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Assignment General Notes & Change Log
Assignment
Case Study
Dialog Telekom Limited: Leader in Mobile Telecommunication
Introduction
History
Industry Background
Vision
Mission
Corporate Values
Organizational Goals
Culture
Organizational Structure
Board Of Directors
Senior Management
Products & Services
Mobile
ISP
Global
Broadband
Dialog SAT
Rewards Programs
Operations
Coporate Social Resposibilities
Reference
Case Analysis
Dialog Telekom Limited
Executive Summary
Introduction
Internal Environment Analysis
Strategy
Structure
Systems
Style
Staff
Superordinate Goals
Skills
Financial Analysis
External Environment Analysis
PESTEL
Political
Economical
Socio-Cultural
Technological
Ecological
Legal
Five forces
Threat of New Entrants
Bargaining Power of Buyers
Threat from Substitutes
Bargaining Power of Suppliers
Rivalry among Competing Firms
SWOT Analysis
Strengths
Weaknesses
Opportunities
Threats
Strategic Alternatives & Recommendations
Corporate Strategy
Business Strategy
Functional Strategy
Implementation
Evaluation & Control
Conclusion
Presentation Slides
Slide : External Environment Analysis
Slide : PEST Analysis
Political
Economical
Socio-Cultural
Technological
Legal
Five forces
Threat of New Entrants
Bargaining Power of Customer (Buyer)
Threat from Substitutes
Bargaining Power of Suppliers
Rivalry among Competing Firms
SWOT Analysis
Strengths
Weaknesses
Opportunities
Threats
Slide 3
Slide n
Appendix
Appendix A: Financial Statements
Dialog Telekom Limited: Leader in Mobile
Telecommunication
Introduction
Dialog Telekom, Sri Lanka's flagship Telecommunications Company operates Dialog GSM, the
country's largest mobile phone network, and is a Subsidiary of the Telekom Malaysia Group.
The company is also a key player in the Internet Service Provision Market with its state of the art
ISP, Dialog Internet, and also operates Dialog SAT, the country's pioneer Mobile Satellite
Service Provider. Following an aggressive entry in to the International Services Market, Dialog
Global has established itself as a premier provider of International Services in Sri Lanka

As espoused in its signature, "The Future Today", the company prides itself in its commitment
to, and achievement trail in, Research, Development and New Technology introduction. Dialog
GSM has the distinction of placing Sri Lanka as the first in the country in the region and among
the first 40 countries in the world to support High Speed Packet Based Mobile Data Services
with the launch of GPRS (General Packet Radio Service) in 2001. GPRS - a key element of 2.5G
GSM, is a major step towards 3G (3rd Generation) technology, offering higher data speeds,
packet based data communications and end to end IP (Internet Protocol) based connectivity.
Dialog GSM extended its regional leadership in mobile technology with the introduction of
Multi-Media Messaging (MMS) in 2002 placing itself among the first 35 networks in the world
to support this break through mobile telecommunications technology, enabling the exchange of
multi-media content between mobile phones and even to/from the Internet.

In addition to the above cutting edge service developments, the company was instrumental in
extending the scope of mobile telephony to mobile data and a host of value added applications
within the first few years of its operation. Mobile Banking, mobile email, Information on
Demand services, interactive Short Messaging services for entertainment as well as business
applications were some of the Value Added Services (VAS) which were in commercial operation
in 1998 well ahead of regional networks. The company's thrust towards the expansion of its
portfolio of services continues with relentless momentum, the most recent additions being the
Mobile-Wallet a state of the art mobile commerce application enabling secure payment for a
wide range of products and services via a mobile phone and location based services. The network
also provides a range of Voice Portal Services providing voice based entertainment services
ranging from Sports news and greetings to the registration for medical appointments.

The company prides itself in a customer servicing infrastructure which is unrivalled by any other
service provider in the country. Powered by a dedicated staff of over 150 service professionals,
the company provides 24x7 support for all its services to its customers. With the recent launch of
its state of the art contact centre, billed as a flagship installation in Sri Lanka, Dialog's service
agents are available round the clock via person to person interaction, web based chat and/or
email to support the company's ever increasing customer base.
The company believes in, and attributes its success to, the skills, dynamism and bountiful
potential of the people of Sri Lanka. Through the years during which the company grew to being
a hall mark for Sri Lankan technology excellence on the global mobile telecommunications map,
it has also worked aggressively towards developing the potential of several segments of the
community. Centered on its CHANGE - "Transforming Their Future Today" programme, a wide
variety of community development initiatives have been initiated by the company, ranging from
support for nationally recognised initiatives directed at uplifting the Hearing and Speech
impaired, the Disabled and the nation's Children, through to the sponsorship of sports enabling
Sri Lankan talent to be showcased on the international stage.

The company's research and development efforts have also been directed at the use of mobile
communications technology for the benefit of the community. The company has been recognised
as a world leader in this respect and has the distinction of being the only operator in the world to
win 3 GSM World Awards (from the world GSM body) for its innovations in the use of wireless
technology. The last of these awards was won for the company's unique SMS based Blood
Donation network established in collaboration with the National Blood Transfusion

History
Dialog GSM has spearheaded the mobile industry in Sri Lanka since the late 90's propelling it to
a level of technology on par with the developed world. The company operates a 2.5G GSM
network, supporting the very latest in multimedia and mobile Internet services, and also provides
International Roaming facilities in over 100 countries. Dialog GSM is the country's largest
cellular network providing services to over half a million customers (as of 2002) across all nine
provinces of the island.

The relentless pursuit of excellence in high technology service provision earned the company the
distinction of being the first Telecommunications operator in South Asia to receive ISO 9001
certification. The Commitment of the company to excellence in business practices led to the
winning of the National Quality Award (Large Scale Service Category) in 2001, followed closely
by International recognition in the form of the (Malcolm Baldridge) Asia Pacific Quality Award
in 2002.

The company has pursued a strategy of broadening its portfolio of telecommunications services
and in 1999 launched Dialog Internet a fully fledged ISP connected through to the Internet
Backbone of Telekom Malaysia within the Multi Media Super Corridor in Cyber Jaya.

The company has pioneered a new dimension in mobile telephony in 2002, through the launch of
Satellite Mobile Telephony Services under the brand name of Dialog SAT. Dialog SAT brings
with it the extensive coverage of the Thuraya Satellite Mobile Telephony Services, now available
throughout the length and breadth of Sri Lanka and reaching 3.2 billion people in 99 countries
across 3 continents.

The liberalisation of the International Telecommunications market in 2003 provided an

opportunity for the company to launch its latest power brand - Dialog Global, a forerunner in the
International Services market. With robust linkages in to the Global network of Telekom
Malaysia Bhd., the company has added a new dimension in International Service provisioning in
the country with the commissioning of a state of the art gateway infrastructure providing access
across the globe for retail, wholesale and Private Network services.

Industry Background
Fundamental economics describes that in order to grow you need investments and in order to
invest you need to save. However a popular trend in developing countries is to depend on foreign
investment for growth. In a way this is a positive approach since the developing countries can
improve their balance of payment problems through exports and consumers can benefit from
high quality products and services offered at comparatively low prices due to cheap labour in
developing countries. Hence economies are shaped by policies like tariff lowering, devaluation
of currency, unification of exchange rates and removal of import export restrictions. These trends
have brought fundamental changes in service oriented industries such as Telecommunication,
globally. Human capital development, technology transfer and increased international trade are
some positive impacts of foreign investments on the industry.

The terrorist activities prevailing in the country though is a key decisive factor, has been constant
for the past twenty years. The exchange rate has decreased from Rs 50 per US dollar a decade
ago to, Rs 108 per US dollar. Nevertheless this was a result of a gradual process, not a result of a
crisis. Hence arguably these were not key decisive factors in the investment patterns (Rohan,
2005).

The privatisation programs that were launched by the Sri Lankan government to attract foreign
investment were a trial and error type approach. Significantly the partial liberalisation of the
telecommunication industry became the ground breaking transformation in this process (Asoka,
2006). In 1980 the government split the then tightly coupled posts and telecommunication
services into two departments. As a result the Department of Telecommunication was
formulated. By 1989, nine years after the industry was recognised as a separate entity the first
private investment materialised when Celltel a private mobile operator entered the market. In
1991 the department was transformed into a corporation naming it as Sri Lanka Telecom (SLT)
through the enacting of the Sri Lanka Telecommunications Act No. 25 of 1991. The act
separated policies, operations and regulation and assigned responsibilities to the ministry, SLT
and Sri Lanka Telecommunications Authority (STA), the regulator respectively. This was a
major mile stone in the liberalization process after the initiation in 1980s. However STA did not
have the independence, power, structure, resources or accountability and was performing
unsatisfactorily. Hence, the Sri Lanka Telecommunications Act No. 27 of 1996 converted STA
into Telecommunications Regulatory Commission of Sri Lanka (TRCSL).

In 1997, SLT was partially privatised by sale of a 35% stake to NTT of Japan and Sri Lanka
Telecom Ltd (SLTL) was formalised. Exhibit 1 displays investment details from 1993 to 2005.
TRCSL has became the sole body to inquire into matters related to telecommunications industry
in Sri Lanka. While protecting and promoting the interests of consumers, purchasers and other
users, TRCSL maintains and promote effective competition within the industry. It also promotes
research and development activities for the industry in order to make Sri Lanka the hub for
international transit services in the region.
Exhibit 1: Major Investors in Fixed and Mobile Operators, 1993-2005

 Nine point six percent of Dialog’s stake was opened to public on the 7th July 2005 and it
was over subscribed by six and half percent within one hours of IPO opening (Daily
News, 8 July 2005; The Island, 9 July 2005)

Source: Asoka (2006)

The reforms were not solely initiated by the government but mainly imposed by the World Bank
and International Monitory Fund through structural adjustment programs as conditions for
support. International organisations such as World Trade Organisation and International
Telecommunication Union stimulate the telecommunication industry liberalisation.

During the reign of government monopoly, investments in the industry was driven by
government decisions on how much revenue the state owned institute can reinvest and on the
nature and extent of foreign credit and aid facility. With the adoption of competition-oriented
regulations during mid 90’s over government funded investments there have been positive
indicators of a more natural market. For example in 2002, investments by private operators
exceeded that of SLTL for the first time indicating the start of a normal market-based industry.
Since 1991 the teledensity (number of telephones per 100 persons) for both fixed and mobile
sectors has increased (fixed lines from 0.7 in 1991 to 5.1 in 2004 and of mobile phones from 0.1
in 1991 to 11.4 in 2004). Exhibit 2 displays the annual growth in the industry.
Exhibit 2: Annual Growth Rate of Fixed and Mobile Sectors

Source: TRCSL

Exhibit 3 describes the turnover from 1994 to 2005. The turnover for mobile operators comprises
of income received from rental income, interconnection revenue, value added services, other
service income, and sale of handsets. The turnover for fixed line operators comprise of income
received from sources such as, rental income, domestic call revenue, receipts from other network
operators-domestic (interconnection) and international, Telex, data transmission and other
telephony services.

Sri Lanka compared to its neighbouring countries has many advantages apart from most
favourable policies towards foreign investors. Factors include better social conditions (high
literacy rate, low infant mortality rate and long life expectancy), strategic location and an
educated and trainable work force. However, in comparison Sri Lanka has not attracted
significant private investments into the sector. Sri Lanka despite its many advantages and early
opening up of the economy is lagging behind India, which had followed relatively closed
economic policies until recent but after mid 90s has aggressively attracted and dominated foreign
investments.
Exhibit 3: Turnover of Mobile and Fixed line Operators

Source: TRCSL

Some of the reasons for slow growth can be aggregated to decisions taken by TRCSL. The fixed
line private operators were restricted to wireless operations putting the wire-line exclusivity on
SLT and the operations of international telephone services were solely vested on SLT. The tariff
rebalancing permission, given to SLT at privatization for five consecutive years added the
situation to a further deterioration by the regulator. However, competition in the mobile sector is
positive for a number of reasons such as, competition among operators, affordable initial price
(prepaid systems), constant improvements in mobile phone technology, quick supply, expansion
of coverage, declining number of public payphones, shortage of fixed line supply, opening up of
new market segments (war-torn areas) due to peace building efforts etc. However, quality of
mobile services in Sri Lanka appears to be low because some operators have been insufficiently
capitalized to maintain network capacity in the face of rapid demand (Asoka, 2006). Again
discriminatory type responses by TRCSL have led to slow growth in the sector. For example
LankaBell’s request to utilise CDMA technology was approved only in 2002 after a long hold.
Suntel faced a similar problem and they were allowed to use the technology only in 2004.

Vision
To be the undisputed leader in the provision of multi-sensory connectivity resulting always, in
the empowerment and enrichment of Sri Lankan Lives and Enterprises.

Mission
"To lead in the provision of technology enabled connectivity touching multiple human sensors
and faculties, through committed adherence to customer driven, responsive and flexible business
processes, and through the delivery of quality service and leading edge technology unparalleled
by any other, spurred by an empowered set of dedicated individuals who are driven by an
irrepressible desire to work as one towards a common goal in the truest sense of team spirit."
Corporate Values
 Total commitment to our customers
 Dynamic & human centered leadership
 Commitment to task & team work
 Uncompromising integrity
 Professionalism and accountability
 Foremost concern for respect & care

Organizational Goals
 The deliverance of industry best return on investment to the shareholders of the company,
and financial market recognition as the highest valued mobile communication operator in
Sri Lanka.

 The deliverance of the best product in the market place through leadership in customer
service, product quality, provision and adaptation to emerging technologies and
convergence with the internet.

 Achievement of leadership in terms of (economically) effective subscriber base, brand

recognition, consumer first choice and ownership of heart and mind share of Sri Lankan
consumers

 The achievement of leadership in term of management practices, internal strengths,

competitive resilience and quality of empowered resources, through adaptation of best
practices and the active pursuit in new business in which corporate strengths could be
exploited in the interest of growing the value of the company

Culture
Dialog Telekom Organization culture can be summarized as a performance-driven culture, where
good work result in more work and more rewards and benefits.

Organizational Structure
The operations of the Company are managed through a faculty of Strategic Management
Committees (SMC), focused on the delivering of corporate targets within the core functional
areas of Service Delivering, Technology, Business and Finance, Information System, Sales
Marketing and Support Services.

The primary role of an SMC is to provide strategic and operational leadership in all functions of
the Company.
Board Of Directors

 Non - Executive Director/Chairman

 Executive Director/Chief Executive
 Non - Executive Director
 Independent Non - Executive Director
 Non - Executive Director
 Non - Executive Director
 Independent Non - Executive Director

Senior Management

 Director / Chief Executive

 Chief Financial Officer
 General Manager - Engineering, Planning and Development
 General Manager - Corporate Planning, Quality Systems, Corporate Development,
Management Information Systems and Enterprise Risk Management
 General Manager - Engineering Operations and Information Technology
 General Manager - Legal, Regulatory Affairs, Administration and International
Business / Company Secretary
 General Manager - Sales and Marketing
 Head - Network Operations and Fundamental Network Coordination
  Head - Customer Service
 Head - Human Resources Management and Development
 Head - Network Planning
 Head - Corporate Finance and Internet Business
 Head - Information Technology
 Head - Corporate Planning and Quality Management

Products & Services

Dialog Telekom product and services are distributed across the following business areas;

Mobile

Dialog entered in to Sri Lankan market as the first GSM (2G) operator of South Asia and
currently they have launched the 3G Technology again as the first operator in the South Asian
region.

As a GSM Operator apart from Call Origination and Termination, Dialog provides various value
added services for it's customers.

 Call Diversion
 Call Conferencing
 Missed Call Alert
 Call Hold
 Call Waiting
 Voice Mail
 CLI
 IDD
 Roaming
 SMS
 Star call

In addition as referred in the following diagram, Dialogs mobile telephony portfolio tries to
make a right balance between prices against provided products and services.
ISP

Dialog Internet was launched in 2001, In addition to act as a Internet Service provider, Dialog
provides services in the following areas using their ISP backbone.

 GPRS (mainly an enhancer of the core GSM service Dialog Offers)

 WiFi Solutions.
 Web Billing.

Global

Dialog acts as a global operator providing the following services to the global market.

 International call Terminating.

 International call Originating.
 Transferring (switching)
 Global IPLC.

Broadband

After acquiring Dialog Broadband (Pvt) Ltd. formerly known as MTT, Dialog received the
ability to work as a transmission and communication operator. This enabled them to provide
customer specific voice, data and video solutions using their country wide transmission
backbone.

Dialog SAT
Dialog SAT technology provides access disregarding the location and this was implemented as
an integration of Thuraya and Dialog Technologies.

Rewards Programs

Dialog Telekom supports a comprehensive portfolio of customer rewards programs focused on

rewarding customers for loyalty and continued usage of Dialog Telekom services. Based on the
wide spectrum of consumer segments addressed by the Company, several rewards/loyalty
programs have been designed with specific focus on key segments.

 Star Point scheme

 Club Vision/Priority customer
 Nexus Points

Operations
Coporate Social Resposibilities
Corporate Social Responsibility (CSR) is a culture by itself for Dialog Telekom that drives them
on visioning to empower all Sri Lankans equitably, integrating resources, values and ethics
across economic, social, cultural and traditional boundaries. It is integral part of their business in
whatever they do, plan and believe. Their CSR initiatives are applied within a local context,
which implies that they balance their core business case with community needs. They also
embed CSR across fundamental business processes internally and as well as external project
oriented CSR such as Social Investments and the Company Change Trust Fund initiatives.

There are four dimensions of strategic CSR thrust at Dialog Telekom to which all these CSR
initiatives can be categorized into.

 Business Integral CSR which challenges Dialog Telekom to integrate CSR in business
planning and decision making.

 Corporate Philanthropy which is channeled through the Change Trust Fund

 Action Oriented CSR which spans within local communities in times of need and
disaster.

 Technology for CSR to create services and products with high social value

There are so many successful and effective CSR projects that have been initiated by Dialog
Telekom. Few of those are;

 The first ever research lab for Telecommunication Technologies Research opened at the
University of Moratuwa, named as Dialog - University of Moratuwa Research
Laboratory.
  The Disaster Management Centre, together with Dialog Telekom Limited, is currently
piloting Sri Lanka’s first mass alert early warning system. The Disaster and Emergency
Warning Network (DEWN) uses GSM communication technologies and devices, and
transmits alerts through the GSM network. It can be used to issue customized alerts to
selected recipients instantaneously, and is compliant with the internationally accepted
alerting protocol – CAP.

 Dialog Telekom Limited has identified a great opportunity to use its infrastructure and
core competencies to bridge the divide in level of education between the urban and rural
areas. As an entirely non-commercial exercise Dialog partnered with the Ministry of
Education to build the Digital Bridge. The Digital Bridge enables lectures conducted at a
central location to be transmitted live to remote schools, and for the teachers and students
to interact, creating a virtual classroom. A teaching studio has been established at the
ministry specifically for the purpose.

 The Dialog scholarship program go beyond the short-term gain to develop the intellectual
capital of Sri Lanka’s future leaders. they support interaction between the scholars and
their employees, which facilitates mentoring, internships and soft skills development to
prepare these scholars for a position of community leadership and service.

Few awards that Dialog Telekom has received in recognition of the CSR initiatives are;

GSM World Award 2001

2001 GSM World Award for the idea behind the Change Trust Fund initiative, a unique system
where Dialog post-paid customers are given the opportunity to donate half a percent (0.5%) of
their monthly bill up to a maximum of SLRs. 25/= with the company matching the contribution,
which would be used for charity.

GSM World Award 2002

2002 GSM in the Community Award on Wireless Accessibility for SMS 112, a SMS based
emergency call facility for the hearing and speech impaired.

GSM World Award 2003

2003 GSM in the Community Award on Best Use of Wireless in Emergency Situations for
Dialog’s blood appeal, matching and donor management system

Reference
Rohan Samarajiva & Anupama Dokeniya with Sabina Fernando, Shan Manikkalingam & Amal
Sanderatne (2005). Regulation and Investment: Sri Lanka Case Study (Report on the World
Dialog on Regulation)

Asoka Fernando (2006). Regulation and FDI: Sri Lankan Telecommunications Industry

Case Analysis
Dialog Telekom Limited
Executive Summary
This is a case analysis for Dialog Telekom Limited, the Premier Mobile Telecommunication
Company in Sri Lanka, based on the strategic management perspective.

It starts by giving a basic overview of Dialog Telecom Limited, its operations and performance.
Then the internal environment analysis gives a view of its resources, structure and processes
while financial analysis included in the same shows the current standing of the company in terms
of financials. Next the external environment of Dialog Telkom has been analyzed based on
PESTEL factors and Five Forces Model. All these are used to perform the SWOT analysis to
derive strategies to be developed to suit Dialog Telekom’s environments keeping alive its
objectives.

Finally all levels of strategies have been recommended together with programs required to
implement those. It also includes evaluation steps required to assess the success of strategy
implementation in Dialog Telekom and how controlling can take place.

Introduction
Dialog Telekom Limited is the largest mobile operator in Sri Lanka with over 3 Million
subscribers representing over 60% market share in the mobile communication sector. Dialog
Telekom is also the largest listed company on the Colombo Stock Exchange in terms of Market
Capitalization with a market capitalization (as of 30 September 2006) of SL Rs 161 Billion.

Dialog Telekom Limited is a subsidiary of Telekom Malaysia International and a member of the
Telekom Malaysia Group. In addition to its core mobile telephony business, the company
provides international services, supporting an International Gateway infrastructure providing
retail and wholesale international voice and data services under the brand name of Dialog
Global. The company also provides Internet services through
Dialog Internet - a fully-fledged Internet Service Provider (ISP). Dialog Telekom also operates
Dialog SAT, a mobile satellite service.

Dialog Telekom has clearly defined vision, mission, corporate values and goals as given below.

Vision

To be the undisputed leader in the provision of multi-sensory connectivity resulting always, in

the empowerment and enrichment of Sri Lankan Lives and Enterprises

Mission
To lead in the provision of technology enabled connectivity touching multiple human sensors
and faculties, through committed adherence to customer driven, responsive and flexible business
processes, and through the delivery of quality service and leading edge technology unparalleled
by any other, spurred by an empowered set of dedicated individuals who are driven by an
irrepressible desire to work as one towards a common goal in the truest sense of team spirit

Corporate Values

 Total commitment to our customers

 Dynamic & human centered leadership
 Commitment to task & team work
 Uncompromising integrity
 Professionalism and accountability
 Foremost concern for respect & care

Organization Goals

 The deliverance of industry best return on investment to the shareholders of the company,
and financial market recognition as the highest valued mobile communication operator in
Sri Lanka.

 The deliverance of the best product in the market place through leadership in customer
service, product quality, provision and adaptation to emerging technologies and
convergence with the internet.

 Achievement of leadership in terms of (economically) effective subscriber base, brand

recognition, consumer first choice and ownership of heart and mind share of Sri Lankan
consumers

 The achievement of leadership in term of management practices, internal strengths,

competitive resilience and quality of empowered resources, through adaptation of best
practices and the active pursuit in new business in which corporate strengths could be
exploited in the interest of growing the value of the company

some more needed to be added

Internal Environment Analysis

7S model has been used as a primary tool to analyse the internal environment

Strategy

Dialog strategies are visible in the company's corporate, business and functional levels. They
have already diversified their business across many areas during the last few years. For instance,
by acquiring MTT, Dialog managed to strengthen it's transmission backbone. Also recent past it
has acquired CBNSAT, a sattelite TV transmission company, and DERANA TV Channel with
along term objective of a value chain convergence. In addition to reach the customer, Dialog has
created many alliances with other business corporations. Cargills-Dialog alliance to allow
Cargills customers to settle Dialog bills is just one such example.

The business plan is formulated at the beginning of the year considering main objectives of the
company. The progress of each project is monitored in a monthly basis through different
strategic committee meetings.

On the other hand, Dialog tries to introduce latest technologies into the market considering
global mega trends (refer diagram) through it's comprehensive Research & Development wing.

Among them, the Dialogs initiative to setup the Dialog Research Lab at the University of
Moratuwa is of importance, because it effectively enabled Dialog to provide tailor made
solutions to the local market. Nokia phones with Sinhala language support and Tsunami warning
system for mobiles are just to name a few such examples. These technology initiatives can be
considered as a strategy used to capture the market by effectively saying ahead from the
competition in the technology and innovation sphere.

Structure

The Company’s business and operations are managed under the supervision of the Board of
Directors comprising of five (5) non executive directors and one (1) executive director. The
Board has the power to appoint executive directors including the CEO. Divisional structure can
be identified in company level but performances of the divisions are measured through different
strategic committees.

Systems
Apart from the technical back bone, Dialog uses several systems to execute their business
strategies successfully. For instance;

 SAP ERP (Enterprise Resource Planning) – This was launched in 2006 January to
integrate identified key process in the company .
 CCBS (Customer Care Billing system) – Currently existing billing system is going to be
migrated in to a new system to provide more customer centric services.
 HRIS - Used for human resource management and all the day to day functions are carried
out through this system.

Style

The management style always depends on targets and objectives. Strict deadlines are imposed
while performance and progress are very closely monitored at all levels of the organizational
structure. Rewards and benefits schemes are in line for the top performers and better
achievements.

All the employees will have a number of recreational opportunities such as trips, get-together,
sports…etc to take some time off from busy work schedules.

Staff

The Company currently employs a workforce of 2500 who in turn are considered pivotal to the
organization’s growth and success. Annual manpower planning and recruitment is carried out in
parallel with the business plan preparation. The capabilities required by potential employees are
based on the requirements of the business plans applicable to respective departments of the
Company in any given year. Recruitment to the Company is governed by several policies. The
core policy on filling vacancies spells out the Company’s intention to attract the best with the
aim of exploiting the individual’s potential while providing career development opportunities
irrespective of communal or gender differences. Seven percent (7%) of the total HR cost is
devoted to training and development. The training needs for individuals and teams are identified
from the competency requirements arising from the Company’s business plan and employees’
annual performance review.

Superordinate Goals

All individuals with different backgrounds, different ethnics and nations are teamed up and
driven towards a common set of goals and objectives at Dialog Telekom. The company has been
successful in focusing the entire team towards a single vision by incorporating all individuals’
goals and personal objectives together.

Skills

Dialog team consists of number of individuals with distinctive capabilities and competences
from top to bottom. Dialog is proud to have a very energetic and talented CEO in the caliber of
Dr Hans Wijesuriya. In addition to that Dialog is served by a team of top class individual in the
Sri Lankan Industry with lot of talent and exposures.

Financial Analysis

External Environment Analysis

PESTEL
Political

Sri Lanka has very positive foreign investment policies. However, though Sri Lanka identified
importance of liberalisation early as in 1977, due to political direct intervention, bureaucratic
attitudes inherited from colonial reign and poor governance, the country as a whole and
specifically the industry has not grown as it was foreseen at the time of liberalisation. During the
past two decades, terrorist activities have remained constant as well.

Economical

Unstable macro economic environment and trade policy regime has a negative impact on the
industry. The fall of the exchange rate over the years happened on a gradual pace.

Since the inception of liberalisation policy it has undergone massive reforms in this sector.
However Sri Lanka lags dynamics incorporated by India to attract foreign direct investments.
The attitude towards foreign direct investments needs to be improved.

Socio-Cultural

Sri Lanka has better social conditions for example, literacy rate is high, infant mortality rate is
low and life expectancy is long. The country also has an educated and trainable work force.

Nevertheless Sri Lankans inherit a bureaucratic attitude from the colonial administration that
results in inefficiencies and discrimination.

Technological

Sri Lanka depends on technology transfers from foreign direct investments. However TRCSL
encourages local research and development.

The country comparatively has not performed well enough to adapt technological changes on a
timely manner. For example the shift from analogue to digital and the adoption of CDMA
technology materialised in a slow pace.

Ecological
Legal

TRCSL, the regulatory body takes up multidimensional roles. It ensures fair enforcement of
Government policy, hold operators accountable for performance, address consumer issues,
monitor changing industry needs, and provide feedback to the policy making units.

However TRCSL has been criticised over the years for information asymmetry, inefficiency and
discrimination.

Five forces
Threat of New Entrants

The most awaited fifth mobile operator license for Sri Lanka has been awarded to AIRTELL,
India’s largest mobile operator. With this the threat of competition increases. However as per
TRCSL there will not be any further licenses issued which creates an entry barrier for any others
to the market.

Bargaining Power of Buyers

In Sri Lanka buyers/customers are not strong as compared to customers in Western countries.
The number of customer groups to protect themselves is almost non-existing in the Sri Lankan
context. This is quite evident from the demanding nature of customers in the Western countries.
Hence quality, standards and support are comparatively not major concern if they exist to a basic
level.

However people are very cost conscious, as such when switching costs are fewer, buyers tends to
go for the lowest rates. As there are four other operators and switching cost is negligible,
bargaining power of buyers will increase. But with the increasing number of Value Added
Services (VAS) provided by Dialog Telekom, they are able to keep certain segment of buyers
tied to them.

Threat from Substitutes

In strict Mobile Telecommunication sense there is no substitute technologies like VOIP over
wireless which is popular here in Sri Lanka. However in general, fixed line communication
operators (SLT, Suntel & Lankabell) create the substitution effect, particularly with the award of
CDMA licenses.

SLT, Lankabell and Suntel are the substitute telecommunication providers which one can go for
if he/she is looking at connectivity without mobility (eg. for home usage). However this is still a
smaller market as compared to the total market.

Bargaining Power of Suppliers

There are suppliers both local as well as international for Dialog Telekom in various operations it
performs. For network connectivity back haul is critical. Dialog Telekom does not own a
national backbone hence has to depend on local providers. It is only a few like SLT, MTT and
few other VSAT operators who have direct access to the national back bone. Hence these
suppliers are quite powerful and certain suppliers are indirectly competitors as well. For this
reason Dialog Telekom has recently acquired MTT and now it is part of the group and operates
as a subsidiary known as Dialog Broadband Network.

Sri Lanka being a small country with a comparatively smaller number of data/voice users the
traffic generated is quite low. With this the bargaining power of upstream providers (eg.
specially International ISPs), Content Providers for VAS and peering partners are high.

Rivalry among Competing Firms

Even though the competition is high in the Sri Lankan mobile communication market, there are
few factors which have given the edge to Dialog Telekom over others. The product and service
characteristics offered are different to most other operators. They have a variety of Value Added
Services like Star Call, e-Channeling via mobile, RingIN Tones, Push N Talk, Photo Technica &
D-Services are to name a few. These are becoming popular among the users and most operators
provide only basic services.

Also the amount of investment for the new services as well as expanding the coverage and
capacity is quite high. This is also another differentiator which gives Dialog Telekom the
competitive edge. The diversity of the rivals in the industry is another factor. As such Dialog
Telekom competes on value addition and differentiation, while most other operators compete on
rates and coverage.

Hence Dialog has surpassed all the mobile operators as well as it has gained more subscribers
than incumbent SLT, which reflects how it stands apart from others due to above factors.

SWOT Analysis
Strengths

1. As the first mover of GSM in Sri Lanka technology, has a greater competitive advantage.
2. Strong infrastructure and hence the mobile telecommunication coverage is one of the
widest and best in Sri Lanka.
3. Relationship with a telecommunication giant in the region; Telekom Malaysia Group.
4. With numerous collaborations with other Telecom Corporations, has enabled Dialog to
have a global reach with services such as High Roaming and Satellite Coverage.
5. Aggressive marketing strategy allowing Dialog brand name to be carried to every corner
of the country and hence to have a good and stable Brand Equity.
6. As reflected in the financial analysis the financial stability of the organization with all the
current investments.
7. Strong Public Relations that has been built up over the years.
8. Greater CSR involvement, reflected via the CSR initiatives that has taken place.
 9. Technology leadership with high technical innovation. This is powered by there Applied
Research & Development initiatives in areas such as GPRS, MMS, EDGE, Intelligent
network services, SMS, GPRS/WAP, IVR….etc.
10. Boosting company image through investors confidence reflected via share prices.
11. Strong island wide distribution network.
12. Greater level of customer satisfaction via high quality customer support.
13. Well established customer base.
14. Extended breath of product range.
15. Skilled and dedicated Management Team
16. High level of corporate business knowledge retention through low employee turnover
(exception is the front-office staff).

Weaknesses

1. No Clear focus for a broader market even though there is a huge investment on
advertising and value addition through technical innovation.
2. Poor performance as an ISP.
3. Lack of pricing innovations compared to the competitors.
4. Distributed nature of the Head Office in the city of Colombo due to non-expandability of
current location.
5. Decreasing level of motivation of internal employees due to multiple strategies of very
high impact being deployed simultaneously without managing the resulting confusion
and disillusionment.
6. Decreasing trend in Quality of Service due to the rapidly growing customer base.
7. Employee turnover is high in the front-office (Call Centre and Help Desk).

Opportunities

1. Telecom, is one of the fastest growing sectors in Sri Lanka’s 19.5 million people and the
Central Bank estimates that 4.5 million users have mobile phones as at end 2006.
2. Continuous development of the communication industry.
3. Low fixed line penetration.
4. The acceptability of the Value Added Services (VAS) by the users hence increasing the
probability of success of any new VAS initiative.
5. The strategic partnership with Vodafone UK.
6. Potential to reap benefits of Value Chain Convergence.
7. Technology advancements especially in the realms of mobile multimedia technologies
and the advent of the next (3rd) Generation of mobile communications.

Threats

1. All 3 other existing GSM Mobile service providers pose a threat at different magnitudes.
2. The 5th Mobile operator license in Sri Lanka has been offered to India's Bharti Airtel Ltd
to launch the 2G and 3G services in 2007.
3. All 3 existing CDMA service providers too pose a different kind of threat.
 4. Strongest Competitor, the Mobile wing of fixed line telecom giant SLT is focused on
cost-leadership competitive advantage strategy through its low cost pre-paid product to
the mass market. (Remember more than 80% of Dialog subscribers are low income pre-
paid users.)
5. Volatile changes in the political, social and economical conditions and the laws and
regulations and their interpretation (Eg : TRC regulations)
6. Changes in currency exchange rates and high inflation which is badly effecting the global
business.
7. Due to customer awareness the rapid change in customer preferences and their growing
needs.
8. Changes in technology.
9. Uncertainty due to the escalating counter terrorist campaign. For instance Dialog had to
switch off all base station in northern province during the last few months due to military
operations by the Sri Lankan government forces.

Strategic Alternatives & Recommendations

Corporate Strategy

Considering the current performance, the Key Success Factors and the SWOT analysis the
directional strategy alternatives would be as follows.
• Growth strategy to expand the activities of Dialog Telekom further would be the first
alternative. Since the current product lines have real growth potential concentration of resources
on those would be ideal. In concentration Dialog Telekom can follow the vertical growth
strategy to take the benefit of the value chain convergence opportunity that is existing in Sri
Lankan context.

• Stability strategy to continue with current activities without any changes to the direction would
be the second alternative. Here Dialog Telekom can utilize pause/proceed with caution strategy
to have only incremental improvements while the weaknesses stated are overcome. It can use
this time to stabilize the organization due to the changes took place due to multiple strategies it
adopted earlier such as acquisitions and investing on innovative developments, which will help
to get back the loosing internal employee motivation.

The first alternative will move Dialog Telekom further away from the competition and create a
monopoly temporarily for converged industries of telecommunication, content & media and
retail. However unfocused highspeed growth to capture the market without stabilizing the
existing acquisitions can disassemble everything. The second alternative will give Dialog
Telekom and its employees much needed breathing space.

The recommendation would be to implement the second alternative initially to stabilize the
organization without any other drastic change in the direction. And after some time they can
adopt their long-term beneficial value chain convergence option depicted in first alternative.

Business Strategy
The business strategy alternatives available for Dialog Telekom to improve the competitive
position in the industries it operates would be as follows.

 The first alternative for the competitive strategy would be to improve on the current
strategy of differentiation. It can improve this by having unique value added services for
each of its current strategic business units DBN, CBNSAT and Dialog Telekom itself.
This can improve the customer loyalty and thereby can charge a reasonable premium rate
than competitors.

 The second alternative which Dialog Telekom can try to implement is cost leadership to
overcome the threat of lower rates provided by competition, Mobitel. Since the VAS are
less in Mobitel the switching from Dialog to Mobitel is not much in urban people who
use these VASes. But people who are using purely as a voice/SMS only are shifting as
most of them are cost conscious and there is no much of a different in coverage. Hence if
Mobitel improves on its VASes it would become a serious threat, at which stage it would
be only the rates which decides the attraction of that segment of the market.

Typically the differentiation strategy is more likely to generate higher profits than low-cost
strategy. However differentiation strategy implementation may involve higher investment than
low cost strategy.

Competitive scope is an important factor when considering competitive strategies. The

recommended alternative depends on the competitive scope in this situation.. Considering both
alternatives and there pros and cons of each, most ideal should be to have culmination of both
differing from the segment of the market. Dialog Telekom should have a focused differentiation
strategy in the market where people are valuing the VASes and cost focus in the market where
usage is purely for voice/SMS.

Simultaneously Dialog Telekom should look at strategic alliances as a corporative strategy to

gain competitive advantage by working with other organizations. Currently they have stated this
with some banks and some supermarket chains as mentioned above. However this can be vastly
improved to include alliances with Insurance Companies, Stock Brokers, Popular Food Chains
etc.

Functional Strategy

Most of these functional strategies are developed considering Dialog Telekom operations, hence
they cannot be applied directly to Dialog Telekom's other strategic business units like DBN and
CBNSAT.

Functional strategies based on the strategic choice of corporate and business strategies should be
as follows.

 The Marketing strategy currently followed by Dialog Telekom should be slightly

modified to accommodate the business strategy of cost focus. There should be new
packages to attract new customers as keeping existing customers who require basic voice
 & SMS. This product/package development for the existing market can be supported by
improving the current “pull” marketing strategy for advertising and promotion.

 Dialog Telekom should not do any changes to there current Financial strategy as they
are going to have pause/proceed stability corporate strategy. Hence they could further
improve there financial stability as there are no major growth strategies to be
implemented.

 Dialog Telekom being a technological leader, R&D/Technology strategy is critical for its
performance. They should further improve R&D capabilities by having strategic alliances
with their major technology vendors. This is because most of these vendors are the
pioneers in developing latest technological developments. This will be mutually
beneficial to both the parties.

 The Operational strategy of Dialog Telekom should be streamlined to have a common,

more efficient and effective operations flow with all business units. This requirement has
arisen from the recent expansions and acquisitions. Also change management would be
required in creating a common culture among Dialog Telekom, DBN and CBNSAT.

 The Human Resource Management strategy is another key functional strategy for
Dialog Telekom. It should review its programs and procedures to suit the new stabilizing
corporate strategy. It should improve on its current team based working environment to
self-managing work teams which is more suited for an organization where rapid growth
is anticipated in future.

 The current Information Systems strategy should also be changed to handle enterprise
ICT development in much more strategic level. The Information Systems developed
should be aligned with corporate and business level objectives. And also there should be
an integrated approach among business units as much as possible.

 Apart from this Dialog Telekom should outsource certain operations such as legal, IS/IT
infrastructure support, Advertising, 1st level Call Center operation etc apart from the
already outsourced operations like cleaning and transportation. This is mainly because
there is no major distinctive and/or core competencies of Dialog Telekom in the above
areas.

 Dialog Telekom is known for its quality innovations due to their high emphasis on
Research & Development. However these precious research and their development work
needs to be protected by patents, copyrights and other legislative means. Hence if
applicable, Dialog Telekom should aggressively follow these protective legislations.

Implementation
Evaluation & Control
Conclusion

Presentation Slides
Slide : External Environment Analysis
1. PEST Analysis
2. Porter's Five Forces Analysis
3. SWOT Analysis

Slide : PEST Analysis

Political

1. Positive foreign investment policies.

2. However, political direct intervention, bureaucratic attitudes and poor governance exists
3. Terrorism & counter-terrorism

Economical

1. Unstable macro economic environment has a negative impact on the industry.

2. The gradual fall of the exchange rate over the years.
3. Inflation has reached more than 20%.

Socio-Cultural

1. Better social conditions than other developing countries.

2. High literacy rate.
3. Low infant mortality rate
4. Long life expectancy.
5. Educated and trainable work force.
6. Bureaucratic attitudes, inefficiencies and discrimination exists.

Technological

1. Sri Lanka depends on technology transfers from foreign direct investments.

2. TRCSL encourages local research and development.
3. Poor adaptation of technologies in a timely manner - Risk averse.

Legal

1. Telecommunications Regulatory Commission of Sri Lanka (TRCSL).

2. Ensures fair enforcement of Government policy,
 3. Hold operators accountable for performance.
4. Addresses consumer issues,
5. Monitor changing industry needs, and provide feedback to the policy making units.

Five forces
Threat of New Entrants

1. Fifth mobile operator license awarded to AIRTELL,

2. However as per TRCSL, there won't be any more licenses awarded.
3. This creates an entry barrier for any others to the market.

Bargaining Power of Customer (Buyer)

1. Consumer protection groups are almost non-existing.

2. Compared to Western countries, customers are not very strong in their demands.
3. Quality, standards and support are comparatively not major concerns if they exist at a
basic level.
4. Switching costs are low.
5. Customers are very cost conscious.

Threat from Substitutes

1. Very minimum.
2. Alternatives are fixed line and the more recent CDMA connectivity.
3. However this is still a smaller market as compared to the total market.

Bargaining Power of Suppliers

1. Local & International Suppliers for Dialog

2. Depends on SLT, MTT and a few other VSAT operators to access the national backbone.
3. Hence these particular suppliers are very powerful.
4. Acquisition of MTT and the creation of the new subsidiary known as Dialog Broadband
Network.

Rivalry among Competing Firms

1. Very high competition with continuous price/coverage wars.

2. Dialog has an edge because of their VAS & differentiation strategy and the huge
customer base.
3. Value Added Services becoming very popular among the consumers.
4. VAS examples: Star Call, e-Channeling via mobile, RingIN Tones, Push N Talk, Photo
Technica & D-Services.

SWOT Analysis
Strengths

1. First Mover of GSM Technology in Sri Lanka.

2. Strong Infrastructure, Alliances and Global Coverage.
3. Aggressive Marketing Strategy & Stable Brand Equity.
4. Strong Public Relations & Greater CSR Involvement
5. Technology Leadership through Applied Research & Development.
6. Strong Island Wide Distribution Network.
7. Well Established Customer Base & High Quality of Customer Support.
8. Wide Product Range.
9. Skilled and Dedicated Management Team.

Weaknesses

1. Lack of Focus for a Broader Market.

2. ISP woes.
3. Lack of Pricing Innovations Against Competitors.
4. Real Estate Issues.
5. Confusion, Disillusionment & Decreasing Motivation of Employees.
6. High Employee Turnover - Front Office
7. Gap in Quality of Service Against Growing Customer Base.

Opportunities

1. Telecom, a Fastest Growing Sector in Sri Lanka.

2. Low Fixed Line Penetration.
3. The acceptability of the Value Added Services (VAS).
4. Strategic Partnerships.
5. Value Chain Convergence.
6. Technology Advancements

Threats

1. Competition.
2. Volatile Changes in the Political, Social, Economical, Technological & Legal Spheres.
3. Managing Customer Expectations.
4. Terrorism & Counter-Terrorism.

Slide 3
Slide n

Appendix
Appendix A: Financial Statements