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2012

Md. Mesbah Uddin

[BANGLADESHS MOBILE TELECOM INDUSTRY & GRAMEENPHONE LIMITED: A STRATEGIC ANALYSIS]


From the dawn of human civilization people use many ways to communicate with each other and those ways of communication were changed or updated time to time because of new innovation and demand. The power of telephony is forging a new enterprise culture, from banking to agriculture to healthcare. The opportunities that lie in the telecom industry seem endless and lucrative due to the continuous innovation and growing demand for mobiletelephony. Nowadays mobile phones have become an indispensable part of Bangladeshi's everyday-life and we never want to leave this device at home while we head for our work.

Bangladeshs Mobile Telecom Industry & Grameenphone Limited


A Strategic Analysis

Prepared For Dr. Nazmul A. Majumder Course Instructor Strategic Management (MBA/EMBA 600) Department of Business Administration East West University

Section-2 Session: Summer 2012

Prepared By Md. Mesbah Uddin


2010-3-95-078

East West University, Bangladesh


July 31, 2012

Letter of Transmittal
July 31, 2012 Dr. Nazmul A Majumder Course Instructor: Strategic Management (MBA/EMBA 600) East West University, Dhaka
Subject: Submission of the report on Bangladeshs Mobile Telecom Industry & Grameenphone Limited: A Strategic Analysis

Dear Sir, Here is the research report on Bangladeshs Mobile Telecom Industry & Grameenphone
Limited: A Strategic Analysis as you asked us to prepare for the partial fulfillment of the

Strategic Management course. With great pleasure we are submitting this report as an integral part of the course. Working for this report has definitely enriched our theoretical and practical knowledge about the External and Internal Environment of a business, corporate level strategy & CSR policy of an organization, and proper implementation of the formulated strategies- which ultimately strengthened our overall understanding of the Strategic Management. This task also enhanced our skills in writing research report. As per your direction, we tried our level best to highlight our findings by applying strategic management concepts and models. We tried to gather a collection of information to make our report specific and coherent, and make the report as reflective as possible. We are really thankful to you for giving us such a splendid opportunity to present you the report, which is authentically based on our team effort and we appreciate this kind of work. We also appreciate to provide any information or clarification if necessary. Thank you for your consideration.

Sincerely Yours, Md. Mesbah Uddin 2010-3-95-078

Table of Contents
Executive Summary ....................................................................................................................... 6 Chapter One: Introduction ............................................................................................................. 7 1.1 Mobile Telecom Industry in Bangladesh ................................................................................... 8 1.2 Grameenphone Limited (GP).................................................................................................... 9 1.3 Objectives .............................................................................................................................. 11 1.4 Outline of the Report ............................................................................................................. 11 Chapter Two: External Environment Analysis ............................................................................... 12 2.1 Macro Environment Analysis.................................................................................................. 12 2.1.1 Demographic ...................................................................................................................... 13 2.1.2 Socio-cultural ...................................................................................................................... 13 2.1.3 Political/Legal: .................................................................................................................... 14 2.1.4 Technological ...................................................................................................................... 15 2.1.5 Economic ............................................................................................................................ 16 2.1.6 Global ................................................................................................................................. 17 2.2 Porters Five Forces Analysis .................................................................................................. 18 2.2.1 Bargaining power of Buyers: ............................................................................................... 18 2.2.2 Bargaining power of Suppliers: ............................................................................................ 18 2.2.3 Industry Substitutes: ........................................................................................................... 19 2.2.4 Threat of New Entrants: ...................................................................................................... 19 2.2.5 Rivalry among competitors: ................................................................................................ 20 Chapter Three: Internal Environment Analysis of Grameenphone ................................................ 21 3.1 Core Competencies ................................................................................................................ 21 3.1.1 Excellence in Network: ........................................................................................................ 22 3.1.2 Branding and Market Position: ............................................................................................ 22 3.1.3 Innovative Products and Services: ....................................................................................... 22 3.1.4 Better Customer Services: ................................................................................................... 23 3.1.5 Top Management: .............................................................................................................. 23 3.2 SWOT Analysis ....................................................................................................................... 23 3.2.1 Strengths: ........................................................................................................................... 24 3.2.2 Weaknesses: ....................................................................................................................... 24 3.2.3 Opportunities: .................................................................................................................... 24 3.2.4 Threats: .............................................................................................................................. 24

Chapter Four: Grameenphones Competitive Strategies and Implementation .............................. 26 4.1 Corporate-Level Strategies: .................................................................................................... 26 4.1.1 Entry Strategy: .................................................................................................................... 26 4.1.2 Diversification Strategy: ...................................................................................................... 27 4.2 Strategy Implementation in Grameenphone .......................................................................... 28 4.2.1 Strategic Control: ................................................................................................................ 29 4.2.2 Organizational Design: ........................................................................................................ 29 4.2.3 Corporate Governance: ....................................................................................................... 29 4.3 CSR Policy of Grameenphone ................................................................................................. 30 4.3.1 GPs CSR Practices: .............................................................................................................. 30 Chapter Five: Conclusion & Recommendations ............................................................................ 33 Chapter Six: References ............................................................................................................... 34 Appendix ..................................................................................................................................... 38

Executive Summary
From the dawn of human civilization people use many ways to communicate with each other and those ways of communication were changed or updated time to time because of new innovation and demand. The power of telephony is forging a new enterprise culture, from banking to agriculture to healthcare. The opportunities that lie in the telecom industry seem endless and lucrative due to the continuous innovation and growing demand for mobiletelephony. Nowadays mobile phones have become an indispensable part of Bangladeshi's everyday-life and we never want to leave this device at home while we head for our work. Hence we have preferred the mobile telecom industry of Bangladesh for our current study and chosen Grameenphone Limited (GP) as the case. There are six mobile phone operators in Bangladesh. These are Grameenphone (GP), Banglalink, Robi, Airtel, Citycell and Teletalk. Citycell was the first mobile phone operator, while Grameenphone Limited is the largest mobile operator in Bangladesh in terms of revenue, coverage and subscriber base. There are many unexploited opportunities in mobile telecom industry, like around 40% of the population yet to be connected, buying habits as well as talking habits of the people, availability of cheap skilled workers, trust & dependence on foreign companies & products, relatively flexible regulations, advancement in ICTs & government patronization for foreign investment, development of Hi-Tech park, opportunities for Value Added Services and diversified products, there is a vast demand for high speed internet, and last but not the least the country is eagerly waiting for 3G technology- new and existing companies can be benefited from these opportunities. Moreover, the mobile telecom industry in Bangladesh is moderately attractive with huge growth potential. GP has positioned itself in the best way to explore these opportunities with its core competencies and competitive strategies. It also has resilience in its diversified business model. GPs strategy implementation is best in the industry and its corporate governance is up to the international standard. It also has excellence in CSR activities which is clearly evident form its ubiquitous presence in social development in Bangladesh. Thus GP has achieved excellence in all of its business activities and proudly earned the leadership position in Bangladesh telecom industry.

Chapter One: Introduction


From the dawn of human civilization people use many ways to communicate with each other and those ways of communication were changed or updated time to time because of new innovation and demand. Those innovations were done by some gifted human beings for the well being of human society. Their work also inspired others to do research and invent new things which changed the history of human civilization. Telephone was one of these inventions that revolutionized the way of communication. Mr. Watson, come here, I want to see you, this was the first message ever transmitted from one place to another, through a device called telephone and the eminent scientist Alexander Graham Bell (1847-1922) is credited with inventing the first practical telephone (Wikipedia, 2012d). During the last decade, telecommunication sector has grown up as one of the most competitive sector in the business world. Mobile phone service providing is one of them (Hossain & Iftekhar, 2011). Mobile phones are spreading ubiquitously across the planet. They are considered a common manifestation of the latest phase of globalization, along with Chinese consumer goods and Indian information technology services. With about 3.5 billion subscribers and users worldwide, mobile phones have out-diffused virtually every prior technology, including bicycles, radios, television (TV) sets, wallets, wireline phones, and wristwatches, and have done so in twenty-five years (Kalba, 2008). The power of telephony is forging a new enterprise culture, from banking to agriculture to healthcare. The opportunities that lie in the telecom industry seem endless and lucrative due to the continuous innovation and growing demand for mobile-telephony. We have come a long way since the invention of telephone and today it is a part and parcel of our everyday life. However, mobile phones are also playing a great role in telecommunication. Nowadays mobile phones have become an indispensable part of Bangladeshi's everyday-life and we never want to leave this device at home while we head for our work. Thanks to the telecom-revolution and its relentless evolution that together has made it possible even in developing country like Bangladesh. This is the dominant device that we now express ourselves through, get our work done and share our pains and pleasures with (Moon, Fahmi, & Murtuza, 2010). Hence we have preferred the mobile telecom industry of Bangladesh for our current study and chosen Grameenphone Limited (GP) as the case.

1.1 Mobile Telecom Industry in Bangladesh


Bangladesh is the first South Asian country to adopt cellular technology back in 1993 by introducing Advanced Mobile Phone System (AMPS) (BTRC, 2011a). In fact, the liberalization of Bangladeshs telecommunications sector began back in 1989 but it took several years to launch the services. In 1996 the then government awarded three GSM licenses aimed at breaking the monopoly and making the cellular technology affordable to the general masses (Appendix: Table 1). Since then the country's cellular industry never looked back, now it has turned into the largest infrastructure provider within telecom sector and has created new opportunities by generating employment, facilitating education and health services for common people (BTRC, 2011a; Wikipedia, 2012f). There are six mobile phone operators in Bangladesh. These are Grameenphone (GP), Banglalink, Robi, Airtel, Citycell and Teletalk (Wikipedia, 2012f). Citycell is the first mobile phone operator in Bangladesh. Today GP is the market leader and Banglalink is the market challenger, in terms of number of subscribers they have, in Bangladesh mobile telecom industry (Appendix: Fig. 1). In Bangladesh, mobile phone subscribers are increasing very rapidly (Appendix: Fig. 2). In February 2009 total subscriber was 45.21 million which reached 76.43 million at the end of June 2011; at the end of December 2011 the figure reached 85.455 million and finally 92.120 million at the end of May 2012 (BTRC, 2011b, 2012; Wikipedia, 2012f). Telecom voice market in Bangladesh is dominated by Mobile phone operators and its percentage is 97% while land phone is 3% only, of which BTCL represents 2% and all private land phone is 1% (BTRC, 2011a). According to the BTRCs (2011a) information, contributions of mobile industry to the National Exchequer are worth more than BDT 20,000 crore (FY 2008), 8% of the National Revenue. It has generated direct and indirect employment of 675,000 people till 2006-07 FY which has increased further in recent years. The successful regulation of BTRC, ensuring competitive environment among the telecom operators, has reduced the cell phone tariff in Bangladesh to one of the lowest in the world (BTRC, 2011c). A total of around US $ 430 million was invested in the country's telecommunication sector, particularly by fast-growing mobile phone companies in FY 09. Mobile communications sector in Bangladesh has helped boost the economic and social development in the country in three main ways: (1) by providing value-added services and creating employment from direct/indirect firms in the telecommunications sector, (2)

increased productivity in businesses as a result of mobile phone usage and (3) increasing the involvement and engagement of its population with news and current affairs (BTRC, 2011a). The government has identified the Information and Communication Technology (ICT) as one of the thrust sectors for rapid economic development, unemployment, & poverty alleviation (Ashaduzzaman & Ahmed, 2011). Internet penetration in Bangladesh is the lowest in the region. Among the 6 million internet users, around 90% uses Mobile internet which means more mobile penetration will create more internet access for the people of Bangladesh (BTRC, 2011a). Increased mobile penetration will help in upward access to Voice & Data, Ehealth service for 24 hours in remote areas. It will open the door for Medical advice, Eeducation, E-Governance, E-payment, E-banking and Agri-service. Thus this sector has opportunities for growth & diversification and the participants can survive profitably in the long run if adopt appropriate strategies in the competitive market.

1.2 Grameenphone Limited (GP)


Grameenphone Limited is the largest mobile telecommunications operator in Bangladesh in terms of revenue, coverage and subscriber base (GP, 2012a). Grameenphone converted to a public limited company on June 25, 2007. Trading of the companys shares started at Dhaka and Chittagong Stock Exchanges from 16 Nov. 2009. The shareholding structure comprises of mainly two sponsor Shareholders namely Telenor Mobile Communications AS (55.80%) and Grameen Telecom (34.20%). The rest 10.00% shareholding includes General public & other Institutions. GP also has a fully owned subsidiary named Grameenphone IT Limited (GP, 2012a). GP was founded by Iqbal Z. Quadir, a Bangladesh-born Wharton graduate, in 1996 and began its service from March 26, 1997, the Independence Day of Bangladesh (GP, 2011; Isenberg, Lane, & Knoop, 2007; Salam, 2012). In August 1995, the Bangladesh Ministry of Posts and Telecommunications (MOPT) invited tenders for three cellular licenses (Isenberg, et al., 2007). Mr. Quadir has successfully convinced Grameen Bank and Telenor for participating in the bid. After a study by Telenor Consult, the consulting arm of Telenor, both Telenor and Grameen Bank found the feasibility study persuasive. On October 8, 1995, Telenor gave green signal to Mr. Quadir for participating in the bidding process for a mobile operator license (Isenberg, et al., 2007). They have own a cellular license in the bid and incorporated as a private limited company on October 10, 1996 (GP, 2011). According to the

Prof. Yunuss suggestion the company is named as GrameenPhone, a simple name that carried a nationally recognized brand name and would not confuse rural people with complex words like telecommunications. (Isenberg, et al., 2007) GP has 38.412 million mobile subscriptions (BTRC, 2012) and 4,696 employees (Telenor Group, 2012). It is also the largest taxpayer of the country, paid BDT 1,121 crores to the national exchequer during the first quarter of 2012 in the form of taxes, VAT and duties. This sum up GPs accumulated contribution to the national exchequer to BDT 25,638 crores since its inception (GP, 2012b). GP offers core voice services and a number of value-added services on both a contract and prepaid basis (Telenor Group, 2012). GP operates a digital mobile telecommunications network based on the GSM standard in the 900 MHz and1800 MHz frequency bands, under a license granted by the Bangladesh Telecom Regulatory Commission (BTRC) (GP, 2012a). GP serves both rural and urban customers across Bangladesh, where mobile telephony is a major driver of socioeconomic development. It built its network on a nationwide basis. As of December 2011, GPs network covered 99% of Bangladeshs population and 90% of the total land area, and the network infrastructure included more than 13,000 base stations located in about 7,200 sites in operation around the country (GP, 2012a). The company is one of the first mobile phone operators to launch GSM service in the country. GP was also one of the first operators in Bangladesh to offer the subscribers mobile to mobile service, EDGE, prepaid service, voice SMS and over-the-air top-ups. In January 2008, Grameenphone became the first mobile operator in Bangladesh to offer BlackBerryTM services (GP, 2012a). It has been also a pioneer in bringing innovative mobile-based solutions to Bangladesh (Telenor Group, 2012). Notable among these is the Healthline, a 24 hour medical call centre manned by licensed physicians. Other innovations (Appendix: Fig. 3) include Studyline, a call centre-based service providing education related information, Mobicash, for electronic purchase of train tickets, Billpay, for paying bills through mobile phones and over 500 community information centers across Bangladesh. These centers bring affordable Internet access and other information based services to people in rural areas. GPs financial performance is among the best in the country and it consistently paying high dividend to its investors. On its 15th Annual General Meeting the shareholders approved the 205% cash dividend (including 140% interim cash dividend) for the year 2011 among other

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agenda. GP reported BDT 2,322 crore revenues for the first quarter of 2012 with 12.3% increase from same period of 2011. Net profit after taxes for the first quarter of 2012 was BDT 520 crores with 22.4% margin compared to BDT 287 crores with 13.9% margin of the first quarter of 2011. Higher profit for this period was mainly due to revenue growth, efficient cost management and reduced depreciation expenses. EBITDA margin for the first quarter of 2012 was 55.1%, which also has increased by 7.3 percentage points compared to 47.8% of the same period last year. As a result, Earnings per share (EPS) for the first quarter of 2012 stood at BDT 3.85 compared to BDT 2.12 of the first quarter of 2011. (GP, 2011, 2012a, 2012b)

1.3 Objectives
The objectives of this study are to analyze the external and internal environment of mobile telecom industry of Bangladesh taking Grameenphone Limited (GP) as the case. Then review the corporate level strategies, strategy implementation process and CSR policy of GP.

1.4 Outline of the Report


This report has tree major parts: introduction, body and concluding part. In introduction we gave a brief account of Bangladeshs Mobile Telecom Industry and Grmeenphone limited. This part also contains the objectives of the study and outline of this report. The body is composed of external analysis, internal analysis, and analysis of competitive strategies & strategy implementation in GP. External analysis starts with analyzing the macro/general environment of telecom industry of Bangladesh followed by analyzing the competitive environment of the mobile telecom industry through Porters five forces analysis. In internal analysis, we have discussed the core competencies of GP and then performed SWOT analysis. In competitive strategy section we have discussed the corporate strategies, strategy implementation and CSR policy of GP. The concluding part consists of conclusion & recommendations, references and appendix. There is also an executive summary in the beginning of the report. While writing the report, we have used EndNote X3 as citation manager and APA 5th bibliographic style.

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Chapter Two: External Environment Analysis


External environment analysis is very much important as we cannot or should not develop strategies in a vacuum (G. G. Dess & Lumpkin, 2003). The strategies must be responsive to the external business environment otherwise the firm could become the most efficient producer of obsolete items- which have no value in the market. To avoid such mistakes, firms must monitor and scan the environment as well as analyze competitors. In order to adapt in changing environment, a company must have its antennae tuned to signals of change from the external environment, decode them, and quickly act to refine or reinvent its business model and even reshape the information landscape of its industry (Reeves & Deimler, 2011). Mobile phone markets are one of the most turbulent market environments today due to the increased competition and rapid change of technology (Karjaluoto et al., 2005). The mobile market is also becoming increasingly important in developing countries, with benefits such as increased employment and wages (Chowdhury, Parvin, Weitenberner, & Becker, 2006). Bangladesh has a big market for mobile telecom business and the industry is expanding quickly. The estimated total population of Bangladesh was 152,518,015 on 16th July (Morol, 2012) and the total number of active mobile phone subscribers are 92,120,000 at the end of May 2012 (BTRC, 2012), i.e. around 60.40% of total population use mobile phones. An internal and external analysis of the Bangladesh business environment in which Grameenphone currently competes can provide a wider understanding of the strategies the company has employed to sustain its market position. Here we have briefly analyzed the general and competitive environment of telecom industry in Bangladesh.

2.1 Macro Environment Analysis


The macro environment is composed of factors that can have dramatic effects on the firm strategy (Dean, Brown, & Bamford, 1998). Typically, a firm has little ability to predict trends and events in the general environment, and even less ability to control them (G. G. Dess & Lumpkin, 2003). The general environment consists of six segments- demographic, sociocultural, political/legal, technological, economic and global (G. G. Dess & Lumpkin, 2003). A brief description of these segments is given below.

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2.1.1 Demographic
Demographics are the most easily understood and quantifiable elements of the general environment. They are the root of many changes in society. Demographics include elements such as the aging population, rising or declining affluence, changes in ethnic composition, geographic distribution of the population, and disparities in income level (Colvin, 1997; G. G. Dess & Lumpkin, 2003). According to the Population and Housing Census 2011, total population of Bangladesh is 149,772,364 with an annual growth rate of 1.37% (Morol, 2012). The projection shows that the population is likely to grow up to 222 million around 2051, and stabilize at 250 million by 2081, even if replacement level fertility is achieved by the year 2015 (Nabi, 2012; Ruiz & Michalski, 2009). The fertility rate fell from 6.6 births per woman in 1975 to 2.4 in 2009, a huge drop attributed to the introduction of a major policy initiative in 1976 that emphasized population and family planning as integral to national development (UNDP, 2011). Bangladesh is largely ethnically homogeneous and its name derives from the Bengali ethnolinguistic group, which comprises 98% of the population (Wikipedia, 2012c). About 90% of Bangladeshis are Muslims and the remainders are mostly Hindus. Average life expectancy is 67.2 years and 61.4% of the population belongs to 15-64 years range and thus are the potential target for the mobile operators (Wikipedia, 2012c). The mobile telecom sector is the fastest growing sector of the country and still there are around 60 million people who are yet to use cell phone. This implies that there are a lot unmet needs that could be a great potential for the industry. The literacy rate of the country is 67% which implies that major portion of the population have the academic depth to adopt new products and services, but they are highly price sensitive and prefer low prices for their poor economic condition (Salam, 2012). These statistics show that demographic trends are continuously diversifying, indicating why it is becoming ever so important to target specific customer groups, determine their needs, and then satisfy them (Murray, 1998).

2.1.2 Socio-cultural
Socio-cultural forces influence the values, beliefs, and lifestyles of a society. Examples include a higher percentage of women in the workforce, dual-income families, increases in the number of temporary workers, greater concern for healthy diets and physical fitness, greater interest in the environment, and postponement of having children (G. G. Dess & Lumpkin, 2003).

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In Bangladesh people have more leisure than work, and they love to gossip & talk whenever have time. The phenomenal growth of the telecom industry over the last two decades has considerably changed the way people interact. Mobile telecom has played a significant role in appealing consumers' emotions and stressing the importance of social conversations and staying connected to family & friends using aggressive advertising and promotional activities and thus strengthened our social relationships (Wikipedia, 2012e). Here people love city dwelling rather then quiet village stay. The proportion of urban population in Bangladesh has increased from 5.2% in 1961 to 25.1% in 2008, and most of the urban growth is taking place in the major cities of the country e.g. Dhaka, Chittagong, Rajshahi and Khulna (Nabi, 2012). According to the article (Nabi, 2012), 57% of people will be living in cities in Bangladesh by 2050 and Dhaka may become one of the densest cities of the world. The national population growth rate is 1.34%, while the national internal migration rate is 4.5% per annum (Nabi, 2012). Gender discrimination in Bangladesh begins at birth as most parents want to have male children (Shahidullah, Islam, Majid, & Shams, 2004). There are glass-ceilings for woman at work though they are the half (50%) of our total population. Despite many barriers, more and more women are taking higher education today and doing jobs. Womens work participation rates have doubled in Bangladesh since 1995 but they are still extremely low at 26 percent (World Bank, 2008). The last decade has witnessed an impressive rise of women in the workforce in Bangladesh, especially in a variety of male-driven corporate sectors (Hassan, 2012).

2.1.3 Political/Legal:
Political processes and legislation influence the environmental regulations with which industries must comply (G. G. Dess & Lumpkin, 2003). Some important elements of the political/legal arena of Bangladesh include The Corporate Governance Guidelines of 2006, SEC Act of 1993, The Company Act of 1994, The Labour Act of 2006, The Consumer Rights Protection Act of 2009, etc. In order to ensure development of telecommunication services in Bangladesh and to regulate them, Bangladesh Telecommunication Regulatory Commission (BTRC) was formed as an independent statutory body under the Telecommunication Act 2001 (MOF, 2011; Wikipedia, 2012f). All relevant powers, responsibilities and pertinent matters related to

telecommunication regulation have been vested with the Commission. Tariff regulation is one

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of the most important responsibilities of the BTRC to provide the telecommunication facilities to the general people at an affordable price (BTRC, 2011d). High taxation regime for the telecom sector has compelled the mobile operators to subsidize Tk 605 on every single SIM in Bangladesh (FE Report, 2012b). According to Robi Axiata official, all mobile operators except the Grameenphone are incurring loss due to this taxation on SIM (FE Report, 2012b). There is some problem with the 2G licensing also. License tenure of four mobile operators has expired on November 10, 2011 (FE Report, 2012d). The renewal decision has not been finalized as some issues around the license renewal are pending before the court and thus the final conditions for renewal are still unclear (Johnsen & Rusten, 2012; Telenor, 2011).

2.1.4 Technological
Developments in technology lead to new products and services and improve how they are produced and delivered to the end user. Innovations can create entirely new industries and alter the boundaries of existing industries (G. G. Dess & Lumpkin, 2003). Internet technology provides better opportunities for companies to establish distinctive strategic positionings than did previous generations of information technology (Porter, 2001). ICTs can reduce communication costs, break down geographical borders and make an important development impact by overcoming barriers of social, economic, and geographical isolation, increasing access to information and education, and enabling poor people to take part in more of the decisions that affect their lives (M. A. Rahman, 2007) and thus technology can empower the Poorest (Kelly, 2008). There is digital divide between developed and developing countries. But the mobile phone sector has made possible the availability of data enabling services across Bangladesh and mobile internet has helped, and will likely continue, to bridge the digital divide between people with access to information and services (BTRC, 2011a; CIPE, 2010). With the support from the Government and increasing private investment, Bangladesh has stepped into a new digital era, replacing analogue technology. Six mobile operators and nine PSTN operators have been allowed to operate to facilitate the customers with voice services (MOF, 2011, pp. 238-239). For narrowing the gap and for the liberalization of innovative VoIP technologies, a number of IP Telephony licenses have been issued. A good number of internet service providers, new entrant WiMAX operators and also the mobile as well as PSTN operators are playing the same role for data service (MOF, 2011, pp. 238-239). Infrastructure operators and

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the gateway operators (IGW, IIG, & ICX) are the important parts of the telecom-skeleton of Bangladesh. Rural telecommunication has been given the topmost priority and BTRC is striving to ensure access for each of the citizens. IP telephony license (IPTSP) has been opened for ISP operators as an overlay service and already 40 licenses have been issued (MOF, 2011, pp. 238-239). Bangladesh is connected to SEA-ME-WE 4 or South-East Asia Middle East Western Europe 4 through submarine cable and also a member of the proposed SEA-ME-WE-5 (Wikipedia, 2012f). The country is planning to send her first ever satellite Bangabandhu-1 into space in 2015 (Wikipedia, 2012f). Third Generation (3G) cellphone technology is knocking at our door. The government is seeking opinions from the public on the guideline for 3G cellphone service as it moves to issue five licenses for the advanced technology (FE Report, 2012d). IT industries are also flourishing in Bangladesh. Currently, more than 50 software and IT service companies in Bangladesh are exporting software and providing their services to 30 different countries which include among others USA, UK, Australia, Canada, Denmark, KSA, Japan, Sweden, UAE, Germany, Italy, Netherlands, Norway, Switzerland, France and Nepal, and earned US$ 45.31 million in FY 2010-11 (MOF, 2011, p. 238). Some important users of Bangladeshi software are Nokia, Japan Airlines, World Bank, HP, US Postal Department and US Department of Agriculture (MOF, 2011, p. 238).

2.1.5 Economic
The economy has an impact on all industries, from suppliers of raw materials to manufacturers of finished goods and services, as well as all organizations in the service, wholesale, retail, government, and nonprofit sectors (G. G. Dess, Lumpkin, & Eisner, 2007). Key economic indicators include interest rates, unemployment rates, the Consumer Price Index, the gross domestic product, and net disposable income (G. G. Dess, et al., 2007; Pearce-II & Robinson-Jr., 2003). Telecommunication has a significant social, cultural and economic impact on modern society. In 2008, estimates placed the telecommunication industry's revenue at $3.85 trillion or just under 3% of the gross world product (Wikipedia, 2012e). Because communication technologies deliver tangible economic empowerment to individuals, low initial purchasing power does not create a barrier. According to Iqbal Z. Quadir, Connectivity is productivity; productivity translates as the ability to pay (CIPE, 2010).

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The overall economic performance of Bangladesh in FY 2010-11 provided grounds for optimism with 6.66% growth in GDP, compared to 6.07% in FY 2009-10 and 5.74% in FY 2008-09 (MOF, 2011, pp. 1-2). In FY2010-11, per capita GNI and per capita GDP stood at US$ 818 and US$ 755 respectively, up from US$ 751 and US$ 687 respectively a year earlier (MOF, 2011, pp. 1-2). The year-on-year inflation reached 10.17 percent in June 2011 from 8.70 percent in June 2010, food inflation rose to 12.51 percent in June 2011 from 10.88 percent in June 2010, while non-food inflation increased moderately to 5.73 percent from 5.24 percent in June 2010 (MOF, 2011, pp. 3, 28). The weighted average rate of interest on commercial lending increased to 12.39 percent in June 2011, from 12.37 percent in June 2010 and the deposit rate increased to 8.85 percent from 7.40 percent over the same period (MOF, 2011, p. 5). The BD taka has depreciated by more than 15% against the US dollar during the year 2011(Ahmed, 2012; S. Rahman, 2012). Though the exchange rate was steady at Tk. 68Tk. 69 between 2004 and 2010, even in the beginning of 2011 the dollar was sold at Tk. 71 for import payments (S. Rahman, 2012). According to the Bangladesh Economic Review2011, the number of economically active population (above 15 years) is 5.37 crore, out of which, a labour force of 5.10 crore (male 3.85 crore and female 1.25crore) is engaged in a number of professions, i.e. unemployment rate is 5% (MOF, 2011, p. 27).

2.1.6 Global
There is an increasing trend for firms to expand their operations and market reach beyond the borders of their home country. Globalization provides both opportunities to access larger potential markets and a broad base of factors of production such as raw materials, labor, skilled managers, and technical professionals. The world has come out of the recession of 2007-2009 stronger than anticipated (MOF, 2011, pp. 1-2). The economy of Bangladesh has successfully tackled the contagion effect of global economic crisis and managed to maintain a sustained growth. The foreign exchange reserve remained steady at above US$ 10 billion during this period (MOF, 2011, pp. 1-2). There are incentives from both government and public sectors which helped the telecom sector to grow and it is now one of the biggest sectors of Bangladesh. As a populous country, its huge ICT market has attracted many foreign investors to invest in this sector (Wikipedia, 2012f). BTRC is committed to ensure effective control on telecommunication and to introduce new services and to create a favorable atmosphere for the local and foreign investors who intend to invest in the telecommunication sector in Bangladesh (MOF, 2011, pp. 162-167). In order to attract

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big transnational companies or world-class investors with a view to facilitating hi-tech and knowledge-based industries, construction of infrastructure facilities for Hi-Tech Park on 231.685 acre of land at Kaliakoir, Gazipur is going on (MOF, 2011, pp. 162-167).

2.2 Porters Five Forces Analysis


The industry environment has more direct impact on a firms strategic competitiveness and above-average returns, compared to the general environment (Grigorova, Mller, & Hschelrath, 2008). So, before getting into a market, every company should have an assessment of the market environment, how that market could react in different circumstances. Porters (2008b) five forces model has the ability to determine the competitiveness of a market. According to Porter (2008a), awareness of the five forces can help a company understand the structure of its industry and stake out a position that is more profitable and less vulnerable to attack. Industry structure drives the competition and profitability- no matter whether the industry is emerging or mature, high tech or low tech, regulated or unregulated and the strategy should be formulated in such way that the company can defend itself against these forces or influence them in its favor (Porter, 2008a). Porters five forces are (i) bargaining power of buyers, (ii) bargaining power of suppliers, (iii) threat of substitutes, (iv) threat of new entrants, and (v) rivalry among competitors. An awareness of these factors is critical in formulating strategies and is also helpful in neutralizing competitive threats and increasing power over customers and suppliers (G. G. Dess, et al., 2007). The mobile telecom industry of Bangladesh in respect to Porter's five forces is discussed below:

2.2.1 Bargaining power of Buyers: There are six mobile telecom operators in
Bangladesh and they offer almost homogenous services which have low switching costs between operators and thus has provided buyers with extremely high bargaining power. The bargaining power of buyers in this industry is very high, with the exception of remotearea customers who have no alternative network available in their vicinity.

2.2.2 Bargaining power of Suppliers: All the mobile operators other than Teletalk
have international identity and have experience to work in the global platform. The companies have the opportunity to acquire necessary equipments from different international chains across the globe. The bargaining power of suppliers in the mobile industry varies depending on the brand name and strategic importance of the supplies as well as the size of

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the Company, such as Ericsson and Nokia Siemens in the mobile telecom machinery industry is that type of suppliers who enjoy strong power in the industry. On the other hand there are many potential suppliers and vendors in telecom industry e.g. Cisco, Siemens Enterprise Communications, Alcatel-Lucent, Huawey and Motorola, Nortel, Oracle, Nokia, Samsung, Juniper, Converse, HP, Sun etc. According to Salam (2012) in 2010, Huawei, the Chinese telecom equipment manufacturer, was one of the major suppliers of telecom equipment in Bangladesh and its major clients include Grameenphone, Banglalink, Robi, Citycell, Teletalk and BTCL; while VimpelCom (a.k.a 'BeeLine') provided voice and data services to Djuice of Grameenphone and Banglalink, and ACME Tele Power Ltd. (India) provided solar power support to Grameenphone. Recently, Huawei Technology played an important role in modernizing GPs network infrastructure on the new 3G platform (GP, 2011). All of these available resources ensure competitive price and abundant supply support to the country's telecom industry. Therefore, the bargaining power of suppliers in the industry is moderate to weak.

2.2.3 Industry Substitutes: Mobile telecommunications is a high-tech industry and the


substitutes that would replace the products or services of today are strongly related to the factor of innovation. In case of Bangladesh mobile telecom industry, substitutes exist in the form of government fixed-land lines and some upcoming PSTN operators. Some additional substitutes include VoIP service providers (VSP), Skype, Google Talk, wireless Internet providers such as WiMax based companies etc. However, there is no strong competitive substitute for mobile telecom industry as the existing alternatives are either nearly obsolete or in embryonic stage and thus poses very little threat to the industry. So the threat from substitutes is weak in Bangladesh.

2.2.4 Threat of New Entrants: Mobile Telecom is capital and resource intensive
business which poses a significant entry barrier for potential players in Bangladesh. Existing companies have created significant brand positioning and economies of scale in network coverage- which also act as entry barrier. Government rules and regulations- like imposition of huge tax on SIM card, strong tariff control by the authority, can also create difficulties to entrants; in addition the price battle between the competitors brought the tariffs to its lowest in this region. But the major barrier to entry in Bangladesh mobile telecom market is to obtain a radio spectrum license from BTRC. So potential direct entry to the industry is relatively restricted at the moment, due to control over licenses. However, companies are

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finding other ways to enter the industry, i.e. through merging with existing operators. For example, Bharti Airtel acquired 70% stake of Warid Telecom and rebranded as Airtel in order to enter the Bangladesh market (Salam, 2012). Hence it seems that the threats of new entrants in mobile industry are moderate to weak.

2.2.5 Rivalry among competitors: There is an intense battle in price ground between
the six mobile operators. Grameenphone is leading the industry and standing in an advantageous position than others. Each company is trying to increase the market share by lowering call rate, superior network coverage and better Value Added Services. The competition has driven the industry's average revenue per share to a very low level. Considering the intensity of the competition - the rivalry among existing competitors is very high. Form the five forces analysis we can say the mobile telecom industry in Bangladesh is moderately attractive with great growth potential. Summary: Form the general environment we can identify many unexploited opportunities. New and existing companies can be benefited from the huge population of the countryaround 40% of the population yet to be connected through mobile phone services, buying habits as well as talking habits of the people, availability of cheap skilled workers, trust & dependence on foreign companies & products, relatively flexible regulations, advancement in ICTs & government patronization for foreign investment in ICTs, development of Hi-Tech park, opportunities for Value Added Services and diversified products, Internet penetration is one of the lowest and there is a vast demand for high speed internet, and last but not the least the country is eagerly waiting for 3G technology. Form the five forces analysis we can say the mobile telecom industry in Bangladesh is moderately attractive and still has huge potential for growth. There are already six giant companies trying to find their position. It has been clearly noticed that as the market is growing, proportionately all the operators are getting new subscribers depending on their nationwide coverage. And due to the high growth rate of the industry each company is being benefited, despite strong bargaining power of the customers and intense rivalry between the competitors.

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Chapter Three: Internal Environment Analysis of Grameenphone


We live in an era of risk and instability. Globalization, new technologies, and greater transparency have combined to upend the business environment and give many CEOs a deep sense of unease. Today the experience curve and the scale curve are not the key indicators of success, if it were Nokia would still be leading the smartphone market (Reeves & Deimler, 2011). Traditional approaches to strategy assume a relatively stable world. They aim to build an enduring competitive advantage by achieving dominant scale, occupying an attractive niche, or exploiting certain capabilities and resources. But in the era of globalization, new technologies, and greater transparency- sustainable competitive advantage no longer arises from positioning or resources (Reeves & Deimler, 2011). According to Reeves & Deimler (2011) it stems from the four organizational capabilities that foster rapid adaptation: (1) The ability to read and act on signals of change, (2) The ability to experiment rapidly and frequently- not only with products and services but also with business models, processes, and strategies, (3) The ability to manage complex and interconnected systems of multiple stakeholders, (4) The ability to motivate employees and partners. Thus internal environment analysis is very much important to identifying a firms flexibility, adaptive capability, strengths and weaknesses to exploit the opportunities and neutralize the threats. The core competencies of GP and a SWOT analysis of the firm are given below:

3.1 Core Competencies


For a firm to gain a competitive advantage, it must have superior core competencies that are relevant in the marketplace (Hanson, Dowling, Hitt, Ireland, & Hoskisson, 2008). Core competencies are resources and capabilities that the firm utilizes in an exceptional manner- in comparison to its competitors- to gain a competitive advantage (Hanson, et al., 2008). Hanson, et al. (2008) also defined core competencies as, resources and capabilities that serve as a source of competitive advantage for a firm over its rivals. According to Thompson & Strickland (2003), a core competence is something that a company does well relative to other internal activities, a distinctive competence is something a company does well relative to

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competitors. Core competencies of a firm can sometimes become core rigidity for it (G. Dess & Picken, 1999; Ingram & Baum, 1997). In this view, if the firm continues its strategic focus on the core competence when it is no longer relevant in the external environment, this then disadvantages the firm by restricting the development of new core competencies, and thus the development of a new competitive advantage (Hanson, et al., 2008). According to Porter (1996), a company can outperform rivals only if it can establish a difference that it can preserve. From GPs case, we can clearly identify the following important core competencies- which make the firm a leader in its chosen industry.

3.1.1 Excellence in Network: Network has always been a strong point for GP and seen
as the best network by the mobile phone users in Bangladesh. To retain this position, GP has upgraded its entire network with future proof technology (GP, 2011). The modernized network is ready for facilitating 3G technology and broadband services. As of December 2011, GPs network covered 99% of Bangladeshs population and 90% of the total land area, and the network infrastructure included more than 13,000 base stations located in about 7,200 sites in operation around the country (GP, 2012a). It invested BDT 373 crores during first quarter of 2012 for network capacity and quality enhancement. With this, GPs cumulative investment since inception now stands at BDT 17,465 crores (GP, 2012b).

3.1.2 Branding and Market Position: GP has positioned in Bangladesh with Stay
Close slogan, creating a differentiated image of the quality and reach of its network (GP, 2011). It is the largest mobile telecom operator in Bangladesh in terms of revenue, coverage and subscriber base. GP has 38.412 million mobile subscriptions, i.e. 42% of total market share (BTRC, 2012). This brand reputation is valuable, as it provides meaningful differentiation to its competitors, and has directly contributed to higher levels of customer satisfaction.

3.1.3 Innovative Products and Services: Innovation in products and services is one
of the core competencies of GP. In the products and services side, the Company introduced My Zone, first of its kind in Bangladesh, which offers discount on call tariff depending on customers location (GP, 2011). A number of products, diversified promotional tariff offerings and innovative Value-added Services (VAS) were launched during the year 2011, e.g. dynamic pricing, allocation based discount offer in tariff, Bangla contents in low cost handsets Grameenphone C200, modified Prepaid price plans for Apon & Bondhu, GP

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branded QWERTY handset Q100, Android Handset Crystal for both consumer & Business segment, 1-sec-pulse prepaid package Spondon, mobile Facebook for valued customers, Micro SIM card for iPhone and iPad users, and organized Internet Festival jointly with Prothom Alo (GP, 2011). Other innovations include Healthline, Studyline, Mobicash, Billpay, Cellbazaar etc. (Appendix: Fig. 3).

3.1.4 Better Customer Services: GP always strives to provide quality services to its
valued subscribers. Grameenphone established a Customer Experience Lab, which is helping the Company to gain valuable customer insight about its products and services (GP, 2011). The corporate website of the Company has been revamped with many new tools and applications to make life easy for its customers (GP, 2011). Bangla versions of the website along with WAP version were also lunched. One of the major features of the website has been the eCare system, which enabled the customers to avail many services online (GP, 2011). In addition, GP is in touch with the subscribers round the year through various customer touch points such as 93 Grameenphone Centers (GPC) - a flagship sales and service point under one roof- especially designed to cater customers need 365 days a year. GP has expanded its distribution footprint and is serving the customers with around 342,000 retail points with increased focus in the rural markets.

3.1.5 Top Management: GP has a strong professional management team which is the
best in the in the industry and highly valued by all the stakeholders. The top management is well experienced from international mobile telecom industry as well as from multinational corporations (MNCs) and, is a core competency of the company.

3.2 SWOT Analysis


To understand the business environment of a particular firm, we need to analyze both the general environment and the firms industry and competitive environment (G. G. Dess, et al., 2007). One of the most basic techniques for analyzing firm and industry conditions is SWOT analysis. SWOT is an acronym for the internal Strengths and Weaknesses of a firm and the environmental Opportunities and Threats facing that firm (Pearce-II & Robinson-Jr., 2003). SWOT analysis is a widely used technique through which managers create a quick overview of a companys strategic situation. The SWOT analysis of Grameenphone is given below (Appendix: Table 2):

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3.2.1 Strengths: Grameenphone has always been committed to providing quality services
and it has been one of the main strengths for GP from the beginning. Other strengths includeGPs clear strategic direction, its a multinational company, its the market leader with a 42% market share, skilled & dedicated workforce (4,970 employees in GP & GPIT), best indoor coverage, 99% population coverage, 90% geographic coverage, network infrastructure included more than 13,000 base stations located in about 7,200 sites in operation around the country, strong financial position (credit rating: AAA for long term loan and ST-1 for short term loan), multiple financing alternatives, wide range of product and product innovation skills, strong brand image and reputation in the industry, strong company culture, superior customer care (BTRC, 2012; GP, 2011, 2012a).

3.2.2 Weaknesses: The weaknesses of GP are relatively high tariff rate for users,
multicultural management, poor leadership development from local talents for top level position, poor negotiation & conflict management skills for solving regulatory problems, unfair labor practice with no specific guideline for recruitment (Azad, 2012; FE Report, 2012c; Staff Correspondent, 2012), and huge capital expenditure for modernization of network (Telenor, 2011).

3.2.3 Opportunities: There are potential in the industry for increasing the customer base
and market shares. There is also a vast demand for high speed internet and BSCCL has a plan to lease out a portion of its spare capacity (only 30% percent of bandwidth is being utilized) (MOF, 2011). BTRC is planning to approve mobile banking (BTRC, 2011d), which could serve as a solution for 76% of the population in Bangladesh that are unbanked (Telenor Group, 2012). The government is going to issue five licenses for 3G cellphone technologyfour licenses will be given to four local mobile phone operators, including state-owned operator Teletalk, and one to the foreign operator through auction process (FE Report, 2012d).

3.2.4 Threats: There are few threats from political/legal side, e.g. unstable political
condition, increasing regulatory surveillance and government legislation, imposition of additional taxes and charges on talk time and SIM cards. M&A between Bharti Airtel and Warid Telecom and introduction of 3G mobile technology by Teletalk also poses threat to GP. Rapid changes and advancement in existing cellular technology, changes in customers needs, proliferation of substitutes in the market etc also pose threats to the company. IP

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telephony, by VoIP service providers, is the new threat in telecom industry (FE Report, 2012a). It has the potential to buoy a raft of new household brand. Summary: GPs core competencies make it the leader in the market. GP has a valuable inventory of strengths that will help it succeed. Its strengths will also help it capitalize on emerging opportunities. GP has many threats and opportunities from the external environment, and also have some weaknesses that it should overcome in shortest possible time.

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Chapter Four: Grameenphones Competitive Strategies and Implementation

In this section we will discuss the corporate-level strategies, implementation of strategies and CSR policy of Grameenphone.

4.1 Corporate-Level Strategies:

Corporate-level strategy is an action taken to

gain a competitive advantage through the selection and management of a mix of businesses competing in several industries or product markets (Majumdar, 2012). Corporate-level strategy addresses two related issues (G. G. Dess, et al., 2007): (1) what businesses should a corporation compete in, and (2) how can these businesses be managed so they create synergy? The corporate-level strategies of GP are discussed below:

4.1.1 Entry Strategy: The global marketplace provides many opportunities for firms to
increase their revenue base and their profitability (G. G. Dess, et al., 2007). Moreover, in todays knowledge-intensive economy, there is the potential to create advantages by leveraging firm knowledge when crossing national boundaries to do business. A firm has many options available to it when it decides to expand into international markets e.g. Exporting, Licensing, Franchising, Strategic Alliance, Joint Venture, and Wholly Owned Subsidiary. Telenors corporate strategy has been characterized since the 1990s by almost prescient acquisitions in underserved wireless markets ready to blossom (Ruiz & Michalski, 2009). The first wave of acquisitions took place in early nineties, when Telenor decided to expand their operations into the Eastern European market. In the mid-nineties their focus swiveled towards the underserved markets of South East Asia, starting with Bangladesh in 1996 and moving later into Thailand, Malaysia, and Pakistan. Telenor entered into Bangladesh in a joint venture agreement with Grameen Telecom- Telenor (62%) and Grameen Telecom (38%). Joint venture involves the formation of a third-party legal entity where two or more firms contribute their assets(G. G. Dess & Lumpkin, 2003).

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4.1.2 Diversification Strategy: A primary approach to corporate-level strategy is


diversification and it is a form of growth strategy (Majumdar, 2012). Diversification strategies are used to expand firms operation by adding markets, products, services, or stages of production to the existing business- which allow the company to enter in lines of business that are different from current operations (Majumdar, 2012). There are two key alternative approaches for diversification: related and unrelated. With related diversification, corporations strive to enter product markets that share some resources and capabilities with the existing business units (G. G. Dess & Lumpkin, 2003). Here value is created by leveraging core competencies, sharing activities, pooled negotiation power, and vertical integration. The synergies come from horizontal relationships among the business units. Cost savings and enhanced revenues can be derived from tow major sources (G. G. Dess & Lumpkin, 2003). First, economies of scope can be achieved from the leveraging of core competencies and the sharing of activities. Second, market power can be attained from greater, or pooled, negotiating power and from vertical integration. On the other hand, with unrelated diversification, there are few similarities in the resources and capabilities among the firms business units but value can be created in a variety of ways. These include restructuring, corporate patenting, and portfolio analysis approaches (G. G. Dess & Lumpkin, 2003). Here synergies derived from vertical or hierarchical relationships between the corporate office and the business units. In case of GP, we can find the firm adopted both related and unrelated diversification to propel its growth in Bangladesh telecom industry. Its related diversification is evident in its innovative products and services offerings- leveraging the core competencies and sharing activities, which gave it sheer market power (Appendix: Fig 3). Other diversification activities include: (i) Grameenphone IT Ltd. (GPIT), (ii) Wholesale Business, and (iii) Financial Services (GP, 2011) - these are unrelated to core voice and ancillary services of mobile telecom business. (i) Grameenphone IT Ltd.: GPIT is the leading fastest growing IT Company registered with the Registrar of the Joint Stock Companies and Firms of Bangladesh under the Companies Act 1994. It is a 100% subsidiary company of GP. As a leading IT company, GPIT is providing end to end solutions for Bank, Financial Institute, FMCG, Pharmaceuticals and Telecom Industry- in addition to managing GPs IT infrastructure, services and solutions (GPIT, 2012).

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(ii) Wholesale Business: Wholesale Business is dedicated to provide Shared Telecom Infrastructure products and services to other telecom operators as well as other businesses like WiMAX operators, ISPs, etc (GP, 2011). A number of new innovative wholesale products and services were introduced into the market in 2011, which catered to the immediate demand of the market. GP has signed agreements on different infrastructure sharing products with Telecom operators (e.g. Robi, Banglalink, Airtel Bangladesh etc), ISP operators (e.g. Bangladesh Internet Exchange, Agni Systems, Drik ICT Ltd. etc.) and WiMAX operators (e.g. Bangladesh Internet Exchange etc) in 2011. (iii) Financial Services: GP continued to see greater acceptance and growth of mobile financial services for executing basic transactional services via mobile phone infrastructure. In addition to its existing services (i.e. bill payment, railway & sports ticketing etc.), GP has launched the initial phase of an inward foreign remittance disbursement service on behalf of two leading banks in the country focusing on cash-to-cash disbursement of remittance payments in the last mile of distribution (GP, 2011). GPs BillPay service processed and settled several million utility bills for nine major utility companies in the country and continued to build significant market share in its areas of operation. According to a study conducted by the Boston Consulting Group for Telenor in 2011 the introduction of mobile financial services to Bangladesh could serve as a solution for 76% of the population in Bangladesh that are unbanked (Telenor Group, 2012). The economical and societal contributions of the new business activity include adding a 2% increase to the total GDP by 2020, creating 500,000 new jobs and improving health care access. All these corporate-level strategies gave GP a competitive edge over its rivals. GPs diversification strategies ensures above average return from its investment by reducing its exposure in single business, and optimizing business portfolio.

4.2 Strategy Implementation in Grameenphone


Strategy implementation is the translation of chosen strategy into organizational action so as to achieve strategic goals and objectives (managementstudyguide.com, 2012). Strategy implementation is also defined as the manner in which an organization should develop, utilize, and amalgamate organizational structure, control systems, and culture to follow strategies that lead to competitive advantage and a better performance.

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Companies typically realize only about 60% of their strategies potential value because of defects and breakdowns in planning and execution (Mankins & Steele, 2005). Research shows that enterprises fail at execution because they go straight to structural reorganization and neglect the most powerful drivers of effectiveness decision rights and information flow (Neilson, Martin, & Powers, 2008). The ability of frontline employees to execute a companys strategy without close central oversight is vital as the pace of technological change accelerates and as companies grow rapidly and become increasingly decentralized (Gadiesh & Gilbert, 2001). According to Rogers & Blenko (2006), A good decision executed quickly beats a brilliant decision implemented slowly. Many companies adopt early balanced scorecard concepts to improve their performance measurement systems- which enable the company to align its management processes and focus the entire organization on implementing long-term strategy (Kaplan & Norton, 2007). The balanced scorecard provides a framework for managing the implementation of strategy while also allowing the strategy itself to evolve in response to changes in the companys competitive, market, and technological environments (Kaplan & Norton, 2007). Lets focus on GPs strategy implementation.

4.2.1 Strategic Control: Organization must have effective strategic controls if they are to
successfully implement their strategies. This includes systems that exercise both informational control and behavioral control (G. G. Dess & Lumpkin, 2003). An organizational control system is also required. This control system equips managers with motivational incentives for employees as well as feedback on employees and organizational performance. GP has strong informational and behavioral control- attributed by its good corporate governance.

4.2.2 Organizational Design: Organizational design is the process of deciding how a


company should create, use, and combine organizational structure, control systems and culture to pursue a business model successfully. GP has an efficient organizational structure which is given in the appendix (Fig. 4).

4.2.3 Corporate Governance: Corporate governance is the system by which companies


are directed and controlled (Wikipedia, 2012a). It involves regulatory and market mechanisms, and the roles and relationships between a companys management, its board, its shareholders and other stakeholders, and the goals for which the corporation is governed. In the fast-paced world of telecommunications, vibrant and dynamic corporate governance

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practices are essential ingredients to success. GP believes in the continued improvement of corporate governance. This in turn led the Company to commit considerable resources and implement international corporate standards in its day-to-day operations. In GP, Corporate governance is ensured through a structured process that directs controls and holds the organization accountable (GP, 2011). In pursuing these objectives, the Board of Directors of the Company is committed to high standards of Corporate Governance through a culture of accountability, transparency, well-understood policies and procedures. A detailed compliance report on Corporate Governance as recommended by the SEC of Bangladesh is shown in appendix (Table 3).

4.3 CSR Policy of Grameenphone


Corporate social responsibility (CSR) is a form of corporate self-regulation integrated into a business model, while CSR policy functions as a built-in, self-regulating mechanism whereby a business monitors and ensures its active compliance with the spirit of the law, ethical standards, and international norms (Wikipedia, 2012b). When attempting to gain market power over competitors, CSR practices can add value to a business strategy (Spadafora & Majumdar, 2011). There are very few literatures about CSR practices in developing countries like Bangladesh, and therefore the global models cannot be replicated there as the macro environmental conditions are very much different from that of developed countries (Majumdar, 2010). However, there are five recognized domains in the existing CSR models, e.g. economical, legal, ethical, philanthropic, and environmental (Majumdar, 2010). CSR practices in Bangladesh are still in its infancy and most of the businesses in Bangladesh are family owned, first-generation businesses (Alam, Hoque, & Hosen, 2010). Here philanthropy gets the main attention from the corporate bodies (Majumdar, 2010), without having any definite policy about the expenses or any solid motive regarding financial gains in many instances (Alam, et al., 2010).

4.3.1 GPs CSR Practices:


The following discussion, on different aspects of GPs CSR practices in Bangladesh, is based on GPs Annual Report-2011 (GP, 2011).

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GP always works with the community and strives to address the development needs of the country while doing business in an environmentally responsible manner (Appendix- Fig 5). Accordingly, GPs policies and practices are structured and reflected in its Corporate Responsibility initiatives and those are contributing towards the development of underprivileged segments of the society. GPs CSR program covers many aspects of life with special focus on health, education, entrepreneurship and environment through its ventures like Village Phone, Community Information Centre (CIC), HealthLine, StudyLine, etc. GP partnered with Jaago Foundation to initiate Online Classroom, undertook a project to provide specialized dermatology services for the rural community, joined hands with Mobile Alliance for Maternal Action (MAMA) to deliver vital health information to new and expectant mothers, also provided support to establish hotline for Women Support and Investigation Division of Dhaka Metropolitan Police, and National Legal Aid Services Organization (NLASO) under Ministry of Law. GPs Climate Strategy aims to become a Green Company by shifting towards low carbon operations, practicing green standards internally and developing a greater momentum in the community with people. Its ambition is to reduce 40% carbon footprint and become a Green Company by 2015. GP initiated Building a Greener Network initiative back in 2007 to transform GPs Network and Office Building to an environment friendly & energy efficient solution, and to reduce carbon emissions by saving energy and fuel consumptions. Overall 50% energy has been saved from network modernization project through swapping of network equipments; dismantling of all air conditioners from sites by installation of DC Ventilation System, approximately 43% network energy consumption has been reduced, and GPHouse is saving yearly 60% energy comparing to the traditional building system. GP has been a vibrant example in Bangladesh Telecom Industry considering effective management of Health, Safety and Security issues of employees and its value chain partners. As a responsible company, GP respects all HSSE provisions of Labour Law as well as standards in this field and gives its best effort to provide for all employees the best working conditions and necessary protection. Village Phone, when started in 1997, was a unique idea that brings modern mobile communication services and new business opportunities to communities that may have been overlooked by traditional telecommunication access. Inspired by the success of Village Phone Program, GP introduced Community Information Center (CIC), where the rural people can

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have access to wide range of state-of-the-art services such as Internet, voice communications and all other information services. Summary: GPs corporate-level strategies gave it a competitive edge over its rivals. Its diversification strategies ensures above average return from its investment by reducing its exposure in single business, and optimizing business portfolio. Strategy implementation is very much efficient in GP which is attributed by its strategic control system, unique organizational structure and good corporate governance practices. From GPs case we can say, CSR is no longer exclusively practiced in developed countries- companies in Bangladesh are showing interest and commitment in CSR. GP has concern about all the five domains of CSR, and it helped GP to earn its leading market position in Bangladesh mobile telecom industry.

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Chapter Five: Conclusion & Recommendations


From this long discussion about the mobile telecom industry in Bangladesh, it can be said that this industry still has potential for growth with profitability. Though there are some problems in political and legal ground, the industry is lucrative enough for rapid growth and expansion in ICTs- which can contribute to the dream of digital Bangladesh. Our case organization, GP has positioned itself in the best way to explore all opportunities from the environment with its core competencies and competitive strategies. It also has resilience in its diversified business model. GPs strategy implementation is best in the industry and its corporate governance is up to the international standard. It also has excellence in CSR activities which is clearly evident form its ubiquitous presence in social development in Bangladesh. Thus GP has achieved excellence in all of its business activities and proudly earned the leadership position in Bangladesh telecom industry.

From this study, we have the following recommendations for GP: It should revise its tariff plan according to the market trend It should develop a recruitment policy based on the rules and regulation of Bangladesh It should focus on leadership development from local tenants It should hire professionals for negotiation and conflict management It should develop more resilience in its business model to absorb the uncertainty stems from the macro environment Should focus on efficient diversification by grabbing all the feasible opportunities in the industry, e.g. mobile banking and financial services, 3G services, IP TV services, VoIP services, high speed broadband Internet etc.

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Chapter Six: References


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Appendix
Table 1: Brief History of Telecom Sector in Bangladesh (BTCL, 2011; Salam, 2012)
Year 1853 1971 1975 1979 1981 1983 1985 1989 1989 1989 1989 1995 1995 1995 1996 1996 1998 2000 2001 2002 2004 2005 2006 2008 2010 2010 Events Telegraph branch under Posts and Telegraph Department, British India. Reconstructed as Bangladesh Telegraph and Telephone Department under Ministry of Posts and Telecommunications. Reconstructed as Telegraph and Telephone Board. Reconstructed as Bangladesh Telegraph and Telephone Board (BTTB) with right to issue license for telecom and wireless services. Digital Telex Exchange in Bangladesh. Automatic Digital ITX started in Dhaka. Coinbox Telephone service introduced in Bangladesh by BTTB. GENTEX Telegraph messaging service introduced in Bangladesh. Bangladesh Rural Telecom Authority got license to operate exchanges in 200 upazilla. Sheba Telecom got license to operate exchange is 199 upazilla. Cellular mobile phone company Pacific Bangladesh Telephone Limited and Bangladesh Telecom got license. Card Telephone service introduced in Bangladesh by BTTB and TSS (TSS - Telephone Shilpa Sangstha is the premier manufacturer of Telephone sets of Bangladesh). Regulatory power of BTTB (Bangladesh Telegraph and Telephone Board) transferred to Ministry of Posts and Telecommunications. 2nd and 3rd ITX installed in Dhaka. Grameenphone got cellular mobile Telephone license. Telecom Malaysia International Bangladesh got cellular mobile license. Telecom Policy. Global Telecom Service (GTS) Telex Exchange venture with British Telecom. Telecommunication Commission (BTRC). Act, to establish Bangladesh Telecommunication Regulatory

Information & Communications Technology (ICT) Policy. Teletalk cellular mobile launched. Egypt based Orascom acquired Sheba Telecom and established the brand name of 'Banglalink' Next Generation Network (NGN) introduced in BTTB (Bangladesh Telegraph and Telephone Board). BTTB (Bangladesh Telegraph and Telephone Board) converted into Bangladesh Telecommunications Company Limited (BTCL) with 100% shares owned by Government. NTT DoCoMo bought 30 percent stake in Aktel and rebranded as 'Robi' Bharti Airtel acquired 70 percent stake in Warid Telecom and emergence of the brand 'Airtel'.

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Table 2: SWOT analysis of Grameenphone Limited

Strengths
Clear strategic direction Multinational Corporation Strong Company Culture Superior customer care Market leader with a 42% market share Skilled & dedicated workforce (4,970 employees in GP + GPIT) Brand image & reputation for best network and quality services 99% population coverage, 90% geographic coverage 3,000 base stations located in about 7,200 sites Wide range of product and product innovation skills Strong financial position (credit rating: AAA for long term loan and ST-1 for short term loan) Multiple financing alternatives

Weaknesses
Comparatively high tariff rate Huge capital expenditure for network upgradation Multicultural management Poor local leadership development for top level position Poor negotiation skills & for conflict solving management

regulatory problems No specific guideline for recruitment and unfair labor practice (Azad, 2012;

FE

Report,

2012c;

Staff

Correspondent, 2012)

Opportunities
The potential to increase the customer base The potential to increase market share Growth opportunities in broadband Internet Mobile Banking 3G cellphone technology

Threats
Political instability The proliferation of substitutes Technological advancement Changes in customers needs Increasing regulatory monitoring and government legislation IP telephony by VoIP service providers (VSP) M&A between Bharti Airtel and Warid Telecom Introduction of 3G by Teletalk

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Table 3: GPs Status of compliance with the conditions of the Securities and Exchange Commission (GP, 2011)

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Figure 1: Percentage of Active Mobile Phone Subscribers by Mobile Operators at the end of May 2012. The total number of subscribers was 92.120 million- among these GP has 38.412 million, Banglalink has 25.252 million, Robi has 18.733 million, Airtel has 6.667 million, Citycell has 1.713 million and Teletalk has 1.342 million subscribers (BTRC, 2012).

Robi 20%
Teletalk 2% Other 4% Citycell 2% GP 42%

Banglalink 27%

Airtel 7%

Figure 2: The total number of Mobile Phone subscribers in different time periods (BTRC, 2011b, 2012; Wikipedia, 2012f)
Millions

100
90 80 70 60 50 40 30 20 10 0 45 76.43 85.455

92.12

No. of Mobile Phone Subscribers

Feb-09 Jun-11 Dec-11 May-12

Time

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Figure 3: Products and Services offered by Grameenphone Limited (GP, 2011).

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Figure 4: GP's Organizational Structure (GP, 2011)

* Not a member of the Management Team **Deputy CEO has a special role on Stakeholder Relations of the Company

Figure 5: Corporate Responsibility at Grameenphone (GP, 2011)

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