Assignment

Strategic management
SWOT Analysis
Of
NCELL

Submitted by: Submitted to:

Sanjeela Joshi Birat Pd. Shrestha Sir
Semester 8th
Section A
BBA BI
SWOT Analysis ( Internal Environment)
Strengths:
1. Strong brand name:
Strong advertisements and promotions of NCELL are one of its biggest strength. Today,
from 10 years old child to 70 years old man, everyone is aware from a brand name called
Ncell, especially with the purple color due to its advertisement and schemes. Thus, in
present situation Ncell has become a well-established Telecommunication organization in
Nepal.

2. Strong distribution network:

With the equal distribution of customer all over Nepal, it has established many Ncell
centre in the major cities of Nepal that provides customer care service to its customers.
Besides, there are hundreds of Ncell shops all over the country. Ncell’s 3G coverage is
available in 54 major cities of Nepal.

3. High skilled human resource:

Currently Ncell has more than 500 employees working for them. All of them are high
skilled trained with knowledge of newly released technology which is one of the main
strength of Ncell.

4. Largest market share:

Ncell is the largest telecom service provider (GSM), having 43% market share. It has
crossed more than 80 lakhs customer. Besides, it is also a leading ISP in Nepal.

5. Product cost:
Ncell sim cards are one of the cheapest sim cards ever provided in Nepal. Thus, they are
attracting more customers with their product cost.

Weakness:
6. High advertising cost:
Ncell has been paying high cost for its advertising agency. There is significant increase
advertising budget.

7. Low signal strength :

Large number of call drops and quality of connection is not good which one of the major
weakness of Ncell is.
Opportunities:
8. Large domestic market:
There is a huge market development opportunity in urban region of Nepal. At present it
has only got 43% market share which can be expanded for being a market leader.

9. Untapped rural market :

Most of the area of Nepal lies under rural area and the telecommunication market over
there is very poor. Thus, Ncell can get opportunity to expand their business over there.

10. Creation of new business opportunity:

Though, Ncell has entered an ISP, it has much more scope in other fields as well. It can
expand itself within the industry or in any other related industry as well as cellphones.

Threats:
11. High competition:
Ncell is facing high competition mainly from Ncell high competition mainly from NTC
and other companies such as UTL NTC and Ncell has entered into a business war, as
NTC is giving tough competition to Ncell sim cards and internet services.

12. Customers demand:

Nowadays, customers are well known with various new technologies around the world
due to which they are demanding more quality and features such as high internet ( upto
4G) at low price.

13. Political instability:

Until now Nepal is facing problems with their political instability which is one of the
major threat to business organizations because as the new government forms their rules
and regulation, market budget and all of the running schedule of the country changes due
to which organizations like Ncell are facing problems.

14. Health related problems:

According to studies, there are also many health related diseases like cancer which is
caused due to excessive use of mobile phones.
External and internal environment analysis of Ncell

Assessment of External Environment

Forces and condition outside the organization that affects the performance and outcome
of the business organization is the External environment of the business organization.
The control of external environmental factors is out of the hand of business organization.
Analysis of external environment depicts the opportunities and threats to business
organization. External environment consist of different factors such as political,
economic, socio-cultural, technological, legal and environmental. In short we can say as
PESTLE Analysis
Political Analysis
Politically, it will not be wrong to say that Nepal is in the state of the transition phase. So
the political instability seems to be normal during this period. All the sectors in the
economy are more or less affected by it, and Ncell also can’t remain unaffected. The
major areas that are affected by the political system is in terms of new investment and
direct restriction of the authority body.NTA is the regulating body of telecommunication
sector in the country. Since the largest telecommunication house, NTC is state owned
body; NTA always makes laws in favor of NTC. Due to this factor, private sector like
Ncell is facing the trouble of game of politics. The most relevant example is the price
factor. Although Ncell is trying to reduce the service tariff, it is unable to reduce due to
the restrictions made by NTA. Apart from that, unclear rules and regulations and the less
reactive bureaucrats is also the political problem for Ncell. For example, due to the
unclear government policy, Ncell is forced to keep its highly precious machines in the
duty office Tatopani since 4 months.
Economic Analysis

Although the economy in the world is shrinking, the disposable income of the people in
Nepal is increasing. The inflow of remittance in the country is directly helping in this
prospect. The number of people using the cellular mobile phone is increasing day by day.
Furthermore, the inflow of Chinese mobile phones at the low cost is also helping people
to enjoy the services of mobile technology. Hence in Nepal, the economic environment
seems to be favorable.
By analyzing this broad range of peoples, Ncell has developed customized products that
best suits them according to their economic status. For example, Ncell has just launched
Samsung s-III for the luxury peoples. But at the same time, it has also introduced the
scheme of free cell phone with the sim card purchase. Other products like sajilo number,
ramro number, sim for couples, etc are the attractive plans that address the economic
class of Nepalese people.
Socio-Cultural Analysis
The life style of the people is changing gradually due to the effect of western culture. TV
shows, movies, songs, etc are the major factors that change the life style of the people.
For many people, internet has become the major need. Social networking sites like
facebook, twiter, google plus, skype are getting popular these days among nepalese
peoples. So by targeting those groups of peoples, it has introduced various internet plans
that best suits the needs. The fastest internet of 3.6 Mbps is one of the examples of it,
including the fastest internet in Nepal.
Nepal has got a huge variety of peoples in terms of culture. Ranging from Terai to
Himalaya and from Mechi to Mahakali, there are hundreds of peoples who have different
cultures. Apart from the main stream festivals like dashain, tihar and chhat, the western
festivals are also getting popular among the peoples. Christmas, Valentine’s Day, etc, are
getting popular these days. So in accordance to these cultures, Ncell has designed its
products by focusing on these issues. And there is a trend of peope going abroad. In the
city area, most of the house hold has sent their family members abroad. So to make
business out of it, has lowered the international tariff.

Technological Analysis
Technology in the communication sector is a crucial aspect. New technologies are been
developing day by day. Ncell is also adopting the new technologies to get updated with
the trend. The new services like 3G, GPRS and fastest internet services are already been
used by Nepal Telecom. Recently Ncell completed its optical fiber connection with its
sub branches across Nepal.
Ncell is quiet rich in terms of technology among the competitor. The major services likec
all forwarding, missed call notification, etc are found in the sim card  and the technical
Nepal Telecommunication Authority is the governing body for the telecommunication
sector. It enacts laws to bind this sector. With the provision of know your customers, it is
bound to distribute the sim cards to its customers only after the full and detailed
information. It is also restricted to distribute the unlimited number of sim cards since the
frequency is limited to them.
Environmental Analysis
With the obvious information that our country is very much diversified geographically, it
has vast difference in its tropical points where Kanchan Kali is situated at lowest point of
70 meters above the sea level and highest point of 8848 meters at Mount Everest.  There
is certainly a big problem to build the towers for network and in the installation of
machines to run the service. Due to this hitch, mountains act as a barrier for smooth flow
of radio frequency. Hence, NTC has to build more number of towers to capture further
coverage, which directly induces to rise of operating cost.
Competitive Analysis
The competitive analysis is a statement of the business strategy and how it relates to the
competition.

Porter’s Five Force Model of competitive analysis

Porter’s five forces model determines the competitive status with the analysis of five
competitive forces which are:  Threats of new entrant, bargaining power of customers,
bargaining power of customers, Threat of substitute and Level of rivalry.Ncell
competitive analysis is also done by analysis the five force model suggested by Michael
E. Porter.

1. Entry of Competitors:
It represents how easy or difficult is the situation for new entrants to startup the similar
company in the industry. To compete, which barriers do exist, a huge investment is
required. Nepal Telecom (NT) was the only state owned firm in the sector. NT held
monopoly in the telecommunication market for almost 30 years. But the growth of
telecommunication has been restricted by NTA itself for new and emerging services. By
imposing conditions that are not conducive through taxes, time consuming bureaucratic
practice etc. (Telecom service tax is 10 percent plus VAT 13 percentage makes the
service provider bear expensive tariff costs). According to the interview conducted with
the personnel of Ncell, the reasons for the restriction in proliferation is because of
unprepared technical expertise for the usage of new services and lack of awareness about
technology amongst the executives and government bureaucrats.
From the different angle, there is neck to neck competition between the two major brands
(NTC and Ncell), it will cost very high for new players to gain the attraction of
customers. And from the customer view point, it will cost a lot to switch a brand to
another. It will be hassle to change the contact number time and again. Hence the
customers are reluctant to switch to other service providers.
2. Bargaining Power of Buyers:
Bargaining power of buyers refers to the strength of the buyer’s position. In context of
the telecommunication Industry, buyers / customers are the individuals or organizations
using the services provided by the telecommunication companies. Buyers are weak
because they do not have significant influence over product and the price. Although there
are 6 companies that provide telecommunication facility in the country, the situation is
almost oligopoly. The nearest and largest competitor NTC is not able to fulfill the
customer’s demand. But on the other hand, Ncell is supplying abundant sim cards. In this
sense, the bargaining power of customer is a bit weak.
3. Bargaining Power of Suppliers:
The Suppliers in the telecommunication industry for the mobile operation are the firms
manufacturing and distributing SIM cards, recharge cards, CDMA handsets and
technologies for activating and providing the service. Ncell and NT select the suppliers
from global bidding process. The main players are Zhongxing Telecommunication
Equipment Corporation (ZTE) and Huawei. UTL’s handsets and chipsets are supplied by

LG, Korea. The power of the companies to select the suppliers shows that the suppliers
are weak. On the other hand, the availability of few suppliers forces the companies to
have a limited choice and act as the strength of the suppliers.
4. Rivalry among the Existing Players:
NT was only player in the telecommunication industry for almost 30 years. The
monopoly of NT ended with the entry of Ncell and UTL. Currently there are 6 players in
the telecommunication industry with NT being the dominant player. Nepal Telecom is
the leader in the market with maximum number of services and capturing the maximum
market share. Ncell, though a leader in ISP, it has its major stake in GSM mobile service
and UTL is limited with CDMA service. The huge gap between the services offered by
the companies and control of NT over the Telecommunication Industry depicts a week
rivalry among the existing players. However, we cannot neglect the fact that Ncell has a
competitive edge in providing value added services as well as by using price strategies to
attract larger customer base.
5. Threat of Substitutes:
The threat of substitute products occurs when the demand of a product is affected by the
price or service provided by the substitute product changes. The cheaper price and easy
availability of SIM cards of Ncell and value added services and schemes like one hour
free talk-time, free SMS etc… has attracted the mobile users. But simultaneously, the
expensive call tariff is another blockade for the extensive growth of business of Ncell.
The internet based telecommunication can be the strong substitute product that does not
need to pay the charge. So the lower price substitute products could as the strong
competitor for Ncell.