discussions, interviews, and surveys can be used to analyse the internal environment. Organizations also need to analyse the external environment. This would include customers, suppliers, creditors, and competitors. Several questions can be asked which may help analyse the external environment. It examines the company’s relationship with its customers and...

Words: 2003 - Pages: 9

Premium Essay

Strategic Management

...Strategic Management & Business Policy, 13e (Wheelen/Hunger) Chapter 1 Basic Concepts in Strategic Management 1) Strategic management is one decision that determines the short-term performance of a corporation. Answer: FALSE Diff: 1 Page Ref: 5 Topic: The Study of Strategic Management 2) In the externally oriented planning phase, plans are developed by heavily involving the input of managers from lower levels. Answer: FALSE Diff: 2 Page Ref: 5 Topic: The Study of Strategic Management 3) General Electric led the transition from strategic planning to strategic management during the 1980s. Answer: TRUE Diff: 1 Page Ref: 6 Topic: The Study of Strategic Management 4) One of the benefits of strategic management is a clearer sense of vision for the firm. Answer: TRUE Diff: 2 Page Ref: 6 Topic: The Study of Strategic Management 5) To be effective, strategic management must be a formal process. Answer: FALSE Diff: 3 Page Ref: 7 Topic: The Study of Strategic Management 6) Globalization is the internationalization of markets and corporations. Answer: TRUE Diff: 1 Page Ref: 8 Topic: Globalization and Environmental Sustainability: Challenges to Strategic Management 7) As more industries become global, strategic management is becoming less important in positioning a company for long-term competitive advantage. Answer: FALSE Diff: 2 Page Ref: 8 Topic: Globalization and Environmental Sustainability: Challenges to Strategic......

Words: 5592 - Pages: 23

Premium Essay

Strategic Management

...Strategic Management Process MGT/498 ROLANDO ESPIRITU September 1, 2014 Strategic Management process is used to define a process by which the management team sets up a strategy to perform better among its competitors. The strategic management process is comprised of four phases. These phase assist a business with the development of a process that will enable them to aggressively compete with the competition within a given market. The four phase are 1) Basic Financial Planning, 2) Forecast Based Planning, 3) Externally Oriented Planning, and 4) Strategic Management (Wheelen & Hunger, 2010). Basic Financial Planning consists of managers putting of activities for weeks while the planning process is place to gather ideas to be used within a proposed budget. An evaluation is completed based on historic sales figures as well as the current environmental information. The budget is a short term budget used to get through one year of planning. Forecasting Based Planning, or long term planning, consists of budgets being created that expand for three to five years. This requires extensive planning based off current market information and stretched out over a given future time period. Many endless meetings take place in order to balance out the budget. Externally Oriented Planning is the stage where the top management takes over the planning. The budget is handed off and re-evaluated. The budget is scrutinized by top management officials that is often re-evaluated by an......

Words: 705 - Pages: 3

Premium Essay

Strategic Management

...Essentials of Strategic Management Authors: David Hunger & Thomas. L. Wheelen Book Review by Asik Kathwala © www.hrfolks.com All Rights Reserved 1 The Essentials of Strategic Management “The Essentials of Strategic Management” provides us with a short, concise explanation of the most important concepts and techniques in strategic management. It is a rigorous explanation of many topics and concerns in strategic management. These concepts are clearly explained by citing various examples. Precisely the book deals with the following. • A strategic decision-making model based on the underlying process of environmental scanning, strategy formation, strategy implementation and evaluation and control. • Michael Porter’s approach to industry analysis and competitive strategy • Functional analysis and functional strategies. R & D and R & D strategies which emphasize the importance of technology to strategy and product-market decisions. • Executive leadership and succession, reengineering, total quality management, MBO and action planning. • Social responsibility in terms of its importance to strategic decision making. © www.hrfolks.com All Rights Reserved 2 Basics concepts of strategic management The study of strategic management Strategic management is the set of managerial decision and action that determines the long-run performance of a corporation. It includes environmental scanning (both external and internal), strategy formulation (strategic or long range......

Words: 6642 - Pages: 27

Premium Essay

Strategic Management

...Strategic Management-2 Case Study Synopsis Of Case:-1) Competitive Advantage in new patent regime 2) Strategic leadership and competitive advantage 1) Competitive Advantage in New Patent Regime: A Study of the Indian Pharmaceutical Industry In the global business environment, traditional factors e.g labour costs and superior access to financial recourses and raw materials can still create a competitive advantage in the current competitive landscape. In the current landscape, the recourses, capabilities and the core competencies in the firm’s internal organization likely have a stronger influence on its performance than do conditions in the external environment. The IPI is one of the largest and most advanced among the developing countries. It is the 4th largest by volume i.e. around 8 percent and 11th largest in terms of value i.e. around 1.5 percent. The Indian pharmaceutical industry is a heterogeneous mixture of firms split between the organized and unorganized sectors. The control and support of the Indian government plays a critical role in the competitiveness of the IPI. According to Sampath (2006), areas of government support critical to the IPI include speed of processing of patent applications, R&D conducive environment, and reduced price Control, access of land for expansion and the patent amendment act, 2005. The government can also help increase the potential of the nascent venture capital industry in India, with an......

Words: 1714 - Pages: 7

Premium Essay

Strategic Management

...Elizabeth Huhn MGT/498-Strategic Management The Strategic Management Process Peter Braverso February 17, 2014 Strategic Management is necessary and integral part of every business, from small start-ups to large corporations. “Strategic management emphasizes long-term performance” (Wheelen & Hunger, 2010) There are different phases to the strategic management process. Phase one is the basic financial planning, which consists of planning out the following year's budget. Phase two is forecast-based planning which may include a five-year plan and environmental data. Phase three is focused on external concerns; “...seeks to increase responsiveness to changing markets and competition by thinking strategically.” (Wheelen & Hunger, 2010) Outside consultants may be used in this phase of the strategic process. All of these phases contribute to a smoother running organization and emphasize communication and clear roles within the organization. “...The real value of modern strategic planning is more in the strategic thinking and organizational learning that is part of a future-oriented planning process than in any resulting written strategic plan.” Starbucks Coffee Company is a prime example of effective strategic planning. Starbucks has a longer list of strengths than weaknesses, although a longer list of threats than opportunities, there is awareness of these threats. Among its strengths, sound financial records tops the list, followed by being the...

Words: 686 - Pages: 3

Premium Essay

Strategic Management

...external dimensions of the SPACE Matrix? a. b. c. d. e. Environmental stability and industry strength Environmental stability and competitive advantage Industry strength and competitive advantage Competitive advantage and financial strength Financial strength and industry strength 6. In the SPACE analysis, what does a (+6, +3) strategy profile portray? a. b. c. d. e. A strong industry An unstable environment A stable environment A weak industry A weak financial position 7. Selling all of a company’s assets in parts for their tangible worth is called a. Joint venture. b. Divestiture. c. Concentric diversification. d. Liquidation. e. Unrelated integration 8. Which stage of the strategy-formulation framework involves the Quantitative Strategic Planning Matrix? a. b. Stage 1 Stage 2 c. d. e. Stage 3 Stage 4 Stage 5 9. 10. Which strategy should be implemented when a division is responsible for an organization’s overall poor performance? a. Backward integration b. c. b. c. Divestiture Forward integration Cost leadership Related diversification 11. What analytical tool has four quadrants based on two dimensions: competitive position and market growth? a. b. c. d. e. Competitive Profile Matrix Internal-External Matrix SPACE Matrix Grand Strategy Matrix QSPM. 12. Which of the following is not true about objectives? a. b. c. d. e. They should be communicated throughout the organization. They should have an appropriate time dimension. They should......

Words: 4249 - Pages: 17

Premium Essay

Strategic Management

...“Consultant Report On United Breweries Limited ” Student Name: Gangadharan Renganathan Student Id Course Subject : 1229047 : Master of Business Administration : Strategic Management Submitted To: William Naylor Table of Contents Introduction: ........................................................................................................................ 3 Objectives: ............................................................................................................................. 3 Recommendations: ............................................................................................................ 4 Prior Recommendation for future development: ................................................... 7 Conclusion: ............................................................................................................................ 7 Reference: ............................................................................................................................. 7 Appendix: .............................................................................................................................. 9 Introduction: United Breweries was founded on early 19th century. This group is operating more than 100 years. A Scotsman, Thomas Leishman in 1857, founded UB GROUP. He started this business as a big producer of beer from a south Indian based British Breweries. Thomas Leishman was founded the United Breweries Limited (UBL) on15th......

Words: 2195 - Pages: 9

Premium Essay

Strategic Management

...SUMMARY 1. Firms use SMP to achieve strategic competitiveness(SC) & earn above average returns(AAR). -SC is achieved when firms develops & implements a value-creating strategy. -AAR provide the foundation needed in order to satisfy all of the firm’s stakeholders. 2. Since the nature of competition is different in the current competitive landscape, those making strategic decisions must adopt a different mind-set, which allows them to learn how to compete in highly turbulent & chaotic(disorganized) environments that produce a great deal of uncertainty. The globalization of industries in their markets and rapid & significant technological changes are the two primary factors that contribute to the turbulence (instability) of the competitive landscape. 3. Firms use 2 major models to help develop their vision & mission and then choose 1 or more strategies in pursuit of SC and AAR. (i) Industrial Organization (I/O) Model, assumptions: - firm’s external environment has large influence on the choice of strategies > do the firm’s internal resources, capabilities and core competencies. - thus, it used to understand the effects an industry’s characteristic can have on a firm when deciding what strategy or strategies with which to compete against rivals. - ARR are earned when the firms locates attractive industry or part of an industry and successfully implements the strategy dictated by the industry’s characteristics. (ii) Resource-Based model,......

Words: 655 - Pages: 3

Premium Essay

Strategic Management

...Strategic Management - Exam Three Study Guide Corporate Level Strategy Part I. Chapters 13 & 15 (pages 392-404, 450-459, 461-464) 1. Benefits and Costs of Concentration A. Benefits (Advantages): 1) Firms can master one industry environment (top managers acquire an in-depth knowledge of the industry) 2) All resources are put back into the business (creates sustainable competitive advantage) 3) There are typically lower overhead costs and fewer “layers” in the organization which leads to reduced “bureaucratic costs” B. Costs (Disadvantages): 1) There is a total dependency on the industry (the firm has all its eggs in one basket) 2) Firms tend to develop a “myopic” view and management doesn’t see change coming and therefore is unable to change when times get tough 3) Top managers are not challenged and may become bored and stagnant 4) The firm misses opportunities to leverage resources and capabilities in an area outside of the industry that may be more profitable 2. Vertical Integration A. What is vertical integration? Vertical integration is the degree to which a firm owns its upstream suppliers and its downstream buyers. Typically a firm does not vertically integrate unless by doing so it can either cut costs or create a differentiation advantage. B. What are the pros (benefits) and cons (drawbacks) of vertical integration? Benefits of Vertical Integration: 1) ...

Words: 2935 - Pages: 12

Free Essay

Strategic Management

...JESSLYNE (090503322) STRATEGIC MANAGEMENT ASSIGNMENT NOKIA CASE STUDY JESSLYNE (090503322) STRATEGIC MANAGEMENT ASSIGNMENT NOKIA CASE STUDY SUMMARY Nokia, once a world leader in wireless telecommunications, has lost nearly 39% of its market share to its competitors and in some instances to no name companies. In 80s and 90s Nokia expanded through the acquisition of many other companies with various technologies. Due to this rapid expansion, Nokia lost focus of its ingenuity in wireless communications. However Nokia reorganized by selling most of its businesses which were not performing well and directed its focus once again to its wireless technologies. Acquisition of Sega in 2003 and then merger with Siemens AB in 2006 put Nokia once again in a place where it could compete its rivals. RIM’s blackberry and Apple’s iPhone are the major rivals and have a large market share from business users and consumers. * According to Nokia’s business strategy; the winning strategy is based upon the following factors. Best mobile devices regardless the price and geographical location * Provide extensive internet solutions on mobile devices * Enter into the markets by providing business mobility solutions to the corporate users Analysis: I believe that Nokia’s strategy is a winning strategy for the following reasons: * Business solutions: Innovative Business mobility solutions will attract the corporate users, since Nokia devices are based upon a very......

Words: 408 - Pages: 2

Free Essay

Strategic Management

...BUSI 1317: Srategic management | Lincoln Electric | The Welding Industry’s Titan | | | | 1st December, 2014 ABSTRACT The purpose of this paper is to analyze Lincoln Electric’s overall strategy and business model and evaluate how generalizable is the company’s business model in other industries, specifically focusing on feasible strategies for one of the fastest developing country, India. | Contents Lincoln Electric’s Background 2 Recent Reporting 2 Main Features of the Lincoln Electric Business Model 2 Company Philosophy 2 Overall Strategy 3 Compensation, Leadership and Communication 3 How generalizable is Lincoln Business Model to other industries? 4 How generalizable is the Lincoln’s approach to India? 5 Employment System 5 Incentive System 6 Conclusion 6 Appendices 7 Exhibit 1: Hofstede's Dimensions Comparison - India & USA 7 Exhibit 2: India and U.S GDP Comparison 7 Bibliography 8 Lincoln Electric’s Background Lincoln Electric Company is the largest manufacturer of welding equipment in the world and has been in existence for over 100 years since 1895. The founder, John C. Lincoln started the business selling his own designed electric motors with the $200 he made from redesigning Herbert Henry Dow’s engine (Paul F. Buller, 2006). The company grew steadily, and in 1906 sales rise to $50,000 a year. John expanded his work force and in 1907, his brother, James F. Lincoln joined the company as a senior manager and......

Words: 2042 - Pages: 9

Free Essay

Strategic Management

...THE STATE UNIVERSITY OF NEW YORK At NEW PALTZ “Great Food. Low Prices. Friendly Service.” STRATEGIC MARKETING PLAN GROUP 5: DUYGU KAYACIOGLU JENNIFER CASTILLO ANNA TRUONG-CHAU SCARLETT PANEPINTO ABDON WADE DR. RUSSELL ZWANKA BUS 429-01 Marketing Strategy Monday, November 16, 2015 Table of Contents ● Executive Summary………………………………………………………… 2 ● Stop & Shop Description…………………………………………………… 3 ○ Overview, History and Successes of Company ● Stop & Shop Strategic Plan and Focus………………………………….. 4 ○ Mission/Vision ○ Financial and Nonfinancial Goals ○ Core Competencies and Sustainable Competitive Advantage ● Situational Analysis………………………………………………………….. 6 ○ Microenvironment ○ Macroenvironment ○ SWOT Analysis (Macro and Microenvironment Factors).... ● Market-Product Focus……………………………………………………… 10 ○ Growth Strategies ○ Target Markets ● Marketing Program Strategy and Tactics……………………………….. 12 ○ 4 Elements of Marketing Mix......

Words: 6327 - Pages: 26