STRATEGIC MANAGEMENT

BSBM 3 HRMT 2

Midterm Requirement
SMART COMMUNICATION INC.

Submitted by: Kyla Mae A. Aruta

Kaila Mae A. Basit
Alexandra E. Bautista
Nonalyn Diloy
Lara Mae S. Forbes
Aila Marie A. Pastor

Submitted to: Betsy Rose S. Fidel

Instructor

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I. INTRODUCTION

Strategic management is a plan which is used to make goals and meet the

objectives of an organization. It involves assessing and analyzing the competitive

environment, internal organization, formulating strategies, and ensuring that

management implements the strategies within the organization. To achieve long-term

sustainability and maximized shareholder value growth, it is more important than ever

to proactively and professionally prepare where the business is going in today's

competitive and unpredictable market with rapidly evolving consumer needs.

The telecommunications industry is broad than it was in the past, it has long

been associated with telephony or the transmission of speech signals. It

encompasses multiple service providers, including telephone companies, cable

system operators, internet service providers, wireless carriers, and satellite

operators. Today's telecommunications, on the other hand, is marked by "digital

integration," in which the distinctions between audio, data, and video networks are

being increasingly blurred. Customers want seamless access to a wide range of

audio, data, and video content at an affordable price.

Telecommunications companies will be able to reach the utmost improvement

by implementing strategic management. Since the telecommunication industry

provides services in the community, they have an idea to innovate their product and

services, maintaining the network coverage and quality are in good condition. They

will be also aware of the threat and weaknesses that need to improve which give

them an idea to formulate solutions in it.

Telecommunications has grown in importance as a basic sector, which bodes

well for its future opportunities and growth. Industry growth and competition are being

fueled by continuous developments in high-speed broadband networks and Internet

connections between users. Telecommunication companies must assess their

internal and external environments, as well as their Information System (IS)

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preparation, to provide appropriate strategic planning assistance to their enterprises.

It's also important to inform consumers about the technological advancement phase

and assure them that their service will improve as a result of the transition. During the

development phase, good strategic planning and continuous constructive

communication can help the consumer prevent misunderstanding and

inconvenience. Having a successful strategic management planning in the

telecommunications industry is significant to the company's growth and progress as it

helps the organization in terms of providing a highly available, secure, resilient,

standards-based, networking and communications infrastructure. Implementing

strategic management will be useful for the telecommunications industry because it

gives ideas for the improvement of the overall performance of the company.

Sources: https://www.nap.edu/read/11711/chapter/3
https://dialtone.co.nz/services/strategic-planning/
https://www.sciencedirect.com/topics/social-sciences/telecommunications-industry

Company Background

Smart Communications, Inc. (Smart) is a wholly-owned wireless

communications and digital services subsidiary of PLDT, Inc., the Philippines’ largest

and only integrated telecommunications company. Smart serves approximately 95

percent of the country’s cities and municipalities with its combined 2G, 3G, 4G LTE,

and 5G network*, providing mobile communications services, high-speed internet

connectivity, and access to digital services and content to over 72.4 million Filipinos*,

through its commercial brands Smart and TNT. Smart also offers satellite

communication services under the brand Smart World.

As part of PLDT's massive digital transformation program, Smart has

committed to giving more than 96 percent of the population access to its most

advanced LTE-A and 5G networks, to support the country's growing digital economy,

as well as provide the best customer experience for an increasingly digital Filipino

lifestyle.

Source: https://smart.com.ph/About/profile/

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Brief History

Smart (then named Smart Information Technology, Inc.) was founded on

January 24, 1991, by a group of Filipino investors led by Orlando B. Vea and David

T. Fernando in anticipation of the liberalization of the Philippines' telecommunications

industry in 1992. In April 1992, the Company received its congressional franchise,

and in May 1993, it was granted provisional authority to operate a mobile cellular

service. Smart launched its cellular service commercially in December 1993. Smart

had attracted partners by that point. First Pacific, a Hong Kong-based conglomerate

through its Philippine subsidiary Metro Pacific Investments Corporation, and Nippon

Telegraph and Telephone of Japan were among them (NTT).

Smart established a local exchange service in the cities and provinces

assigned to it under the "service area scheme" to the government's

telecommunications program. Besides, the company obtained licenses to offer

international gateway, paging, and inter-carrier transmission services. On March 24,

2000, PLDT completed its share-swap acquisition of Smart, making Smart a wholly-

owned subsidiary of PLDT. Since December 2006, Smart Communications has been

a member of the Conexus Mobile Alliance for international roaming. Then in 2016,

Smart and its parent company, PLDT, unveiled new logos and identities on June 13,

as part of the company's ongoing digital pivot.

Source: https://publicrelationcom.wordpress.com/2016/07/27/history-of-pldt-and-smart/

Smart’s Core Values

 Deliver awesome customer experiences

 Take care of our people

 Collaborate to win

 Fast is better than perfect

 Malasakit

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  Humility to listen and learn

Latest Awards

October 2019

 Runner-up: Best Operator in an Emerging Market category 

 Smart Communications

 Runner-up: Best IPTV Innovation category:

 Smart Free YouTube Everyday

 Runner-up: Social Contribution category

 Learn Smart Mother Tongue-Based Literacy Apps 

 World Communication Awards

 London 

Source: https://smart.com.ph/About/profile/innovations-and-awards

II. VISION AND MISSION STATEMENT

II.1 Vision Statement

Lead and Inspire Filipinos to Create a Better Tomorrow

II.2 Diagnosis

Attributes YES NO
1. Future-Oriented

Where is the organization headed?
2. Inspiring and Challenging

What is your dream? 

What mountaintop are you striving to
reach?
3. Motivating and Memorable

What notable and emotionally 

connecting future direction do you want
to keep reaching and pushing toward?
4. Purpose-driven
What is the larger sense of purpose you

are striving to obtain? Are you building
a cathedral or are you laying stones?
5. Unique 
Can you substitute your strategic vision

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 statement for others inside or outside
your industry?

II.3 New Vision Statement

To be the leading telecommunication company in the Philippines and to inspire

Filipinos to create better tomorrow through our services.

II.4 Mission Statement

Empower Filipinos everywhere with customer-focused digital innovations that

unlock and share their infinite potential.

II.5 Diagnosis

Excerpts from
Components Yes / No
Mission Statement
1. Customers Yes Filipinos
2. Products / Services Yes Digital Innovations
3. Markets (Geographically,
Yes Filipinos everywhere
where does the firm compete?
4. Technology
(Is the firm technologically Yes Digital innovations
current?)
5. Concern for survival
(Is the firm committed to growth Yes Infinite Potential
and financial soundness?)
6. Philosophy (What are the basic
beliefs, values, aspirations & Yes Customer Focused
ethical priorities?)
Empower Filipinos
everywhere with
7. Self-Concept (What are the
customer-focused
firm’s distinctive competencies or Yes
digital innovations
major competitive advantage?)
that unlock and share
their infinite potential.
8. Concern for public image
(Is the firm responsive to social, Empower Filipinos
Yes
community, and environmental everywhere
concerns?
9. Concern for employees (Are
employees a valuable asset of the No
firm?)

II.6 Proposed Mission Statement

Excerpts from
Components Yes / No
Mission Statement

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 1. Customers Yes Filipinos
2. Products / Services Yes Digital Innovations
3. Markets (Geographically,
Yes Filipinos everywhere
where does the firm compete?
4. Technology
(Is the firm technologically Yes Digital innovations
current?)
5. Concern for survival
(Is the firm committed to growth Yes Infinite Potential
and financial soundness?)
6. Philosophy (What are the basic
beliefs, values, aspirations & Yes Customer Focused
ethical priorities?)
Empower Filipinos
everywhere with
7. Self-Concept (What are the
customer-focused
firm’s distinctive competencies or Yes
digital innovations
major competitive advantage?)
that unlock and share
their infinite potential.
8. Concern for public image
(Is the firm responsive to social, Empower Filipinos
Yes
community, and environmental everywhere
concerns?
9. Concern for employees (Are
Customer and
employees a valuable asset of the Yes
employee-focused
firm?)

III. ENVIRONMENTAL ANALYSIS

III.1 Economic Development

The telecommunications industry in the Philippines has been growing steadily

over the years. In the past, the market was a duopoly dominated by two

telecommunications networks – Smart and Globe Telecommunications. However,

new players have emerged quickly in the sector, particularly in the internet services

industry, resulting in a growing number of internet service providers (Sanchez, 2020).

The result of the study of the Statista Research Department last 29th of March

2021 shows that the Philippines led the daily time-spent in using the internet in the

Asia-Pacific region with an average of 10hrs and 56 minutes. This resulted in strong

competition between the internet service providers, especially in mobile and data

services. As of December 2020, the mobile phone internet user penetration in the

Philippines reached up to 65.4 percent and it was forecasted that there will be rapid

growth in mobile phone internet user penetration in the Philippines up to 76.59

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percent in 2025. The forecast shows that almost 80% of cell phone users will be

using their phones to access the internet, increasing mobile subscribers. The data

showed that there are 138 million mobile phones in the Philippines as of December

2020. Despite this growing number, the fixed-line remained underdeveloped. Hence,

to remain competitive, telecommunications networks must invest in modernizing fixed

infrastructures (Sanchez, 2020).

III.2 External Factor Evaluation

Smart Communications Inc. was evaluated according to its identified external

factors, opportunities, and threats. The opportunities were identified according to the

data from PLDT 2020 form and other sites related to the company. Consistency in

quality, increasing demand, partnerships, and top in market share are some major

opportunities according to our evaluation. These opportunities had the major

weighted score in the evaluation. The threats were also identified according to what

would inflict warnings in the organization. Economic recession, the introduction of

stricter regulations, compliance with Government legal standards, government

threats, and inflation rate are some of the major threats that were identified.

Below is the paired comparison method used. The table shows the overall rating

of Smart Communications Inc. in terms of those factors, showing a total average of

3.10, which can be rated as average.

III.3 Paired comparison Method – External Factors Matrix

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 O1 Top in the market share over the Philippines.
O2 Increasing demand is caused by increasing users of mobile internet and connections.
O3 Consistency in Quality
O4 Demand for the power of 5G
O5 Building a strong security group operations
O6 Environmental Initiatives/Programs
O7 Environmental Response
O8 Partnership with Orange International Carriers
O9 Smart's Consistent Service Quality
O1
0 Social Acceptability

T1 The increasing number of direct/indirect competitors

T2 Increased of unlimited packages from telecommunications providers
T3 Limited resources (ex. spectrum facility) to support innovations.
T4 The appearance of incompatible technology or frequency bands.
T5 Emergence of Technology
T6 The rise in inflation increases affects business profitability.
T7 Economic Recession. The deteriorating economic conditions affect business performance.
T8 Increasing competition in the Industry
T9 Climate Change
T10 Natural Disaster
Compliance with Government legal standards makes more complex and challenging for business
T11 organization.
T12 Introduction of new stricter regulations.
T13 Smart Headquarters Lease, Back Agreement
T14 Government threatens to seize Smart Communications, Inc.

III.4 External Factor Evaluation (EFE) Table

WEIGHTED
OPPORTUNITIES WEIGHT RATING
SCORE
Top in the market share over the
1 0.040 3 0.120
Philippines.
Increasing demand is caused by
2 increasing users of mobile 0.047 3 0.141
internet and connections.
3 Consistency in Quality 0.058 3 0.174
4 Demand for the power of 5G 0.025 2 0.050
5 Building a strong security group 0.040 3 0.120

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 operations
Environmental
6 0.025 3 0.075
Initiatives/Programs
7 Environmental Response 0.040 3 0.120
Partnership with Orange
8 0.051 3 0.153
International Carriers
Smart's Consistent Service
9 0.047 3 0.141
Quality
1
Social Acceptability 0.018 3 0.054
0

WEIGHTED
THREATS WEIGHT RATING
SCORE
The increasing number of
1 0.033 3 0.090
direct/indirect competitors
Increased of unlimited packages
2 from telecommunications 0.058 3 0.174
providers
Limited resources (ex. spectrum
3 0.018 3 0.054
facility) to support innovations.
The appearance of incompatible
4 0.025 3 0.075
technology or frequency bands.
5 Emergence of Technology 0.022 3 0.066
The rise in inflation increases
6 0.069 3 0.207
affects business profitability.
Economic Recession. The
7 deteriorating economic conditions 0.080 4 0.320
affect business performance.
Increasing competition in the
8 0.047 4 0.188
Industry
9 Climate Change 0.007 3 0.021
10 Natural Disaster 0.011 3 0.033
Compliance with Government
legal standards makes more
11 0.069 2 0.138
complex and challenging for
business organization.
Introduction of new stricter
12 0.080 3 0.240
regulations.
Smart Headquarters Lease, Back
13 0.022 3 0.066
Agreement
Government threatens to seize
14 0.069 4 0.276
Smart Communications, Inc.

Total 1.00 3.10

III.5 Key Success Factors

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 Market Position. A corporation with significant business size and market

share tends to possess stronger resistance against any unfavorable business

environment, a far better bargaining position to barter with the vendors,

distributors, regulators, also as better flexibility to regulate selling prices

because of its strong brand equity. The company's capability to enlarge the

customer base is in line with the capacity to boost the network coverage,

which frequently requires a large investment cost. Therefore, the market

position of a cellular company is typically keen on the financial capacity to

support capital expenditures.

 Operating Management. An organization with a clear vision and business

strategy will be able to rapidly adjust to the most recent business

developments and will be able to provide goods that will be well received by

the consumer. By being the pioneer in providing such new and innovative

products, the company will have the advantage to capture more market

opportunity and have a comparatively stronger price position, which

eventually can generate substantial margins to hide the costs of investment,

research, and development.

 Diversification. The company's ability to equally diversify revenue generation

based on the types of businesses or services offered, market segment, and

regions, including revenue from the international market. The ability to

differentiate products and distribute sales through multiple market segments

and geographical areas will not only maintain the company's revenue

stream's consistency but will also provide stronger protection against any

business downturn.

 Quality of Service. The company’s ability to produce satisfactory services to

the customers, which can be reflected by its network coverage areas, line

exchange capacity, the technology used for the services which will determine

the connection quality, numbers, and accessibility of its customers' services

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 supports, as well as other operational indicators such as level of churn rates,

successful connection ratios, and data of any major disruption. By

consistently providing excellent quality of services, the organization should be

able to continuously increase its subscribers’ base, which in return should

improve its business productivity.

 Financial Policy. Financial policies and procedures are critical to ensuring

the smooth operation of every company. Financial strategies and procedures

aid in ensuring that the company is properly managed. The goal is to guide

the organization over the long term and offering support in decision-making

despite changes in representatives and personnel. The company's previous

financial responsibilities are also analyzed to ascertain the extent of its

commitments, as well as the ability and consistency to pay obligations on

time.

 Capital Structure. A capital structure is the common combination of debt and

equity it uses to fund the company’s overall operations and progress. It can

influence the return a company earns for its shareholders and whether or not

a firm survives in a recession or depression. (Kennon, 2019)

 Cash Flow Protection and Liquidity. It allows you to assess the amount of

capital you have in your business, and the way solvent the business is in the

short to medium term. It is where the company's cash flow generation and

capability to meet its short-term and long-term financial obligations.

 Financial Flexibility. Financially flexible businesses can withstand financial

challenges in an unexpected situation and pursue a profitable opportunity.

This means they'll be able to come up with the money they need without

putting themselves in a bad financial situation now or in the future.

Source: Kennon J. (2019). An Introduction to Capital Structure. Retrieved from:

https://www.thebalance.com/an-introduction-to-capital-structure-357496

III.6 Competitor Analysis

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 In analyzing Smart’s competitors, we based on our Competitive Profile Matrix.

The Competitive Profile Matrix shows data from three internet service providers in the

Philippines namely Smart Communications Inc., Globe Telecommunications, and

DITO Telecommunications. Key Success Factors or Critical Success Factors

involved in measuring the strengths and weaknesses of this industry involve Market

Position, Operating Management, Diversification, Quality of Service, Financial Policy,

Capital Structure, Cash Flow Projection, and Liquidity, and Financial Flexibility.

Among these factors, Operating Management has the highest weight of 0.250

followed by Quality of Service (0.188). Market Position, Diversification, and Capital

Structure weigh 0.125 while the three remaining factors have 0.063. The assigned

weight for each factor pertains to how critically important the factor is in determining

the success of the business. The weights range from 0, signaling low importance, to

1, denoting high importance (Hubbard L., n.d.).

Each Critical Success Factors are rated with 1 (poor), 2 (below average), 3

(average), or 4 (superior). Based on the gathered data shown on the table, Globe

Telecommunications is the company that is strongest in the industry garnering a total

weighted score of 3.57. This number was calculated by multiplying the rate and the

weight for each factor and adding all the weighted scores of each company. On the

other hand, Smart Communications Inc. has a total weighted score of 3.51. While

DITO Telecommunications has a total weighted score of 2.88 in the matrix. Thus, it

can be interpreted that there is a low competitive advantage between Globe

Telecommunications and Smart Communications Inc., but both have a high

competitive advantage against DITO Telecommunications.

In a more detailed analysis, Smart Communications Inc. has a relative strength in

its Market Position and a drawback in Diversification and Operating Management.

Therefore it is advised that they protect the Market Position area and strengthen the

areas where they are behind. Moreover, Globe Telecommunications’ asset or strong

area is in their Operating Management while their relative weakness is observed to

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be in their Quality of Service and Market Position. Finally, there is no relative strength

based on the data under DITO Telecommunications. However, the said internet

service provider could maintain and protect the superior rating they have in the area

of Diversification and Quality of Service. All remaining factors could be subject to

further improvement by the company.

Additionally, it is recognized that both Smart Communications Inc. and Globe

Telecommunications have an average rating on Cash Flow Protection and Liquidity

and Financial Flexibility while DITO Telecommunications has a below-average rating

in the said areas. The aforementioned relative strengths recorded and presented in

the Competitive Profile Matrix of each internet service provider should be protected

and/or maintained while relative weaknesses should be improved at the same time.

Source: Lori Hubbard (n. d.). How to Interpret CPM Matrix. Chron. Retrieved from
https://smallbusiness.chron.com/interpret-cpm-matrix-77261.html on April 19, 2020.

III.7  Competitive Profile Matrix (CPM) Table

SMART GLOBE DITO

COMMUNICATIONS TELECOMMUNICATION TELECOMMUNICATIO
INC. S NS

CRITICAL SUCCESS WEIGHTED WEIGHTED WEIGHTED

WEIGHT RATING
SCORE RATING 2 RATING 3 SCORE 3
FACTORS SCORE 2

Market Position 0.125 4 0.500 3 0.375 2 0.250

Operating Management 0.250 3 0.750 4 1.000 3 0.750
Diversification 0.125 3 0.375 4 0.500 4 0.500
Quality of Service 0.188 4 0.752 3 0.564 4 0.752
Financial Policy 0.063 4 0.252 4 0.252 2 0.126
Capital Structure 0.125 4 0.500 4 0.500 2 0.250
Cash Flow Protection
0.063 3 0.189 3 0.189 2 0.126
and Liquidity
Financial Flexibility 0.063 3 0.189 3 0.189 2 0.126
TOTAL WEIGHTED
1.00 3.51 3.57 2.88
SCORE

Ratings:

(1) Poor (2) Below Average (3) Average (4) Superior

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