Telecommunications in Bangladesh
Aktel Company Profile
AKTEL is the dynamic and leading end-to-end countrywide GSM mobile communication solutions of TM International (Bangladesh) Limited. It is a joint venture company between Telecom Malaysia Berhad and A.K. Khan & Co. Limited, which was established in the year 1996, and services launched in 1997 under the brand name AKTEL.
Today, AKTEL is recognized as a leading brand in Bangladesh and this is driven by our persistent pursuit of quality and technology, putting it clearly ahead of the rest. The future with AKTEL is promised to be exciting as we strive to employ the best resources and latest technology in offering many more innovative and exciting products and services
Figure: Share Proportion of AKTEL
To be the most preferred GSM cellular service provider in Bangladesh.
To provide total customer satisfaction as the company strives to become the most preferred GSM cellular service provider in Bangladesh. TMIB will achieve this through developing people, products, and services of the highest quality and meeting the needs of its employees, shareholders and the nation.
1) Total quality objective
2) Total commitment to the needs of our customers,
3) Following the highest ethics standards,
4) Continual improvement of all work processes,
5) Permanent improvement of all the employees knowledge and skills,
6) Securing quality of the service to match the quality of services offered by the world’s most successful companies in the field
7) Preserving the Company’s leading position in the national market of mobile telecommunications.
Product & Services of AKTel
Connection Price for JOY Partner Pack (2 SIMs)
Standard + Standard: Tk. 400
Link + Link (with T&T incoming-outgoing) Tk. 400
– Free talk-time of TK 50.00 upon activation (till Jan 31, 2007)
– 50 SMS Free upon activation. Valid for AKTEL-AKTEL and 07days from Activation. (till Jan 31, 2007).
|All the existing AKTEL Exceed connections will be auto-migrated
to AKTEL Power.
From now on Pre-Paid REGULAR Mobile Link and Mobile Plus customers will enjoy the facilities of Pre-Paid REGULAR Standard under AKTEL POWER.
Connection Price Tk. 200
Free talk-time of TK 50.00 upon activation (till Jan 31, 2007) v 50 SMS Free upon activation. Valid for AKTEL-AKTEL and 07days from Activation. (till Jan 31, 2007).
With AKTEL Phurti enjoy 10% bonus talktime!
10% bonus talk time (AKTEL to AKTEL) based on monthly incoming air time (valid for 7 days)
Package price: Tk.150/- (Tk.20 bonus on activation)
|Package price (Govt duty & VAT inclusive)||Tk.1000||Tk.1200|
Other Value Added Services
I. Friends & Family (F&F)
III. SMS Email 2 Email SMS
IV. SMS based MSN / Yahoo! Messenger
V. Voice Mail Service (VMS)
VI. Night Bird Talk Plan (NBTP)
VIII. Short Message Service (SMS)
X. AKTEL INTERNATIONAL SMS
XI. Fun Dose
Figure: AKTel’s Subscriber Growth
Justification of Industrial Life Cycle
From the graph it is apparent that the mobile telecommunication industry is in the growth phase of the market as a whole. Form analyzing the characteristics of the product life cycle the characteristic, marketing objective & strategies the companies are setting up to. The sales in the mobile industry are rapidly increasing. The cost is average per customer. Profits are marginally increasing. Customers are more or less early adopters. They are aware of the services that have been offered to them more precisely. The competitors are growing in number. The common marketing objective of all the companies are to maximize there market share. On the market strategies segment the product strategy is on the offer product extensions and on service orientation. More and more offers of value added service and added features are included in the package. The pricing strategy is to penetrate the market. So they are all more or less following the penetration pricing strategy. In distribution strategy the industry is the building on intensive distribution. More and more emphasis is given on gaining the market. So distributing the product to the far corners of the country has become a priority. In case advertising & promotional strategy the companies are all in aggressive advertising policy. Using all the possible media uses to increase the market share & reaching potential customers in mass market. Lastly in sales promotion the companies are on a rampage. They are offering enormous amount of services with the same package & low cost rate with different events all round the year.
PEST analysis is concerned with the environmental influences on a business. The acronym stands for the Political, Economic, Social and Technological issues that could affect the strategic development of a business. Identifying PEST influences is a useful way of summarizing the external environment in which a business operates. However, it must be followed up by consideration of how a business should respond to these influences.
Political Factors Marketing strategy is deeply affected by political perspectives. The government of Bangladesh has given mobile sector ample amount of freedom to do business. There were some stiff regulations that hindered the possible entry in the mid 90’s but as technology entered the new millennia government freed the way for companies to enter the market. Government in a way is the regulatory entity as well.
This factor is also an important factor. Usually economic environment is analyzed with reference to the following key economic factors: employment, CPI, personal income, real GNP etc. The economy has been a major roller coaster ride. Though the government claims that the economy is stable and the GDP is on the rise, the personal disposal income is still in question. But these factors are not influencing the consumers. The growth has been tremendous over the last few years. Especially this year after Banglalink entered the market. GrameenPhone reached an astonishing 50 lakh customers this year.
The ultimate test of a business is its social relevance. An important aspect of the social environment concerns the values consumers hold. Values mainly revolve around a number of fundamental concerns regarding time, environment, personal finance, diversity etc Orientation towards time: Convenience is a critical source of differential advantage, particularly in the service sector. Youth are making or influencing more household decisions. Moreover as the population ages time pressures become more widespread and acute. The interest to acquire and use new technology has been a big factor. Everybody wants to be connected with each other & having a mobile connection has become a social status for some part of the population. Diversity of Lifestyle: Mobile phones have given a diversified lifestyle to the society. The diversification & integration and doing multi tasking has become more easy day by day. The connections in the rural areas have given a touch of focusing the rural business with the business of that of the capital.
Technological factors include the use if technology in doing business. Up to date use technology helps to acquire the economies of scale for the company and cost savings. It also gives them the opportunity to expand in the future. Currently in Bangladesh the mobile phone companies are not exactly using the state of the art of technology. Although different multinational companies like Siemens, Nokia & Ericsson helping but they need to be updated more.
Porters 5 Forces Model
To survive in an industry, grow, sustain in competition & differentiate a company must understand the dynamics of the industry competition among firms. Mr. Michael Porter has developed a framework known as 5 forces model. His model focuses on following 5 five forces that shape competition within an industry, i.e. –
§ Potential Competitors
§ Bargaining power of buyers
§ Bargaining power of suppliers
§ Closeness of substitutes to an industry’s products
§ Rivalry among established firms
After analyzing the above factors we can know the competition prevailing in the mobile phone industry.
a. Potential Competitors
Potential Entrants are companies that are not currently competing in the industry but have the capability to do so if they choose.
The risk of entry by potential competitors is a function of height of Barriers to Entry.
i. Brand Loyalty
Large companies enjoy a brand loyalty in the market through its huge customer base, customer retention ratio, reputation, high product quality & after sales service.
There are large established companies in mobile telecommunication sector, i.e. –GrameenPhone, Banglalink, CityCell & Teletalk who have brand loyal customers & enjoy a competitive position in the market. So whatever product/service they come up in the future they can easily capture market share. This makes it difficult for new entrants to fight with these established brands for gaining market share.
ii. Absolute Cost Advantage
Absolute Cost Advantage arise from following sources; i.e. – product diversification, pricing strategy etc, they represent lower risk than entrants.
In mobile telecommunication industry companies have long experience in this sector. Some of them have experience in doing business in different parts of the world. Using that experience here & following those successful strategies gives the companies some cost advantages as well.
iii. Economies of Scale
The sources of economies of scale are i.e. – discounts on bulk purchases cards, advantages gained by spreading fixed production cost over a large production volume and cost savings associated with spreading marketing/advertising expense over a large output.
In telecommunication industry the companies get 2% – 5% discounts from card making companies because of bulk purchase, can spread fixed cost over huge number of conversions & save advertising costs over their large output.
iv. Customer Switching Costs
Switching costs arise when it costs a customer time, energy & money to switch from products offered by established firms to products offered by new entrants.
Because of intense competition in the market the switching cost is very low right now. The companies are offering very low connection fee. So there is a tendency of customers using multiple company service at the same time.
v. Government Regulation
Government regulation summarizes government’s policy towards setting up new industry.
ü The newly imposed tax of Tk 1,200 on every mobile SIM (subscriber identification module) card and connection
ü The government had reduced the mobile handset tariff in fiscal 2004-05 to Tk 1,500 from the previous Tk 4,000
b. Bargaining Power of Buyers
An industry’s buyers are individual customers who consume products, as end users & retailer’s are who buy it for selling to customers. The customers and the dealers are the main buyers in the mobile industry. It gives them more bargaining power over the company.
c. Bargaining Power of Suppliers
It refers to the ability of suppliers to raise input prices, threat to stop selling products & delay in delivering products.
The suppliers are the mobile SIM card providers. They don’t have that much of bargaining power with the company.
d. Closeness of substitutes to an industry’s products
Substitutes are products that of different business that can satisfy similar customer needs.
In mobile telecommunication the close substitute is the BTTB land phones & some other new wireless fixed phones. BTTB land phone connections have been there for the last 30 years and so but the mobile phone connection out numbered them in a couple of years. So they are not a big threat now. The new wireless FIXED phones are relatively new in the market so they are not opposing any direct threat to the mobile sector as well. Moreover these phones are targeting some specific segments of the market.
e. Rivalry among established firms
Rivalry refers to the competitive struggle between companies in an industry to gain market share from each other using price, product design, superior product offering, advertising spending, after sales service & support. The intensity of rivalry among companies in an industry is a function of industry competitive structure, demand condition & height of exit barriers in the industry.
i. Industry Competitive Structure
It refers to the number & size distribution of companies within that industry.
In Bangladesh the mobile phone industry falls under consolidated industry representing a small number of large companies, i.e. –GrameenPhone, AKTel, Banglalink, CityCell & Teletalk.
ii. Demand Conditions
The current demand in the market for connection is very high. On a average every company is launching a new product or extensions every month. Price sensitive customers are really switching connections every time a new package comes out.
iii. Exit Barriers
Exit Barriers represents investment in fixed asset, high fixed cost, equipment & economic dependence on industry.
All the companies entered the market with huge initial investment and strong market commitment strategy. So the exit barrier is very high.
The term competition defies definition because the view of competition held by different groups varies. Most firms define competition in crude, simplistic and unrealistic terms. Some firms fail to identify the true source of competition; others underestimate the capabilities and reactions of their competitors. When the business climate is stable, a shallow outlook toward the competition might work, but in the current environment, a business strategy is really competitively oriented. In the telecom sector of Bangladesh the competition is really strategic oriented competition. Studied deployment of resources based on a high degree of insight into the systematic cause and effect in the business environment. Ever changing technological advances in the technological industry, customer demand and the scope of investment in this sector has made Bangladesh a profitable target for various multi national companies to setup mobile companies here. TELENOR, Telecom Malaysia, SingTel & Orascom are the major MNCs to enter Bangladesh with GrameenPhone, AKTel, CityCell and Banglalink CityCell. Event the government regulated company BTTB has come forward to join the competition with TELETALK. AKTel’s major competition comes from all the four companies mentioned above. All the companies are aggressively marketing there product. Especially after Orascom entered Bangladesh earlier this year gave the competition a new edge. The customers are looking for the best buy with bundled features & low price talk time.
GrameenPhone is the largest mobile company in Bangladesh. With a customer over 4 million GrameenPhone has been the ultimate example of success in Bangladesh. Strong network & flexibility in the price & service category quickly made the company a market leader.
The vision of GrameenPhone Ltd. is “To be the leading provider of telecommunication services all over Bangladesh with satisfied customers, shareholders and enthusiastic employees”
GrameenPhone Ltd. has a duel objective to receive an economic return on its investments and to contribute to the economic development of Bangladesh through telecommunication. This is why Grameen Phone, in collaboration with Grameen Bank and Grameen Telecom, is aiming to place one phone in each village to contribute significantly to the economic benefit of the poor. It is on the way to bring a total revolution in the telecommunication field. By attaining the success factors, Grameen Phone would like to be recognized as a reliable, honest and committed company to its valued subscribers and stakeholders.
The basic strategy of GrameenPhone Ltd. is for the overall coverage of both urban and rural areas. It builds continues coverage, cell after cell, with an intention to bring the whole country under its network. Though the priority of the intensity of coverage varies from area to area, the basic strategy of cell-to-cell coverage is applied through the whole country. Presently it has network coverage in 57 districts around the country including all six divisional headquarters, with 749 base stations in operation. GrameenPhone’s strength comes in their strong network capability, extended product line and services attracted the customers very quickly. GrameenPhone offers a number of products and value-added services to its valued subscribers. These attractive products and services are designed to cater to the needs of the individual subscribers. There are six products currently being offered by GrameenPhone. The products are: GP Regular, GP National, Anytime 300, Anytime 500, EASY GOLD and EASY Pre-paid. In addition, GrameenPhone offers a number of Value-added Services (AS) to its subscribers. These include Text Messaging (SMS), Voice Mail, Fax/Data service and Wireless Application Protocol (WAP). The SMS-based Push-Pull Service was also launched in January 2003. Also GrameenPhone’s subsidiary DJuice created a heavy buzz in the market when introduced in the middle of 2005. GrameenPhone targeted the younger generation of audiences with the brand and became an instant hit. The made heavy promotions for the brand & value added services that they were providing with it. Concerts, fairs etc attracted people to buy DJuice. Product positioning & repositioning is one of the major strength of the company. Their product line is one of the most comprehensive in the business. Services are launched keeping in mind each and every segment of the market. They also reposition their product on the basis of change in the environment. Price flexibility is another strategy that the company follows prominently. In case of product overlap (i.e. easy pre paid & DJuice), occasions or simply for promotion the company exercises the price flexibility issue effectively. GrameenPhone’s creative cell is one of the best in the country. Their recent advertisements are a big hit in the country. They spend more than anyone in the ad campaign in this industry. GrameenPhone believes that good business leads to good development, since high level of productivity is development. The activities of GP contribute to the socio-economic development of Bangladesh in many different ways. In the sports arena, GP is currently sponsoring the Bangladesh National Cricket Team for a period of two years through 2003-2005.
CityCell (Pacific Bangladesh Telecom Limited) is Bangladesh’s pioneering mobile communications company and the only CDMA network operator in the country. CityCell is a customer-driven organization whose mission is to deliver the latest in advanced telecommunication services to Bangladesh.
To continue to be the leader in telecom industries in the region and provide complete communication solution to customers with a smile.
The company offers a full array of fixed and mobile services for consumers and businesses that are focused on the unique needs of the Bangladeshi community. CityCell’s growth strategy is to integrate superior customer service, highest standard technology and choice of packages at affordable rates. The company operates a 24-hour call centre with over 86 well trained operators to respond to customer queries. CityCell’s customer services are open 7 days a week to ensure customers can access CityCell at any convenient time. CityCell is focused on innovation and creating new ways for customers to stay in touch and to do business. CityCell’s is offering a wide range of competitive prepaid and postpaid mobile packages as well as Value Added Services such as SMS and information based services. CityCell is looking forward in introducing CDMA 1x technology in 2004 to provide innovative multimedia features, including Multimedia Messaging Service (MMS) and many more data based mobile features currently not available in Bangladesh. CityCell was the first entrant in Bangladesh with mobile phone but it is sad to say that the company couldn’t capitalized on the first movers advantages that it got from entering the market. CityCell could have created a lead for itself that others would have found difficult to match. Following the concept of the experience curve, if the first entrant gains a respectable share of the market, across the board costs should go down by a fixed percentage. But in the case of CityCell this didn’t happen. It is mainly because of the poor strategy selection by the top management. They followed a “island” strategy building strong network here & there where they see the customers are buying CityCell connection.
In case of marketing strategy CityCell made some mistakes too. The advertisement & promotional campaign wasn’t adequate to match those of GrameenPhone’s. No heavy promotional campaign was undertaken in the last 5-6 yrs or so. Even in the early entry stage CityCell was not too aggressive in marketing their services. They thought that entering the market first gives them the adequate market share & they were happy with it. They didn’t consider the environmental change & competition from the other companies that may enter Bangladesh in the future. So when competitors like Grameen, AKTel entered the market it was clear that CityCell will lose their market share significantly. CityCell also lacked in the product market as well. They are the only company in Bangladesh in operating the CDMA technology. This gives them some obvious disadvantages in the market. First of all CDMA technology prohibits users to change their mobile sets. So when cell phone manufacturing companies are bringing out these new phones every month the users of CityCell cannot switch to those phones. While other companies with GSM technology doesn’t have this barrier. Secondly CityCell product positioning was very limited from the beginning. They concentrated on the high income bracket target market form the start of their business. Even after the competition picked up it failed to reposition its product in the market. Thirdly the company failed to attract new target market with their promotional campaign. Hardly any CityCell advertisements were visible during the last 4-5 yrs up until now.
Hopefully CityCell will find it course back sometimes soon because Singapore telecom giant SingTel bought 45% of CityCell’s share in the middle of 2005. The management hopes to diversify their service & reach out to a larger population by the end of next year.
With the vision of “Banglalink understands people’s needs best and will create and deliver appropriate communication services to improve people’s life and make it easier” Banglalink entered the market in late 2004. Banglalink aims to understand peoples’ needs best and develop appropriate communication services to improve peoples’ life and make it simple. All their work is aimed towards meeting their vision. The company behind Banglalink is Orascom Telecom. It is one of the most dynamic telecommunications powerhouses in the world. Orascom is based in Egypt and has operations in 11 countries worldwide. Established in 1998, it is today the largest capitalized company on the Cairo & Alexandria Stock Exchanges with over 11 million subscribers worldwide. It has grown to be one of the largest and most diversified GSM network operators in the Middle East, Africa and Asia.
Banglalink understands people’s needs best and will create and deliver appropriate communication services to improve people’s life and make it easier. The biggest barrier today for people is the cost of handsets. Banglalink strive to lower the total cost of owning a mobile. They are here to help make a difference in people’s lives by providing affordable and reliable connectivity solutions. The company strives to connect people and link their lives by listening to them and by understanding their needs. They are here to help you speak your language.
Teletalk Bangladesh Limited (TBL) is formed as Public limited company under the Companies Act 1994 on 26th December 2004. Therefore it is a Govt. owned company. Although a new entrant, Teletalk is staffed by experienced Telecom Engineers. Committed to accessibility, quality, coverage and price Teletalk launched it’s much anticipated Mobile Telecom service on commercial basis on 31st March 2005.
A new Middle East Based telecom company named Warid Telecom is on its verge to enter into Bangladesh in the next few month. Their strategies are yet to be known to public. However rumor and public opinion expects Warid to make the mobile phone service industry further competitive.
Value Chain Analysis
The value chain analysis describes the activities the organization performs and links them to the organizations competitive position. Value chain analysis describes the activities within and around an organization, and relates them to an analysis of the competitive strength of the organization. Therefore, it evaluates which value each particular activity adds to the organizations products or services. This idea was built upon the insight that an organization is more than a random compilation of machinery, equipment, people and money. Only if these things are arranged into systems and systematic activates it will become possible to produce something for which customers are willing to pay a price. Porter argues that the ability to perform particular activities and to manage the linkages between these activities is a source of competitive advantage.
Porter distinguishes between primary activities and support activities. Primary activities are directly concerned with the creation or delivery of a product or service. They can be grouped into five main areas:
ü Inbound logistics,
ü Outbound logistics,
ü Marketing and sales, and service.
Each of these primary activities is linked to support activities which help to improve their effectiveness or efficiency.
There are four main areas of support activities:
ü Technology development (including R&D),
ü Human resource management, and
ü Infrastructure (systems for planning, finance, quality, information management etc.).
AKTel’s Value Chain Analysis
AKTel’s value chain is centered on the idea of lowering the cost structure and increase the perceived value if the products and service through differentiation.
Research & Development:
R&D is not only concerned about the product design and production process but also the segmentation and the needs of the customers. The customers are at the core of the activities of the function of AKTel. So the needs of the customers are always a preference for the company. The R&D department are continuously on the market research to find out about the demand of a product which may be about to launch or will be launched in the future. The R&D function can help to lower costs or permit a company to charge higher prices.
Production is considered with the creation of a good or service. In the case of AKTel it is in the service sector. To the production really takes place when the service is delivered to the customers. By performing its activities efficiently the production function of a company helps to lower its cost structure.
Marketing & Sales
There are several ways in which the marketing and sales functions of a company help to create value. Through brand positioning and advertising, the marketing functions can increase the value that customers perceive to be contained in companies product. This is the most important value creation activity of AKTel in a sense that this is the way to survive in the market in Bangladesh at the moment. The rivalry is so high right now those competitors are putting cent percent effort on big ad campaigns. A detailed marketing plan of AKTel has been included in the AUDIT.
The roles of service function of an enterprise are to provide after sale service and support. This function can create a perception of superior value in the minds of the customers by solving customer problems and supporting customers after they have purchased the product. AKTel lacks behind in this value creation category comparing to their competitors. The customer care service isn’t up to the mark. The after sales service is also not up to the expectations.
The supporting activities of the value chain provide inputs that allow the primary activities to take place. These activities are broken down in the following fuctions:
Company infrastructure is the companywide context within all the value creation activities takes place; the organizational structure, control system, company culture. Because the top management can exert considerable influence in shaping these aspects of a company top management should also be viewed as part of the infrastructure of a company. AKTel’s organizational structure is basically a flat one with the view to smooth the communication process with upward and downward communication. But there are times when this gets affected. There are sometimes interdepartmental conflicts. On the other hand the control system is fairly centralized. The company practices strong intergrated culture within the organization.
Human Resource Management
There are a number of ways in which the human resource functions can help a company to create more value. This function ensures that the company has the right mix of skilled people to perform its value creation activities effectively. AKTel has a sound HR practice and tries to motivate the employees to keep up the good works. From giving incentives to organizing cultural activities to inspire the employees and give them the feeling of being a part of the family is given importance in AKTel.
This is for managing inventory, tracking sales, pricing products, selling products, customer service inquires etc. The technologies used in the company are state not state of the art. The customer service centre needs to be up to date.
Different Levels of Strategy
Functional level strategies are the strategies that the companies take to improve the effectiveness of the company’s operation and thus its ability to attain superior efficiency, quality, innovation, and customer responsiveness. In each functional area identified by the strategist as needing goals and action plans, the aspects of the domain of each and the degree of detail entered into are matters of choice. Management’s concern in setting functional strategy should be to provide the firm’s functional officers with sufficient guidelines to carry out the functional parts of implementing other levels of strategy AKTel focuses on achieving superior quality throughout the functional level of the organization. Even though the service provided by the company may be of higher standard that does not imply that the company has achieved superior quality. Any company that has achieved superior quality would be able to reduce rework and delay costs. It would be able to service provider in such a fashion that would require less rework and less delays. It would be able to better utilize the time and materials of production. Hence, cost would ultimately go down- making it more efficient in manufacturing. In order to achieve such a state, AKTel should consider implementing Total Quality Management. At its essence, the strategy is build around the notion that doing something correctly in the first time is more profitable for the company. Even though zero defect tolerance policy might be too extreme for such a company as AKTel, it must make sure its defect and rework rate is at the minimum. The easy way to ensure that is by making sure that it is able to produce the required quality service.
Incorporating TQM with corporate culture
TQM initially might increase the cost of production due to the strategies devotion to superior quality. However, as the company rides down the experience curve, the cost of production will go down substantially. Thus, at first the TQM policy might not be well accepted among the employees of the service providing companies. They might view the policy as inefficient and redundant. Hence, care must be taken so that the benefits of the policy are well-communicated among the employees of the organization. Historically it has been seen that self-managed teams are more effective in implementing TQM. However, self managed teams require substantial amount of decentralization. The concept of decentralization might be met with significant resistance from the upper management of the company. Still, AKTel should consider the possibilities offered by self-managed teams.
In the business level, the company follows the strategy of Focused Differentiation. It enables to provide its targeted market with quality service that is clearly differentiated from its competitors’ offerings.
However, mobile phone service is the kind of products for which the rates of innovations are fast. Innovation in the aspect of mobile phone service is product based. The companies in the market are practically in a war situation. They are at each others throat to get the customer. AKTel in that sense have to come up with new better ideas than the competitors if they want to sustain the competition. So differentiation strategy is a must for the company. The company can also
Incorporating Differentiation strategy with corporate culture
Adopting a differentiation strategy would require a number of changes within the organization. Management of AKTel must work hard to minimize the bureaucratic costs. Grouping tasks and functions and efficiently using integrating mechanism to better coordinate the tasks and functions is highly recommended. In addition, the company must clearly allocate authority and responsibility and properly define its goals to its employees. Flattening the organizational structure might prove fruitful.
Corporate Level Strategy
The principal concerns of corporate level strategy are to identify in the business in which should participate, the value creation activities it should perform in those businesses and the best means for expanding or constructing in different businesses.
AKTel’s corporate strategy revolves around strategic outsourcing. It involves spreading out some of a company’s value creation activity within a business and letting them be performed by a specialist in that activity. In other words strategic outsourcing is concerned with reducing the boundaries of the company and focusing on the fewer value creation functions. From the setup of the network to distribution of its card AKTel has outsourced many of its works. AKTel engaged in strategic outsourcing because they believe that they can better execute their business model by doing so and thus increase profitability.
Reducing cost through outsourcing
Out sourcing is an activity that will reduce cost when the price that must be paid to a specialist company to perform that activity is less than what it would cost the company to perform that activity internally.
AKTel’s distribution is strictly based on outsourcing. Refill cards are distributed through a third party. This way they reduce the distribution cost and overhead cost of running an vertically integrated distribution channel.
For both service and marketing department performance will be one of the criterions to evaluate employee performance. Profit sharing will be part of the pay package of the employees that will ensure the higher employee performance
AKTel’s Corporate Social Responsibility
AKTEL is a dynamic and leading end-to-end countrywide GSM mobile operator. As a committed corporate citizen of Bangladesh, AKTEL provides yearly scholarships to meritorious and financially needy Bangladeshi students for Bachelor degrees in Multimedia University, Malaysia. AKTEL will offer scholarships for the academic year 2006-2007.
These are the formal target setting measurement and feedback system that allows managers to evaluate whether the company has achieving superior efficiency, quality, innovation and customer responsiveness. Personal Control is the desire to shape and influence the behavior of a person in face to face interaction in the pursuit of the company’s goal. For AKTel this is more applicable because managers can questions and probe subordinates about the problems or issues they are facing to get a better understanding. Output control is a system where managers’ estimates or forecasts appropriate performance goals for each division and employees and then measures actual performance on these goals. It motivates the employees. For AKTel it is going in to a broad focus business in the future can help to keep track of the business by implementing this control system.
Implementing Differentiation Strategy
In pursuing a differentiation strategy the company will start to produce a wider range of packages and serve more market segments, which means it has to customize its products to the needs if different groups of customers. So to implement this managers should develop a more sophisticated control system increasingly make use of technology.
Implementing a Broad Focus based Product Line Strategy
Because the recommended strategy is to go for more broad focus based product line differentiation the company must first decide how to group overall product line into product groups or categories so that each product groups can be developed at lowest cost consistent with permitting the differentiation needed to create value for customers. Now to keep costs as low as possible the decision is made to centralize the support value chain functions like information system at the top management of the organization and the different product groups share their services. Strategic control system can now be developed to measure the performance of each product group separately from the others. Thus the performance of each product group is easy to monitor and evaluate. Strategic reward system can be more applicable here.
In case of competitive advantages AKTel is seeking Differentiation focus, Cost focus and Cost leadership at the same time.
Strategy – Differentiation Focus
A DIFFERENTIATION STRATEGY is one of creating a product or service that is perceived as being unique “throughout the industry”. AKTel was the first telecommunication company to introduce GPRS, entertainment packages like Fun Dose etc. Their step to setup “CLUB MAGNET” for their loyal customers with special offers from them & affiliated companies are also an indication of the differentiation focus.
Strategy – Cost Leadership
A COST LEADERSHIP STRATEGY is based on the concept that the company can produce and market a good quality product or service at a lower cost than its competitors. These low costs should translate to profit margins that are higher than the industry average. AKTel’s recent package “Exceed” gives the indication that the company is trying to attain this strategy and command over the competitors.
Strategy – Cost Focus
A FOCUS STRATEGY may be the most sophisticated of the generic strategies, in that it is a more ‘intense’ form of either the cost leadership or differentiation strategy. It is designed to address a “focused” segment of the marketplace, product form or cost management process and is usually employed when it isn’t appropriate to attempt an ‘across the board’ application of cost leadership or differentiation. AKTel’s new offerings, redefining the post packages indicates that they are trying to follow this strategy as well.
Existing Market Strategy
AKTel’s marketing strategy is diverged. They use different type of marketing strategy to get the desired market share and the target segment.
Market Scope Strategy
AKTel is serving at different distinct segment of the market without focusing on a particular one. This gives them an opportunity to expand their coverage in the market. To implement this multi-market strategy the company is focused to those segments that it feels most comfortable and in which the company is able to avoid confronting the companies that serve the entire market. Their implementation is done through selling different products in the different segments.
Market Geographic Strategy
From the start the company has taken a national marketing strategy to cover the whole Bangladesh market. Gradually they set upped the network and now they are covering almost 60 districts of the country.
Market Commitment Strategy
AKTel follows a strong market commitment strategy. With Telecom Malaysia & AK Khan group in its backbone the company invested heavily in the market. The strong commitment strategy gives the company a chance to operate in a market optimally by realizing economies of scale in promotion, distribution and so on. Challenge from competitors like GrameenPhone, Banglalink for the position in the market is handled by AKTel by aggressively fighting back with different forms of product, price, promotion & distribution strategies. In other words because the company has a high stake in the market it does all it can to defend its position.
The implementation of the product strategies requires cooperating among different groups: finance, research and development, the corporate staff, and marketing. This level of integration makes the product strategies difficult to develop and implement.
Product Positioning Strategy
The term positioning refers to placing a brand in that part of the market where it will receive a favorable reception compared to competing products. AKTel’s single brand positioning gives them benefits to play a dominate role in the core segment. This strategy gives them the flexibility to attract customers for the other segments outside its core segments.
Broadly speaking pricing objective can be either profit oriented or volume oriented. AKTel pursue both at the same time.
Pricing Strategy for New Products
For their new products AKTel follows penetration-pricing strategy, so they can enter the market with a low initial price and capture a greater market share. Because of high price elasticity of demand they are adopting this strategy. It also gives them option to achieve economies of scale.
Pricing Strategy For Established Products
In case of their established prepaid & postpaid product AKTel is following reduces price strategy. For all existing prepaid & post paid services the company uses the reduced tariffs. It can identified as a defensive strategy responding to the competition, offensive in nature because suing the experience curve concept costs across the board go down by a fixed percentage every time experiences double or it can be because of the customer needs. Lowering the prices sometimes becomes prerequisite for inducing the market to grow, customers’ need may then become the pivot of marketing strategy, all other marketing aspects are developed accordingly.
AKTel distribution strategy is not vertically integrated with the organization. They outsource the distribution to a third party. They have
· NERO (non exclusive retail organization)
· Exclusive distributors
Promotional strategies are concerned with the planning, implementation and control of persuasive communication with the consumer. For AKTel these strategies are revolved around advertising, sales promotions and special offers.
Promotional Mix Strategy
AKTel in promotional aspect follows the promotional mix strategy. It basically covers the following factors
· Product factor
· Market factor
· Customer factor
· Budget factor
· Marketing mix factor
· Environmental factor
They follow this strategy to adequately blend the three types of promotion to complement each other for a balanced promotional perspective. To advertise their products and services to the market AKTel uses various types of media that are available. From television commercials to Newspaper and magazine they are now even sponsoring the evening news headlines. This of course falls under their advertising copy strategy. One important factor is that AKTel uses both PUSH & PULL strategy at the same time. They have their in house advertising campaign department. But they outsource their other big ad plans to ad firms as well.
In concluding remarks it can be said that Aktel is a doing fairly ok in their strategic policy but because of extensive competition in the market it needs to shake things up. Because it won’t be long the company may lose their core customers to its competitors if it doesn’t take some counter measures. The customers are demanding and they are willing to switch to other brands, as there are other options available in the market
Aktel was doing fairly well up until this year. Because of the entrance of BanglaLink in the market the competition is heating up. The consumers are very price sensitive in our country. The offering of new packages at lower price by the competitors along with heavy promotion has been affecting the company. The growth of the company has not been up to the mark like that of Grameenphone or BanglaLink. Grameenphone extended their market size by 1 million only by a six months gap by introducing a subsidiary brand Djuice. BanglaLink on the other hand is going on a rampage with their sales promotion and advertising. They are offering at a lower cost all around the clock during day and night.
So keep up with market and grow as it plans Aktel must reinvent itself in the industry itself. They should not modify the only a single strategy rather reposition their existing marketing mix with modification.
___________________________________List of Reference
We used the following sources for secondary data: