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Strategic Management Analysis On:
Mobilink Pakistan
Author:
Sajjad Hussain, Sayed
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TABLE OF CONTENT
*.) EXECUTIVE SUMMARY------------------------------------------------------------------------------------------------5
1.) COMPANY INTRODUCTION----------------------------------------------------------------------------------------- 6
2.) PAKISTANI PERSPECTIVE------------------------------------------------------------------------------------------ 8
3.) EXTERNAL AND INTERNAL FACTORS ASSESSMENT---------------------------------------------------- 9
4.) PORTERS FIVE FORCES MODEL-------------------------------------------------------------------------------- 12
5.) PEST ANALYSIS------------------------------------------------------------------------------------------------------- 14
6.) ECONOMIC FACTORS----------------------------------------------------------------------------------------------- 15
7.) COMPETITIVE PROFILE MATRIX--------------------------------------------------------------------------------- 17
8.) SWOT ANALYSIS OF MOBILIINK--------------------------------------------------------------------------------- 18
9.) SPACE MATRIX OF MOBILINK------------------------------------------------------------------------------------ 21
10.) RELATIVE MARKET SHARE IN THE INDUSTRY V/S SALES GROWTH RATE IN
THE INDUSTRY------------------------------------------------------------------------------------------------------------- 23
11.) RELATIVE MARKET SHARE V/S SALES GROWTH RATE IN PERCENT--------------------------- 24
12.) THE INTERNAL AND EXTERNAL (I.E) MATRIX OF MOBILINK---------------------------------------- 25
13.) GRAND STRATEGY MATRIX OF MOBILINK----------------------------------------------------------------- 26
14.) THE QUANTITATIVE STRATEGIC PLANNING MATRIX—QSPM-------------------------------------- 27
15.) ANALYSIS OF SNAGS AND ITS RESOLUTION TO MOBILINK---------------------------------------- 30
16.) IMPLEMENTATION CONTROL AND EVALUATION OF STRATEGIES------------------------------- 33
17.) RECOMMENDATION-------------------------------------------------------------------------------------------------36
18.) REFERENCES---------------------------------------------------------------------------------------------------------- 37
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*.) EXECUTIVE SUMMARY
Mobilink is Pakistan’s leading provider of voice and data services, bringing more people together through
service excellence and product innovation. With more than 38 million subscribers, Mobilink maintains
market leadership through cutting-edge, integrated technology, the strongest brands and the largest
portfolio of value added services in the industry, a broadband carrier division providing next generation
internet technology as well as the country’s largest network with over 9,000 cell sites making everyday a
better day for its customers.
As a responsible corporate citizen, Mobilink offers a range of socially inclusive products and services
dedicated to enhance access to information. Through Mobilink Foundation, the company passionately
supports education, health and environmental initiatives and promotes sustainable business practices.
Mobilink offers exclusive & personalized tariff plans that empower customers and cater to the
communication needs of a diverse group of people, from individuals to businessmen to corporate and
multinationals.
Even though Mobilink has currently facing problems such as decline in the subscriber base, employee’s
turnover and how to minimize cost. This comprehensive reports interprets the whole scenario of Mobilink
and enlists all problems and best fit strategies, based on the matrices, Dr. Michael Porter’s five forces,
PEST analysis and all economic factors such as fluctuation in the interest rate, Exchange rate, inflation etc.
Finally, come to know major problems and their intensity and evaluate the best fit strategies, based on goal
and objectives, compatibility with either existing or new structure of Mobilink, scope, cost and Human
resources required, that are being implemented in manner to get good strategic position of the Mobilink.
Here, two strategies suggested to Mobilink to increase subscriber base in postpaid segment and foster
OTT sharing carefully to sustain its position atincreasing rate.
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President and CEO
(Jeffery Hedberg)
Vice President
Corporate Affairs(Agha
Mohammad Qasim)
Vice President Human
Resources &
Administration (Sadia
Ahmad)
Vice President Business
Services (Azfar
Manzoor)
Chief Commercial
Officer(Bilal Munir
Sheikh)
Chief Technology Officer
(Gabriele Sgariglia)
1.) COMPANY INTRODUCTION
Mobilink is the Pakistan’s leading telecommunication data and voice service provider, retaining market
supreme position by providing widest network to over 9000 cell sites, high tech and value added services to
more than 38 million subscribers all over the country.
Mobilink has recently invested USD 1 billion to upgrade network coverage, to provide uninterrupted
connectivity and international roaming up to 140 countries with 300 operator partners across the world.
1.1.) COVERAGE
Mobilink is covering more than 10,000 cities, towns and villages. Due to its huge investment for network
modernization Mobilink is capable enough to provide widest network coverage to connect up to 31.6 million
subscribers per second. It was only possible through three main types of network coverage; physical
presence, Indoor spillover coverage, Outdoor spillover coverage.
1.2.) CORPORATE RESPONSIBILITY
Mobilink is actively supporting for social development through Mobilink Foundation. Mobilink Foundation is
the key to ensure sustainable social development by providing education, health, environment and disaster
relief.
1.3.) MOBILINK’S VISION
To be the leading Telecommunication Services Provider in Pakistan by offering innovative Communication
solutions that make each day better for our customers while exceeding Shareholder value & Employee
Expectations.
1.4.) MOBILINK’S VALUES
Be Passionate: We at Mobilink are passionate about fulfilling & exceeding customer needs and
enriching their lives every day.
Be Professional: We take pride in practicing the highest ethical standards and take responsibility
for our actions.
Lead with Purpose: We are committed to lead the market through innovations in new services,
products, as well as innovative technologies and solutions.
1.5.) BOARD OF DIRECTORS:
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1.6.) FINANCIAL & MARKET POSITIONING:
Mobilink has posted 8% decline in its quarterly revenues during Q2 2014 as compared to last year during
the same duration, said a financial report published by company’s parent group VimpelCom. As per stats,
Mobilink generated Rs. 26.3 billion during second quarter of FY 2014, down from Rs. 28.5 billion it
generated during the same duration last year. Group’s quarterly report said that revenues were mainly
impacted by strong competition on the back of increased network capacity as well as unfavorable macro-
economic situation. Company’s 4 percent of revenues, or Rs. 1.1 billion were generated through data
services. EBITDA decreased 16% YoY, negatively impacted by higher customer associated cost and
higher tax absorption. CAPEX increased to USD 110 million due to the network modernization project and
the 3G roll out. The network modernization project is delayed due to congestions in some of the already
modernized areas and is expected to be completed in 1Q15, which was previously planned for completion
during Q3 2014. Financial stats suggest that Mobilink’s ARPU (Average Revenue per User) stood at Rs.
214 per month, down 14 % from Rs. 249 per month it reported during the same duration last year. Not only
the ARPU, but the average minutes per user per month also declined to 230 minutes per user per month,
down from 233 minutes of consumption per user month during last year. Mobilink’s mobile customer base
increased 4% YoY (year over year) to 38.8 million by the end ofreported period.
2.) PAKISTANI PERSPECTIVE
Industry Analysis
In Pakistan Telecom sector de-regularize and a number participant had entered into a Pakistan Telecom
Industry. Five Telecommunication Companies are operating in Pakistan UFONE, TELENOR, WARID,
ZONG and MOBILINK.
The revenue of Telecom Sector in USD 345.5 billion, PAKISTAN ECONMIC SURVEY FINANCE
MINISTRY 2013.
Industry overview from report of PTA, the number of mobile subscribers is reached 136.5 million,
PAKISTAN ECONMIC SURVEY FINANCE MINISTRY (2013).
The investment in this sector has also increased from USD 251 million to USD 530 million Dollars
during 2013-14 Tele density has also reached 78% of the population and cover 92% total land area of the
country and 75% of the Population .
Despite this growth Pakistan is still lagging behind the global standards and had just introduce 3G and 4G
in Telecom industry. The major Contributor is Cellular Mobile sector covering 71.1% of the Population, PTA
ANNUAL REPORT (2013).In Pakistan Telecom Revenues has experienced a growth of 7% during the year
2012.
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CELLULAR PHONE SUBSCRIBERS AS PERPTA ANNUAL REPORT (2013):
Subscribers Table suggest that Mobilink being the first mover is enjoyed the highest number of
subscribers relative to its competitive but is found to be slow in adapting to the new technology that is why
Telenor is leading in the Cellular Industry in 3G subscribers
3.) EXTERNAL AND INTERNAL FACTORSASSESSMENT
External Factors assessment includes the assessment of opportunities and threats to Mobilink.
Opportunities are always prevail in the External environment; along with opportunities there are also threats
to company in many aspects. Threats might give edge to rival to perform in the best way that Mobilink could
not. Threats might be of any type such as restriction by the PTA, large Tax penalties etc. Opportunities give
edge to Mobilink againstits rivals.
Internal factors are the strengths and weakness of the company. For the Mobilink it is most eminent to
know there strength and weakness and how to best utilize strengths at optimal level and how to transform
weaknesses in to strengths or minimize its impact. Following is the EFE and IFE of Mobilink.
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3.1.) EFE (OPPORTUNIIES AND THREATS) OF MOBILINK
External Factors Weights Ratings Weighted
Score
OPPORTUNITIES
1 Minimized cost because of OTT Sharing ( It Helps them to be even
better to travel in Future Smarter Communities)
0.10 3 0.30
2 Gap mobile Literacy Based App to promote education to those
areas where girls have restrictions specially
0.10 4 0.40
3 Gap for Mobile Apps Services and Mobile Advertisement (Mobile
Ad Industry worth more than USD 5 globally.
0.05 3 0.15
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Pakistan is growing 2.04% annually in Population
(188.2 Million currently)
0.03 2 0.06
5 Opportunity to capture 50 million new Subscribers ( Total industry
Subscribers are approx. 128.9 million total Population of Pakistan
approximately 200 Million
0.02 1 0.02
6 Extension of growing demand for smart phones and M-Banking
Other create an opportunity to exploit untapped rural market for
Mobile Banking.
0.07 4 0.28
7 Increasing demand for Islamic Insurance (Takaful), Creates
opportunity for this value added service.
0.10 3 0.30
8 Opportunity to diversify Services portfolio by offering satellite TV
Channel and Radio Services.
0.03 1 0.03
9 Shift of business model/Productline/category extension
(online book bank like i-store ofapple)
0.05 2 0.10
THREATS
1 Retaliation (price war) 0.08 3 0.24
2 Rupee Depreciation make Pakistan un attractive for investment of
international investors like Mobilink.
0.10 4 0.40
3 Threat of decreasing number of subscribers due to Bio metric
verification.
0.06 3 0.18
4 Declining trend in SMS/Calls 0.10 4 0.40
5 Threat ofincrease in tax rate due to dwindling economy. 0.02 1 0.02
6 Changing customers’ needs/preferences/expectation/mindset
which may lead to switch to other Networks
0.04 3 0.12
7 Quickening technological cycle reshaping. Lack of confidence in
ROI because arrival of smart phones has shrunk the life of new
Technology from 15 years from mobile phones to four to five years
Smart Phone.
0.05 2 0.10
TOTAL 1.00 3.10
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3.2) IFE (STRENGTHS AND WEAKNESSES) OF MOBILINK
Internal factors Weights ratings Weighted
score
STRENGTHS
1 Mobilink did Alliance with Opera Browser to facilitate with
optimized browsing atgiven network speed
0.08 4 0.32
2 Signed MoU with Pepsi to launch Vending Machine 0.10 4 0.40
3 Enjoying Firstmover advantage in GSM 0.05 4 0.20
4 Largest network coverage Market leader with respect to
subscribers.
0.06 3 0.18
5 Powerful brand equity 0.08 4 0.32
6 First choice of corporate people for Example INDIGO
(B2Corporate Family)
0.05 3 0.15
7 MOU with 50 operators enabled roaming services in 42 countries. 0.05 4 0.20
8 Higher contribution into CSR through Mobilink Foundation is
helping to build Social acceptance.
0.10 4 0.40
9 Mobilink has offered Nano SIM to increase its customer base 0.05 3 0.15
WEAKNESS
1 Market Share Decline by 1.5% because ofincrease in CAPEX 0.08 1 0.08
2 Not hitting bottom ofpyramid approach relative to competitors 0.03 2 0..06
3 Not having innovative R & D department relative to that of
competitors e.g.Zong, Ufone.
0.12 1 0.12
4 Dwindling workforce motivation because ofrecentlay off. 0.10 2 0.10
5 High operational cost (embezzlement and theft in tower
maintenance and generator fuel)
0.05 1 0.05
TOTAL 1.00 2.73
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4.) PORTERS FIVE FORCES MODEL:
Porter (1980) gave the idea of deployment of five forces for the industry analysis. These five forces are (1)
the threats of substitute products or services (2) the threats of the entry of the new competitors (3) the
intensity of competitive rivalry (4) the bargaining power of buyers (5) the bargaining power of suppliers. He
said that these forces jointly determine the competitive intensity of a firm within the industry. Strength of
these forces leads to lower profitability of an organization and vice versa. An analysis of Mobilink in the light
of Porter five forces model is described as under;
4.1.) The intensity of competitive rivalry:
Mobilink has strong rivals in telecommunication sector of Pakistan like Telenor and U-fone, besides this
rivalry Mobilink is enjoying leading position in Cellular Subscribers base that is more than 37 million as per
PTA Annual Report 2013, Telenor is giving a tough time to Mobilink with almost 33 million Subscribers
and this number is growing due to relatively better 3G services offered by Telenor. In 1994 it had only two
competitors (Paktel and Instashame) now this figure has jumped to six. All these companies are providing
similar services with the same capabilities. Similar Services for example easy load M-Banking, Internet
Facility hence it can be concluded that there is a competitive rivalry in the TELECOM SECTOR of the
Pakistan
4.2.) Bargaining Power of Buyers:
Although subscribers are not concentrated, do not purchase in bulk but still can easily switch for better
quality, coverage and rates. According to research Article, Dr. Rihanna Kosar et al 2012, It was found that
the Customer satisfaction was highly dependent on call rates, poor Network Services, Network Coverage,
High SMS Flux and MMS charges, GPRS Services, Poor Customer Services and Voice Quality. Article also
gives an insights of the future switching reasons that might be Network Services, Customer Service,
Coverage, Low Call Rates, Friends and Family Facility and Bundle Packages.
Availability of competitors who are offering all those aforesaid services plenty of options are available to
customer are at Switching cost is slow. As far as Mobilink is concerned it has lost big chunk of Customer to
UFONE because of the relative swiftness of UFONE in the introduction of attractive and economical Bundle
of Packages.
Mobilink is lagging behind in the provision of 3G services. Its services quality is not as good as the Telenor
has and a low switching costhas made the buyers enjoy in a strong bargaining power.
4.3.) Threats of Substitutes:
Presence and easy availability ofsubstitute products is a greatthreat for the successful
Survival of Mobilink since it can force the company to cut the price of its product. For Mobilink’s product
substituted products are fixed line and wireless. These two products are offering by many companies like
Pakistan Telecommunication Company Limited (PTCL), National Telecommunication Corporation (NTC),
World Call, Wateen, and Great Bear etc. For substituted products Mobilink has major threat from PTCL that
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has more than 3,387,495 fixed line and 1,300,121 wireless local loop subscribers. New entries into the
industry calls for a heavy capital expenditure. A relative saturation of market also makes it unattractive for
the new entrants to enter Pakistani cellular network market because population of the Pakistan is
approximately 188 million whereas total Cellular subscribers base comprises of 129 million. PTCL is also a
major supplier of Telecommunication services to the corporate sector and Government institution. These
customer pf PTCL insures a study stream of Revenues to the PTCL. This is makes PTCL a Strong
Substitute of Mobilink.
4.4.) Bargaining Power ofSupplier:
For Mobilink various physical goods suppliers’ are following: M-Link is a Luxembourg based subsidiary that
provides gateway services for Orascom Telecom operations in Pakistan.
M-link acts as control center for all satellites operations and interactions with all of the various international
carrier networks.
Ring is the distributor of handsets and is responsible for procurement SIM (Subscribers Identification
Module) and scratch cards for Orascom Telecom subsidiaries now shifted to VimpelCom.
Motorola entered in an agreementwith Mobilink to deploy a WiMAX.
Since VimpelCom has followed the strategy of backward integration so its subsidiaries has no danger or
uncertainty from suppliers.
Analysis indicates that although to meet competition Mobilink is struggling hard but the presence of strong
rivals has greatly cut its market share. While formulating different strategies it has to be careful from
substituted goods as well from its subscribers, since although Mobilink is following market penetration,
market development and product development strategies but still through media subscribers’ awareness is
high about various companies’ packages. Mobilink has no threats or uncertainties from suppliers since
almost all suppliers are owned by parent company itself. Adoption of this backward integration strategy
makes the power of suppliers weak. We can analyze the position of Mobilink by rating each competitive
force as high, medium or low in strength
http://journal-archieves8.webs.com/704-712.pdf
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4.5.) DR.MICHAEL PORTER’S FIVE-FORCES MODEL ANALYSIS
5.) PEST ANALYSIS:
Analyzing Macro environmental factors is very important and necessary for any company because, it will
show the relative worth in the market and propose real market conditions. There is lots of macro
environmental factors that can affect Mobilink performance, however emphasizes has been given on major
factors. The PEST analysis of Mobilink is as follow:
5.1.) Political Environment:
Political factors affect every small or giant organization, every company is operating in certain political
settings that maybe favorable or oppose the policies made by the company. The political environment up to
a greater extent also affects Mobilink; following are the major political factors, which need to be addressed.
o M-Link
o RingDistributer
o Motorola
o Liberalized Economy
SUPPLIERS POWER
THREAT OF NEW ENTRANTS
THREAT OF SUBSTITUTE
RIVALRY
BUYER’S POWER
o Telenor
o Ufone
o SwitchingPower
o Price Consciousness
o Plentyoptions
o PTCL
o NTC
o Wateen and World Call
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5.2.) Government type:
In Pakistan, recent regime was democratic, but because of ex-dictator policies and current government
inability to manage issues in a proper way, it can be clearly concluded that the government isn’t that much
able and stable as it was expected to be which is notgood for companies like Mobilink.
5.3.) Rule of law, Bureaucracy and corruption:
Due to the amendments made by government and domination of elite class on key government posts,
there is no justice and rule of law in Pakistan. Furthermore, extra layer of powerful bureaucracy makes it
difficult for companies to do business in Pakistan. Moreover, corruption is widespread in our society;
because of lack of honest and improper judicial system, which adversely affects the performance of those
companies, which believes in business ethics so, is the case ofMobilink.
5.4.) Regularity Authorities:
However, there are regularity bodies in Pakistan, like PTA, which regulates the Telecom companies.
However, it does not have tight control on issues, which is expected from it because of the authorization
given to it.
5.5.) Tax Policy:
The tax policy of Pakistan in the recent time was very investment friendly, but due to bad economic
conditions and increasing budget deficit, the government has imposed various extra taxes. As far as,
Telecom industry is concerned legislator has imposed some extra taxes on this industry the most recent
one is around Rs 18 on every recharge of Rs 100. This is negatively affecting Mobilink and its competitors
business.
6.) ECONOMIC FACTORS
Importance of the Economic factors can’t be avoided, profound analysis of economic factors will give an
idea for how to do the business. It will help you to analyze Factors, like current and projected economic
growth, inflation, interest rate, unemployment rate, cost of labor, disposable income and distribution of
income etc collectively comprise economic environment.
6.1.) Current and projected economic conditions:
In previous years, Pakistan’s economic figures were implying very impressive and promising
consequences but it all proved to be wrong. There are number of reason behind this the most prominent
ones are that the economic policies were not integrated with political environment in an appropriate
manner. Secondly, terrorism has affected our economy in a very negative manner. Therefore, because of
the reasons Pakistan current and projected economic conditions are not in favor ofMobilink.
6.1.1.) Inflation and interest rate:
Inflation and interest rate both were very high in Pakistan. Interest rate declined significantly and inflation
has cool down up to some level because of global recession in few years back. In most of countries, it is
quite natural that when the economic conditions are bad central banks reduces interest rate in order to
boost investment where as in Pakistan the case is opposite. So, collectively inflation (rising cost of buying
things) and interest rate (major factor affecting source of financing investment) are presenting very bad
picture for Mobilink.
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6.1.2.) Unemployment rate and cost of labor:
Due to higher education boom there is a talented pool of candidates (MBAs, Engineers, technical diplomas
holder) ready to work in organizations. In contrast, the production of new jobs is not competent with supply
pool, so there is high unemployment rate. In addition because of high supply of potential workers the cost
of labor is low in Pakistan which is a positive sign for Mobilink.
6.1.3.) Level of disposable money and income distribution:
It is evident that when there are bad economic conditions people of that particular country does not have
high level of income, which they can, spent. Moreover, as matter of fact national income distribution is very
unequal or unfair in Pakistan due to the domination of elite class on key government posts. Rich is
becoming more richer and poor is becoming more poorer which is stopping the rise of middle class, thus
low disposable income and unfair income distribution are significantly bad for Mobilink.
6.2.) Socio-Cultural Environment
These factors also affect consumer in deep way because in every purchase decision people are somehow
affected by their culture, social class, family etc. Following are important element of socio-culture
environment:
6.2.1.) Population growth rate and age profile:
Population of Pakistan is increasing at very high pace. It has more than 185 million people which mean
that Mobilink is operating in very big market. As for as, age profile of Pakistan is concerned almost half of
Pakistan’s population is young according to some estimates and average death age has fallen just below
60. So, all this implies that young people are energetic and can work if they getopportunities.
6.2.2.) Population education and Social mobility:
People of Pakistan are not very much educated. Literacy rate is below India, and Bangladesh but the
status quo has been in development process for the past few years. More and more people are getting
education which is in favor of Mobilink for the reason that only educated people can or will use its services
in well manner. Additionally, people are moving from villages to cities in order to getbetter living. Still, most
of the citizens live in villages which are somehow a positive sign for the telecommunication industry,
because they can expand over there.
6.2.3.) Cultural changes and life styles:
Culture in Pakistan is changing so their lifestyles are too. People are more inclined towards western ways
of living and doing things. Hence, our culture is becoming materialistic which means more use of
technological equipment’s which includes cell phone so the consequences of cultural changes are good for
Mobilink.
6.3.) Technological environment
It is the most vital area for businesses today. Important aspects of technological environment are discussed
below.
6.3.1.) Impact of emerging technologies:
Technology is the only field in which development take place in its highest pace. New and improved
technologies are emerging nowadays in Telecom sector from which Mobilink can benefit a lot in terms of
costand competitive advantage.
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6.3.2.) Impact of Internet and other communication equipment:
The effects of internet are very huge on businesses, particularly in communication area. It has helped
organization with communicating within and outside stakeholders at an extremely low cost. So, is the case
of Mobilink, internet and other communication technologies has helped it to be in touch with its customer at
a very low costthus fulfilling its objective regarding customer care.
6.3.3.)Research and development (R &D):
This is the most vital field for companies related to technologies equipment business directly or indirectly
like Mobilink. Mobilink does not have it own R&D department tough it will benefit from its strategic
partnership SingTel a Singapore based Telecom company but still it isn’t enough. R&D helps organizations
in gaining sustainable competitive advantage.
7.) COMPETITIVE PROFILE MATRIX
MOBILINK TELENOR UFONE ZONG WARID
Critical
Success Factor
Weight
Rating
Score
Rating
Score
Rating
Score
Rating
Score
Rating
Score
Promising
Business Model 0.060 3.00 0.180 4.00 0.240 3.00 0.180
4 0.24 3 0.18
Advertising 0.050 3.00 0.150 4.00 0.200 4.00 0.200 3 0.15 3 0.15
Service Quality 0.100 3.00 0.300 3.00 0.300 3.00 0.300 3 0.30 3 0.30
Market Share 0.120 4.00 0.480 3.00 0.360 2.00 0.240 2 0.24 2 0.24
Customer
Loyalty 0.100 3.00 0.300 3.00 0.300 3.00 0.300
3 0.30 3 0.30
Technology &
Innovation 0.150 4.00 0.600 3.00 0.450 3.00 0.450
3 0.45 3 0.45
Price
Competitiveness 0.150 3.00 0.450 4.00 0.600 4.00 0.600
4 0.60 3 0.15
Financial
Position 0.100 4.00 0.400 3.00 0.300 2.00 0.200
3 0.30 2 0.20
R & D 0.070 4.00 0.280 3.00 0.210 2.00 0.140 2 0.14 2 0.14
Management 0.100 3.00 0.300 4.00 0.400 2.00 0.200 3 0.30 4 0.40
Total 1.000 3.440 3.360 2.810 3.02 2.51
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8.) SWOT ANALYSIS OF MOBILIINK
Strengths Weakness
1.) Mobilink’s Alliance with
Opera Browser to facilitate with
optimized browsing at given
network speed
2.) Signed MoU with Pepsi to
launch Vending Machine
3.) Enjoying First mover
advantage in GSM
4.) Largest network coverage
Market leader with respect to
subscribers
5.) Powerful brand equity
6.) First choice of corporate
people for Example INDIGO (
B2Corporate Family)
7.) MOU with 50 operators
enabled roaming services in 42
countries
8.) Higher contribution into CSR
through Mobilink Foundation is
helping to build Social
acceptance.
9.) Mobilink has offered Nano
SIM to increase its customer
base
1.) Market Share Decline by
1.5% because of increase in
CAPEX
2.) Not having innovative R &
D department relative to that
of competitors e.g. Zong,
Ufone.
3.) Dwindling workforce
motivation because of recent
lay off.
4.) High operational cost
(embezzlement and theft in
tower maintenance and
generator fuel )
5.) Not hitting bottom of
pyramid approach relative to
competitors
Opportunities SO Strategies WO Strategies
1.) Minimized cost because of OTT
Sharing ( It Helps them to be even
better to travel in Future Smarter
Communities)
2.) Gap mobile Literacy Based App to
promote education to those areas
where girls have restrictions specially
1.) Foster Alliance with Pepsi
and so on to diversify Service
Portfolio ( S1 S2, S3,O1,O4,O5)
2.) Add its own M-Play and
Apps store ( S5,S3,S4,O2,O3)
3.) Launch M – Islamic
1.) Stabilize Employees
Morale (W3, O1,9)
2.) Install R & D Department
(W2,O1,5,9)
3.) Focus on Postpaid
Segment that is proper billing
system through Enterprise
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3.) Gap for Mobile Apps Services and
Mobile Advertisement (Mobile Ad
Industry worth more than USD 5
globally
4.) Pakistan is growing 2.04% annually
in Population
(188.2 Million currently)
5.) Opportunity to capture 50 million
new Subscribers ( Total industry
Subscribers are approx. 128.9 million
total Population of Pakistan
approximately 200 Million
6.) Extension of growing demand for
smart phones and M-Banking Other
create an opportunity to exploit
untapped rural market for Mobile
Banking
7.) Increasing demand for Islamic
Insurance (Takaful), Creates
opportunity for this value added
service.
8.) Opportunity to diversify Services
portfolio by offering satellite TV
Channel and Radio Services
9.) Shift of business model/Product
line/category extension
(online book bank like i-store ofapple)
Insurance Service with alliance
of banking
(S3, O7)
4.) Increase No. Of Subscribers
Base (S2,7,8, O2,3,4,7,8)
Application Paymentsoftware.
Threats ST Strategies WT Strategies
1.) Retaliation (price war)
2.) Rupee Depreciation make Pakistan
un attractive for investment of
international investors like Mobilink.
3.) Threat of decreasing number of
subscribers due to Bio metric
verification.
1.) Hire Mobilink
representatives to promote
convenience registration
process (S4,O3)
2.) Introduce Cost effective data
byte Bundles to retain
subscriber’s base. (S4,O4)
1.) To reduce call interference
and Overlapping problems
that they will be facing in OTT
sharing. (T4, T3. W4)
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4.) Declining trend in SMS/Calls
5.) Threat of increase in tax rate due to
dwindling economy.
6.) Changing customers’
needs/preferences/expectation/mindset
which may lead to switch to other
Networks
7.) Quickening technological cycle
reshaping. Lack of confidence in ROI
because arrival of smart phones has
shrunk the life of new Technology from
15 years from mobile phones to four to
five years Smart Phone.
3.) Establish Foundation to self-
finance their operation in future.
(S1,2, O2,5)
A nine chamber SWOT matrix of Mobilink enlist opportunities and Threats vertically and Strengths and
weaknesses horizontally. These will facilitate to make four different quadrant strategies for Mobilink current
states. These strategies will be of four types that were Strength over Opportunity (SO), Weaknesses over
Opportunity (WO), Strength over Threats (ST) and Weakness over threats (WT)
20
9.) SPACE MATRIX OF MOBILINK
INTERNAL STRATEGIC POSITION EXTERNAL STRATEGIC POSITION
FP SP
Return on investment 1
Leverage 3
Working capital 3
Cash flow 2
Inventory turnover 3
Earnings per share 2
P/E ratio 4
Total Score 18
Average Score 2.6
Technology changes -2
Rate of inflation -3
Demand variability -2
Pricing range of competitors -3
Competitive pressure -4
Ease ofexitfrom market -3
Risk involved in the business -5
Total Score -21
Average Score -3.10
CP IP
Market share -7
Productquality -2
Productlife cycle -1
Customer loyalty -5
Technology utilization -4
Technology Know how -5
Control over supplier -6
Control over distributors -5
Total Score -35
Average Score -4.5
Growth potential 6
Profit potential 5
Financial stability5
Excellentleverage 7
Resource utilization 6
Productivity7
Total Score36
Average Score6
Axis Computation of the Space matrix
X- Axis = IP + (-CP) = 6 + (- 4.5) = 1.5
Y- Axis = FP + (-SP) = 2.6 + (- 3.1) = -.50
21
SPACE MATRIX DIAGRAM
+7
+6
+5
+4
+3
+2
+1
-7 -6 -5 -4 -3 -2 -1 +1 +2 +3 +4 +5 +6 +7
-1
-2
-3
-4
-5
-6
-7
According to given data, SPACE matrix suggests that Mobilink has major competitive advantage in High
Growth Industry. The Competitive strategies that Mobilink could apply will be Backward, forward and
Horizontal Integration, Market Penetration, Market Developmentand ProductDevelopment.
22
10.) RELATIVE MARKET SHARE IN THE INDUSTRY V/S SALES GROWTH RATE IN
THE INDUSTRY
High +20 Backward, Forward or Horizontal
Integration
Market Penetration
Market Development
ProductDevelopment
Stars
II
Market Penetration
Market Development
ProductDevelopment
Divesture
Question Marks
I
Medium 0
Low -20
ProductDevelopment
Diversification
Retrenchment
Divesture
Cash Cows
III
Retrenchment
Divesture
Liquidation
Dogs
VI
Provinces Revenues
(millions)
% Revenues
( rounded
Figures)
Profits in
Million
% Profits (
rounded
Figures)
RMSP IG rate (%)
Sindh 80 54.5% 85 54% +.8 +15
Punjab 35 24% 45 29% +.4 +10
KPK 30 20.5% 25 16% +.2 00
Baluchistan 2 1% 3 1 +.7 -7
Total 147 100% 158 100%
Relative market share in the industry v/s sales growth rate in the industry suggest that Mobilink has long
run opportunities for growth and profitability Sind Province depicts the highest profitability in Quadrant II.
High
1.0
Medium
0.5
Low
0.0
23
Punjab Province lies in Quadrant I that is Question Mark. Yet Mobilink has very low market share but even
compete in high Industry Position. Generally Firm has high cash needs but unable to generate enough
cash to meet up the operations and liability. Therefore, Mobilink need use Intensive strategies such bas
Market development, Market Penetration and Product Strategies. To meet up the current requirement to
stabilize its Market Position.
11.) RELATIVE MARKET SHARE V/S SALES GROWTHRATE IN PERCENT
Provinces Sales
(millions
% Sales (
rounded
Figures)
Profits in
Million
% Profits (
rounded
Figures)
RMSP IG rate (%)
Sind 60 54% 70 58% +.8 10
Punjab 30 27% 32 26% +.4 5
KPK 20 18% 18 15% +.2 00
Baluchistan 1 1% 0.5 1 +.7 -5
Total 111 100% 120.5 100%
This BCG matrix also suggest should use Intensive strategies to Mobilink. The difference is that in this
matrix we use relative market share with respect to sales. Mobilink needs to draft intensive strategies
sustain its position againstrivals in the Industry.
27%
1 54% 2
18%
3
4 1%
5
4 31%
High Medium Low
1.0 0.5 0.0
High +20
Medium 0
Low -20
24
12.) THE INTERNAL AND EXTERNAL (I.E) MATRIXOF MOBILINK
Total IFEV/S EFE weighted Average Score
Strong
3.0 to 4.0
4.0 3.0
Average
2.0 to 2.99
2.0
Weak
1.0 to 1.99
1.0
4.0
High
2.0 to 3.0
I II III
3.0
Medium
2.0 to 2.99
VI V VI
2.0
Low
1.0 to 1.99
1.0
VII VII IX
I.E matrix is the amalgam of Internal and external factor evaluation. The IFE score is 3.10 and EFE matrix
Score is 2.73. This combination of th4e score lie in the VI Quadrant and covering I and II Quadrant. It
reflects that Mobilink should apply strategies, Backward, Forward and Horizontal Integration, Market
Penetration, Market Developmentand ProductDevelopmentthat facilitate them to grow and build.
13.) GRAND STRATEGY MATRIX OF MOBILINK
Rapid Market Growth
Quadrant II Quadrant I
Market Development Market Development
Market Penetration Market Penetration
Product Development Product Development
Horizontal Integration Forward Integration
Divesture Backward Integration
Liquidation Horizontal Integration
Related Diversification
Weak Strong
Competitive Competitive
Position Position
Quadrant III Quadrant IV
Retrenchment Rated Diversification
Related Diversification Unrelated Diversification
Unrelated Diversification Joint Venture
Divesture
Liquidation
25
Along with SWOT Matrix, SPACE Matrix, BCG Matrix, and IE Matrix, the Grand Strategy Matrix has helped
to devising alternative strategies. All organizations can be positioned in one of the Grand Strategy Matrix’s
four strategy quadrants. A firm’s divisions likewise could be positioned. The Grand Strategy Matrix is based
on two evaluative dimensions: competitive position and market (industry) growth. Any industry whose
annual growth in sales exceeds 5 percent could be considered to have rapid growth. Appropriate strategies
for Mobilink to consider, are listed in sequential order ofattractiveness in each quadrant ofthe matrix
14.) THE QUANTITATIVESTRATEGIC PLANNING MATRIX—QSPM
Strategic Alternative Strategies
Strategies that are required to implement but which one
first is still decision in pending
Key Factor Weight 1 2 3 4 5
Focus on
Post Paid
Segment
and Launch
M-App
Store
Launch M
App Store
Employ
Socialization
among third
parties
contractors
Launch
Literacy
Based offline
Subscription
base App
Foster OTT
sharing by
reducing
Interferences
Key External Factors
Economy
Political/Legal/Govt
Social/ Cultural/
demographic/
environmental
Technological
Competitive
Key Internal Factors
Management
Marketing
Finance/Accounting
Production/Operation
R & D
MIS
QSPM is the quantitative strategic planning matrix is made initially on the basis of key successive matrix.
Afterwards strategies are evaluated on the basis of weight and score. Such as we have enlisted five
strategies above in the Matrix. Finally we opt those which are the best fit to the Mobilink market’s
strengthen position. Filtered strategies are further evaluated by enlisting SWOT Matrix and total
attractiveness score.
26
THE QSPM MATRIX
STRATEGY ALTERNATIVES
STRATEGY 1 STRATEGY 2
Focus on Post
Paid Segment
and Launch M-
App Store
Foster OTT
sharing by
reducing
Interferences
Opportunities WEIGH
T
AS TAS AS TAS
Gap for Mobile Apps Services and Mobile Advertisement
(Mobile Ad Industry worth more than USD 5 globally.
0.10 4 0.40 - -
Opportunity to capture 50 million new Subscribers ( Total
industry Subscribers are approx. 128.9 million total
Population ofPakistan approximately 200 Million
0.10 4 0.40 4 0.40
Extension of growing demand for smart phones and M-
Banking Other create an opportunity to exploit untapped
rural market for Mobile Banking.
0.05 - - 2 0.10
Increasing demand for Islamic Insurance (Takaful), Creates
opportunity for this value added service.
0.03 2 0.06 - -
Opportunity to diversify Services portfolio by offering
satellite TV Channel and Radio Services.
0.02 - - 1 0.02
Shift of business model/Productline/category extension
(online book bank like i-store ofapple)
0.07 - - 3 0.21
THREATS
Retaliation (price war) 0.10 4 0.40 3 0.30
Rupee Depreciation make Pakistan un attractive for
investmentof international investors like Mobilink.
0.03 - - - -
Threat of decreasing number of subscribers due to Bio
metric verification.
0.05 4 0.20 - -
Declining trend in SMS/Calls 0.08 3 0.24 2 0.16
Threat ofincrease in tax rate due to dwindling economy. 0.10 - - 4 0.20
Changing customers’
needs/preferences/expectation/mindset which may lead to
switch to other Networks
0.06 - - - -
Extension of growing demand for smart phones and M-
Banking Other create an opportunity to exploit untapped
rural market for Mobile Banking.
0.07 1 0.07 - -
Increasing demand for Islamic Insurance (Takaful), Creates
opportunity for this value added service.
0.14 1 0.14 - -
TOTAL
STRENGTHS
Mobilink’s Alliance with Opera Browser to facilitate with
optimized browsing atgiven network speed
0.08 4 0.32 - -
27
Signed MoU with Pepsi to launch Vending Machine 0.10 4 0.40 4 0.40
Enjoying Firstmover advantage in GSM 0.05 - - - -
Largest network coverage Market leader with respect to
subscribers
0.06 - - 3 0.18
Powerful brand equity 0.08 4 32 - -
First choice of corporate people for Example INDIGO (
B2Corporate Family)
0.05 - - - -
MOU with 50 operators enabled roaming services in 42
countries
0.05 - - 2 0.10
Higher contribution into CSR through Mobilink Foundation
is helping to build Social acceptance.
0.10 4 0.40 - -
Mobilink has offered Nano SIM to increase its customer
base
0.05 - - - -
Threats
Market Share Decline by 1.5% because of increase in
CAPEX
0.08 4 0.32 4 0.32
Not hitting bottom of pyramid approach relative to
competitors
0.03 3 0.09 1 0.03
Not having innovative R & D department relative to that of
competitors e.g.Zong, Ufone.
0.12 - - - -
Dwindling workforce motivation because ofrecentlay off. 0.10 1 0.10 3 0.30
High operational cost (embezzlement and theft in tower
maintenance and generator fuel)
0.05 1 0.05 1 0.05
TOTAL 1 3.91 2.92
The Above enlisted two strategies are the bestto implementbecause they are
Above two alternative strategies—(1) Focus on Post Paid Segment and Launch M-App Store and (2)
Foster OTT sharing by reducing Interferences are being considered by a Mobilink. Note by sum total
attractiveness scores of 3.91 versus 2.92 that the analysis indicates the business should buy implement
strategy that is Focus on Post Paid Segment and Launch M-App Store land and Foster OTT sharing by
reducing Interferences. The use of dashes to indicate those factors that do not affect the strategy choice
being considered. If a particular factor affects one strategy but not the other, it affects the choice being
made, so attractiveness scores should be recorded for both strategies. Never rate one strategy and not the
other.
28
15.) ANALYSIS OF SNAGS AND ITS RESOLUTION TOMOBILINK
As Per PTA reports Mobilink market share has declined from 30s to 28 currently but still it is has an edge of
market leader with respect to coverage. It has the strongest brand equity so majority of the customer are
unable to switch its service. There are enormous problem a Mobilink has. We analyzed that there are so
many things still going to happen. Mobilink has also implemented the effective resolution of those pro blems
but still they are lacking. As soon as they have purchased the auction of the 3G service the pattern of their
investment has been increased from which cause them many pro0blems too in short term. There are the
following problems currently the Mobilink has are
1.) The number of subscriber decline in both segmentprepaid and Postpaid.
There is 188.8 million population in Pakistan of which 128.8 million population is catered by Telecom Sector
of which Mobilink has 38.154 Million, the highest user in the Telecom industry before Biometric comes.
Close competitor of the Mobilink with respect to number of user is Telenor that has 35.219 million user. No
doubt, Mobilink is enjoying there its benefit from its most glorious prepaid segment (as per Connectpk.com
report) even though with switching status of the customer. But Mobilink still look up into how to cater them
and aware the remaining 50 million of the population. The one who cater quickly will be the winner in this
segment because the highest subscriber base enhance costeffective approach in this identical Segment of
the competition.
As PTA has introduced the biometric technology in order to have a registered number of subscribers to
reduce crimes. So After this all the companies are forced to go with this move. Now 86.7/128.8 million
Subscribers are registered of which the Mobilink Subscriber are 30.01 million and Telenor has 28.03
million.
After detailed analysis we come to know that the Mobilink has declination rate in prepaid is very much low
than others rivals which does not matter to Mobilink at the moment. Snag to Mobilink is from the postpaid
segment subscribers are moving at higher rate than from prepaid. When they switch, switch completely
from Mobilink’s network.
29
Therefore the detailed analysis suggest that Mobilink has Mobilink should work on Postpaid segment to
retain and enhance postpaid subscribers. Mobilink 20% revenue generated from the post segment is
equivalentto 80% of postpaid segment.
Resolution
Mobilink is glorious in prepaid segment so now focus more over on postpaid segment. Reasons that we
have attained from the employees and subscribers interviews are:
No proper billing System: Each time user has to visit retailer to pay their bills. Most of the time bills will not
be properly paid.
Overhead Charges: Mobilink apply overhead charges when it is going to sign any sort of MoU with the giant
companies. Therefore Mobilink should notcharge there postpaid customer.
Balance Theft: Mobilink has as introduced postpaid segment then there the first and most influential issue
arise is the balance theft. The interesting thing is that they are not treating their customer because they
don’t have any evidence. Mobilink must foster database management for postpaid subscriber transaction.
As they feel secure and go along with their facilities that they will be offering.
Mobilink must sign MoU with Microsoft to have such an application that furnish convenience to their service
user to enhance their strong payment mode. That software is Enterprise Application Software in which the
record is tracked at national Bank of Pakistan and at Mobilink itself. As the crimes and cost reduce and
easily tackle such problems. This is good option to make their customer to inhale their service. This service
help user by sending three reminders and continuously sending status report and call summary to view
their record.
2.) Mobilink has high employee turnover with respect to prominent employees in the Industry. That is
employee acquisition.
Mobilink and its rivals are performing in the same sector with the identical product and services and
regulated by the single authority that is PTA.
30
According to PTA reports and blogs at Propakistan are highlighting that Mobilink has 16% employee
turnover in the Telecom Industry. Because of stiff competition and identical sector, rivals are trying to
acquire each other core employees to get an edge in the sector. Therefore, this becomes the challenge for
the Mobilink k to retain the prominent employees. As research, report at mobilegruerevies.com suggests
various factors that foster rapid Employee turnover. Some of those factors are Dissatisfaction with
management, accepted another position, dissatisfaction with Team, Job Expectation, job expectation are
not metetc. are the major reason.
Resolution
Mobilink could tackle these problems by:
Enhancing the socialization among third party contract employees.
Conduct exitInterviews and maintain database for them.
Conduct regular Employees Reviews.
Introduce sense ofownership through Stock options
By Doing so, Mobilink can retain their major Employees. Social gathering make all type of employees to
feel that company has worth ofsoul. This will help them to make sincere contribution for the Mobilink
3.) Over the Top sharing Incline in the info theft, call interference, call overlapping and voltage problem
to rival access point.
Over the Top (OTT) sharing is the most popular in the America. Currently, the OTT sharing is not so much
popular in the Pakistan. But these issues like info theft, call interference, call overlapping and voltage
problem to rival access point, matter a lot in US. They have also resolved those problem by taking concrete
measure.
Mobilink has signed MoU with Ufone to share tower. This Tower sharing may raise same issues that
already occurred in the USA. Mobilink has now opportunity to adapt those measure that behave been taken
in the USA for resolution. To do so, Mobilink will sustain its reputation.
The USA has put recommendation to fix modified access point, covered with thin metal plate, at standard
distance and location and provide tower security.
31
16.) IMPLEMENTATIONCONTROL AND EVALUATION OF STRATEGIES
STRATEGY 1
Goal and Objective:
Currently Mobilink goal is to increase the subscriber base in both segments that is prepaid and postpaid.
Along with that they need to improve Postpaid service where expected increase in postpaid is 25% in every
fiscal year.
Strategy
The easiest way is to focus on postpaid segment in a way that the sign MoU with Microsoft for the
development of an Enterprise Application Payment Software (EAPS) this software will work as Manager at
HBL are pressing a single click at the end of every month to pay salaries, benefits and reminder to all of
employees. The database will be managed by National Bank because this software will be integrated with
National Bank and Mobilink itself. This facilitates to provide max benefitto their postpaid subscribers.
Mobilink must launch M-App Store this will target both users, pre and postpaid. The uniqueness in this
store is that this M-App store is only for those who are the Mobilink user. Software is provided with full
featured and value added features. These keep subscribers motivated to avail it. By doing so, user first
must be a subscriber to avail Mobilink service and later on avail the access ofit.
Implementation
Mobilink Mustsign MoU first with Microsoft.
Purchase/ requestfor developmentofEAPS Software.
This strategy is compatible with the existing organization structure and IT department will manage this
whole process EAPS. For this the cost that occur is PKR. 520000 (include software purchase and renewal
fees)
Scope
Mobilinkwill get good results that are improve billing system, joint companies MoU, customer base increase
by 20% and leading position will be achieved in postpaid segment.
Control and Evolution
There will be need of 4 human resource who are monitoring this whole system. After few weeks result will
be evaluated in order to verify that weather we have achieved goal and objectives or not.
32
STRATEGY 2
Goal and Objective:
Mobilink main objective is to mitigate the risk of losing employees up to 8% in the Telecom Industry. This
will add in productivity and decrease the staffing expense decrease. This results in the lowest employees
turnover.
Strategy
Majority of employees to Mobilink, are third party contractors and Mobilink don’t allow them to be the part of
social events. This led to dissatisfaction and no value among employees of the Mobilink. Therefore, the
Rivals easily attract them. To mitigate this risk, Mobilink need not to waste time, organize social event
where all type of employees will meet with each other, bond ofemployees will come stronger, sincerity, and
loyalty will increase too
Implementation:
Conduct regular employees reviews that will facilitate them to get good know how about employees who
are dissatisfied but at what level no one knows. Exit interviews are also one of tool to know what actually is
behind the scene. Existing structure/ HR Department is managing it. This will add costofPKR. 10, 00,000.
Scope
Customer service will be improved and performance will increase too.
Control and evaluation
33
HR department will continuously monitoring the performance of employees on provided engineer at every
Tower. They evaluate the performance and tackle any worry quickly
1.) OTT Sharing at standardized distance with modified Access Point(AP)
STRATEGY 3
Goal and Objectives
To decrease customer complaint ratio with respect to voice quality, call drop, Enhance coverage quality,
subscribers base will increased
34
Strategy
Sign MoU with The USA TELECOM to adapt technology. That is modified TFT coated AP will be introduced
and installed.
Implementation
To implement this Strategy, Mobilink need to purchase modified Access Point that are used by the USA
Telecom Industry, covered with thin metallic plate. It reduces voice overlapping, call interference, and foster
voice quality.
Scope
Mobilink’s subscriber’s base will be increased because every subscriber dream is to enjoy wide range of
the quality services with the possible limited cost. Coverage quality will increase and cost will be reduces in
a manner that perhaps not happened already in Pakistan. By doing so the investment pattern will be
reduced which is estimated that if Mobilink has installed its own tower, they need space, tower related
material, generator, air conditions and two engineers to ensure proper working and maintenance of the
Tower which costs up to PKR. 2,103000. After OTT Sharing Mobilink need just Modified access point an
one employee to ensure proper working of Access Point which cost Mobilink up to PKR. 750000 (all tax
and tariffs are inclusive) After OTT sharing, Call drop ratio and call interference will decreases at increasing
rate, along with coverage and quality broaden.
Control and Evaluation
Once Mobilink will purchase these modified Access then they must hire training sessions for the employees
to have a proper control and diagnosis of problems in OTT sharing. For this we need to new technical
Employees who are doing the assessment of the OTT and evaluate the problems that are reported to
management. After OTT sharing, Mobilink has predicted cost leadership along with coverage and
subscribers base in upcoming October 2015
17.) Recommendation
Based on detailed analysis of Matrices, Mobilink needs to apply strategy 1 first and then strategy 3,
discussed above. Strategy 2 is also play vital role. Before fore implementation of the strategy 2 there must
be the implementation of suggested strategies that are the most prominent to tackle the current problems.
These suggested strategies are no doubtare simple and easy to implementand make a strong control.
35
18.) REFERENCES
http://www.mobilink.com.pk/
http://www.pta.gov.pk/index.php?Itemid=599
www.propakistani.pk/
http://www.connectpk.com/Comparison/index.php
www.slideshare.com
http://journal-archieves8.webs.com/704-712.pdf
http://androidpak.net/the-cheapest-3g-plan-in-pakistan/
http://www.pakstatus.com/2015/01/mobilink-ufone-telenor-zong-3g-packages-2015/
PAKISTAN ECONMIC SURVEY FINANCE MINISTRY 2013
PTA ANNUAL REPORT (2013)
Dr. RihannaKosar et all 2012

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Strategic Management Analysis of Mobilink Pakistan

  • 1. 1 Strategic Management Analysis On: Mobilink Pakistan Author: Sajjad Hussain, Sayed
  • 2. 2
  • 3. 3
  • 4. 4 TABLE OF CONTENT *.) EXECUTIVE SUMMARY------------------------------------------------------------------------------------------------5 1.) COMPANY INTRODUCTION----------------------------------------------------------------------------------------- 6 2.) PAKISTANI PERSPECTIVE------------------------------------------------------------------------------------------ 8 3.) EXTERNAL AND INTERNAL FACTORS ASSESSMENT---------------------------------------------------- 9 4.) PORTERS FIVE FORCES MODEL-------------------------------------------------------------------------------- 12 5.) PEST ANALYSIS------------------------------------------------------------------------------------------------------- 14 6.) ECONOMIC FACTORS----------------------------------------------------------------------------------------------- 15 7.) COMPETITIVE PROFILE MATRIX--------------------------------------------------------------------------------- 17 8.) SWOT ANALYSIS OF MOBILIINK--------------------------------------------------------------------------------- 18 9.) SPACE MATRIX OF MOBILINK------------------------------------------------------------------------------------ 21 10.) RELATIVE MARKET SHARE IN THE INDUSTRY V/S SALES GROWTH RATE IN THE INDUSTRY------------------------------------------------------------------------------------------------------------- 23 11.) RELATIVE MARKET SHARE V/S SALES GROWTH RATE IN PERCENT--------------------------- 24 12.) THE INTERNAL AND EXTERNAL (I.E) MATRIX OF MOBILINK---------------------------------------- 25 13.) GRAND STRATEGY MATRIX OF MOBILINK----------------------------------------------------------------- 26 14.) THE QUANTITATIVE STRATEGIC PLANNING MATRIX—QSPM-------------------------------------- 27 15.) ANALYSIS OF SNAGS AND ITS RESOLUTION TO MOBILINK---------------------------------------- 30 16.) IMPLEMENTATION CONTROL AND EVALUATION OF STRATEGIES------------------------------- 33 17.) RECOMMENDATION-------------------------------------------------------------------------------------------------36 18.) REFERENCES---------------------------------------------------------------------------------------------------------- 37
  • 5. 5 *.) EXECUTIVE SUMMARY Mobilink is Pakistan’s leading provider of voice and data services, bringing more people together through service excellence and product innovation. With more than 38 million subscribers, Mobilink maintains market leadership through cutting-edge, integrated technology, the strongest brands and the largest portfolio of value added services in the industry, a broadband carrier division providing next generation internet technology as well as the country’s largest network with over 9,000 cell sites making everyday a better day for its customers. As a responsible corporate citizen, Mobilink offers a range of socially inclusive products and services dedicated to enhance access to information. Through Mobilink Foundation, the company passionately supports education, health and environmental initiatives and promotes sustainable business practices. Mobilink offers exclusive & personalized tariff plans that empower customers and cater to the communication needs of a diverse group of people, from individuals to businessmen to corporate and multinationals. Even though Mobilink has currently facing problems such as decline in the subscriber base, employee’s turnover and how to minimize cost. This comprehensive reports interprets the whole scenario of Mobilink and enlists all problems and best fit strategies, based on the matrices, Dr. Michael Porter’s five forces, PEST analysis and all economic factors such as fluctuation in the interest rate, Exchange rate, inflation etc. Finally, come to know major problems and their intensity and evaluate the best fit strategies, based on goal and objectives, compatibility with either existing or new structure of Mobilink, scope, cost and Human resources required, that are being implemented in manner to get good strategic position of the Mobilink. Here, two strategies suggested to Mobilink to increase subscriber base in postpaid segment and foster OTT sharing carefully to sustain its position atincreasing rate.
  • 6. 6 President and CEO (Jeffery Hedberg) Vice President Corporate Affairs(Agha Mohammad Qasim) Vice President Human Resources & Administration (Sadia Ahmad) Vice President Business Services (Azfar Manzoor) Chief Commercial Officer(Bilal Munir Sheikh) Chief Technology Officer (Gabriele Sgariglia) 1.) COMPANY INTRODUCTION Mobilink is the Pakistan’s leading telecommunication data and voice service provider, retaining market supreme position by providing widest network to over 9000 cell sites, high tech and value added services to more than 38 million subscribers all over the country. Mobilink has recently invested USD 1 billion to upgrade network coverage, to provide uninterrupted connectivity and international roaming up to 140 countries with 300 operator partners across the world. 1.1.) COVERAGE Mobilink is covering more than 10,000 cities, towns and villages. Due to its huge investment for network modernization Mobilink is capable enough to provide widest network coverage to connect up to 31.6 million subscribers per second. It was only possible through three main types of network coverage; physical presence, Indoor spillover coverage, Outdoor spillover coverage. 1.2.) CORPORATE RESPONSIBILITY Mobilink is actively supporting for social development through Mobilink Foundation. Mobilink Foundation is the key to ensure sustainable social development by providing education, health, environment and disaster relief. 1.3.) MOBILINK’S VISION To be the leading Telecommunication Services Provider in Pakistan by offering innovative Communication solutions that make each day better for our customers while exceeding Shareholder value & Employee Expectations. 1.4.) MOBILINK’S VALUES Be Passionate: We at Mobilink are passionate about fulfilling & exceeding customer needs and enriching their lives every day. Be Professional: We take pride in practicing the highest ethical standards and take responsibility for our actions. Lead with Purpose: We are committed to lead the market through innovations in new services, products, as well as innovative technologies and solutions. 1.5.) BOARD OF DIRECTORS:
  • 7. 7 1.6.) FINANCIAL & MARKET POSITIONING: Mobilink has posted 8% decline in its quarterly revenues during Q2 2014 as compared to last year during the same duration, said a financial report published by company’s parent group VimpelCom. As per stats, Mobilink generated Rs. 26.3 billion during second quarter of FY 2014, down from Rs. 28.5 billion it generated during the same duration last year. Group’s quarterly report said that revenues were mainly impacted by strong competition on the back of increased network capacity as well as unfavorable macro- economic situation. Company’s 4 percent of revenues, or Rs. 1.1 billion were generated through data services. EBITDA decreased 16% YoY, negatively impacted by higher customer associated cost and higher tax absorption. CAPEX increased to USD 110 million due to the network modernization project and the 3G roll out. The network modernization project is delayed due to congestions in some of the already modernized areas and is expected to be completed in 1Q15, which was previously planned for completion during Q3 2014. Financial stats suggest that Mobilink’s ARPU (Average Revenue per User) stood at Rs. 214 per month, down 14 % from Rs. 249 per month it reported during the same duration last year. Not only the ARPU, but the average minutes per user per month also declined to 230 minutes per user per month, down from 233 minutes of consumption per user month during last year. Mobilink’s mobile customer base increased 4% YoY (year over year) to 38.8 million by the end ofreported period. 2.) PAKISTANI PERSPECTIVE Industry Analysis In Pakistan Telecom sector de-regularize and a number participant had entered into a Pakistan Telecom Industry. Five Telecommunication Companies are operating in Pakistan UFONE, TELENOR, WARID, ZONG and MOBILINK. The revenue of Telecom Sector in USD 345.5 billion, PAKISTAN ECONMIC SURVEY FINANCE MINISTRY 2013. Industry overview from report of PTA, the number of mobile subscribers is reached 136.5 million, PAKISTAN ECONMIC SURVEY FINANCE MINISTRY (2013). The investment in this sector has also increased from USD 251 million to USD 530 million Dollars during 2013-14 Tele density has also reached 78% of the population and cover 92% total land area of the country and 75% of the Population . Despite this growth Pakistan is still lagging behind the global standards and had just introduce 3G and 4G in Telecom industry. The major Contributor is Cellular Mobile sector covering 71.1% of the Population, PTA ANNUAL REPORT (2013).In Pakistan Telecom Revenues has experienced a growth of 7% during the year 2012.
  • 8. 8 CELLULAR PHONE SUBSCRIBERS AS PERPTA ANNUAL REPORT (2013): Subscribers Table suggest that Mobilink being the first mover is enjoyed the highest number of subscribers relative to its competitive but is found to be slow in adapting to the new technology that is why Telenor is leading in the Cellular Industry in 3G subscribers 3.) EXTERNAL AND INTERNAL FACTORSASSESSMENT External Factors assessment includes the assessment of opportunities and threats to Mobilink. Opportunities are always prevail in the External environment; along with opportunities there are also threats to company in many aspects. Threats might give edge to rival to perform in the best way that Mobilink could not. Threats might be of any type such as restriction by the PTA, large Tax penalties etc. Opportunities give edge to Mobilink againstits rivals. Internal factors are the strengths and weakness of the company. For the Mobilink it is most eminent to know there strength and weakness and how to best utilize strengths at optimal level and how to transform weaknesses in to strengths or minimize its impact. Following is the EFE and IFE of Mobilink.
  • 9. 9 3.1.) EFE (OPPORTUNIIES AND THREATS) OF MOBILINK External Factors Weights Ratings Weighted Score OPPORTUNITIES 1 Minimized cost because of OTT Sharing ( It Helps them to be even better to travel in Future Smarter Communities) 0.10 3 0.30 2 Gap mobile Literacy Based App to promote education to those areas where girls have restrictions specially 0.10 4 0.40 3 Gap for Mobile Apps Services and Mobile Advertisement (Mobile Ad Industry worth more than USD 5 globally. 0.05 3 0.15 4 Pakistan is growing 2.04% annually in Population (188.2 Million currently) 0.03 2 0.06 5 Opportunity to capture 50 million new Subscribers ( Total industry Subscribers are approx. 128.9 million total Population of Pakistan approximately 200 Million 0.02 1 0.02 6 Extension of growing demand for smart phones and M-Banking Other create an opportunity to exploit untapped rural market for Mobile Banking. 0.07 4 0.28 7 Increasing demand for Islamic Insurance (Takaful), Creates opportunity for this value added service. 0.10 3 0.30 8 Opportunity to diversify Services portfolio by offering satellite TV Channel and Radio Services. 0.03 1 0.03 9 Shift of business model/Productline/category extension (online book bank like i-store ofapple) 0.05 2 0.10 THREATS 1 Retaliation (price war) 0.08 3 0.24 2 Rupee Depreciation make Pakistan un attractive for investment of international investors like Mobilink. 0.10 4 0.40 3 Threat of decreasing number of subscribers due to Bio metric verification. 0.06 3 0.18 4 Declining trend in SMS/Calls 0.10 4 0.40 5 Threat ofincrease in tax rate due to dwindling economy. 0.02 1 0.02 6 Changing customers’ needs/preferences/expectation/mindset which may lead to switch to other Networks 0.04 3 0.12 7 Quickening technological cycle reshaping. Lack of confidence in ROI because arrival of smart phones has shrunk the life of new Technology from 15 years from mobile phones to four to five years Smart Phone. 0.05 2 0.10 TOTAL 1.00 3.10
  • 10. 10 3.2) IFE (STRENGTHS AND WEAKNESSES) OF MOBILINK Internal factors Weights ratings Weighted score STRENGTHS 1 Mobilink did Alliance with Opera Browser to facilitate with optimized browsing atgiven network speed 0.08 4 0.32 2 Signed MoU with Pepsi to launch Vending Machine 0.10 4 0.40 3 Enjoying Firstmover advantage in GSM 0.05 4 0.20 4 Largest network coverage Market leader with respect to subscribers. 0.06 3 0.18 5 Powerful brand equity 0.08 4 0.32 6 First choice of corporate people for Example INDIGO (B2Corporate Family) 0.05 3 0.15 7 MOU with 50 operators enabled roaming services in 42 countries. 0.05 4 0.20 8 Higher contribution into CSR through Mobilink Foundation is helping to build Social acceptance. 0.10 4 0.40 9 Mobilink has offered Nano SIM to increase its customer base 0.05 3 0.15 WEAKNESS 1 Market Share Decline by 1.5% because ofincrease in CAPEX 0.08 1 0.08 2 Not hitting bottom ofpyramid approach relative to competitors 0.03 2 0..06 3 Not having innovative R & D department relative to that of competitors e.g.Zong, Ufone. 0.12 1 0.12 4 Dwindling workforce motivation because ofrecentlay off. 0.10 2 0.10 5 High operational cost (embezzlement and theft in tower maintenance and generator fuel) 0.05 1 0.05 TOTAL 1.00 2.73
  • 11. 11 4.) PORTERS FIVE FORCES MODEL: Porter (1980) gave the idea of deployment of five forces for the industry analysis. These five forces are (1) the threats of substitute products or services (2) the threats of the entry of the new competitors (3) the intensity of competitive rivalry (4) the bargaining power of buyers (5) the bargaining power of suppliers. He said that these forces jointly determine the competitive intensity of a firm within the industry. Strength of these forces leads to lower profitability of an organization and vice versa. An analysis of Mobilink in the light of Porter five forces model is described as under; 4.1.) The intensity of competitive rivalry: Mobilink has strong rivals in telecommunication sector of Pakistan like Telenor and U-fone, besides this rivalry Mobilink is enjoying leading position in Cellular Subscribers base that is more than 37 million as per PTA Annual Report 2013, Telenor is giving a tough time to Mobilink with almost 33 million Subscribers and this number is growing due to relatively better 3G services offered by Telenor. In 1994 it had only two competitors (Paktel and Instashame) now this figure has jumped to six. All these companies are providing similar services with the same capabilities. Similar Services for example easy load M-Banking, Internet Facility hence it can be concluded that there is a competitive rivalry in the TELECOM SECTOR of the Pakistan 4.2.) Bargaining Power of Buyers: Although subscribers are not concentrated, do not purchase in bulk but still can easily switch for better quality, coverage and rates. According to research Article, Dr. Rihanna Kosar et al 2012, It was found that the Customer satisfaction was highly dependent on call rates, poor Network Services, Network Coverage, High SMS Flux and MMS charges, GPRS Services, Poor Customer Services and Voice Quality. Article also gives an insights of the future switching reasons that might be Network Services, Customer Service, Coverage, Low Call Rates, Friends and Family Facility and Bundle Packages. Availability of competitors who are offering all those aforesaid services plenty of options are available to customer are at Switching cost is slow. As far as Mobilink is concerned it has lost big chunk of Customer to UFONE because of the relative swiftness of UFONE in the introduction of attractive and economical Bundle of Packages. Mobilink is lagging behind in the provision of 3G services. Its services quality is not as good as the Telenor has and a low switching costhas made the buyers enjoy in a strong bargaining power. 4.3.) Threats of Substitutes: Presence and easy availability ofsubstitute products is a greatthreat for the successful Survival of Mobilink since it can force the company to cut the price of its product. For Mobilink’s product substituted products are fixed line and wireless. These two products are offering by many companies like Pakistan Telecommunication Company Limited (PTCL), National Telecommunication Corporation (NTC), World Call, Wateen, and Great Bear etc. For substituted products Mobilink has major threat from PTCL that
  • 12. 12 has more than 3,387,495 fixed line and 1,300,121 wireless local loop subscribers. New entries into the industry calls for a heavy capital expenditure. A relative saturation of market also makes it unattractive for the new entrants to enter Pakistani cellular network market because population of the Pakistan is approximately 188 million whereas total Cellular subscribers base comprises of 129 million. PTCL is also a major supplier of Telecommunication services to the corporate sector and Government institution. These customer pf PTCL insures a study stream of Revenues to the PTCL. This is makes PTCL a Strong Substitute of Mobilink. 4.4.) Bargaining Power ofSupplier: For Mobilink various physical goods suppliers’ are following: M-Link is a Luxembourg based subsidiary that provides gateway services for Orascom Telecom operations in Pakistan. M-link acts as control center for all satellites operations and interactions with all of the various international carrier networks. Ring is the distributor of handsets and is responsible for procurement SIM (Subscribers Identification Module) and scratch cards for Orascom Telecom subsidiaries now shifted to VimpelCom. Motorola entered in an agreementwith Mobilink to deploy a WiMAX. Since VimpelCom has followed the strategy of backward integration so its subsidiaries has no danger or uncertainty from suppliers. Analysis indicates that although to meet competition Mobilink is struggling hard but the presence of strong rivals has greatly cut its market share. While formulating different strategies it has to be careful from substituted goods as well from its subscribers, since although Mobilink is following market penetration, market development and product development strategies but still through media subscribers’ awareness is high about various companies’ packages. Mobilink has no threats or uncertainties from suppliers since almost all suppliers are owned by parent company itself. Adoption of this backward integration strategy makes the power of suppliers weak. We can analyze the position of Mobilink by rating each competitive force as high, medium or low in strength http://journal-archieves8.webs.com/704-712.pdf
  • 13. 13 4.5.) DR.MICHAEL PORTER’S FIVE-FORCES MODEL ANALYSIS 5.) PEST ANALYSIS: Analyzing Macro environmental factors is very important and necessary for any company because, it will show the relative worth in the market and propose real market conditions. There is lots of macro environmental factors that can affect Mobilink performance, however emphasizes has been given on major factors. The PEST analysis of Mobilink is as follow: 5.1.) Political Environment: Political factors affect every small or giant organization, every company is operating in certain political settings that maybe favorable or oppose the policies made by the company. The political environment up to a greater extent also affects Mobilink; following are the major political factors, which need to be addressed. o M-Link o RingDistributer o Motorola o Liberalized Economy SUPPLIERS POWER THREAT OF NEW ENTRANTS THREAT OF SUBSTITUTE RIVALRY BUYER’S POWER o Telenor o Ufone o SwitchingPower o Price Consciousness o Plentyoptions o PTCL o NTC o Wateen and World Call
  • 14. 14 5.2.) Government type: In Pakistan, recent regime was democratic, but because of ex-dictator policies and current government inability to manage issues in a proper way, it can be clearly concluded that the government isn’t that much able and stable as it was expected to be which is notgood for companies like Mobilink. 5.3.) Rule of law, Bureaucracy and corruption: Due to the amendments made by government and domination of elite class on key government posts, there is no justice and rule of law in Pakistan. Furthermore, extra layer of powerful bureaucracy makes it difficult for companies to do business in Pakistan. Moreover, corruption is widespread in our society; because of lack of honest and improper judicial system, which adversely affects the performance of those companies, which believes in business ethics so, is the case ofMobilink. 5.4.) Regularity Authorities: However, there are regularity bodies in Pakistan, like PTA, which regulates the Telecom companies. However, it does not have tight control on issues, which is expected from it because of the authorization given to it. 5.5.) Tax Policy: The tax policy of Pakistan in the recent time was very investment friendly, but due to bad economic conditions and increasing budget deficit, the government has imposed various extra taxes. As far as, Telecom industry is concerned legislator has imposed some extra taxes on this industry the most recent one is around Rs 18 on every recharge of Rs 100. This is negatively affecting Mobilink and its competitors business. 6.) ECONOMIC FACTORS Importance of the Economic factors can’t be avoided, profound analysis of economic factors will give an idea for how to do the business. It will help you to analyze Factors, like current and projected economic growth, inflation, interest rate, unemployment rate, cost of labor, disposable income and distribution of income etc collectively comprise economic environment. 6.1.) Current and projected economic conditions: In previous years, Pakistan’s economic figures were implying very impressive and promising consequences but it all proved to be wrong. There are number of reason behind this the most prominent ones are that the economic policies were not integrated with political environment in an appropriate manner. Secondly, terrorism has affected our economy in a very negative manner. Therefore, because of the reasons Pakistan current and projected economic conditions are not in favor ofMobilink. 6.1.1.) Inflation and interest rate: Inflation and interest rate both were very high in Pakistan. Interest rate declined significantly and inflation has cool down up to some level because of global recession in few years back. In most of countries, it is quite natural that when the economic conditions are bad central banks reduces interest rate in order to boost investment where as in Pakistan the case is opposite. So, collectively inflation (rising cost of buying things) and interest rate (major factor affecting source of financing investment) are presenting very bad picture for Mobilink.
  • 15. 15 6.1.2.) Unemployment rate and cost of labor: Due to higher education boom there is a talented pool of candidates (MBAs, Engineers, technical diplomas holder) ready to work in organizations. In contrast, the production of new jobs is not competent with supply pool, so there is high unemployment rate. In addition because of high supply of potential workers the cost of labor is low in Pakistan which is a positive sign for Mobilink. 6.1.3.) Level of disposable money and income distribution: It is evident that when there are bad economic conditions people of that particular country does not have high level of income, which they can, spent. Moreover, as matter of fact national income distribution is very unequal or unfair in Pakistan due to the domination of elite class on key government posts. Rich is becoming more richer and poor is becoming more poorer which is stopping the rise of middle class, thus low disposable income and unfair income distribution are significantly bad for Mobilink. 6.2.) Socio-Cultural Environment These factors also affect consumer in deep way because in every purchase decision people are somehow affected by their culture, social class, family etc. Following are important element of socio-culture environment: 6.2.1.) Population growth rate and age profile: Population of Pakistan is increasing at very high pace. It has more than 185 million people which mean that Mobilink is operating in very big market. As for as, age profile of Pakistan is concerned almost half of Pakistan’s population is young according to some estimates and average death age has fallen just below 60. So, all this implies that young people are energetic and can work if they getopportunities. 6.2.2.) Population education and Social mobility: People of Pakistan are not very much educated. Literacy rate is below India, and Bangladesh but the status quo has been in development process for the past few years. More and more people are getting education which is in favor of Mobilink for the reason that only educated people can or will use its services in well manner. Additionally, people are moving from villages to cities in order to getbetter living. Still, most of the citizens live in villages which are somehow a positive sign for the telecommunication industry, because they can expand over there. 6.2.3.) Cultural changes and life styles: Culture in Pakistan is changing so their lifestyles are too. People are more inclined towards western ways of living and doing things. Hence, our culture is becoming materialistic which means more use of technological equipment’s which includes cell phone so the consequences of cultural changes are good for Mobilink. 6.3.) Technological environment It is the most vital area for businesses today. Important aspects of technological environment are discussed below. 6.3.1.) Impact of emerging technologies: Technology is the only field in which development take place in its highest pace. New and improved technologies are emerging nowadays in Telecom sector from which Mobilink can benefit a lot in terms of costand competitive advantage.
  • 16. 16 6.3.2.) Impact of Internet and other communication equipment: The effects of internet are very huge on businesses, particularly in communication area. It has helped organization with communicating within and outside stakeholders at an extremely low cost. So, is the case of Mobilink, internet and other communication technologies has helped it to be in touch with its customer at a very low costthus fulfilling its objective regarding customer care. 6.3.3.)Research and development (R &D): This is the most vital field for companies related to technologies equipment business directly or indirectly like Mobilink. Mobilink does not have it own R&D department tough it will benefit from its strategic partnership SingTel a Singapore based Telecom company but still it isn’t enough. R&D helps organizations in gaining sustainable competitive advantage. 7.) COMPETITIVE PROFILE MATRIX MOBILINK TELENOR UFONE ZONG WARID Critical Success Factor Weight Rating Score Rating Score Rating Score Rating Score Rating Score Promising Business Model 0.060 3.00 0.180 4.00 0.240 3.00 0.180 4 0.24 3 0.18 Advertising 0.050 3.00 0.150 4.00 0.200 4.00 0.200 3 0.15 3 0.15 Service Quality 0.100 3.00 0.300 3.00 0.300 3.00 0.300 3 0.30 3 0.30 Market Share 0.120 4.00 0.480 3.00 0.360 2.00 0.240 2 0.24 2 0.24 Customer Loyalty 0.100 3.00 0.300 3.00 0.300 3.00 0.300 3 0.30 3 0.30 Technology & Innovation 0.150 4.00 0.600 3.00 0.450 3.00 0.450 3 0.45 3 0.45 Price Competitiveness 0.150 3.00 0.450 4.00 0.600 4.00 0.600 4 0.60 3 0.15 Financial Position 0.100 4.00 0.400 3.00 0.300 2.00 0.200 3 0.30 2 0.20 R & D 0.070 4.00 0.280 3.00 0.210 2.00 0.140 2 0.14 2 0.14 Management 0.100 3.00 0.300 4.00 0.400 2.00 0.200 3 0.30 4 0.40 Total 1.000 3.440 3.360 2.810 3.02 2.51
  • 17. 17 8.) SWOT ANALYSIS OF MOBILIINK Strengths Weakness 1.) Mobilink’s Alliance with Opera Browser to facilitate with optimized browsing at given network speed 2.) Signed MoU with Pepsi to launch Vending Machine 3.) Enjoying First mover advantage in GSM 4.) Largest network coverage Market leader with respect to subscribers 5.) Powerful brand equity 6.) First choice of corporate people for Example INDIGO ( B2Corporate Family) 7.) MOU with 50 operators enabled roaming services in 42 countries 8.) Higher contribution into CSR through Mobilink Foundation is helping to build Social acceptance. 9.) Mobilink has offered Nano SIM to increase its customer base 1.) Market Share Decline by 1.5% because of increase in CAPEX 2.) Not having innovative R & D department relative to that of competitors e.g. Zong, Ufone. 3.) Dwindling workforce motivation because of recent lay off. 4.) High operational cost (embezzlement and theft in tower maintenance and generator fuel ) 5.) Not hitting bottom of pyramid approach relative to competitors Opportunities SO Strategies WO Strategies 1.) Minimized cost because of OTT Sharing ( It Helps them to be even better to travel in Future Smarter Communities) 2.) Gap mobile Literacy Based App to promote education to those areas where girls have restrictions specially 1.) Foster Alliance with Pepsi and so on to diversify Service Portfolio ( S1 S2, S3,O1,O4,O5) 2.) Add its own M-Play and Apps store ( S5,S3,S4,O2,O3) 3.) Launch M – Islamic 1.) Stabilize Employees Morale (W3, O1,9) 2.) Install R & D Department (W2,O1,5,9) 3.) Focus on Postpaid Segment that is proper billing system through Enterprise
  • 18. 18 3.) Gap for Mobile Apps Services and Mobile Advertisement (Mobile Ad Industry worth more than USD 5 globally 4.) Pakistan is growing 2.04% annually in Population (188.2 Million currently) 5.) Opportunity to capture 50 million new Subscribers ( Total industry Subscribers are approx. 128.9 million total Population of Pakistan approximately 200 Million 6.) Extension of growing demand for smart phones and M-Banking Other create an opportunity to exploit untapped rural market for Mobile Banking 7.) Increasing demand for Islamic Insurance (Takaful), Creates opportunity for this value added service. 8.) Opportunity to diversify Services portfolio by offering satellite TV Channel and Radio Services 9.) Shift of business model/Product line/category extension (online book bank like i-store ofapple) Insurance Service with alliance of banking (S3, O7) 4.) Increase No. Of Subscribers Base (S2,7,8, O2,3,4,7,8) Application Paymentsoftware. Threats ST Strategies WT Strategies 1.) Retaliation (price war) 2.) Rupee Depreciation make Pakistan un attractive for investment of international investors like Mobilink. 3.) Threat of decreasing number of subscribers due to Bio metric verification. 1.) Hire Mobilink representatives to promote convenience registration process (S4,O3) 2.) Introduce Cost effective data byte Bundles to retain subscriber’s base. (S4,O4) 1.) To reduce call interference and Overlapping problems that they will be facing in OTT sharing. (T4, T3. W4)
  • 19. 19 4.) Declining trend in SMS/Calls 5.) Threat of increase in tax rate due to dwindling economy. 6.) Changing customers’ needs/preferences/expectation/mindset which may lead to switch to other Networks 7.) Quickening technological cycle reshaping. Lack of confidence in ROI because arrival of smart phones has shrunk the life of new Technology from 15 years from mobile phones to four to five years Smart Phone. 3.) Establish Foundation to self- finance their operation in future. (S1,2, O2,5) A nine chamber SWOT matrix of Mobilink enlist opportunities and Threats vertically and Strengths and weaknesses horizontally. These will facilitate to make four different quadrant strategies for Mobilink current states. These strategies will be of four types that were Strength over Opportunity (SO), Weaknesses over Opportunity (WO), Strength over Threats (ST) and Weakness over threats (WT)
  • 20. 20 9.) SPACE MATRIX OF MOBILINK INTERNAL STRATEGIC POSITION EXTERNAL STRATEGIC POSITION FP SP Return on investment 1 Leverage 3 Working capital 3 Cash flow 2 Inventory turnover 3 Earnings per share 2 P/E ratio 4 Total Score 18 Average Score 2.6 Technology changes -2 Rate of inflation -3 Demand variability -2 Pricing range of competitors -3 Competitive pressure -4 Ease ofexitfrom market -3 Risk involved in the business -5 Total Score -21 Average Score -3.10 CP IP Market share -7 Productquality -2 Productlife cycle -1 Customer loyalty -5 Technology utilization -4 Technology Know how -5 Control over supplier -6 Control over distributors -5 Total Score -35 Average Score -4.5 Growth potential 6 Profit potential 5 Financial stability5 Excellentleverage 7 Resource utilization 6 Productivity7 Total Score36 Average Score6 Axis Computation of the Space matrix X- Axis = IP + (-CP) = 6 + (- 4.5) = 1.5 Y- Axis = FP + (-SP) = 2.6 + (- 3.1) = -.50
  • 21. 21 SPACE MATRIX DIAGRAM +7 +6 +5 +4 +3 +2 +1 -7 -6 -5 -4 -3 -2 -1 +1 +2 +3 +4 +5 +6 +7 -1 -2 -3 -4 -5 -6 -7 According to given data, SPACE matrix suggests that Mobilink has major competitive advantage in High Growth Industry. The Competitive strategies that Mobilink could apply will be Backward, forward and Horizontal Integration, Market Penetration, Market Developmentand ProductDevelopment.
  • 22. 22 10.) RELATIVE MARKET SHARE IN THE INDUSTRY V/S SALES GROWTH RATE IN THE INDUSTRY High +20 Backward, Forward or Horizontal Integration Market Penetration Market Development ProductDevelopment Stars II Market Penetration Market Development ProductDevelopment Divesture Question Marks I Medium 0 Low -20 ProductDevelopment Diversification Retrenchment Divesture Cash Cows III Retrenchment Divesture Liquidation Dogs VI Provinces Revenues (millions) % Revenues ( rounded Figures) Profits in Million % Profits ( rounded Figures) RMSP IG rate (%) Sindh 80 54.5% 85 54% +.8 +15 Punjab 35 24% 45 29% +.4 +10 KPK 30 20.5% 25 16% +.2 00 Baluchistan 2 1% 3 1 +.7 -7 Total 147 100% 158 100% Relative market share in the industry v/s sales growth rate in the industry suggest that Mobilink has long run opportunities for growth and profitability Sind Province depicts the highest profitability in Quadrant II. High 1.0 Medium 0.5 Low 0.0
  • 23. 23 Punjab Province lies in Quadrant I that is Question Mark. Yet Mobilink has very low market share but even compete in high Industry Position. Generally Firm has high cash needs but unable to generate enough cash to meet up the operations and liability. Therefore, Mobilink need use Intensive strategies such bas Market development, Market Penetration and Product Strategies. To meet up the current requirement to stabilize its Market Position. 11.) RELATIVE MARKET SHARE V/S SALES GROWTHRATE IN PERCENT Provinces Sales (millions % Sales ( rounded Figures) Profits in Million % Profits ( rounded Figures) RMSP IG rate (%) Sind 60 54% 70 58% +.8 10 Punjab 30 27% 32 26% +.4 5 KPK 20 18% 18 15% +.2 00 Baluchistan 1 1% 0.5 1 +.7 -5 Total 111 100% 120.5 100% This BCG matrix also suggest should use Intensive strategies to Mobilink. The difference is that in this matrix we use relative market share with respect to sales. Mobilink needs to draft intensive strategies sustain its position againstrivals in the Industry. 27% 1 54% 2 18% 3 4 1% 5 4 31% High Medium Low 1.0 0.5 0.0 High +20 Medium 0 Low -20
  • 24. 24 12.) THE INTERNAL AND EXTERNAL (I.E) MATRIXOF MOBILINK Total IFEV/S EFE weighted Average Score Strong 3.0 to 4.0 4.0 3.0 Average 2.0 to 2.99 2.0 Weak 1.0 to 1.99 1.0 4.0 High 2.0 to 3.0 I II III 3.0 Medium 2.0 to 2.99 VI V VI 2.0 Low 1.0 to 1.99 1.0 VII VII IX I.E matrix is the amalgam of Internal and external factor evaluation. The IFE score is 3.10 and EFE matrix Score is 2.73. This combination of th4e score lie in the VI Quadrant and covering I and II Quadrant. It reflects that Mobilink should apply strategies, Backward, Forward and Horizontal Integration, Market Penetration, Market Developmentand ProductDevelopmentthat facilitate them to grow and build. 13.) GRAND STRATEGY MATRIX OF MOBILINK Rapid Market Growth Quadrant II Quadrant I Market Development Market Development Market Penetration Market Penetration Product Development Product Development Horizontal Integration Forward Integration Divesture Backward Integration Liquidation Horizontal Integration Related Diversification Weak Strong Competitive Competitive Position Position Quadrant III Quadrant IV Retrenchment Rated Diversification Related Diversification Unrelated Diversification Unrelated Diversification Joint Venture Divesture Liquidation
  • 25. 25 Along with SWOT Matrix, SPACE Matrix, BCG Matrix, and IE Matrix, the Grand Strategy Matrix has helped to devising alternative strategies. All organizations can be positioned in one of the Grand Strategy Matrix’s four strategy quadrants. A firm’s divisions likewise could be positioned. The Grand Strategy Matrix is based on two evaluative dimensions: competitive position and market (industry) growth. Any industry whose annual growth in sales exceeds 5 percent could be considered to have rapid growth. Appropriate strategies for Mobilink to consider, are listed in sequential order ofattractiveness in each quadrant ofthe matrix 14.) THE QUANTITATIVESTRATEGIC PLANNING MATRIX—QSPM Strategic Alternative Strategies Strategies that are required to implement but which one first is still decision in pending Key Factor Weight 1 2 3 4 5 Focus on Post Paid Segment and Launch M-App Store Launch M App Store Employ Socialization among third parties contractors Launch Literacy Based offline Subscription base App Foster OTT sharing by reducing Interferences Key External Factors Economy Political/Legal/Govt Social/ Cultural/ demographic/ environmental Technological Competitive Key Internal Factors Management Marketing Finance/Accounting Production/Operation R & D MIS QSPM is the quantitative strategic planning matrix is made initially on the basis of key successive matrix. Afterwards strategies are evaluated on the basis of weight and score. Such as we have enlisted five strategies above in the Matrix. Finally we opt those which are the best fit to the Mobilink market’s strengthen position. Filtered strategies are further evaluated by enlisting SWOT Matrix and total attractiveness score.
  • 26. 26 THE QSPM MATRIX STRATEGY ALTERNATIVES STRATEGY 1 STRATEGY 2 Focus on Post Paid Segment and Launch M- App Store Foster OTT sharing by reducing Interferences Opportunities WEIGH T AS TAS AS TAS Gap for Mobile Apps Services and Mobile Advertisement (Mobile Ad Industry worth more than USD 5 globally. 0.10 4 0.40 - - Opportunity to capture 50 million new Subscribers ( Total industry Subscribers are approx. 128.9 million total Population ofPakistan approximately 200 Million 0.10 4 0.40 4 0.40 Extension of growing demand for smart phones and M- Banking Other create an opportunity to exploit untapped rural market for Mobile Banking. 0.05 - - 2 0.10 Increasing demand for Islamic Insurance (Takaful), Creates opportunity for this value added service. 0.03 2 0.06 - - Opportunity to diversify Services portfolio by offering satellite TV Channel and Radio Services. 0.02 - - 1 0.02 Shift of business model/Productline/category extension (online book bank like i-store ofapple) 0.07 - - 3 0.21 THREATS Retaliation (price war) 0.10 4 0.40 3 0.30 Rupee Depreciation make Pakistan un attractive for investmentof international investors like Mobilink. 0.03 - - - - Threat of decreasing number of subscribers due to Bio metric verification. 0.05 4 0.20 - - Declining trend in SMS/Calls 0.08 3 0.24 2 0.16 Threat ofincrease in tax rate due to dwindling economy. 0.10 - - 4 0.20 Changing customers’ needs/preferences/expectation/mindset which may lead to switch to other Networks 0.06 - - - - Extension of growing demand for smart phones and M- Banking Other create an opportunity to exploit untapped rural market for Mobile Banking. 0.07 1 0.07 - - Increasing demand for Islamic Insurance (Takaful), Creates opportunity for this value added service. 0.14 1 0.14 - - TOTAL STRENGTHS Mobilink’s Alliance with Opera Browser to facilitate with optimized browsing atgiven network speed 0.08 4 0.32 - -
  • 27. 27 Signed MoU with Pepsi to launch Vending Machine 0.10 4 0.40 4 0.40 Enjoying Firstmover advantage in GSM 0.05 - - - - Largest network coverage Market leader with respect to subscribers 0.06 - - 3 0.18 Powerful brand equity 0.08 4 32 - - First choice of corporate people for Example INDIGO ( B2Corporate Family) 0.05 - - - - MOU with 50 operators enabled roaming services in 42 countries 0.05 - - 2 0.10 Higher contribution into CSR through Mobilink Foundation is helping to build Social acceptance. 0.10 4 0.40 - - Mobilink has offered Nano SIM to increase its customer base 0.05 - - - - Threats Market Share Decline by 1.5% because of increase in CAPEX 0.08 4 0.32 4 0.32 Not hitting bottom of pyramid approach relative to competitors 0.03 3 0.09 1 0.03 Not having innovative R & D department relative to that of competitors e.g.Zong, Ufone. 0.12 - - - - Dwindling workforce motivation because ofrecentlay off. 0.10 1 0.10 3 0.30 High operational cost (embezzlement and theft in tower maintenance and generator fuel) 0.05 1 0.05 1 0.05 TOTAL 1 3.91 2.92 The Above enlisted two strategies are the bestto implementbecause they are Above two alternative strategies—(1) Focus on Post Paid Segment and Launch M-App Store and (2) Foster OTT sharing by reducing Interferences are being considered by a Mobilink. Note by sum total attractiveness scores of 3.91 versus 2.92 that the analysis indicates the business should buy implement strategy that is Focus on Post Paid Segment and Launch M-App Store land and Foster OTT sharing by reducing Interferences. The use of dashes to indicate those factors that do not affect the strategy choice being considered. If a particular factor affects one strategy but not the other, it affects the choice being made, so attractiveness scores should be recorded for both strategies. Never rate one strategy and not the other.
  • 28. 28 15.) ANALYSIS OF SNAGS AND ITS RESOLUTION TOMOBILINK As Per PTA reports Mobilink market share has declined from 30s to 28 currently but still it is has an edge of market leader with respect to coverage. It has the strongest brand equity so majority of the customer are unable to switch its service. There are enormous problem a Mobilink has. We analyzed that there are so many things still going to happen. Mobilink has also implemented the effective resolution of those pro blems but still they are lacking. As soon as they have purchased the auction of the 3G service the pattern of their investment has been increased from which cause them many pro0blems too in short term. There are the following problems currently the Mobilink has are 1.) The number of subscriber decline in both segmentprepaid and Postpaid. There is 188.8 million population in Pakistan of which 128.8 million population is catered by Telecom Sector of which Mobilink has 38.154 Million, the highest user in the Telecom industry before Biometric comes. Close competitor of the Mobilink with respect to number of user is Telenor that has 35.219 million user. No doubt, Mobilink is enjoying there its benefit from its most glorious prepaid segment (as per Connectpk.com report) even though with switching status of the customer. But Mobilink still look up into how to cater them and aware the remaining 50 million of the population. The one who cater quickly will be the winner in this segment because the highest subscriber base enhance costeffective approach in this identical Segment of the competition. As PTA has introduced the biometric technology in order to have a registered number of subscribers to reduce crimes. So After this all the companies are forced to go with this move. Now 86.7/128.8 million Subscribers are registered of which the Mobilink Subscriber are 30.01 million and Telenor has 28.03 million. After detailed analysis we come to know that the Mobilink has declination rate in prepaid is very much low than others rivals which does not matter to Mobilink at the moment. Snag to Mobilink is from the postpaid segment subscribers are moving at higher rate than from prepaid. When they switch, switch completely from Mobilink’s network.
  • 29. 29 Therefore the detailed analysis suggest that Mobilink has Mobilink should work on Postpaid segment to retain and enhance postpaid subscribers. Mobilink 20% revenue generated from the post segment is equivalentto 80% of postpaid segment. Resolution Mobilink is glorious in prepaid segment so now focus more over on postpaid segment. Reasons that we have attained from the employees and subscribers interviews are: No proper billing System: Each time user has to visit retailer to pay their bills. Most of the time bills will not be properly paid. Overhead Charges: Mobilink apply overhead charges when it is going to sign any sort of MoU with the giant companies. Therefore Mobilink should notcharge there postpaid customer. Balance Theft: Mobilink has as introduced postpaid segment then there the first and most influential issue arise is the balance theft. The interesting thing is that they are not treating their customer because they don’t have any evidence. Mobilink must foster database management for postpaid subscriber transaction. As they feel secure and go along with their facilities that they will be offering. Mobilink must sign MoU with Microsoft to have such an application that furnish convenience to their service user to enhance their strong payment mode. That software is Enterprise Application Software in which the record is tracked at national Bank of Pakistan and at Mobilink itself. As the crimes and cost reduce and easily tackle such problems. This is good option to make their customer to inhale their service. This service help user by sending three reminders and continuously sending status report and call summary to view their record. 2.) Mobilink has high employee turnover with respect to prominent employees in the Industry. That is employee acquisition. Mobilink and its rivals are performing in the same sector with the identical product and services and regulated by the single authority that is PTA.
  • 30. 30 According to PTA reports and blogs at Propakistan are highlighting that Mobilink has 16% employee turnover in the Telecom Industry. Because of stiff competition and identical sector, rivals are trying to acquire each other core employees to get an edge in the sector. Therefore, this becomes the challenge for the Mobilink k to retain the prominent employees. As research, report at mobilegruerevies.com suggests various factors that foster rapid Employee turnover. Some of those factors are Dissatisfaction with management, accepted another position, dissatisfaction with Team, Job Expectation, job expectation are not metetc. are the major reason. Resolution Mobilink could tackle these problems by: Enhancing the socialization among third party contract employees. Conduct exitInterviews and maintain database for them. Conduct regular Employees Reviews. Introduce sense ofownership through Stock options By Doing so, Mobilink can retain their major Employees. Social gathering make all type of employees to feel that company has worth ofsoul. This will help them to make sincere contribution for the Mobilink 3.) Over the Top sharing Incline in the info theft, call interference, call overlapping and voltage problem to rival access point. Over the Top (OTT) sharing is the most popular in the America. Currently, the OTT sharing is not so much popular in the Pakistan. But these issues like info theft, call interference, call overlapping and voltage problem to rival access point, matter a lot in US. They have also resolved those problem by taking concrete measure. Mobilink has signed MoU with Ufone to share tower. This Tower sharing may raise same issues that already occurred in the USA. Mobilink has now opportunity to adapt those measure that behave been taken in the USA for resolution. To do so, Mobilink will sustain its reputation. The USA has put recommendation to fix modified access point, covered with thin metal plate, at standard distance and location and provide tower security.
  • 31. 31 16.) IMPLEMENTATIONCONTROL AND EVALUATION OF STRATEGIES STRATEGY 1 Goal and Objective: Currently Mobilink goal is to increase the subscriber base in both segments that is prepaid and postpaid. Along with that they need to improve Postpaid service where expected increase in postpaid is 25% in every fiscal year. Strategy The easiest way is to focus on postpaid segment in a way that the sign MoU with Microsoft for the development of an Enterprise Application Payment Software (EAPS) this software will work as Manager at HBL are pressing a single click at the end of every month to pay salaries, benefits and reminder to all of employees. The database will be managed by National Bank because this software will be integrated with National Bank and Mobilink itself. This facilitates to provide max benefitto their postpaid subscribers. Mobilink must launch M-App Store this will target both users, pre and postpaid. The uniqueness in this store is that this M-App store is only for those who are the Mobilink user. Software is provided with full featured and value added features. These keep subscribers motivated to avail it. By doing so, user first must be a subscriber to avail Mobilink service and later on avail the access ofit. Implementation Mobilink Mustsign MoU first with Microsoft. Purchase/ requestfor developmentofEAPS Software. This strategy is compatible with the existing organization structure and IT department will manage this whole process EAPS. For this the cost that occur is PKR. 520000 (include software purchase and renewal fees) Scope Mobilinkwill get good results that are improve billing system, joint companies MoU, customer base increase by 20% and leading position will be achieved in postpaid segment. Control and Evolution There will be need of 4 human resource who are monitoring this whole system. After few weeks result will be evaluated in order to verify that weather we have achieved goal and objectives or not.
  • 32. 32 STRATEGY 2 Goal and Objective: Mobilink main objective is to mitigate the risk of losing employees up to 8% in the Telecom Industry. This will add in productivity and decrease the staffing expense decrease. This results in the lowest employees turnover. Strategy Majority of employees to Mobilink, are third party contractors and Mobilink don’t allow them to be the part of social events. This led to dissatisfaction and no value among employees of the Mobilink. Therefore, the Rivals easily attract them. To mitigate this risk, Mobilink need not to waste time, organize social event where all type of employees will meet with each other, bond ofemployees will come stronger, sincerity, and loyalty will increase too Implementation: Conduct regular employees reviews that will facilitate them to get good know how about employees who are dissatisfied but at what level no one knows. Exit interviews are also one of tool to know what actually is behind the scene. Existing structure/ HR Department is managing it. This will add costofPKR. 10, 00,000. Scope Customer service will be improved and performance will increase too. Control and evaluation
  • 33. 33 HR department will continuously monitoring the performance of employees on provided engineer at every Tower. They evaluate the performance and tackle any worry quickly 1.) OTT Sharing at standardized distance with modified Access Point(AP) STRATEGY 3 Goal and Objectives To decrease customer complaint ratio with respect to voice quality, call drop, Enhance coverage quality, subscribers base will increased
  • 34. 34 Strategy Sign MoU with The USA TELECOM to adapt technology. That is modified TFT coated AP will be introduced and installed. Implementation To implement this Strategy, Mobilink need to purchase modified Access Point that are used by the USA Telecom Industry, covered with thin metallic plate. It reduces voice overlapping, call interference, and foster voice quality. Scope Mobilink’s subscriber’s base will be increased because every subscriber dream is to enjoy wide range of the quality services with the possible limited cost. Coverage quality will increase and cost will be reduces in a manner that perhaps not happened already in Pakistan. By doing so the investment pattern will be reduced which is estimated that if Mobilink has installed its own tower, they need space, tower related material, generator, air conditions and two engineers to ensure proper working and maintenance of the Tower which costs up to PKR. 2,103000. After OTT Sharing Mobilink need just Modified access point an one employee to ensure proper working of Access Point which cost Mobilink up to PKR. 750000 (all tax and tariffs are inclusive) After OTT sharing, Call drop ratio and call interference will decreases at increasing rate, along with coverage and quality broaden. Control and Evaluation Once Mobilink will purchase these modified Access then they must hire training sessions for the employees to have a proper control and diagnosis of problems in OTT sharing. For this we need to new technical Employees who are doing the assessment of the OTT and evaluate the problems that are reported to management. After OTT sharing, Mobilink has predicted cost leadership along with coverage and subscribers base in upcoming October 2015 17.) Recommendation Based on detailed analysis of Matrices, Mobilink needs to apply strategy 1 first and then strategy 3, discussed above. Strategy 2 is also play vital role. Before fore implementation of the strategy 2 there must be the implementation of suggested strategies that are the most prominent to tackle the current problems. These suggested strategies are no doubtare simple and easy to implementand make a strong control.