In the name of ALLAH the most beneficent & the most merciful

MBA HRM Semester autumn 2011 Management information system Assignment 2

Is a technique to gain competitive advantage

Contents; Introduction Competitive advantage Competitive strategy Practices of Competitive advantage Gaining a competitive advantage Practical study Swot analysis Conclusion & recommendations References

Introduction;
Competitive advantage is defined as the strategic advantage one business entity has over its rival entities within its competitive industry. Achieving competitive advantage strengthens and positions a business better within the business environment Competitive advantage; When a firm is implementing a value creating strategy not simultaneously being implemented by any current or potential competitors, then we can say the firm has Competitive advantage a And when a firm is implementing a value creating strategy not simultaneously being implemented by any current or potential competitors and when these other firms are unable to duplicate the benefits of this strategy, then we can say the firm has a sustained Competitive advantage. There are two major models that have to be considered. The first one is the position or environmental model and the second one is the resource-based view model. The Position or Environmental Model: In order to achieve a Competitive advantage the firm is required to make a choice about the type of Competitive advantage it seeks to attain and the scope within which it will attain it. Choosing the Competitive scope or the range of the firms activities can play a powerful role in determining Competitive advantage because it aims to establish a profitable and sustainable position against the forces that determines your industry competition.

Competitive strategy;
The Competitive strategy as the positioning of a company in its Competitive environment. Begin with understanding your industry. Focus attention on significant force. Watch out for industry change.
Either the company can be lucky enough to come up

with something that its rivals cannot copy which is very rare The company is improving so fast that its rivals can not catch up. Porter shows that there are five Competitive forces which play a major role in the company success or failure The entry of new competitors, The threat of substitutes, The bargaining power of suppliers, The bargaining power of buyers, and The rivalry among the existing competitors.

The collective strength of these five Competitive forces determines the ability of firms in an industry to earn on average, a rate of return on investment in excess of the cost of the capital. Porter also notes that a business can develop a sustainable Competitive advantage by following two strategies; cost leadership strategy or differentiations strategy. Following on from his work analyzing the competitive forces in an industry, Michael Porter suggested four "generic" business strategies that could be adopted in order to gain competitive advantage. The four strategies relate to the extent to which the scope of businesses' activities are narrow versus broad and the extent to which a business seeks to differentiate its products.

The four strategies are summarized in the figure below:

The differentiation and cost leadership strategies seek competitive advantage in a broad range of market or industry segments. By contrast, the differentiation focus and cost focus strategies are adopted in a narrow market or industry.

Strategy Differentiation;
This strategy involves selecting one or more criteria used by buyers in a market - and then positioning the business uniquely to meet those criteria. This strategy is usually associated with charging a premium price for the product - often to reflect the higher production costs and extra value-added features provided for the consumer. Differentiation is about charging a premium price that more than covers the additional production costs, and about giving customers clear reasons to prefer the product over other, less differentiated products.

Examples of Differentiation Strategy: Mercedes cars; Bang & Olufsen

Strategy - Cost Leadership;

With this strategy, the objective is to become the lowest-cost producer in the industry. Many (perhaps all) market segments in the industry are supplied with the emphasis placed minimising costs. If the achieved selling price can at least equal (or near)the average for the market, then the lowest-cost producer will (in theory) enjoy the best profits. This strategy is usually associated with large-scale businesses offering "standard" products with relatively little differentiation that are perfectly acceptable to the majority of customers. Occasionally, a low-cost leader will also discount its product to maximize sales, particularly if it has a significant cost advantage over the competition and, in doing so, it can further increase its market share. Examples of Cost Leadership: Nissan; Tesco; Dell Computers

Strategy - Differentiation Focus;

In the differentiation focus strategy, a business aims to differentiate within just one or a small number of target market segments. The special customer needs of the segment mean that there are opportunities to provide products that are clearly different from competitors who may be targeting a broader group of customers. The important issue for any business adopting this strategy is to ensure that customers really do have different needs and wants - in other words that there is a valid basis for differentiation - and that existing competitor products are not meeting those needs and wants. Examples of Differentiation Focus: any successful niche retailers; (e.g. The Perfume Shop); or specialist holiday operator (e.g. Carrier)

Strategy - Cost Focus;

Here a business seeks a lower-cost advantage in just on or a small number of market segments. The product will be basic - perhaps a similar product to the higher-priced and featured market leader, but acceptable to sufficient consumers. Such products are often called "me-too's".

Practices of Competitive advantage;

Sixteen practices of Competitive advantage through people Employment security Incentive pay Participation and empowerment Symbolic egalitarianism Long-term perspective Selectivity in recruiting Employee ownership Teams and job redesign Wage compression Measurement of practices Cross-utilization & cross-training High wage Information sharing Training and skill development Promotion from within Overarching philosophy

Competitive advantage can best be achieved by seeking improvement in the management of people in other words, through better utilization of human resources. From the standpoint of researchers interested in competitive advantage the resource-based view of the firm provides a framework for examining the rule of human resources in competitive success and forces us to think more clearly about the quality of the workforce skills at various levels and the quality of the motivation climate created by strategic human

resource management. The next section will focus on the strategic human resource management and competitive advantage.

Competitive advantage through Job Analysis, Job Description and Job Evaluation;
Job Analysis;
The job analysis looks at the behavioral needs of a particular competitive strategy (cost leadership or differentiation) role peculiar to the culture and organization of the company. It is like performing a Personal Profile Analysis on an imaginary person. The goal is to define the ideal individual for the job position from the perspective of the company and the employees that the successful applicant will work with. Job analysis is the process of collecting information and making judgments about a specific job. From the stand point of researchers, that competitive advantage only occur when employees knowledge, skills and ability can add value to the firm, are rare, cannot be imitated and are not sustainable. In order to target employees with the requisite knowledge, skills and ability, the job has to be carefully defined.

Job Description;
The job description is generally used to identify the responsibilities, the objectives associated with each specific task and the reward that associated with good performance. In order to accomplish the employment relationship effectively, work has to be designed, programmed, coasted, organized and co-coordinated. In other words detailed job description, otherwise can be used by an employee to define what s/he is not prepared to (thats not part of my job or Im not paid to do that).

Job Evaluation;

Once jobs have been analyzed and described, the job evaluation began by considering several job factors such as: working conditions, necessary technical KSA (Knowledge, Skills and Ability) and behavior, salaries and required managerial skills. A rating of each factor is made on a standard scale, and the total rating points can be used to rank jobs hierarchically. The recruiting and selection model appendix A can be used in the rating process by using different criteria and weights such as the above- mentioned job factors.

Competitive advantage through Generic Function of HRM;

the

The aim of Human Resource Management is seen as the optimization of human resources value. Researchers suggest three generic functions of HRM, namely, selection, appraisal and rewards that act as independent variables, in a cycle of human resource interventions on the dependent variable of performance. Selection Security in employment and reliance on the work force for competitive success mean that one must be careful to choose the right people in the right way. The question then is what does the firm want? 1. Employees with more competencies 2. Employees who self-develop without the need for company training 3. Employees who have more ideas that are implemented 4. Employees that have a lower error rate, number of discipline incidents and Absenteeism rate 5. Employees that have a higher customer satisfaction, higher performance appraisal scores, bonus rates and promotion rates 6. Employees that require "low maintenance" from managers 7. Employees that stays longer before quitting 8. Employees who produce more return for every dollar of salary paid to them Selection can be regarded as the primary mechanism in enhancing the organization capabilities. The individual behavior and learning

ability can optimize the organizations situation in its environment. The goal of selecting program is to ensure that the firm is hiring only the highest ability individual. Then the firm must be able to identify high ability individuals and also the firm must be able to attract and retain those applicants deemed to be of the highest ability. But in an increasingly competitive market, it can be almost as hard to attract the right staff as to attract the right customers.

Performance Appraisal and Performance Management Performance appraisal is defined as a process by which an organization measures and evaluates an individual employees behavior and accomplishments for a finite time period. Measuring/reviewing and evaluating the performance of employees is arguably one of the most important tasks for any manager, since critical decisions rely on the accurate assessment of an employees behavior. Historically, organizations tended to develop a performance appraisal instrument and forms administrated on an annual basis. Even though managers have been repeatedly told that performance review should be more than just an annual event, they do not always do it. Employees are often not coached and counseled throughout the year, so when review time arrives, they do not know what to expect. This leads only to confusion and resentment. The question then is how performance appraisal can be done better and more effectively? The answer may be in the approach to managing known as performance management. Performance Management has three basic components: planning, managing and appraising performance Rewards Rewards, both financial and otherwise, send a powerful message to employees of an organization as to what kind of organization management seeks to create and maintain, and what kind of behavior and attitudes management seeks from its employees. According to a report by the American Compensation Associations, August 1996. When it comes to reinforcing team behavior, the reward system is

one of the most effective and influential tools available to the organization

What is the purpose of reward systems? Reward system is intended to motivate certain performance. But under what conditions will rewards actually motivate employees? To be useful, rewards must be seen as timely and tied to effective performance. 1. Employees must believe effective performance will lead to certain rewards. For example attaining certain results will lead to a bonus or approval from others. 2. Employees must feel that the rewards offered are attractive. Some employees may desire promotions because they seek power, but others want a fringe benefit, such as a pension, because they are older and want retirement security. 3. Employees must believe a certain level of individual effort will lead to achieving the Corporations standards of performance. As indicated, motivation to exert effort is triggered by the prospect of desired rewards: money or recognition which may take the form of annual award ceremonies and expensive accommodation and entertainment, promotion, and so forth.

Competitive advantage through people;

The core strength of any organization comes from its employees. To develop and strengthen they will lead to a solid foundation for the organizations future. Good HRM does not happen by accident. It takes strong executive leadership to bring about positive patterns of employment relationships. The manager must continue to develop himself and also have a commitment to help his employees develop

their full potential. The employees depend on the managers, and the organization depends on them for its success. Many researchers believe that for organizations to maintain a competitive advantage they must focus on enhancing performance through a process of continual learning. Also they believe that by focusing on sound and effective leadership skills at every level can provide the catalyst to motivate individuals, teams and human networks to achieve peak performance. Top managers Requirement The manager takes responsibility for planning, monitoring, and controlling the business performance. Usual first tasks are to set the goals and objectives to prepare a preliminary budget, schedule and select the group members, setting a training program if required, ensure required supplies are available and generally try to do whatever is needed to maximize the group performance in order to keep the business moving. To do this the manager has to have certain skills and characteristics. Personal characteristics: The personal characteristics are necessary to manage the group. Such personal attributes include aggressiveness, confidence, poise, decisiveness, resolution, toughness, integrity, versatility and quick thinking. Skills: The most important skills for successful managers are: a. Communication skills i.e. being a good communicator is an essential management skill. b. Organizational skills are vital to good management. Characteristics included in this skill are planning and goalsetting abilities, along with the ability to be analytical. c. Group or team building skills involve developing empathetic relationships with other members of the group, being sensitive to the needs of others, motivating people and building a strong sense of team spirit. The best team leaders use a lot of we statements in describing the relevant subjects to the project. 2. Leadership skills- Several different attributes and behaviors can be catalogued under leadership skills. These included setting a

good example, seeing the big picture, being enthusiastic, having a positive outlook, taking initiative, and trusting people a. Coping Skills- Successful managers require coping or stress-management skills. Respondents indicated that both flexibility and creativity were involved in effectively coping with change, as were patience and persistence. b. Technical skills- Successful managers require a good background in their field.

Competitive advantage in practice

1. Goals/objectives This contains a detailed statement of the general goals and their relationship to the companys objectives. When the project goals are not clear, it is difficult to initiate/formulate the planning efficiently. The lack of planning contributes directly to unrealistic resource allocations and schedules. Notably the key personnel should be actively involved in defining the specific work to be performed, the timing, the resources, the responsibilities, and positive participation in the pursuit of the goal /objectives. 2. Recruitment The argument is how the management can recruit the right employees. Most of management uses a detailed job analysis and job description and some of them use one of the selection models to insure they are employing the right employees. 3. Commitment Commitment is defined by Kline & Peters as a process by which people become psychologically bound to their action in such a way that feel a personal obligation to follow through on the implications of those actions. Obtain commitment from all key personnel regarding the problem plan, its measures and results. This commitment can be enhanced and maintained by high participation of employees in definition of results, measuring

criteria and schedules. It is through this involvement that the employee gain a detailed understanding of the work to be performed, a feeling of importance, develops professional interests in the work and desires to succeed, and eventually makes a firm commitment toward the specific task and the overall project objectives.

4. Tracking/coaching Define and implement a proper tracking/coaching system which captures and processes work performance data conveniently summarized for reviews and management actions. 5. Measurability Assure accurate measurements of performance data, especially technical progress against schedule and budget. 6. Signing - On The process of signing on employees during the initial phases of the job or each task seems to be very important to a proper understanding of the task objectives, the specific task and personal commitment. 7. Interesting Work The managers should try to accommodate the professional interests and desires of supporting employees when negotiating their tasks. The effectiveness of the work depends on the managers ability to provide professionally stimulating and interesting work. This leads to increase involvement, better communications, lower conflict, and stronger commitment. 8. Communication Good communication is essential for effective work. It is the responsibility of the task leaders and ultimately the manager to provide the appropriate communication tools, techniques, and systems. These tools are not the status meeting, reviews,

schedules, and reporting systems, but also the objective statements, specifications. 9. Minimize Threats Managers must foster a work environment that is low on personal conflict, power struggles, surprises, and unrealistic demands. An atmosphere of mutual trust is necessary for the personnel to communicate problems and concerns candidly and at an early point in time. 10. Design a Personal Appraisal and Reward System This should be consistent with the responsibilities of the employee and implies treating employees with respect, rewarding them fairly or even generously and, perhaps, seeking to elicit responsibility and trust.

To have a competitive advantage, you must create an edge over your competitors. In the aggressive business world, especially in todays economy, every advantage counts to establish your business in the top of your industry. Gaining a competitive advantage takes strategic planning and extensive research
1. Analyze your target market and identify your competition Your target market is a specific group of consumers at which a company aims its products and services (Entrepreneur). A target market is distinguished by socioeconomic, demographic, and common characteristics or needs that make them the best audience to focus on selling to. To uncover your target market, answer the following simple questions: What am I selling? Who will most likely buy or consume my product or service?

Before you can crush your competition, you need to know who they are. Find out which businesses are going after your same target market. How do they differentiate themselves from other companies in the industry? Where are they located? To find this information, business directories can be used to search free company profiles. Information included in the company profiles are company overview, contact information, location, key facts, employees, and company payment rating.

2. Learn from your competition and your customers;

Dont be afraid of your competition, but rather use them as a learning tool and assess their business model. Learn your competitors strengths and weaknesses imitate their strengths, and use their weaknesses to your advantage. Use companies that specialize in business information, such as Coretta, to construct and analyze a competitive landscape of the target market. The business information you learn from your rivals will help you develop the competitive edge you need to surpass them in your industry. 3. Create an Economic Moat Take advantage of barriers to entry into the market, using them to dissuade competitors from challenging your marketing share. In some cases, an established companys ability to manipulate hurdles to enter and compete in its market becomes an effective tool against new competition, further entrenching the business and preserving its profit potential for the foreseeable future. 4. Stay on the cutting edge Once youve gained a competitive advantage, your work is far from complete. To be successful, you will need to continuously maintain your competitive advantage. After all, your competitors are not going to sit back and allow you to steal their market share. You can maintain your competitive advantage by predicting future trends in

your industry, constantly researching and monitoring your competitors, and adapting to your customers wants and needs.

5. Use Business Information Resources

The information revolution is here take advantage of it! It creates a competitive advantage by providing companies with new ways to outperform their rivals. Knowledge is power, and business information companies provide just that. Reliable business information companies include:

Practical study Telenor

Introduction;
Telenor at a Glance
Telenor Group is one of the worlds major mobile operators with 120 million mobile subscriptions. Telenor is a world-class provider of mobile communications services. Telenor mobile operations covering 12 countries and broadcast services covering the Nordic region. The Telenor brand expresses its ambition and our logo is a symbol of movement and change our continuous evolution to enable people to communicate better.

Telenor Mobile Communication Communication

Telenor Telecom Telecom

Telenor Broadband Service

Telenor Internet Internet

Telenor Media Bravida EDB

History;
For over 150 years, telecommunications has played a vital part in the development of modern Norwegian society. As the current provider, Telenor has been the driving force in the development of a highly sophisticated home market and is now one of the largest mobile operators worldwide.

Telenor Pakistan is a Pakistani GSM cellular service provider, and is a subsidiary of Telenor, Norway. Telenor Pakistan is owned by Telenor AS and adds on to its operations in Asia together with Thailand, Malaysia and Bangladesh. Telenor ASA is an international provider of high quality telecommunications, data and media

communication services. It ranks as worlds 7th largest mobile operator with a total of 164 million subscribers in its mobile operations. Telenor Pakistan launched its operations in March 2005 as the single largest direct European investment in Pakistan, setting precedence for further foreign investments in the telecom sector. The company has crossed many milestones and grown in a number of directions, making Telenor Pakistan a leading telecom operator of the country. Now Telenor is spreading across Pakistan, creating 2,500 direct and 25,000-plus indirect employment opportunities. Telenor is a network of 23 company-owned sales and service centers, more than 200 franchisees and some 100,000 retail outlets.

VISION
Telenor exists to help customers get the full benefit of communications services in their daily lives. We're here to help.

MISSION
Telenor is a customer focused business mobile service operator/telecommunications Company that seeks competitive advantage in quality and valued added service in both prepaid and postpaid categories through state of the art technology. Telenor relies on building trusting relationships with customers, owners, employees and society in general

PRODUCTS & SERVICES Products: Telenor provide products of two types Prepaid Postpaid Prepaid packages are Dejuice Talkshawk Postpaid offers are Persona individual Persona karobar Services: The Telenor Group provides a wide range of innovative services that are available throughout the world. Here is a selection. Mobile Fun

Following are the mobile fun service of Telenor. Mobile Sports And he scores!!! You just got a text message alerting you about a sportive highlight. Luckily you dont have to wait until you get home to watch that winning moment you can watch it directly on your mobile.

Mobile Music Right now there are 1 million songs ready to download to your mobile. You can share these digital rights management-free songs with your friends and family or transfer them to your mobile phone, mp3 player and PC. Share that funky music! Mobile TV Keep your favorite TV shows available in your pocket and watch them anytime, anywhere. You can easily access live TV channels on the move so you dont have to miss out on any of the action. Keep yourself updated on news, sports, entertainment and more, directly on your own mobile phone. Mobile Communities Get out and about, and stay connected and in touch with your friends. With Telenor you can access communities such as Windows Live MSN and Facebook on your mobile and keep your friends close anytime, anywhere. Mobile Interaction

Following are mobile interaction services providing by Telenor. Community Information Centers 500 Community Information Centers (CICs) offer high speed Internet access to rural areas in Bangladesh, where the nearest Internet facilities would otherwise be at least 20-30 miles away. The service was set up by Telenor's Bangladeshi mobile operator Grameenphone.

ORGANIZATIONAL STRUCTURE

COMPETITIVE ADVANTAGE
In order to gain a competitive advantage one has to align competences and strategies. Highly motivated employees and flexible culture enables them to achieve an edge over competitors.

Core Competencies
The Human Resource at Telenor Pakistan is their core competency. The reason is that the employees create a culture and all the achievements of Telenor are attributed to its flexible culture. It is necessary to motivate and retain this asset of the organization. For this purpose, training and compensation is provided to employees along with other motivational techniques. Human Resource Strategies:

Training
The methods of training differ from function to function. On-the-job training is required in the Customer Relationship Department (CRD) and similar system training in the IT Department. Management Training Programs combine experiential learning with theory. Leaders are chosen according to the following role expectations:

Compensation
The core compensation includes: Base salary Bonus/commission Long-term incentive plans

Employee Motivation
Underperforming managers are encouraged through coaching and counseling by their respective directors or the director of People Excellence. The turnover is not high as compared to that of the industry. There is no defined employee exchange program. Employees performing exceptionally well are taken up to work in the Telenor Group. Relocations are common in the organization: employees are transferred from People Excellence to Finance or from Procurement to Customer Relations. Investment per employee is placed at the higher end of the industry.

PERFORMANCE APPRAISAL SYSTEM:

Policies at Telenor for Performance Appraisal Objectives:
The purpose of this policy is to provide a formal review program to evaluate work performance and to promote communication and discussion of job performance. The intent of these discussions should be to review current job performance and responsibilities, set goals, and discuss future opportunities with reference to past performance at Telenor. The Objectives of the Performance Review Program are: To measure work performance To motivate and assist employees in improving their performance and achieving their personal/professional career goals To identify employees with high potential for advancement To provide objective information for making decisions on salary increases, promotions, bonus and transfers. To identify employees training and development To provide a solid path for career planning for each individual

COMPETITION
As at 30 June 2008, Telenor Pakistan had a market share of approximately 20%. In addition to Telenor Pakistan, there are five other mobile operators in Pakistan: Mobilink, Ufone, Warid, Zong (formerly Paktel) and Instaphone. According to data provided by the Pakistan Telecommunication Authority (the PTA), as at 30 June 2008 Mobilink was the largest cellular mobile operator in Pakistan with a market share of approximately 37%, Ufone had a market share of approximately 20%, Warid had a market share of approximately 17%, Zong had a market share of approximately 4%, and Instaphone had a market share of approximately 0.4%.

Major Competitor
Parameters
Product Life Cycle Market share % Coverage Product Portfolio

Mobilink
Maturity 37% 900 cities Jazz Octane, Mobilink Indigo, Ladies First, 17.2 million Excellent

Telenor
Growth 20% 1100 cities TalkShawk, Telenor Azadi, Djuice 3.6 million Good

Customer Base Marketing Operations

BCG MATRIX
Boston Consulting Group is used to help corporations with analyzing their business units or product lines. This helps the company allocate resources and is used as an analytical tool in brand marketing, product management, strategic management, and portfolio analysis. This BCG matrix is with respect to the competition that exists for Telenor in the telecom industry. This includes the following mobile operators: Mobilink Ufone Warid Zong

Swot analysis

Strengths
First one to bring the concept of "Mobile TV" in Pakistan. Customized packages available for every market segment e.g. Djuice for price conscious class, smart calls for routine users, Telenor persona for upper middle and elite class. State of art technology e.g. they are up with the latest networking underground fiber optical network. Widest network coverage after Mobilink. The first ones to provide free roaming facility during hajj program. Telenor is operating in more than 200 destinations with more than 1.7 subscribers all over the Pakistan.

Weaknesses
Pakistan has no institute that provides formal education in this field regarding networking and other core technical competencies so they are required to have a major chunk of their employees trained from foreign institutions. Poor call center performance. Customer service center is not up to the commitment and most of the customers' calls are not served. Comparatively high prices in Telenor persona (postpaid) as compared to Warid and Ufone.

 Poor visual quality of Telenor mobile TV, as there is a buffering problem and stills are received instead of the proper videos Franchise distribution system is not up to the mark. This is the problem with almost every telecom company in Pakistan. Lack quality in record keeping at franchises and other distribution networks.

Opportunities
Participation within the growing industry. Ample opportunities are available in the telecom sector and still many of the areas are not being covered. Increasing market share Product line expansion. Cost discount strategies. Product innovation. To become customer size specialist. Constant repositioning.

Threats
Monopoly of PTA, at any time PTA can alter the facilities of telecom sector. Immense cut-throat competition operating in kinked demand oligopoly. Implementation of WTO will result in open & competitive pricing even in the service sector exclusively in telecom.

 There is an imbalance between prices of inputs & outputs.

Conclusion;
Structure of Telenor is Organic and functional structure. Decision-making is highly centralized and empowerment is not appreciated as much but to some extent. Telenor has adopted formal rules and procedures whereas some of work is done informal between departments. The important success factor for Telenor is differentiation. Because the environment is becoming tougher with each Passing day so to enhance their competitiveness & profitability it is providing excellent service, giving top priority to meeting customer requirements and charge low operating cost from their customer

Recommendations;
Dealing with challenges requires a coordinated effort so that the company is able to sustain itself in the ever-changing competitive environment and continues to provide superior value to the customers. The group recommends the following:

 Telenor as described in the report has a functional structure with well-defined department. The coordination and communication is enhanced by the cross functional teams. After viewing the functioning of the organization it is recommended that the organization could have a Hybrid Structure, between the characteristics of functional and horizontal structures. Horizontal model offered the best chance to gain a faster, more efficient approach to a customer service. As the organization's structure is highly Functional, and the Environment is currently stable, organization is suited well to the environment. But organization should also focus on the changing trends in the Environment, and make the structure flexible enough for any sudden changes.
The organic structure is being used in the Telenor Pakistan but

organization is needed to move to Mechanistic structure for the better control of the employees for the better use of rules, policies and procedures.