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Rahim Yar Khan Campus
DEPARTMENT OF MANGEMENT SCIENCES
Subject: Strategic Management Presented to: Sir Shahid Yaqub Presented by: Zaigham Ali
Roll no. 30
MBA Morning (4th, B)
In the name of ALLAH the most Beneficent and Merciful. First of all we like to thanks ALLAh who blessed us with such capabilities to perform at all levels of life and secondly we like to thanks sir Shahid Yakoob who provide us great opportunity to enhance our skills and try to reshape our selves. Although we have short time to prepare it but the experience was quite interesting. . We tried our level best in preparing this particular project. As a student of course Strategic management and all the preaching and guidance of my course teacher Mr. Shahid Yakoob. I hereby present my final project as required on firm operating in Pakistan belonging to telecom sector. i.e. Ufone one of the leading cellular service provider along with value added service and business strategies. I also hereby present all the facts and figures which I gather about Ufone from newspapers, websites and from Ufone’s annual report. Due to my job and other secular activities I couldn’t be able to approach the firm directly, however with the help of my friends those close to Ufone. I prepared this project for consideration of approval of my learning and understanding about the said subject.
We dedicate this project to our parents and beloved teachers especially Sir Shahid Yaqub without their patience, understanding, support and most of all love, the completion of this work would not have been possible.
5 Ufone (official name: PTML) is a PTCL company, PTML (Ufone) - a wholly-owned subsidiary has improved its financial performance commenced its operations on 29th January 2001 as a GSM 900 service provider. Since the outset, it has expanded its coverage and customer base at a rapid pace and established itself as one of the leading cellular service providers in Pakistan. During the last year Ufone successfully completed the launching of sites under Phase V in existing as well as new cities and towns by investing more than US$ 525 million. This has increased the asset base of Ufone from rupees 20 billion to 27 billion. To further enhance the subscriber base and strategically position the company in the growing telecom market, Ufone has finalized a network expansion for Phase VI contract amounting to about US$ 170 Million. Ufone currently, has network coverage in more than 4,745 locations throughout the country. Ufone's operational performance has been very encouraging despite stiff competition in Pakistan telecom market which has led to reduction of prices to bare minimum level. Ufone managed to improve its revenue and after tax profit by 87% and 54% respectively, as compared to the last year through aggressive policies and exercising strict control over expenses.
Table of Contents
• • • • • • • • • • • • • • • • • • • • • •
Introduction of Ufone Vision & Mission Details of project Purpose of project Slogan Findings SWOT Analysis Competitive analysis EFE Matrix IFE Matrix CPM SWOT Matrix SPACE Matrix BCG(Boston Consulting Group) Matrix of Ufone BCG(Boston Consulting Group) Matrix for products GSM(Grand Strategy Matrix) IE(Internal, External) Matrix of Ufone IE(Internal, External) Matrix for products QSPM(Quantitative Strategic Planning Matrix) Recommended strategy Conclusion & Recommendations Reference
07 09 10 11 12 13 14 19 21 25 29 32 33 37 40 41 42 44 46 47 48 50
History of Ufone
Ufone GSM is a Pakistani GSM cellular service provider. It is one of six GSM Mobile companies in Pakistan and is a subsidiary of Pakistan Telecommunication Company. The company commenced its operations under the brand name of Ufone from Islamabad on January 29 2001. Ufone expanded its coverage and has added new cities and highways to its coverage network. After the privatization of PTCL, Ufone is now owned by Etisalat. PTML is a wholly owned subsidiary of PTCL. Established to operate cellular telephony. The company commenced its operations, under the brand name of Ufone from Islamabad on January 29 2001. During the year, as a consequence of PTCL’s privatization, 26% of its shares were acquired by Emirates Telecommunication Corporation (Etisalat). Being part of PTCL, the management of Ufone has also been handed over to Etisalat. During the year July 2005 to June 2006, Ufone continued on the path to success. The Company further expanded its coverage and has added new cities and highways. Ufone has network coverage in more than 750 cities, towns and across all major highways of the country. During the year Ufone successfully completed the network expansion of Phase 4 in existing as well as in new cities and towns which amounted to more than US Dollar 170
million. As a result the asset base of the Company has increased from Rs. 20 billion to Rs. 27 billion. Future Plans keeping in view the growth potential of the cellular industry there is no option but to be aggressive in order to remain a potent force in the cellular industry. In order to extend cellular network to new cities, towns and highways and enhance its current installed capacities in existing cities, Ufone has finalized a huge network expansion contract amounting to about USD 550 million, which will enhance the subscribers’ capacity by 10 million. This is the largest ever expansion project of Ufone.
Type Industry Genre Founded Founder(s) Headquarters Area served Key people Products Revenue Parent Website
Private Telecommunication Subsidiary January 29, 2001 Pakistan Telecommunication Company Ltd Islamabad, Pakistan 13-B, F-7 Markaz 2336 cities of Pakistan, GT Road, Super Highway & Motorway Abdul Aziz, CEO
Pre Pay, Post Pay
▼ Rs.5.1 billion PKR (first quarter 2006-07). PTCL Pakistan www.ufone.com
“To be the leading telecommunication service provider in Pakistan by offering innovate communication solutions for our customers while exceeding shareholder value & employee expectation.”
To become the best cellular communication option available in the country for “u”……………. At Ufone we aim to provide you with wider coverage, superior connectivity, clear signals & voice quality. Wherever you are, Ufone keeps you connected
DETAILS OF THE PROJECT
Ufone is a Cellular Service Provider founded in 2001 It is also a subsidiary firm of PTCL As of 2008, Ufone employs more than 1,730 people. It manufactures it’s the GSM company providing services to all four continents urban and rural areas., As of 2008, Ufone is the second largest telecommunication company in Pakistan. In recent years the company has endured significant improvement in services to almost 4,745 locations throughout the country. The major competitors of Ufone are domestic companies like
Pakistan Mobile Communications Limited, better known as Mobilink GSM, is a telecommunication service provider in Pakistan. According to PTA statistics, Mobilink has 30.88 million customers by January 2008. Mobilink's Head office is located in Kulsum Plaza, Blue Area, Islamabad
Telenor (OSE: TEL, NASDAQ: TELN) is the incumbent telecommunications company in Norway, with headquarters located at Fornebu, close to Oslo. Today, Telenor is mostly an international wireless carrier with operations in Scandinavia, Eastern Europe and Asia. In addition, it has extensive broadband and TV distribution operations in four Nordic Countries.
PAKTEL/ CHINA MOBILE/CMPAK
Paktel was the first ever company granted license to carry out cellular phone services in Pakistan, set up by Cable & Wireless. It carried out AMPS services until 2004, when the company launched GSM services as well. Its main competitor emerged in late 1990s as Instaphone and soon began to dominate the market. On 4th May 2007, Paktel was renamed to CMPak. And then, on 16th May 2007, China Mobile announced that it had upped its stake in CMPak to 100%. Moreover, PTA (Pakistan Telecommunication Authority) has announced that it may resolve the frequency issue with China Mobile, as it was one of the main reason for pullout by Millicom International Cellular S.A.
Warid Telecom International is an Abu Dhabi based mobile telecommunication firm providing telephony services in Bangladesh, Pakistan and Uganda.
Zong is the first International brand of China Mobile being launched in Pakistan. It is meant to empower and liberate the people of Pakistan in every nook and corner of the country
PURPOSE OF THE PROJECT
The purpose of this project is to enhance the ability of understanding the important factors, matrix, and strategy of business. And also to encourage knowing more about the telecommunication sector in Pakistan. Ufone is one of my favorite cellular company. I have being using Ufone since 2003. Over the past few years Ufone developed dynamically. Ufone is the purpose of my project and my communication medium in life.
With the monthly additions average around 2.5 million subscribers, 2007 has been a phenomenal year for the mobile market growth in Pakistan. Here’s a look at the numbers (from PTA site) for the first 8 Months Of 2007. A quick analysis of this data reveals few trends about market leadership. Mobilink gained the most subscribers (5.45 million) in this period. Its market share has been decreasing gradually but that’s expected with the increase in competition. Telenor was the fastest growing company, 45% of their current subscribers (5.35 million) were gained this year. No doubt that Telenor has emerged as a strong contender. It took a small lead over Warid in March and has been able to maintain it. The rate of growth for Ufone has been impressive as well. It gained 5.32 million of the approx 20 million new subscribers in first 8 months of this year in Pakistan. Paktel has been barely able to reverse the negative trend of subscriber losses.
One of the main reasons of the popularity of the Ufone is to use slogan to attract the customers. The Slogan of Ufone in Urdu is “Ufone Tum Hi to Ho", In English "it’s all about U”
INTERNAL & EXTERNAL ANALYSIS
INTERNAL ENVIORNMENT Human Resource Management Marketing Department Commercial Department Sales Department Finance Department Payroll Department Information Technology Department Engineering Department Administration Auditing Department Customer Care EXTERNAL ENVIORNMENT Economic Conditions Social Conditions Culture Demographics Environmental Competitive Technological Consumer Attitude Globalization
Ufone has Network Coverage in more than 750 cities, towns and across all major highways of the country. Ufone provides International Roaming facility with more than 150¬ international operators across 79 countries. Ufone is proud to have an efficient and friendly customer service through 21 companyowned Sales & Customer Service Centers and nearly 250 Franchisees across the country. Ufone has always believed in a solid Commitment to growth, security¬ and reliability. Therefore, Ufone has always balanced its expansion efforts and quality of service. With a total current investment of $400 Million. Utunes was launched on 4th Dec2007 which attracted many people towards Ufone. Ufone is offering the service of Multi-media Messaging Service (MMS). As mobile users in the country have reached over 78 million at a very¬ rapid pace. Ufone has maintained itself as the 2nd largest cellular operator in Pakistan with a subscriber base of around 16.5 million and a market share of nearly 25%. Ufone has seen a subscriber growth rate of over 200% in the last year, and since the start of 2005 Ufone added nearly 5 million subscribers onto its network. A remarkable achievement indeed, especially considering the fact that two new international players also entered into the market in 2005. While keeping its tradition of being the Trend setter in the industry, Ufone changed the image of mobile phones from a luxury only affordable by the elite, to a necessity affordable by the common man. Ufone increased its Focus on the youth segment (which comprises 50% of¬ the population), with the Prepay brand. Ufone has the ability to Retain its existing customer base with a high level of customer satisfaction via optimum network service and a 24 hour call center facility. It has the post paid service that is normally to attract the Business class people. Most of the business and elite class people use post paid and other services offered by the Ufone.
15 Ufone has a subscriber base of 18.97 million as of October 2008.¬ Ufone was the first cellular Company in Pakistan that introduced the ¬ service of GPRS and hence took the competitive advantage. Ufone has some exciting and energetic SMS packages that made SMS¬ almost free. They are offering Rs. 25, Rs.50, Rs.100, Rs. 150 SMS packages which its subscribers really love it. Ufone has some very exciting and low call packages like “5 ka 15”,¬ “u-one”, u circle”, “ Ufone ghanta”, “Ufone has some very exciting and low call packages like “5 ka 15” , “uone”, u circle”, “ Ufone ghanta”, “U fine life package” and “ prepay Public Demand” etc which attracted lots of customers towards it and many other cellular company users are also switching to it. Ufone post paid is also offering black berry set that is useful and¬ tempting for the Business class. Ufone currently caters for international roaming to more than 195 live¬ operators across 119 countries and introduced International roaming facility for Prepaid subscribers in Saudi Arabia, United Kingdom, United Arab Emirates, Singapore, Portugal and Kuwait with lowest rates, featuring no security deposit and activation charges. GPRS Roaming facility is available with more than 75 Live Operators across 59 countries. Variety of Value Added Service. Coverage on GT Road 60%. Established customer base including lower middle class. Less rate than competitors.
WEAKNESSES Ufone does not have the proper lists of its customers. It has the list¬ but this list is not authentic which is increasing the unauthorized use of its sim specially pre pay. Ufone have to take serious steps to properly list its customers to ensure that there is no misuse. It has many franchises in the whole country but¬ as its customers are increasing day by day so its present franchises are not enough to fulfill the needs of it customers. Ufone also face problems and its network get jammed on special¬ occasions like Eid, Christmas, New year etc
16 Ufone has the problem of voice quality. Though its coverage area is¬ vast and it covers more than 750 towns and cities in Pakistan but the voice quality is not as good as it should be. Behind on Excessive Demand. This is Ufone's biggest weakness is not attempting to meet the demands Poor Organizational Structure. Centralized structure failed to provide proper guidance over instruction and policies Stagnant Profitability. As compared to financial assets, Ufone is not close to expected profitability Overly Dependent on PTCL. Subsidiary of PTCL, it is dependent on PTCL. Not targeting the rural areas at the moment. Less coverage in remote areas. Its coverage on Southern part of Pakistan is quite good but in northern areas its coverage is a bit poor. In Ufone web support is not available.¬Its customer’s service staff needs training because at many franchises¬ their employees are have been complained about behaving rudely. Ufone is plagued with some internal problems like when it is privatized¬ to Etisalaat being the part of the PTCL many employees were not happy with the pay scale that they were offering.
OPPORTUNITIES Ufone could develop some new and innovative services to attract♣ customers and some of the suggestions are as under which will help them to increase their revenues: It should introduced International SMS packages like local SMS. Already Ufone is offering lowest International SMS rates but if they introduce some package like this it will get lots and lots of success.
17 They should also introduce some International call packages to Middle Eastern countries because there are lots of Pakistanis who are living in those countries so people will definitely be tempted towards such package. In “ Ufone ghanta” package time of the package should be extend two more hours so that more & more people will use this service and causing Ufone to generate more revenues & hidden charges should be removed. Ufone should develop some new franchises in remote areas so that¬ people will get more and more benefit from it and it will help to increase their customers. As in Pakistan Youth is almost the 50% of the population so Ufone can¬ take advantage of this demographic situation and should introduce more and more services and packages that attracts youth towards it. Ufone should extend its network coverage area to Northern part of the¬ country as well because in that part not too many companies are giving services and if Ufone give its service there then it will definitely attract people and its number of customers will shoot like a rocket. It should also introduce some packages for Internet users on mobile if¬ it do so then many people will switch from other networks towards it. If Ufone enhance its voice quality then definitely it would be prefer¬ more by customers. Ufone should import technological equipments from China because they¬ are giving the best technology at very low rates so it will not only help Ufone to be ahead technologically but also will help Ufone to decrease its cost. Ufone can surprise its competitors by introducing “Ufone kiosk”. These¬ will be ATM like machines and that will give 24-hour service to Ufone subscribers to load the balance just like they take money from ATM.
THREATS As Ufone is cellular company and there is cut throat competition among¬ cellular companies in Pakistan. There are six other companies also working in Pakistan so Ufone would have to face some growing competitive pressures.
18 Pakistan is facing some serious economic problems now days so that¬ would also effect Ufone. The current recession in market is not good for any kind of business including telecommunication. In Balochistan and FATA where Ufone already has network coverage is in¬ danger because of critical situation and operation being held there. Investment of Ufone is in danger. Ufone penetrated in the market from 2005 to 2007 quite rapidly but¬ since then it is experiencing a bit slower growth. By the arrival of China Mobile Company (Zong) in cellular industry of¬ Pakistan the Ufone and other companies now have to face the severe competition. As Zong is introducing some various attractive packages of both SMS and calls to attract customers. Ufone have to develop strategies to counter their strategy and to survive in the market. The key threat to Ufone is also some adverse Government policies of¬ implementing Tax on telecommunication industry that will ultimately affect the revenues. There are some rumors about the shares of PTCL in the market. Being the¬ Subsidiary company of PTCL, Ufone will also be affected by that. Telenor is giving higher rumenration to its employees as compared to Ufone so many of its skillful and competent employees are going there. That will affect the company’s profitability in the long run. Some Pressure groups are protesting on the Towers that are installed in¬ residential areas. Their opinion is that it is not good for health of people to have such towers near their homes that cause radiations. Ufone have to revise the list of subscribers who are legal and¬ authorized. Because now the Government has warn to take strict action if any company would not keep such record. Another threat Any new company from foreign countries e.g. Orange and Vodafone.
The competitive environment for mobile telephony in Pakistan is tough and Ufone’s is a major player of the market. Primary competition is of course between four mobile operators for the share of the market. But there is other potential source of competition, which should also be taken into consideration
Direct competition to Ufone service is with thee licensed mobile world in today’s market. These are:
Mobilink. Warid telecom. Telenor. Zong
The indirect competition is from: Fixed line services. Card payphone services. Prepaid calling cards. Massive expansion in penetration and quality of fixed line, payphone and prepaid calling cards can effect mobile business environment. Economic Scenario of Pakistan makes this observation relevant because mobile services are still comparatively much expensive and customer may prefer to use cheaper, more readily available alternatives 1911
Ufone has the target market concerning youth in the nation. This target market of youngster comprises 40% of the population. Ufone has targeted the corporate class for which the Ufone is customizing the packages in order to preserve the existing small businessman. Gender: Both Male & Female Target Class: Middle & Lower Middle Class Targeting: Mainly they are targeting to youth, if we look at their ads, which are shown on the TV, we got the clear idea. Income Group: Rs. 15,000 & above
Industry Analysis: The External Factor Evaluation (EFE) Matrix
An External Factor Evaluation (EFE) Matrix allows strategists to summarize and evaluate economic, social, cultural, demographic, environmental, political, governmental, legal, technological, and competitive information. The EFE matrix consists of five steps process.
• List key external factors (10-20) Opportunities & threats. You have to prepare a list of all external factors which will affect the EFE matrix. These factors should be two points to be kept in mind these are opportunities and threats • Assign weight to each (0 to 1.0) Sum of all weights = 1.0 Now you have to arrange them according to their weight age that which factor is most important. It should be weight age in % ages. The sum of the total of all the factors should always be one. • Assign 1-4 rating to each factor Firm’s current strategies response to the factor: how well firms response to these factors.
• Multiply each factor’s weight by its rating Produces a weighted score How the firm will respond to these factors external factors. Such criteria are known as rating. • Sum the weighted scores for each Determines the total weighted score for the organization. Highest possible weighted score for the organization is 4.0; the lowest, 1.0. Average = 2.5
EXTERNAL FACTOR EVALUATION (EFE) MATRIX
EXTERNAL FACTOR EVALUATION (EFE) MATRIX of Ufone Key External Factors Opportunities 1 Globalization 2 Publicity & Marketing 3 Can target Corporate 4 Develop New value Added services 5 Extend Coverage to Northern Areas 6 introduced International SMS packages like local SMS & call package 7 develop some new franchises in remote areas 8 Introducing “Ufone kiosk”. Just like ATM. Threats 1 Old Stable Companies & arrival of China Mobile Company 2 PTCL cellular license 3 Price War 4 Government Interference 5 Pressure groups & health issues due to towers in residential areas. TOTAL Weight Rating Weighted Score 0.12 0.06 0.08 0.10 0.05 .06 .08 .05 4 3 3 4 3 3 4 2 0.48 0.18 0.24 0.40 0.15 .18 .32 .10
0.10 0.08 0.05 0.12 .05
2 2 2 3 2
0.2 0.16 0.10 0.36 .10
Total weighted score for the Ufone external factor is 2.97 which is above average.
EFE of Ufone Products:
• EFE of Postpay
Opportunities: Increase expiry date No balance consumption during hold Free SMS Packages Free minutes on use of maximum balance Threats: Prepay Mobilink Telenor Zong High taxes Weight Rank .10 2 .10 .10 .15 .15 .10 .10 .08 .08 .04 1.00 2 1 2 2 2 3 1 1 1 WxR .20 .20 .10 .30 .30 .20 .30 .08 .08 .05 1.80
Opportunities: Packages for executives Internet facility Increase expiry date No balance consumption during hold
EFE of Prepay
Weight Rate .10 3 .10 .15 .06 3 3 2 WxR .30 .30 .45 .12 2311
24 SMS packages Low call rates n Ufone Ghanta packages. Threats: Postpay Mobilink Telenor Zong High taxes Total .10 .10 .10 .10 .10 .10 .05 1.00 2 2 4 4 3 2 2 .20 .20 .40 .40 .30 .20 .10 2.97
Internal Factor Evaluation Matrix- IFE Matrix
A summary step in conducting an internal strategic management audit is to construct an Internal Factor Evaluation (IFE) Matrix. This strategy formulation tool summarizes and evaluates the major strengths and weaknesses in the functional areas of a business, and it also provides a basis for identifying and evaluating relationships among those areas. Intuitive judgments are required in developing an IFE Matrix, so the appearance of a scientific approach should not be interpreted to mean this is an all powerful technique. A thorough understanding of the factors included is more important than the actual numbers. Similar to the EFE Matrix and Competitive Profile Matrix described in Chapter 3, an IFE Matrix can be developed in five steps: 1. List key internal factors as identified in the internal audit process. Use a total of from ten to twenty internal factors, including both strengths and weaknesses. List strengths first and then weaknesses. Be as specific as possible, using percentages, ratios, and comparative numbers. 2. Assign a weight that ranges from 0.0 (not important) to 1.0 (all important) to each factor. The weight assigned to a given factor indicates the relative importance of the factor to being successful in the firm’s industry. Regardless of whether a key factor is an internal strength or weakness,
25 factors considered to have the greatest effect on organizational performance should be assigned the highest weights. The sum of all weights must equal 1.0.
3. Assign a I to 4 rating to each factor to indicate whether that factor represents a major weakness (rating = 1), a minor weakness (rating = 2), a minor strength (rating = 3), or a major strength (rating = 4). Note that strengths must receive a 4 or 3 rating and weaknesses must receive a 1 or 2 rating. Ratings are thus company based, whereas the weights in Step 2 are industry based.
4. Multiply each factor’s weight by its rating to determine a weighted score for each variable. 5. Sum the weighted scores for each variable to determine the total weighted score for the organization. Regardless of how many factors are included in an IFE Matrix, the total weighted score can range from a low of 1.0 to a high of 4.0, with the average score being 2.5. Total weighted scores well below 2.5 characterize organizations that are weak internally, whereas scores significantly above 2.5 indicate a strong internal position. Like the EFE Matrix, an IFE Matrix should include from 10 to 20 key factors. The number of factors has no effect upon the range of total weighted scores because the weights always sum to 1.0.
INTERNAL FACTOR EVALUATION matrix for Ufone
KEY INTERNAL FACTOR
INTERNAL STRENGTH Network coverage Unique offers & packages Marketing & Advertising Financial position & sales Deptt. Payroll Department & HRM Latest Technology Administration Customer Care & Feed back INTERNAL WEAKNESSES Lack of Franchises Network problem on special occasions. Behind on Excessive Demand Poor Organizational Structure Global Expansion
(Less coverage in remote areas).
Weight .08 .12 .10 .10 .05 .06 .04 .10 .04 .04 .05 .04 .10 .08 1
Rating 3 4 3 3 3 3 2 3 2 3 3 2 2 1
w. score .24 .48 .3 .3 .15 .18 .08 .3 .08 .12 .15 .08 .2 .08 2.74
Northern areas coverage
Total weighted score for the Ufone internal factor is 2.74 which is above average.
IFE of prepay:
Strengths Base for Ufone Greater market share More contribution in profit Attractive packages Meet customers demand Weaknesses High rates Less duration of SMS packages Some time disturbance Less use by executives Limited duration of packages Total: Weight .15 .10 .10 .08 .09 .08 .08 .12 .10 .10 1.00 Rate 3 3 3 3 3 1 2 1 1 1 WxR .45 .30 .30 .24 .27 .08 .16 .12 .10 .10 2.12
IFE of post pay:
Strengths Greater market share Use by executives Billing system Meet customers demand Good quality service Weight .10 .12 .10 .10 .13 Rate 4 4 4 4 4 WxR .40 .48 .40 .40 .52
Weaknesses High rates Less use by general public Less packages Less duration Less market growth .08 .10 .07 .10 .10 2 2 2 2 1 .16 .20 .14 .20 .10
CPM-Competitive Profile Matrix
EFE is used to collect competitive intelligence information from external environment. It not focuses on internal issues. Whereas CPM is little different from EFE it also consider the internal issues and best feature of CPM that it allow to compare the competitor critical success factor with your organization. • • • • • • Find out critical success factor. Assign weight to each factor depend up how important the specific factor for the organization The weight range from 0.0 to 1.0 lower number shows no or minimum importance and high Assign rating to each factor depends upon how well organization respond to that factor. Assign a 1-4 rating to each critical success factor to indicate how effectively the firm’s current Multiply each factor’s weight by its rating to determine a weighted score. Sum the weighted scores. • Average total weighted score is 2.5.
success. weight show more importance of factor to the company.
strategies respond to the factor. (1 = response is poor, 4 = response is extremely good)
The above CPM matrix compares the oil marketing companies on importance factor. The total calculated figure tells the exact situation. The Competitive Profile Matrix (CPM) identifies a firm's major competitors and their particular strengths and weaknesses in relation to a sample firm's strategic position In a CPM the ratings and total weighted scores for rival firms can be compared to the sample firm. This comparative analysis provides important internal strategic information. Ufone Competitive Profile Matrix is provided in Table. In this matrix market share, growth rate and financial strength
30 are the most important critical success factors, as indicated by a weight of 0.60. In market share Mobilink is leading but in the growth factor Ufone is leading with the weighted point of 0.40
• Competitive Profile Matrix (CPM)
Critical Success Factors (CSF) Market Share Growth Rate Financial Strength Management Coverage CCS Advertising & Marketing Brand Name Packages & Offers Price Competitivene ss TOTAL
Weighte d Score
0.15 0.10 0.08 0.12 0.10 0.13 0.06 0.10 0.09 0.07
4 1 3 4 4 4 2 4 2 2
0.60 0.10 0.24 0.48 0.40 0.52 0.12 0.40 0.18 0.14
3 3 3 3 3 3 3 2 3 3
0.45 0.30 0.24 0.36 0.30 0.39 0.18 0.20 0.27 0.21
1 4 4 3 2 3 3 3 3 3
0.15 0.40 0.32 0.36 0.20 0.39 0.18 0.30 0.27 0.21
3 3 3 3 2 2 4 3 4 4
0.45 0.30 0.24 0.36 0.20 0.26 0.24 0.30 0.36 0.28
31 The ratings values are as follows: 1 = major weakness, 2 = minor weakness, 3 = minor strength, 4 =major strength. As indicated by the total weighted score of 2.78, Zong is weakest. Because it is at its initial position as compare to competitors. With the point of 3.18 Mobilink is leading. Only eight critical success factors are included for simplicity; this is too few in actuality
Threats-Opportunities-Weaknesses-Strengths (TOWS) Matrix
The Threats-Opportunities-Weaknesses-Strengths (TOWS) is also named as SWOT analysis. A TWOS Analysis is a strategic planning tool used to evaluate the Threats, Opportunities and Strengths, Weaknesses, involved in a project or in a business venture or in any other situation requiring a decision. This is an important tool in order to formulate strategy. This Matrix is an important matching tool that helps managers develops four types of strategies: SO Strategies (strength opportunities), WO Strategies (weakness- opportunities), ST Strategies (strength-threats), and WT Strategies (weakness-threats).The most difficult part of TOWS matrix is to match internal and external factor. Once the objective has been identified, TOWS are discovered and listed. TOWS are defined precisely as follows: Strengths are attributes of the organization that are helpful to the achievement of the objective. Weaknesses are attributes of the organization that are harmful to the achievement of the objective. Opportunities are external conditions that are helpful to the achievement of the objective. Threats are external conditions that are harmful to the achievement of the objective.
Steps for developing strategies:
There are eight steps involved in constructing a TOWS Matrix: 1. Rank external opportunities 2. Rank external threats 3. Rank internal strength 4. Rank internal weaknesses. 5. Match internal strengths with external opportunities and mention the result in the SO Strategies cell. 6. Match internal weaknesses with external opportunities and mention the result in the WO Strategies cell. 7. Match internal strengths with external threats and mention the result in the ST Strategies cell. 8. Match internal weaknesses with external threats and mention the result in the WT strategies cell.
32 • SWOT
MATRIX OF UFONE
Strengths–S S1. Capital & financial position S2. Network Coverage & voice quality S3. Resources S4. Trend setter S5. Unique offers & packages S6. High Growth Rate S7. Advertising & marketing S8. Focus & retain customers SO-Strategies S1,O1 Expand S2, O5 Increased coverage & franchises S3,O7 Penetration S1,O3 Acquisition & Make the post paid package more attractive S4,O6 Increased loyalty & brand image S7, O2 Attract new customers. ST-Strategies S1,T3 Cost Leadership S3, T2 Penetration & co branding with others like banks.. S4, T1 Market Leader S5, T2 Introduce new packages & services.
Weaknesses – W W1. Northern areas Coverage W2. Subsidiary of PTCL W3. Low Market Share W4. Weak MIS W5. Old Staff Less motivated & unfamiliar to IT.
Opportunities – O O1. Globalization O2. Publicity O3. Can target corporate O4. New value added services O5. Covering Northern Areas O6. New Product (Ufone kiosk) O7. Penetration Threats – T T1. Old Stable Companies T2. Attractive Packages By Competitors T3. Price War T4. Government Interference T5. Pressure groups & health
WO-Strategies W1,O5 Enhance coverage & market share W3,O3 Acquisition
WT-Strategies W3,T2 Downsizing
• The Strategic Position and Action Evaluation (SPACE) Matrix
The Strategic Position and Action Evaluation (SPACE) Matrix is another important Stage 2 matching tool of formulation framework. It explains that what is our strategic position and what possible action can be taken. It is not closed matrix. It is prepared on graph. It is closed matrix. This follow counter clockwise direction. It contains four-quadrant named aggressive, conservative, defensive, or competitive strategies. The axes of the SPACE Matrix represent two internal dimensions financial strength [FS] and competitive advantage [CA]) and two external dimensions (environmental stability [ES] and industry strength [IS]). These four factors are the most important determinants of an organization's overall strategic position.
SPACE Matrix for UFONE
34 Financial Strength (FS) RAITNGS
2. Return on investment 3. Working capital
5.0 4.0 4.0 13.0
Competitive Advantage (CA)
1. Resources & Assets 2. High growth rate 3. Advertising & Marketing 4. Competition capacity utilization 5. 2nd largest cellular company in Pakistan. 6. Good speed & superior voice quality. 7. Customer focus. 8. Computerized complaint cell 9. Successful brand 10. Attractive packages.
-2.0 -1.0 -2.0 -3.0 -1.0 -3.0 -3.0 -3.0 -2.0 -3.0 -23.0
Environmental stability (ES)
1. Technological changes 2. Rate of inflation
-3.0 -4.0 3411
3. Demand variability 4. Government Interference 5. Tough competition
-3.0 -1.0 -2.0 -13.0
Industry Strength (IS)
1. Financial stability 2. Resources utilization 3. Profit potential 4. GPRS Technology 5. Scope in Ruler areas
5.0 5.0 4.0 5.0 4.0 23.0
FS average is 13/3 = 4.33 = -3.25 4.6+ (-2.3) = 2.3 4.33+ (-3.25) = 1.083
CA average is -23/10 = -2.3 ES average is -13/4 IS average is 23/5 = 4.6
Directional Vector Coordinates: x-axis: Directional Vector Coordinates: y-axis:
The UFONE should peruse Aggressive strategies………
SPACE MATRIX FOR UFONE
Aggressive strategies of Ufone are:
BCG GROWTH-SHARE MATRIX FOR UFONE
Companies that are large enough to be organized into strategic business units face the challenge of allocating resources among those units. In the early 1970's the Boston Consulting Group developed a model for managing a portfolio of different business units. The BCG growth-share matrix displays the various business units on a graph of the market growth rate vs. market share relative to competitors.
BCG Growth-Share Matrix
On the vertical axis, market growth rate provides a measure of market attractiveness. On the horizontal axis, relative market share serves as a measure of company strength in the market. The growth-share matrix defines four types of SBUs:
CASH COW - (LOW GROWTH, HIGH MARKET SHARE) A business unit that has a large market shares in a mature, slow growing industry. Cash cows Require little investment and generate cash that can be used to invest in other business units. STAR - (HIGH GROWTH, HIGH MARKET SHARE) A business unit that has a large market shares in a fast growing industry. Stars may generate Cash, but because the market is growing rapidly they require investment to maintain their lead. If successful, a star will become a cash cow when its industry matures. QUESTION MARK - (HIGH GROWTH, LOW MARKET SHARE) A business unit that has a small market shares in a high growth market. These business units Require resources to grow market share, but whether they will succeed and become stars is unknown. DOG - (LOW GROWTH, LOW MARKET SHARE) A business unit that has a small market shares in a mature industry. A dog may not require Substantial cash, but it ties up capital that could better be deployed elsewhere. Unless a dog has some other strategic purpose, it should be liquidated if there is little prospect for it to gain market share.
Post paid Prepaid 3811
Ufone understands the value of words and the need to communicate effectively and efficiently at all levels of society, which is why company’s primary focus is on U. Ufone offers, Prepay
& Ufone Mobile
services in the Telecom sector. The telecom market’s growing rate in Pakistan is higher than any Asian country. Ufone offers lower rates and better network then other already established cellular companies. All living standards have been captured by Ufone, like Students, Labour and Businessmen; etc.Ufone aims to provide with wider coverage, superior connectivity, clear signals & voice quality to their valued customers
BCG MATRIX of Ufone by products point of view
MARKET GROWTH RATE
RELATIVE MARKET SHARE PREPAY
STARS POS PAYS
QUESTION MARK Ufone Mobile
i. ii. Integration Intensive
i. Product development.
RAPID MARKET GROWTH Quadrant II Quadrant I
WEAK COMPETITI VE POSITION STRONG COMPETITIVE POSITION
Quadrant III SLOW MARKET GROWTH
ii. iii. iv.
Diversification Retrenchment Divestiture
Grand Strategy Matrix
In Grand strategy matrix Ufone lie in 1st quadrant because it has strong competitive position and rapid market growth…..
Suitable strategies of quadrant 1st for Ufone are
1. Market Development 2. Market Penetration 3. Product Development 4. Horizontal Integration 5. Forward Integration 6. Backward Integration 7. Related Diversification
IE Matrix of UFONE:
The Internal-External (IE) matrix is another strategic management tool used to analyze working conditions and strategic position of a business. The Internal External Matrix or short IE matrix is based on an analysis of internal and external business factors which are combined into one suggestive model. The IE matrix is a continuation of the EFE matrix and IFE matrix models. The IE matrix belongs to the group of strategic portfolio management tools. In a similar manner like the BCG matrix, the IE matrix positions an organization into a nine cell matrix. The IE matrix is based on the following two criteria: 1. Score from the EFE matrix -- this score is plotted on the y-axis 2. Score from the IFE matrix -- plotted on the x-axis The IE matrix works in a way that you plot the total weighted score from the EFE matrix on the y axis and draw a horizontal line across the plane. Then you take the score calculated in the IFE matrix, plot it on the x axis, and draw a vertical line across the plane. The point where your horizontal line meets your vertical line is the determinant of your strategy. This point shows the strategy that your company should follow.
43 On the x axis of the IE Matrix, an IFE total weighted score of 1.0 to 1.99 represents a weak internal position. A score of 2.0 to 2.99 is considered average. A score of 3.0 to 4.0 is strong. On the y axis, an EFE total weighted score of 1.0 to 1.99 is considered low. A score of 2.0 to 2.99 is medium. A score of 3.0 to 4.0 is high. Your horizontal and vertical lines meet in one of the nine cells in the IE matrix. You should follow a strategy depending on in which cell those lines intersect. The IE matrix can be divided into three major regions that have different strategy implications. Cells I, II, and III suggest the grow and build strategy. This means intensive and aggressive tactical strategies. Your strategies should focus on market penetration, market development, and product
development. From the operational perspective, a backward integration, forward integration, and horizontal integration should also be considered. Cells IV, V, and VI suggest the hold and maintain strategy. In this case, your tactical strategies should focus on market penetration and product development. Cells VII, VIII, and IX are characterized with the harvest or exit strategy. If costs for rejuvenating the business are low, then it should be attempted to revitalize the business. In other cases, aggressive cost management is a way to play the end game.
• IE Matrix of UFONE
5 = Ufone and Prepay 7 = Postpaid
Hold and maintain i. ii. Market penetration. Product development.
Stage-3 (Decision Stage)
The Quantitative Strategic Planning Matrix (QSPM)
The last stage of strategy formulation is decision stage. In this stage it is decided that which way is most appropriate or which alternative strategy should be select. Steps in preparation of QSPM 1. List of the firm's key external opportunities/threats and internal strengths/weaknesses in the left column of the QSPM. 2. Assign weights to each key external and internal factor 3. Examine the Stage 2 (matching) matrices and identify alternative strategies that the organization should consider implementing 4. Determine the Attractiveness Scores (AS) 5. Compute the Total Attractiveness Scores 6. Compute the Sum Total Attractiveness Score
Quantitative Strategic Planning Matrix (QSPM) of Ufone
Quantitative Strategic Planning Matrix (QSPM) SELECTIVE STRATEGIES Product Development Market Penetration Key External Factors Weight Attractiveness Total Attractiveness Total Scores (AS) Attractiveness Scores (AS) Attractiveness Scores (TAS) Scores (TAS) Opportunities 1 Globalization 0.10 3 0.30 2 0.20 2 Marketing 0.15 4 0.60 3 0.45 3 Acquisition 0.08 3 0.24 2 0.16 4 New Product 0.06 3 0.18 3 0.18 Development 5 Northern Areas 0.10 3 0.30 2 0.20 6 Develop some new franchises in remote areas 7 Introducing “Ufone kiosk”. Just like ATM. Threats 1 Old Stable Companies 2 Attractive Packages By Others 3 Price War 4 Government Interference TOTAL Strengths 1 Investment 2 High Growth Rate 3 Advertising 4 Net Work Portability 5 Ufone Mobile 6 Resources Assets And People 0.12 0.10 4 3 0.48 .30 2 2 0.24 0.20
0.10 0.10 0.04 0.05 1.00 0.10 0.10 0.12 0.10 0.07 0.10
4 3 3 3
0.40 0.30 0.12 0.15
3 2 2 2
0.30 0.20 0.08 0.10
4 4 3 3 3 3
0.40 0.40 0.36 0.30 0.21 0.30
4 3 3 3 3 3
0.40 0.30 0.36 0.30 0.21 0.30
7 Location And Geographical Coverage 8 Government Dealing Weaknesses 1 Lack of Franchises 2 Coverage 3 Less Market Share & behind the demand 4 Weak MIS SUM TOTAL ATTRACTIVENESS SCORE 0.10 0.09 0.05 0.08 0.05 0.04 1.00 3 3 2 1 2 2 0.30 0.27 0.10 0.08 0.10 0.08 6.27 3 3 1 1 2 1 0.30 0.27 0.05 0.08 0.10 0.04 5.02
We select the two strategies Market Penetration and Product development. There total attractive score is 5.02 and 6.27 respectively. The strategy Product Development has big score that’s why we select him.
Conclusions and Recommendation
Ufone is 2nd largest cellular company in Pakistan. More committed towards growth. Telecom industry is most growing industry of Pakistan still huge investment required for coverage. The market also has strong competition after the entrance of China Mobile Company as player. Competitors are hiring professionals to entertain the consumer which is resulting technological implementation and value added services. People are worried about call rates they don’t prefer any particular company. Consumer searches good service with lowest call rates, although companies are minimizing call rates this will result more growth in the market. Ufone bring amazing packages to attract the customers. Ufone promote their product through TV commercial, Newspaper, Radio, Internet etc. The choice of people is Ufone because Ufone price level is low and affordable that every one can say
“It’s all about U”
Ufone could develop some new and innovative services to attract customers to increase their revenues as well as it customers:
It should introduced International SMS packages Ufone has strong financial position & more competitive advantages then other cellular companies so he should more focus on his strategies.
He should grow and maintain his position. They should also introduce some International call packages to Middle Eastern countries.
In “Ufone Ghanta” package time of the package should be extended.
He should pay more attention towards postpaid services
• • •
www.ufonegsm.com. www.google.com www.pta.com.pk
• Naeem Waraich • Rana Shoaib
www.wikipedia.com www.scribd.com Ufone franchise Rahim yar khan in city center…..
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