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

10

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.

11

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.

12

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).

13

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

14

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

15

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).

16

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

17

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

18

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

19

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

21

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

22

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

24

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.

25

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).

26

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).

27

(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.

28

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

29

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).

30

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

31

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.

32

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.

33

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37

Appendix
Table 1: Brief History of Telecom Sector in Bangladesh (BTCL, 2011; Salam, 2012)
Year

Events

1853

Telegraph branch under Posts and Telegraph Department, British India.

1971

Reconstructed as Bangladesh Telegraph and Telephone Department under Ministry of Posts and
Telecommunications.

1975

Reconstructed as Telegraph and Telephone Board.

1979

Reconstructed as Bangladesh Telegraph and Telephone Board (BTTB) with right to issue license for
telecom and wireless services.

1981

Digital Telex Exchange in Bangladesh.

1983

Automatic Digital ITX started in Dhaka.

1985

Coinbox Telephone service introduced in Bangladesh by BTTB.

1989

GENTEX Telegraph messaging service introduced in Bangladesh.

1989

Bangladesh Rural Telecom Authority got license to operate exchanges in 200 upazilla.

1989

Sheba Telecom got license to operate exchange is 199 upazilla.

1989

Cellular mobile phone company Pacific Bangladesh Telephone Limited and Bangladesh Telecom got
license.

1995

Card Telephone service introduced in Bangladesh by BTTB and TSS (TSS - Telephone Shilpa
Sangstha is the premier manufacturer of Telephone sets of Bangladesh).

1995

Regulatory power of BTTB (Bangladesh Telegraph and Telephone Board) transferred to Ministry of
Posts and Telecommunications.

1995

2nd and 3rd ITX installed in Dhaka.

1996

Grameenphone got cellular mobile Telephone license.

1996

Telecom Malaysia International Bangladesh got cellular mobile license.

1998

Telecom Policy.

2000

Global Telecom Service (GTS) Telex Exchange venture with British Telecom.

2001

Telecommunication
Commission (BTRC).

2002

Information & Communications Technology (ICT) Policy.

2004

Teletalk cellular mobile launched.

2005

Egypt based Orascom acquired Sheba Telecom and established the brand name of 'Banglalink'

2006

Next Generation Network (NGN) introduced in BTTB (Bangladesh Telegraph and Telephone Board).

2008

BTTB (Bangladesh Telegraph and Telephone Board) converted into Bangladesh Telecommunications
Company Limited (BTCL) with 100% shares owned by Government.

2010

NTT DoCoMo bought 30 percent stake in Aktel and rebranded as 'Robi'

2010

Bharti Airtel acquired 70 percent stake in Warid Telecom and emergence of the brand 'Airtel'.

Act,

to

establish Bangladesh

Telecommunication

Regulatory

38

Table 2: SWOT analysis of Grameenphone Limited

Strengths

Weaknesses

Clear strategic direction

Comparatively high tariff rate

Multinational Corporation

Huge capital expenditure for network

Strong Company Culture

upgradation

Superior customer care

Multicultural management

Market leader with a 42% market

Poor local leadership development for

share

top level position

Skilled & dedicated workforce (4,970

Poor

employees in GP + GPIT)

management

Brand image & reputation for best

regulatory problems

network and quality services

No specific guideline for recruitment

99%

population

coverage,

90%

negotiation
skills

&

conflict

for

solving

and unfair labor practice (Azad, 2012;

geographic coverage

FE

3,000 base stations located in about

Correspondent, 2012)

Report,

2012c;

Staff

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

Opportunities

Threats

The potential to increase the customer

Political instability

base

The proliferation of substitutes

The potential to increase market share

Technological advancement

Growth opportunities in broadband

Changes in customers needs

Internet

Increasing regulatory monitoring and

Mobile Banking

government legislation

3G cellphone technology

IP telephony by VoIP service providers

(VSP)
M&A between Bharti Airtel and Warid
Telecom
Introduction of 3G by Teletalk

39

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

40

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%

Airtel
7%

Banglalink
27%

Other
4%
Citycell
2%
GP
42%

Millions

No. of Mobile Phone Subscribers

Figure 2: The total number of Mobile Phone subscribers in different time periods (BTRC,
2011b, 2012; Wikipedia, 2012f)
100

92.12
85.455

90
76.43

80
70
60
50

Feb-09

45

40

Jun-11

30

Dec-11

20

May-12

10
0

Time

41

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

42

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)

43