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Strategic Management Analysis On:

Mobilink Pakistan

Author:

Sajjad Hussain, Sayed

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TABLE OF CONTENT

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*.) EXECUTIVE SUMMARY------------------------------------------------------------------------------------------------5

1.) COMPANY INTRODUCTION----------------------------------------------------------------------------------------- 6

2.) PAKISTANI PERSPECTIVE------------------------------------------------------------------------------------------ 8

3.) EXTERNAL AND INTERNAL FACTORS ASSESSMENT---------------------------------------------------- 9

4.) PORTERS FIVE FORCES MODEL-------------------------------------------------------------------------------- 12

5.) PEST ANALYSIS------------------------------------------------------------------------------------------------------- 14

6.) ECONOMIC FACTORS----------------------------------------------------------------------------------------------- 15

7.) COMPETITIVE PROFILE MATRIX--------------------------------------------------------------------------------- 17

8.) SWOT ANALYSIS OF MOBILIINK--------------------------------------------------------------------------------- 18

9.) SPACE MATRIX OF MOBILINK------------------------------------------------------------------------------------ 21

10.) RELATIVE MARKET SHARE IN THE INDUSTRY V/S SALES GROWTH RATE IN THE INDUSTRY------------------------------------------------------------------------------------------------------------- 23

11.) RELATIVE MARKET SHARE V/S SALES GROWTH RATE IN PERCENT--------------------------- 24

12.) THE INTERNAL AND EXTERNAL (I.E) MATRIX OF MOBILINK---------------------------------------- 25

13.) GRAND STRATEGY MATRIX OF MOBILINK----------------------------------------------------------------- 26

14.) THE QUANTITATIVE STRATEGIC PLANNING MATRIX—QSPM-------------------------------------- 27

15.) ANALYSIS OF SNAGS AND ITS RESOLUTION TO MOBILINK---------------------------------------- 30

16.) IMPLEMENTATION CONTROL AND EVALUATION OF STRATEGIES------------------------------- 33

17.) RECOMMENDATION-------------------------------------------------------------------------------------------------36

18.) REFERENCES---------------------------------------------------------------------------------------------------------- 37

*.) EXECUTIVE SUMMARY

Mobilink is Pakistan’s leading provider of voice and data services, bringing more people together through service excellence and product innovation. With more than 38 million subscribers, Mobilink maintains

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market leadership through cutting-edge, integrated technology, the strongest brands and the largest portfolio of value added services in the industry, a broadband carrier division providing next generation internet technology as well as the country’s largest network with over 9,000 cell sites making everyday a better day for its customers.

As a responsible corporate citizen, Mobilink offers a range of socially inclusive products and services dedicated to enhance access to information. Through Mobilink Foundation, the company passionately supports education, health and environmental initiatives and promotes sustainable business practices.

Mobilink offers exclusive & personalized tariff plans that empower customers and cater to the communication needs of a diverse group of people, from individuals to businessmen to corporate and multinationals.

Even though Mobilink has currently facing problems such as decline in the subscriber base, employee’s turnover and how to minimize cost. This comprehensive reports interprets the whole scenario of Mobilink and enlists all problems and best fit strategies, based on the matrices, Dr. Michael Porter’s five forces, PEST analysis and all economic factors such as fluctuation in the interest rate, Exchange rate, inflation etc.

Finally, come to know major problems and their intensity and evaluate the best fit strategies, based on goal and objectives, compatibility with either existing or new structure of Mobilink, scope, cost and Human resources required, that are being implemented in manner to get good strategic position of the Mobilink. Here, two strategies suggested to Mobilink to increase subscriber base in postpaid segment and foster OTT sharing carefully to sustain its position at increasing rate.

1.) COMPANY INTRODUCTION

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Mobilink is the Pakistan’s leading telecommunication data and voice service provider, retaining market supreme position by providing widest network to over 9000 cell sites, high tech and value added services to more than 38 million subscribers all over the country.Mobilink has recently invested USD 1 billion to upgrade network coverage, to provide uninterrupted connectivity and international roaming up to 140 countries with 300 operator partners across the world.

1.1.) COVERAGE

Mobilink is covering more than 10,000 cities, towns and villages. Due to its huge investment for network modernization Mobilink is capable enough to provide widest network coverage to connect up to 31.6 million subscribers per second. It was only possible through three main types of network coverage; physical presence, Indoor spillover coverage, Outdoor spillover coverage.

1.2.) CORPORATE RESPONSIBILITY

Mobilink is actively supporting for social development through Mobilink Foundation. Mobilink Foundation is the key to ensure sustainable social development by providing education, health, environment and disaster relief.

1.3.) MOBILINK’S VISION

To be the leading Telecommunication Services Provider in Pakistan by offering innovative Communication solutions that make each day better for our customers while exceeding Shareholder value & Employee Expectations.

1.4.) MOBILINK’S VALUES

Be Passionate: We at Mobilink are passionate about fulfilling & exceeding customer needs and enriching their lives every day.Be Professional: We take pride in practicing the highest ethical standards and take responsibility for our actions.Lead with Purpose: We are committed to lead the market through innovations in new services, products, as well as innovative technologies and solutions.

1.5.) BOARD OF DIRECTORS:

1.6.) FINANCIAL & MARKET POSITIONING:

Mobilink has posted 8% decline in its quarterly revenues during Q2 2014 as compared to last year during the same duration, said a financial report published by company’s parent group VimpelCom. As per stats, Mobilink generated Rs. 26.3 billion during second quarter of FY 2014, down from Rs. 28.5 billion it

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generated during the same duration last year. Group’s quarterly report said that revenues were mainly impacted by strong competition on the back of increased network capacity as well as unfavorable macro-economic situation. Company’s 4 percent of revenues, or Rs. 1.1 billion were generated through data services. EBITDA decreased 16% YoY, negatively impacted by higher customer associated cost and higher tax absorption. CAPEX increased to USD 110 million due to the network modernization project and the 3G roll out. The network modernization project is delayed due to congestions in some of the already modernized areas and is expected to be completed in 1Q15, which was previously planned for completion during Q3 2014. Financial stats suggest that Mobilink’s ARPU (Average Revenue per User) stood at Rs. 214 per month, down 14 % from Rs. 249 per month it reported during the same duration last year. Not only the ARPU, but the average minutes per user per month also declined to 230 minutes per user per month, down from 233 minutes of consumption per user month during last year. Mobilink’s mobile customer base increased 4% YoY (year over year) to 38.8 million by the end of reported period.

2.) PAKISTANI PERSPECTIVEIndustry Analysis

In Pakistan Telecom sector de-regularize and a number participant had entered into a Pakistan Telecom Industry. Five Telecommunication Companies are operating in Pakistan UFONE, TELENOR, WARID, ZONG and MOBILINK.

The revenue of Telecom Sector in USD 345.5 billion, PAKISTAN ECONMIC SURVEY FINANCE MINISTRY 2013.

Industry overview from report of PTA, the number of mobile subscribers is reached 136.5 million, PAKISTAN ECONMIC SURVEY FINANCE MINISTRY (2013).

The investment in this sector has also increased from USD 251 million to USD 530 million Dollars during 2013-14 Tele density has also reached 78% of the population and cover 92% total land area of the country and 75% of the Population .

Despite this growth Pakistan is still lagging behind the global standards and had just introduce 3G and 4G in Telecom industry. The major Contributor is Cellular Mobile sector covering 71.1% of the Population, PTA ANNUAL REPORT (2013).In Pakistan Telecom Revenues has experienced a growth of 7% during the year 2012.

CELLULAR PHONE SUBSCRIBERS AS PERPTA ANNUAL REPORT (2013):

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Subscribers Table suggest that Mobilink being the first mover is enjoyed the highest number of subscribers relative to its competitive but is found to be slow in adapting to the new technology that is why Telenor is leading in the Cellular Industry in 3G subscribers

3.) EXTERNAL AND INTERNAL FACTORS ASSESSMENT

External Factors assessment includes the assessment of opportunities and threats to Mobilink. Opportunities are always prevail in the External environment; along with opportunities there are also threats to company in many aspects. Threats might give edge to rival to perform in the best way that Mobilink could not. Threats might be of any type such as restriction by the PTA, large Tax penalties etc. Opportunities give edge to Mobilink against its rivals. Internal factors are the strengths and weakness of the company. For the Mobilink it is most eminent to know there strength and weakness and how to best utilize strengths at optimal level and how to transform weaknesses in to strengths or minimize its impact. Following is the EFE and IFE of Mobilink.

3.1.) EFE (OPPORTUNIIES AND THREATS) OF MOBILINK

External Factors Weights Ratings Weighted Score

OPPORTUNITIES1 Minimized cost because of OTT Sharing ( It Helps them to be even

better to travel in Future Smarter Communities)0.10 3 0.30

2 Gap mobile Literacy Based App to promote education to those areas where girls have restrictions specially

0.10 4 0.40

3 Gap for Mobile Apps Services and Mobile Advertisement (Mobile Ad Industry worth more than USD 5 globally.

0.05 3 0.15

4Pakistan is growing 2.04% annually in Population (188.2 Million currently)

0.03 2 0.06

5 Opportunity to capture 50 million new Subscribers ( Total industry Subscribers are approx. 128.9 million total Population of Pakistan approximately 200 Million

0.02 1 0.02

6 Extension of growing demand for smart phones and M-Banking Other create an opportunity to exploit untapped rural market for Mobile Banking.

0.07 4 0.28

7 Increasing demand for Islamic Insurance (Takaful), Creates opportunity for this value added service.

0.10 3 0.30

8 Opportunity to diversify Services portfolio by offering satellite TV Channel and Radio Services.

0.03 1 0.03

9 Shift of business model/Product line/category extension(online book bank like i-store of apple)

0.05 2 0.10

THREATS1 Retaliation (price war) 0.08 3 0.24

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2 Rupee Depreciation make Pakistan un attractive for investment of international investors like Mobilink.

0.10 4 0.40

3 Threat of decreasing number of subscribers due to Bio metric verification.

0.06 3 0.18

4 Declining trend in SMS/Calls 0.10 4 0.405 Threat of increase in tax rate due to dwindling economy. 0.02 1 0.026 Changing customers’ needs/preferences/expectation/mindset

which may lead to switch to other Networks0.04 3 0.12

7 Quickening technological cycle reshaping. Lack of confidence in ROI because arrival of smart phones has shrunk the life of new Technology from 15 years from mobile phones to four to five years Smart Phone.

0.05 2 0.10

TOTAL 1.00 3.10

3.2) IFE (STRENGTHS AND WEAKNESSES) OF MOBILINK

Internal factors Weights ratings Weighted score

STRENGTHS1 Mobilink did Alliance with Opera Browser to facilitate with

optimized browsing at given network speed0.08 4 0.32

2 Signed MoU with Pepsi to launch Vending Machine 0.10 4 0.40

3 Enjoying First mover advantage in GSM 0.05 4 0.20

4 Largest network coverage Market leader with respect to subscribers.

0.06 3 0.18

5 Powerful brand equity 0.08 4 0.326 First choice of corporate people for Example INDIGO

(B2Corporate Family)0.05 3 0.15

7 MOU with 50 operators enabled roaming services in 42 countries. 0.05 4 0.20

8 Higher contribution into CSR through Mobilink Foundation is helping to build Social acceptance.

0.10 4 0.40

9 Mobilink has offered Nano SIM to increase its customer base 0.05 3 0.15

WEAKNESS1 Market Share Decline by 1.5% because of increase in CAPEX 0.08 1 0.08

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2 Not hitting bottom of pyramid approach relative to competitors 0.03 2 0..06

3 Not having innovative R & D department relative to that of competitors e.g. Zong, Ufone.

0.12 1 0.12

4 Dwindling workforce motivation because of recent lay off. 0.10 2 0.10

5 High operational cost (embezzlement and theft in tower maintenance and generator fuel)

0.05 1 0.05

TOTAL 1.00 2.73

4.) PORTERS FIVE FORCES MODEL:

Porter (1980) gave the idea of deployment of five forces for the industry analysis. These five forces are (1) the threats of substitute products or services (2) the threats of the entry of the new competitors (3) the intensity of competitive rivalry (4) the bargaining power of buyers (5) the bargaining power of suppliers. He said that these forces jointly determine the competitive intensity of a firm within the industry. Strength of these forces leads to lower profitability of an organization and vice versa. An analysis of Mobilink in the light of Porter five forces model is described as under;

4.1.) The intensity of competitive rivalry:

Mobilink has strong rivals in telecommunication sector of Pakistan like Telenor and U-fone, besides this rivalry Mobilink is enjoying leading position in Cellular Subscribers base that is more than 37 million as per PTA Annual Report 2013, Telenor is giving a tough time to Mobilink with almost 33 million Subscribers and this number is growing due to relatively better 3G services offered by Telenor. In 1994 it had only two competitors (Paktel and Instashame) now this figure has jumped to six. All these companies are providing similar services with the same capabilities. Similar Services for example easy load M-Banking, Internet Facility hence it can be concluded that there is a competitive rivalry in the TELECOM SECTOR of the Pakistan

4.2.) Bargaining Power of Buyers:

Although subscribers are not concentrated, do not purchase in bulk but still can easily switch for better quality, coverage and rates. According to research Article, Dr. Rihanna Kosar et al 2012 , It was found that the Customer satisfaction was highly dependent on call rates, poor Network Services, Network Coverage, High SMS Flux and MMS charges, GPRS Services, Poor Customer Services and Voice Quality. Article also gives an insights of the future switching reasons that might be Network Services, Customer Service, Coverage, Low Call Rates, Friends and Family Facility and Bundle Packages.

Availability of competitors who are offering all those aforesaid services plenty of options are available to customer are at Switching cost is slow. As far as Mobilink is concerned it has lost big chunk of Customer to

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UFONE because of the relative swiftness of UFONE in the introduction of attractive and economical Bundle of Packages.

Mobilink is lagging behind in the provision of 3G services. Its services quality is not as good as the Telenor has and a low switching cost has made the buyers enjoy in a strong bargaining power.

4.3.) Threats of Substitutes:

Presence and easy availability of substitute products is a great threat for the successfulSurvival of Mobilink since it can force the company to cut the price of its product. For Mobilink’s product substituted products are fixed line and wireless. These two products are offering by many companies like Pakistan Telecommunication Company Limited (PTCL), National Telecommunication Corporation (NTC), World Call, Wateen, and Great Bear etc. For substituted products Mobilink has major threat from PTCL that has more than 3,387,495 fixed line and 1,300,121 wireless local loop subscribers. New entries into the industry calls for a heavy capital expenditure. A relative saturation of market also makes it unattractive for the new entrants to enter Pakistani cellular network market because population of the Pakistan is approximately 188 million whereas total Cellular subscribers base comprises of 129 million. PTCL is also a major supplier of Telecommunication services to the corporate sector and Government institution. These customer pf PTCL insures a study stream of Revenues to the PTCL. This is makes PTCL a Strong Substitute of Mobilink.

4.4.) Bargaining Power of Supplier:

For Mobilink various physical goods suppliers’ are following: M-Link is a Luxembourg based subsidiary that provides gateway services for Orascom Telecom operations in Pakistan.

M-link acts as control center for all satellites operations and interactions with all of the various international carrier networks.

Ring is the distributor of handsets and is responsible for procurement SIM (Subscribers Identification Module) and scratch cards for Orascom Telecom subsidiaries now shifted to VimpelCom.

Motorola entered in an agreement with Mobilink to deploy a WiMAX.

Since VimpelCom has followed the strategy of backward integration so its subsidiaries has no danger or uncertainty from suppliers.

Analysis indicates that although to meet competition Mobilink is struggling hard but the presence of strong rivals has greatly cut its market share. While formulating different strategies it has to be careful from substituted goods as well from its subscribers, since although Mobilink is following market penetration, market development and product development strategies but still through media subscribers’ awareness is high about various companies’ packages. Mobilink has no threats or uncertainties from suppliers since almost all suppliers are owned by parent company itself. Adoption of this backward integration strategy makes the power of suppliers weak. We can analyze the position of Mobilink by rating each competitive force as high, medium or low in strength

http://journal-archieves8.webs.com/704-712.pdf

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4.5.) DR.MICHAEL PORTER’S FIVE-FORCES MODEL ANALYSIS

o M-Linko Ring Distributero Motorola

o Liberalized Economy

SUPPLIERS POWER

THREAT OF NEW ENTRANTSTHREAT OF SUBSTITUTE

RIVALRY

BUYER’S POWER

o Telenor

o Ufone

o Switching Powero Price Consciousnesso Plenty options

o PTCLo NTCo Wateen and World Call

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5.) PEST ANALYSIS:Analyzing Macro environmental factors is very important and necessary for any company because, it will show the relative worth in the market and propose real market conditions. There is lots of macro environmental factors that can affect Mobilink performance, however emphasizes has been given on major factors. The PEST analysis of Mobilink is as follow:

5.1.) Political Environment:

Political factors affect every small or giant organization, every company is operating in certain political settings that maybe favorable or oppose the policies made by the company. The political environment up to a greater extent also affects Mobilink; following are the major political factors, which need to be addressed.

5.2.) Government type: In Pakistan, recent regime was democratic, but because of ex-dictator policies and current government inability to manage issues in a proper way, it can be clearly concluded that the government isn’t that much able and stable as it was expected to be which is not good for companies like Mobilink.

5.3.) Rule of law, Bureaucracy and corruption: Due to the amendments made by government and domination of elite class on key government posts, there is no justice and rule of law in Pakistan. Furthermore, extra layer of powerful bureaucracy makes it difficult for companies to do business in Pakistan. Moreover, corruption is widespread in our society; because of lack of honest and improper judicial system, which adversely affects the performance of those companies, which believes in business ethics so, is the case of Mobilink.

5.4.) Regularity Authorities:However, there are regularity bodies in Pakistan, like PTA, which regulates the Telecom companies. However, it does not have tight control on issues, which is expected from it because of the authorization given to it.

5.5.) Tax Policy: The tax policy of Pakistan in the recent time was very investment friendly, but due to bad economic conditions and increasing budget deficit, the government has imposed various extra taxes. As far as, Telecom industry is concerned legislator has imposed some extra taxes on this industry the most recent one is around Rs 18 on every recharge of Rs 100. This is negatively affecting Mobilink and its competitors business.

6.) ECONOMIC FACTORS

Importance of the Economic factors can’t be avoided, profound analysis of economic factors will give an idea for how to do the business. It will help you to analyze Factors, like current and projected economic growth, inflation, interest rate, unemployment rate, cost of labor, disposable income and distribution of income etc collectively comprise economic environment.

6.1.) Current and projected economic conditions: In previous years, Pakistan’s economic figures were implying very impressive and promising consequences but it all proved to be wrong. There are number of reason behind this the most prominent ones are that the economic policies were not integrated with political environment in an appropriate

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manner. Secondly, terrorism has affected our economy in a very negative manner. Therefore, because of the reasons Pakistan current and projected economic conditions are not in favor of Mobilink.

6.1.1.) Inflation and interest rate: Inflation and interest rate both were very high in Pakistan. Interest rate declined significantly and inflation has cool down up to some level because of global recession in few years back. In most of countries, it is quite natural that when the economic conditions are bad central banks reduces interest rate in order to boost investment where as in Pakistan the case is opposite. So, collectively inflation (rising cost of buying things) and interest rate (major factor affecting source of financing investment) are presenting very bad picture for Mobilink.6.1.2.) Unemployment rate and cost of labor: Due to higher education boom there is a talented pool of candidates (MBAs, Engineers, technical diplomas holder) ready to work in organizations. In contrast, the production of new jobs is not competent with supply pool, so there is high unemployment rate. In addition because of high supply of potential workers the cost of labor is low in Pakistan which is a positive sign for Mobilink.

6.1.3.) Level of disposable money and income distribution: It is evident that when there are bad economic conditions people of that particular country does not have high level of income, which they can, spent. Moreover, as matter of fact national income distribution is very unequal or unfair in Pakistan due to the domination of elite class on key government posts. Rich is becoming more richer and poor is becoming more poorer which is stopping the rise of middle class, thus low disposable income and unfair income distribution are significantly bad for Mobilink.

6.2.) Socio-Cultural Environment These factors also affect consumer in deep way because in every purchase decision people are somehow affected by their culture, social class, family etc. Following are important element of socio-culture environment:

6.2.1.) Population growth rate and age profile: Population of Pakistan is increasing at very high pace. It has more than 185 million people which mean that Mobilink is operating in very big market. As for as, age profile of Pakistan is concerned almost half of Pakistan’s population is young according to some estimates and average death age has fallen just below 60. So, all this implies that young people are energetic and can work if they get opportunities.

6.2.2.) Population education and Social mobility: People of Pakistan are not very much educated. Literacy rate is below India, and Bangladesh but the status quo has been in development process for the past few years. More and more people are getting education which is in favor of Mobilink for the reason that only educated people can or will use its services in well manner. Additionally, people are moving from villages to cities in order to get better living. Still, most of the citizens live in villages which are somehow a positive sign for the telecommunication industry, because they can expand over there.

6.2.3.) Cultural changes and life styles: Culture in Pakistan is changing so their lifestyles are too. People are more inclined towards western ways of living and doing things. Hence, our culture is becoming materialistic which means more use of technological equipment’s which includes cell phone so the consequences of cultural changes are good for Mobilink.

6.3.) Technological environment

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It is the most vital area for businesses today. Important aspects of technological environment are discussed below.

6.3.1.) Impact of emerging technologies: Technology is the only field in which development take place in its highest pace. New and improved technologies are emerging nowadays in Telecom sector from which Mobilink can benefit a lot in terms of cost and competitive advantage.6.3.2.) Impact of Internet and other communication equipment: The effects of internet are very huge on businesses, particularly in communication area. It has helped organization with communicating within and outside stakeholders at an extremely low cost. So, is the case of Mobilink, internet and other communication technologies has helped it to be in touch with its customer at a very low cost thus fulfilling its objective regarding customer care.

6.3.3.)Research and development (R &D):This is the most vital field for companies related to technologies equipment business directly or indirectly like Mobilink. Mobilink does not have it own R&D department tough it will benefit from its strategic partnership SingTel a Singapore based Telecom company but still it isn’t enough. R&D helps organizations in gaining sustainable competitive advantage.

7.) COMPETITIVE PROFILE MATRIX

MOBILINK TELENOR UFONE ZONG WARID

Critical Success Factor W

eigh

t

Ratin

g

Scor

e

Ratin

g

Scor

e

Ratin

g

Scor

e

Ratin

g

Scor

e

Ratin

g

Scor

e

Promising Business Model 0.060 3.00 0.180 4.00 0.240 3.00 0.180

4 0.24 3 0.18

Advertising 0.050 3.00 0.150 4.00 0.200 4.00 0.200 3 0.15 3 0.15Service Quality 0.100 3.00 0.300 3.00 0.300 3.00 0.300 3 0.30 3 0.30

Market Share 0.120 4.00 0.480 3.00 0.360 2.00 0.240 2 0.24 2 0.24

Customer Loyalty 0.100 3.00 0.300 3.00 0.300 3.00 0.300

3 0.30 3 0.30

Technology & Innovation 0.150 4.00 0.600 3.00 0.450 3.00 0.450

3 0.45 3 0.45

Price Competitiveness 0.150 3.00 0.450 4.00 0.600 4.00 0.600

4 0.60 3 0.15

Financial Position 0.100 4.00 0.400 3.00 0.300 2.00 0.200

3 0.30 2 0.20

R & D 0.070 4.00 0.280 3.00 0.210 2.00 0.140 2 0.14 2 0.14Management 0.100 3.00 0.300 4.00 0.400 2.00 0.200 3 0.30 4 0.40

Total 1.000 3.440 3.360 2.810 3.02 2.51

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8.) SWOT ANALYSIS OF MOBILIINK

Strengths Weakness1.) Mobilink’s Alliance with Opera Browser to facilitate with optimized browsing at given network speed

2.) Signed MoU with Pepsi to launch Vending Machine

3.) Enjoying First mover advantage in GSM

4.) Largest network coverage Market leader with respect to subscribers

5.) Powerful brand equity

6.) First choice of corporate people for Example INDIGO ( B2Corporate Family)

7.) MOU with 50 operators enabled roaming services in 42 countries

8.) Higher contribution into CSR through Mobilink Foundation is helping to build Social acceptance.

9.) Mobilink has offered Nano SIM to increase its customer base

1.) Market Share Decline by 1.5% because of increase in CAPEX

2.) Not having innovative R & D department relative to that of competitors e.g. Zong, Ufone.

3.) Dwindling workforce motivation because of recent lay off.

4.) High operational cost (embezzlement and theft in tower maintenance and generator fuel )

5.) Not hitting bottom of pyramid approach relative to competitors

Opportunities SO Strategies WO Strategies1.) Minimized cost because of OTT Sharing ( It Helps them to be even better to travel in Future Smarter Communities)

2.) Gap mobile Literacy Based App to promote education to those areas where girls have restrictions specially

1.) Foster Alliance with Pepsi and so on to diversify Service Portfolio ( S1 S2, S3,O1,O4,O5)

2.) Add its own M-Play and Apps store ( S5,S3,S4,O2,O3)

3.) Launch M – Islamic

1.) Stabilize Employees Morale (W3, O1,9)

2.) Install R & D Department (W2,O1,5,9)3.) Focus on Postpaid Segment that is proper billing system through Enterprise

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3.) Gap for Mobile Apps Services and Mobile Advertisement (Mobile Ad Industry worth more than USD 5 globally

4.) Pakistan is growing 2.04% annually in Population (188.2 Million currently)

5.) Opportunity to capture 50 million new Subscribers ( Total industry Subscribers are approx. 128.9 million total Population of Pakistan approximately 200 Million

6.) Extension of growing demand for smart phones and M-Banking Other create an opportunity to exploit untapped rural market for Mobile Banking

7.) Increasing demand for Islamic Insurance (Takaful), Creates opportunity for this value added service.

8.) Opportunity to diversify Services portfolio by offering satellite TV Channel and Radio Services

9.) Shift of business model/Product line/category extension(online book bank like i-store of apple)

Insurance Service with alliance of banking(S3, O7)

4.) Increase No. Of Subscribers Base (S2,7,8, O2,3,4,7,8)

Application Payment software.

Threats ST Strategies WT Strategies1.) Retaliation (price war)

2.) Rupee Depreciation make Pakistan un attractive for investment of international investors like Mobilink.

3.) Threat of decreasing number of subscribers due to Bio metric verification.

4.) Declining trend in SMS/Calls

5.) Threat of increase in tax rate due to

1.) Hire Mobilink representatives to promote convenience registration process (S4,O3)

2.) Introduce Cost effective data byte Bundles to retain subscriber’s base. (S4,O4)

3.) Establish Foundation to self-finance their operation in future. (S1,2, O2,5)

1.) To reduce call interference and Overlapping problems that they will be facing in OTT sharing. (T4, T3. W4)

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dwindling economy.

6.) Changing customers’ needs/preferences/expectation/mindset which may lead to switch to other Networks

7.) Quickening technological cycle reshaping. Lack of confidence in ROI because arrival of smart phones has shrunk the life of new Technology from 15 years from mobile phones to four to five years Smart Phone.

A nine chamber SWOT matrix of Mobilink enlist opportunities and Threats vertically and Strengths and weaknesses horizontally. These will facilitate to make four different quadrant strategies for Mobilink current states. These strategies will be of four types that were Strength over Opportunity (SO), Weaknesses over Opportunity (WO), Strength over Threats (ST) and Weakness over threats (WT)

9.) SPACE MATRIX OF MOBILINK

INTERNAL STRATEGIC POSITION EXTERNAL STRATEGIC POSITION

FP SP

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Return on investment 1Leverage 3Working capital 3Cash flow 2Inventory turnover 3Earnings per share 2P/E ratio 4

Total Score 18Average Score 2.6

Technology changes -2Rate of inflation -3Demand variability -2Pricing range of competitors -3Competitive pressure -4Ease of exit from market -3Risk involved in the business -5

Total Score -21Average Score -3.10

CP IPMarket share -7Product quality -2Product life cycle -1 Customer loyalty -5Technology utilization -4 Technology Know how -5Control over supplier -6Control over distributors -5

Total Score -35Average Score -4.5

Growth potential 6Profit potential 5Financial stability5Excellent leverage 7Resource utilization 6Productivity7

Total Score36Average Score6

Axis Computation of the Space matrix

X- Axis = IP + (-CP) = 6 + (- 4.5) = 1.5

Y- Axis = FP + (-SP) = 2.6 + (- 3.1) = -.50

SPACE MATRIX DIAGRAM

+7

+6

20

+5

+4

+3

+2

+1

-7 -6 -5 -4 -3 -2 -1 +1 +2 +3 +4 +5 +6 +7-1

-2

-3

-4

-5

-6

-7

According to given data, SPACE matrix suggests that Mobilink has major competitive advantage in High Growth Industry. The Competitive strategies that Mobilink could apply will be Backward, forward and Horizontal Integration, Market Penetration, Market Development and Product Development.

10.) RELATIVE MARKET SHARE IN THE INDUSTRY V/S SALES GROWTH RATE IN THE INDUSTRY

High 1.0

Medium0.5

Low 0.0

27%1 54% 2 18%3

4 1%54 31%

High Medium Low1.0 0.5 0.0

High +20

Medium 0

Low -20

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High +20 Backward, Forward or Horizontal IntegrationMarket PenetrationMarket DevelopmentProduct Development

StarsII

Market PenetrationMarket DevelopmentProduct DevelopmentDivesture

Question MarksI

Medium 0

Low -20

Product DevelopmentDiversificationRetrenchmentDivesture

Cash CowsIII

RetrenchmentDivestureLiquidation

DogsVI

Provinces Revenues (millions)

% Revenues ( rounded Figures)

Profits in Million

% Profits ( rounded Figures)

RMSP IG rate (%)

Sindh 80 54.5% 85 54% +.8 +15Punjab 35 24% 45 29% +.4 +10KPK 30 20.5% 25 16% +.2 00Baluchistan 2 1% 3 1 +.7 -7

Total 147 100% 158 100%

Relative market share in the industry v/s sales growth rate in the industry suggest that Mobilink has long run opportunities for growth and profitability Sind Province depicts the highest profitability in Quadrant II. Punjab Province lies in Quadrant I that is Question Mark. Yet Mobilink has very low market share but even compete in high Industry Position. Generally Firm has high cash needs but unable to generate enough cash to meet up the operations and liability. Therefore, Mobilink need use Intensive strategies such bas Market development, Market Penetration and Product Strategies. To meet up the current requirement to stabilize its Market Position.

11.) RELATIVE MARKET SHARE V/S SALES GROWTH RATE IN PERCENT

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Provinces Sales (millions

% Sales ( rounded Figures)

Profits in Million

% Profits ( rounded Figures)

RMSP IG rate (%)

Sind 60 54% 70 58% +.8 10Punjab 30 27% 32 26% +.4 5KPK 20 18% 18 15% +.2 00Baluchistan 1 1% 0.5 1 +.7 -5

Total 111 100% 120.5 100%

This BCG matrix also suggest should use Intensive strategies to Mobilink. The difference is that in this matrix we use relative market share with respect to sales. Mobilink needs to draft intensive strategies sustain its position against rivals in the Industry.

12.) THE INTERNAL AND EXTERNAL (I.E) MATRIX OF MOBILINK Total IFEV/S EFE weighted Average Score

Strong3.0 to 4.0

4.0 3.0

Average2.0 to 2.99

2.0

Weak1.0 to 1.99

1.0

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4.0High

2.0 to 3.0

I II III

3.0Medium2.0 to 2.99

VI V VI

2.0Low1.0 to 1.991.0

VII VII IX

I.E matrix is the amalgam of Internal and external factor evaluation. The IFE score is 3.10 and EFE matrix Score is 2.73. This combination of th4e score lie in the VI Quadrant and covering I and II Quadrant. It reflects that Mobilink should apply strategies, Backward, Forward and Horizontal Integration, Market Penetration, Market Development and Product Development that facilitate them to grow and build.

13.) GRAND STRATEGY MATRIX OF MOBILINK

Along with SWOT Matrix, SPACE Matrix, BCG Matrix, and IE Matrix, the Grand Strategy Matrix has helped to devising alternative strategies. All organizations can be positioned in one of the Grand Strategy Matrix’s four strategy quadrants. A firm’s divisions likewise could be positioned. The Grand Strategy Matrix is based on two evaluative dimensions: competitive position and market (industry) growth. Any industry whose annual growth in sales exceeds 5 percent could be considered to have rapid growth. Appropriate strategies for Mobilink to consider, are listed in sequential order of attractiveness in each quadrant of the matrix

Rapid Market GrowthQuadrant II Quadrant I

Market Development Market DevelopmentMarket Penetration Market PenetrationProduct Development Product DevelopmentHorizontal Integration Forward IntegrationDivesture Backward IntegrationLiquidation Horizontal Integration

Related Diversification Weak Strong Competitive Competitive Position Position

Quadrant III Quadrant IV

Retrenchment Rated DiversificationRelated Diversification Unrelated DiversificationUnrelated Diversification Joint VentureDivesture

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14.) THE QUANTITATIVE STRATEGIC PLANNING MATRIX—QSPM

Strategic Alternative StrategiesStrategies that are required to implement but which one first is still decision in pending

Key Factor Weight 1 2 3 4 5Focus on Post Paid Segment and Launch M-App Store

Launch M App Store

Employ Socializationamong third parties contractors

Launch Literacy Based offline Subscription base App

Foster OTT sharing by reducing Interferences

Key External FactorsEconomy Political/Legal/GovtSocial/ Cultural/ demographic/ environmentalTechnologicalCompetitiveKey Internal FactorsManagement MarketingFinance/AccountingProduction/OperationR & DMIS

QSPM is the quantitative strategic planning matrix is made initially on the basis of key successive matrix. Afterwards strategies are evaluated on the basis of weight and score. Such as we have enlisted five strategies above in the Matrix. Finally we opt those which are the best fit to the Mobilink market’s strengthen position. Filtered strategies are further evaluated by enlisting SWOT Matrix and total attractiveness score.

THE QSPM MATRIX

STRATEGY ALTERNATIVESSTRATEGY 1 STRATEGY 2Focus on Post Paid Segment and Launch M-App Store

Foster OTT sharing by reducing Interferences

Opportunities WEIGH AS TAS AS TAS

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TGap for Mobile Apps Services and Mobile Advertisement (Mobile Ad Industry worth more than USD 5 globally.

0.10 4 0.40 - -

Opportunity to capture 50 million new Subscribers ( Total industry Subscribers are approx. 128.9 million total Population of Pakistan approximately 200 Million

0.10 4 0.40 4 0.40

Extension of growing demand for smart phones and M-Banking Other create an opportunity to exploit untapped rural market for Mobile Banking.

0.05 - - 2 0.10

Increasing demand for Islamic Insurance (Takaful), Creates opportunity for this value added service.

0.03 2 0.06 - -

Opportunity to diversify Services portfolio by offering satellite TV Channel and Radio Services.

0.02 - - 1 0.02

Shift of business model/Product line/category extension(online book bank like i-store of apple)

0.07 - - 3 0.21

THREATSRetaliation (price war) 0.10 4 0.40 3 0.30Rupee Depreciation make Pakistan un attractive for investment of international investors like Mobilink.

0.03 - - - -

Threat of decreasing number of subscribers due to Bio metric verification.

0.05 4 0.20 - -

Declining trend in SMS/Calls 0.08 3 0.24 2 0.16Threat of increase in tax rate due to dwindling economy. 0.10 - - 4 0.20Changing customers’ needs/preferences/expectation/mindset which may lead to switch to other Networks

0.06 - - - -

Extension of growing demand for smart phones and M-Banking Other create an opportunity to exploit untapped rural market for Mobile Banking.

0.07 1 0.07 - -

Increasing demand for Islamic Insurance (Takaful), Creates opportunity for this value added service.

0.14 1 0.14 - -

TOTAL

STRENGTHSMobilink’s Alliance with Opera Browser to facilitate with optimized browsing at given network speed

0.08 4 0.32 - -

Signed MoU with Pepsi to launch Vending Machine 0.10 4 0.40 4 0.40

Enjoying First mover advantage in GSM 0.05 - - - -

Largest network coverage Market leader with respect to subscribers

0.06 - - 3 0.18

Powerful brand equity 0.08 4 32 - -

First choice of corporate people for Example INDIGO ( B2Corporate Family)

0.05 - - - -

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MOU with 50 operators enabled roaming services in 42 countries

0.05 - - 2 0.10

Higher contribution into CSR through Mobilink Foundation is helping to build Social acceptance.

0.10 4 0.40 - -

Mobilink has offered Nano SIM to increase its customer base

0.05 - - - -

Threats

Market Share Decline by 1.5% because of increase in CAPEX

0.08 4 0.32 4 0.32

Not hitting bottom of pyramid approach relative to competitors

0.03 3 0.09 1 0.03

Not having innovative R & D department relative to that of competitors e.g. Zong, Ufone.

0.12 - - - -

Dwindling workforce motivation because of recent lay off. 0.10 1 0.10 3 0.30High operational cost (embezzlement and theft in tower maintenance and generator fuel)

0.05 1 0.05 1 0.05

TOTAL 1 3.91 2.92

The Above enlisted two strategies are the best to implement because they are

Above two alternative strategies—(1) Focus on Post Paid Segment and Launch M-App Store and (2) Foster OTT sharing by reducing Interferences are being considered by a Mobilink. Note by sum total attractiveness scores of 3.91 versus 2.92 that the analysis indicates the business should buy implement strategy that is Focus on Post Paid Segment and Launch M-App Store land and Foster OTT sharing by reducing Interferences. The use of dashes to indicate those factors that do not affect the strategy choice being considered. If a particular factor affects one strategy but not the other, it affects the choice being made, so attractiveness scores should be recorded for both strategies. Never rate one strategy and not the other.

15.) ANALYSIS OF SNAGS AND ITS RESOLUTION TO MOBILINK

As Per PTA reports Mobilink market share has declined from 30s to 28 currently but still it is has an edge of market leader with respect to coverage. It has the strongest brand equity so majority of the customer are unable to switch its service. There are enormous problem a Mobilink has. We analyzed that there are so many things still going to happen. Mobilink has also implemented the effective resolution of those problems but still they are lacking. As soon as they have purchased the auction of the 3G service the pattern of their investment has been increased from which cause them many pro0blems too in short term. There are the following problems currently the Mobilink has are

1.) The number of subscriber decline in both segment prepaid and Postpaid.

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There is 188.8 million population in Pakistan of which 128.8 million population is catered by Telecom Sector of which Mobilink has 38.154 Million, the highest user in the Telecom industry before Biometric comes. Close competitor of the Mobilink with respect to number of user is Telenor that has 35.219 million user. No doubt, Mobilink is enjoying there its benefit from its most glorious prepaid segment (as per Connectpk.com report) even though with switching status of the customer. But Mobilink still look up into how to cater them and aware the remaining 50 million of the population. The one who cater quickly will be the winner in this segment because the highest subscriber base enhance cost effective approach in this identical Segment of the competition.

As PTA has introduced the biometric technology in order to have a registered number of subscribers to reduce crimes. So After this all the companies are forced to go with this move. Now 86.7/128.8 million Subscribers are registered of which the Mobilink Subscriber are 30.01 million and Telenor has 28.03 million.

After detailed analysis we come to know that the Mobilink has declination rate in prepaid is very much low than others rivals which does not matter to Mobilink at the moment. Snag to Mobilink is from the postpaid segment subscribers are moving at higher rate than from prepaid. When they switch, switch completely from Mobilink’s network.

Therefore the detailed analysis suggest that Mobilink has Mobilink should work on Postpaid segment to retain and enhance postpaid subscribers. Mobilink 20% revenue generated from the post segment is equivalent to 80% of postpaid segment.

Resolution

Mobilink is glorious in prepaid segment so now focus more over on postpaid segment. Reasons that we have attained from the employees and subscribers interviews are:

No proper billing System: Each time user has to visit retailer to pay their bills. Most of the time bills will not be properly paid.

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Overhead Charges: Mobilink apply overhead charges when it is going to sign any sort of MoU with the giant companies. Therefore Mobilink should not charge there postpaid customer.

Balance Theft: Mobilink has as introduced postpaid segment then there the first and most influential issue arise is the balance theft. The interesting thing is that they are not treating their customer because they don’t have any evidence. Mobilink must foster database management for postpaid subscriber transaction. As they feel secure and go along with their facilities that they will be offering.

Mobilink must sign MoU with Microsoft to have such an application that furnish convenience to their service user to enhance their strong payment mode. That software is Enterprise Application Software in which the record is tracked at national Bank of Pakistan and at Mobilink itself. As the crimes and cost reduce and easily tackle such problems. This is good option to make their customer to inhale their service. This service help user by sending three reminders and continuously sending status report and call summary to view their record.

2.) Mobilink has high employee turnover with respect to prominent employees in the Industry. That is employee acquisition.

Mobilink and its rivals are performing in the same sector with the identical product and services and regulated by the single authority that is PTA.

According to PTA reports and blogs at Propakistan are highlighting that Mobilink has 16% employee turnover in the Telecom Industry. Because of stiff competition and identical sector, rivals are trying to acquire each other core employees to get an edge in the sector. Therefore, this becomes the challenge for the Mobilink k to retain the prominent employees. As research, report at mobilegruerevies.com suggests various factors that foster rapid Employee turnover. Some of those factors are Dissatisfaction with management, accepted another position, dissatisfaction with Team, Job Expectation, job expectation are not met etc. are the major reason.

Resolution

Mobilink could tackle these problems by:Enhancing the socialization among third party contract employees.Conduct exit Interviews and maintain database for them. Conduct regular Employees Reviews.Introduce sense of ownership through Stock options

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By Doing so, Mobilink can retain their major Employees. Social gathering make all type of employees to feel that company has worth of soul. This will help them to make sincere contribution for the Mobilink

3.) Over the Top sharing Incline in the info theft, call interference, call overlapping and voltage problem to rival access point.

Over the Top (OTT) sharing is the most popular in the America. Currently, the OTT sharing is not so much popular in the Pakistan. But these issues like info theft, call interference, call overlapping and voltage problem to rival access point, matter a lot in US. They have also resolved those problem by taking concrete measure.

Mobilink has signed MoU with Ufone to share tower. This Tower sharing may raise same issues that already occurred in the USA. Mobilink has now opportunity to adapt those measure that behave been taken in the USA for resolution. To do so, Mobilink will sustain its reputation.

The USA has put recommendation to fix modified access point, covered with thin metal plate, at standard distance and location and provide tower security.

16.) IMPLEMENTATION CONTROL AND EVALUATION OF STRATEGIES

STRATEGY 1

Goal and Objective:

Currently Mobilink goal is to increase the subscriber base in both segments that is prepaid and postpaid. Along with that they need to improve Postpaid service where expected increase in postpaid is 25% in every fiscal year.

Strategy

The easiest way is to focus on postpaid segment in a way that the sign MoU with Microsoft for the development of an Enterprise Application Payment Software (EAPS) this software will work as Manager at HBL are pressing a single click at the end of every month to pay salaries, benefits and reminder to all of employees. The database will be managed by National Bank because this software will be integrated with National Bank and Mobilink itself. This facilitates to provide max benefit to their postpaid subscribers.

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Mobilink must launch M-App Store this will target both users, pre and postpaid. The uniqueness in this store is that this M-App store is only for those who are the Mobilink user. Software is provided with full featured and value added features. These keep subscribers motivated to avail it. By doing so, user first must be a subscriber to avail Mobilink service and later on avail the access of it.

Implementation

Mobilink Must sign MoU first with Microsoft.

Purchase/ request for development of EAPS Software.

This strategy is compatible with the existing organization structure and IT department will manage this whole process EAPS. For this the cost that occur is PKR. 520000 (include software purchase and renewal fees)

Scope

Mobilinkwill get good results that are improve billing system, joint companies MoU, customer base increase by 20% and leading position will be achieved in postpaid segment.

Control and Evolution

There will be need of 4 human resource who are monitoring this whole system. After few weeks result will be evaluated in order to verify that weather we have achieved goal and objectives or not.

STRATEGY 2

Goal and Objective:

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Mobilink main objective is to mitigate the risk of losing employees up to 8% in the Telecom Industry. This will add in productivity and decrease the staffing expense decrease. This results in the lowest employees turnover.

Strategy

Majority of employees to Mobilink, are third party contractors and Mobilink don’t allow them to be the part of social events. This led to dissatisfaction and no value among employees of the Mobilink. Therefore, the Rivals easily attract them. To mitigate this risk, Mobilink need not to waste time, organize social event where all type of employees will meet with each other, bond of employees will come stronger, sincerity, and loyalty will increase too

Implementation:

Conduct regular employees reviews that will facilitate them to get good know how about employees who are dissatisfied but at what level no one knows. Exit interviews are also one of tool to know what actually is behind the scene. Existing structure/ HR Department is managing it. This will add cost of PKR. 10, 00,000.

Scope

Customer service will be improved and performance will increase too.

Control and evaluation

HR department will continuously monitoring the performance of employees on provided engineer at every Tower. They evaluate the performance and tackle any worry quickly

1.) OTT Sharing at standardized distance with modified Access Point (AP)

STRATEGY 3

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Goal and Objectives

To decrease customer complaint ratio with respect to voice quality, call drop, Enhance coverage quality, subscribers base will increased

Strategy

Sign MoU with The USA TELECOM to adapt technology. That is modified TFT coated AP will be introduced and installed.

Implementation

To implement this Strategy, Mobilink need to purchase modified Access Point that are used by the USA Telecom Industry, covered with thin metallic plate. It reduces voice overlapping, call interference, and foster voice quality.

Scope

Mobilink’s subscriber’s base will be increased because every subscriber dream is to enjoy wide range of the quality services with the possible limited cost. Coverage quality will increase and cost will be reduces in a manner that perhaps not happened already in Pakistan. By doing so the investment pattern will be reduced which is estimated that if Mobilink has installed its own tower, they need space, tower related material, generator, air conditions and two engineers to ensure proper working and maintenance of the Tower which costs up to PKR. 2,103000. After OTT Sharing Mobilink need just Modified access point an one employee to ensure proper working of Access Point which cost Mobilink up to PKR. 750000 (all tax and tariffs are inclusive) After OTT sharing, Call drop ratio and call interference will decreases at increasing rate, along with coverage and quality broaden.

Control and Evaluation

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Once Mobilink will purchase these modified Access then they must hire training sessions for the employees to have a proper control and diagnosis of problems in OTT sharing. For this we need to new technical Employees who are doing the assessment of the OTT and evaluate the problems that are reported to management. After OTT sharing, Mobilink has predicted cost leadership along with coverage and subscribers base in upcoming October 2015

17.) Recommendation

Based on detailed analysis of Matrices, Mobilink needs to apply strategy 1 first and then strategy 3, discussed above. Strategy 2 is also play vital role. Before fore implementation of the strategy 2 there must be the implementation of suggested strategies that are the most prominent to tackle the current problems. These suggested strategies are no doubt are simple and easy to implement and make a strong control.

18.) REFERENCES

http://www.mobilink.com.pk/

http://www.pta.gov.pk/index.php?Itemid=599

www.propakistani.pk/

http://www.connectpk.com/Comparison/index.php

www.slideshare.com

http://journal-archieves8.webs.com/704-712.pdf

http://androidpak.net/the-cheapest-3g-plan-in-pakistan/

http://www.pakstatus.com/2015/01/mobilink-ufone-telenor-zong-3g-packages-2015/

PAKISTAN ECONMIC SURVEY FINANCE MINISTRY 2013

PTA ANNUAL REPORT (2013)

Dr. RihannaKosar et all 2012