:

UM BUSINSS SCHL

SMSTR JANUARY 2017

BMST5103
STRATEGIC MANAGEMENT

ASSIGNMNT 1

NAME : ZULKIFLY BIN ABDULLAH

IDNTITY CARD N. : 830609 04 - 5499
TLPHN N. : 013 6526083
-MAIL : zulkifly17286@gmail.cm
LARNING CNTR : JHR LARNING CNTR
1.0 Intrductin

The telecmmunicatins cmpnent f Malaysias IT sectr has been

changing rapidly in recentyears. This is part f the restructuring and liberalizing
prcesses that are underway in nearly all regins and all cuntries f the wrld.

1.1 Telekm Malaysia Bhd

1.1.1 Backgrund

Telekm Malaysia (TM) Berhad establishes, maintains and prvides

telecmmunicatin and related services under a license issued by the Ministry f
Energy, Telecmmunicatins and Psts f Malaysia. ther business activities include
printing and publicatins, cnsultancy and engineering services, public telephne
services, prvisin f mbile telecmmunicatin services, investment hlding and
ther services relating t telecmmunicatins. Telekm Malaysia Berhad lks
large, nt nly in the specific cntext f the Malaysian telecmmunicatins industry,
but als in rdinary life. Since it pened in ctber 1996, the Menara Kuala Lumpur
421 meters twer, it prvided Malaysia a natinal landmark that places the cuntry as
a qualified site in the wrld map in terms f turism, telecmmunicatins, and
develpment. Menara is the highest telecmmunicatins twer in Sutheast Asia and
the 4th in the wrld. As a surce f pride fr every Malaysian, it has bec me a must-
see destinatin fr every turist with its bservatin deck and revlving restaurant
at 282 meters abve the grund. Undubtedly, it was the singular sh wpiece that
symblized the natins claim t leadership in the telecmmunicatins industry in
the regin. TM claimed a large stake in this natinal pride. Aside fr m t wering ver
the natins cllective cultural psyche, TM has als been playing a crucial rle in the
Malaysian ecnmy. In a relatively small natin f a little mre than 20 milli n
peple, it is a big emplyer with mre than 25,000 persnnel. It has the largest
capitalizatin n the Kuala Lumpur Stck Exchange. Like all giants, TM had its
infancy. It was n mre than a single 43 kilmetre cpper line traversing the dense
jungles f Perak that cnnected the British Residents ffice in Kuala Kangsar t his
assistant in Taiping.

Several years after, it included the first submarine cable that cnnected
Prvince Wellesley with Penang. Thrugh a merger between the Telecmmunicatins
Department f Peninsular Malaysia and the Psts and Telecmmunicatins
Department f Sabah and Sarawak, Jabatan Telekm Malaysia was brn. Then it was
privatized in 1987 as Syarikat Telekm Malaysia Bhd and was subsequently given a
20-year perating license. Finally, in 1991, Telekm became alisted cmpany bearing
its current name

1.1.2 Visin & Missin

This shift can ccur in several ways. ften, leaders simply lse sight f
what's imprtant. The laser-like fcus that catapulted them t the tp disappears, and
they becme distracted by the trappings f leadership, such as wealth and ntriety.
Leaders are usually distinguished by their ability t "think big." But when their f cus
shifts, they suddenly start thinking small. They micr manage, they get caught up in
details better left t thers, they becme cnsumed with the trivial and unimprtant.
And t make matters wrse, this tendency can be exacerbated by an inclinatin
tward perfectinism. A mre subtle leadership derailer is an bsessin with "d ing"
rather than "becming." The gd wrk f leadership is usually a result f wh the
leader is. What the leader des then flws naturally frm inner visin and character.
It is pssible fr a leader t becme t actin riented and, in the prcess, lse
tuch with the mre imprtant develpment f self. What is yur primary f cus
right nw? If yu can't write it n the back f yur business card, then it's a sure bet
that yur leadership is suffering frm a lack f clarity. Take the time necessary t get
yur fcus back n what's imprtant. Further, wuld yu describe yur thinking as
expansive r cntractive? f curse, yu always shuld be willing t d whatever it
takes t get the jb dne, but try never t take n what thers can d as well as yu.
In shrt, make sure that yur fcus is n leading rather than ding.
1.1.3 SWT Analysis

S%&T analysis is an assessment technique t analyse strengths and

weaknesses cmprising f psitive and negative internal influences( and
pprtunities and threats which are psitive and negative external influences f an
rganisatin 6?bbins, Bergman, Stagg @Culter, 7)9. An accurate S%&T
analysis is imprtant fr effective rganisatinal planningand gal setting.

1.1.3.1 Strength

Telekm Malaysia(TM) Berhad is the largest telecmmunicatins cmpany in

Malaysia.It was incrprated in 1984 and has a gd backgrund. In Malaysia, TM
has built astrng brand because almst every Malaysian knws abut TM.

TM Net, a subsidiary f TM, is Malaysias largest internet service prvider.

TMswnership f the natins last mile cnnectins restricts cmpetitin t densely
ppulatedareas in majr cities. Since there is n lcal lp unbundling, TM Net
enjys a virtualmnply f the bradband market.

TM is als a gvernment linked cmpany which may give it the benefit f

pririty in prject tenders and als make it easier t get licenses f r new
technlgies. The perfrmance f TM ver the years has been recgnized by the
many awards it has wn.

The demerging f TM int tw separate entities with distinct business

strategies and aspiratins has led t an internal restructuring f the grup. Despite the
demergeractivities, TMs existing internal cntrls are deemed t be sufficient and
functiningeffectively. Furthermre, TM has a frmal rganizatin structure with
clearly definedlines f respnsibility and accuntability, aligned t business and
peratins requirements.TM has als adpted internatinal best practices n
Crprate Gvernance.
1.1.3.2 Weakness

The main issue f TM which yu can find easily by asking anyne in

Malaysia is the slw speeds and the general lack f reliability f cnnectins
prvided. The instability f internet services prvided by TM Net has made a huge
dent in its reputatin. TM shuld fix this matter as sn as pssible t rec ver its
reputatin.

Furthermre, TMs custmer services are pr due t its inefficiency. Even

after severaltimes f cmplaints, the wrkers dnt seem t fix the prblem. The
custmer service staffs and technical staffs shuld be trained t be efficient and
effective.

TM has a debt equity rati f 0.7 which mean it is highly financed by debt.
This is nt gd because debt financing cnsists f high interest csts and it may
hinder the cmpany's grwth and intrduce cash flw r liquidity risks t the
cmpany. As such a large rganizatin natinwide, spread acrss many regins,
there is a risk that TM might lean twards bureaucracy t maintain cntrl. Hwever,
a tall pwer structure might lead t slw implementatin f firm wide pr jects r
adaptatin t change. Given the dynamic nature f the bradband market currently,
this weakness might even be cmpunded.

1.1.3.3 pprtunities & Threat

TM had implemented Supplier Relatinship Management System (SRM)

which is t imprve the relatinship with the suppliers. Hwever, there are still s me
risks between TM and its fibre ptic supplier, PCM Hlding Berhad (HB).
HB was TMs main supplier in fibre ptic cable. Almst 80% f TMs fibre ptic
cable was supplied by HB.

Therefre, it is imprtant fr TM t remain a gd relatinship with HB,

r else the switching cst f changing supplier will be high. T reduce the risk, TM
can reduce the cable vlume supplied by HB by negtiate with ther supplier t get
cheaper price. The implement f develpment f HSBB has prved that TM is at the
advanced in the industry. Hwever, TM shuld always aware f the cmpetitrs
because they might have such technlgy in ne day. Therefre, TM sh uld always
sustain its technlgies in advance t remain its cmpetitive advantages.

Althugh TMs missin is t strive twards custmer service excellence and

peratinalefficiency but it desnt seem that TMs custmer service prvides gd
services fr thecustmers. Custmers cmplaints always being delay and didnt
slve efficiently.Therefre, it is very imprtant fr TM t train quality staff and
imprve the servicesprvided. Furthermre, it is als imprtant t let the custmers
understand that Streamyxsubscribers shuld receive at least 70% f the subscribed
speed mst f the time. If theseare nt dne, TM may suffer huge impact in its
reputatin

1.1.4 Evaluatin f Business Level Strategies

Business level strategy is a plan which sets ut hw a business deplys its

resurces t achieve its gals. The cmpanys values set the tne fr the decisin
making prcess. Generic strategies are charecterized by an individual retailers
respnse t the industry structure. Fr ne f telecmmunicatin prvider in
Malaysia, Digi.cm Bhd, t btain a sustainable cmpetitive advantage they fllw
ne f three generic strategies, develped by Prter.

The fllwing analysis has invlved industry envirnment by using Michael

E. Prters five frces. Prter five frces is a well define analytic framewrk explains
the five frce that shape cmpetitin and als help strategic manager t link the
remte in telecmmunicatin industry t their effect n a rganizatins perating
envirnment. In additinal, this may help in psitin a cmpany t cpe best with its
industry envirnment if the key frce f a cmpany f its industry has been
identified. The fllwing are the characteristics t frm each type f c mpetitive
advantages:
1.1.4.1 Determinatin f Entry

The barrier t entry int telecmmunicatin industry is mainly due t the

regulatin and plicy by gvernment. Every ptential entrant will need t btain a
license by Malaysian Cmmunicatin and Multimedia Cmmissin (MCMC).
Hwever, it is difficult and expensive t get an apprve license frm MCMC due t
the strict requirements and prcedures. In additinal, slely right fr certain prjects
are given by gvernment t the existing entrants will be als a threat f r p tential
entrants t cmpete in this high cmpetitive industry such as the partnership f
submarine cable fr the bradband service at year 2001 and als High-Speed
Bradband (HSBB) which will be launched at mid-year f 2010.

Capital requirement is usually an imprtant issue t build up a firm which is

has high capability t cmpete in the industry. Whereas, telecmmunicatin is a high
cmpetitive industry in rder t gain large market share. Thus, ptential entrants have
t ensure the sufficient financial resurce since having huge capital will be a
cmpetitive advantage t cmpete. This prbably need f few billin Ringgit
Malaysia fr the license and infrastructure which are nrmally limit the p l f
likely entrants.

1.1.4.2 Determinants f Supplier Pwer

A pwerful supplier may exert bargaining pwer by increase selling price r

reduce the quality f the prducts. Hwever, pwerful f a supplier must als
depend n the psitin f market situatin. A grup f suppliers is pwerful when
the prduct they prvide are differentiated r it has built up by switching cst. These
may arise when there is ccasinal requirement by the buyers in this industry such as
high invested in submarine fibre ptic cable, and replace the cpper cable and ld
satellite dishes that may prvide reliable bradband cnnectivity. This may cause
buyer tie it t particular suppliers. High cmpetitive envirnment causes exist
entrants need t invest in high mdernizatin technlgies t enable the cmpany t
supprt and cmpete in this industry. Therefre, it is crucial fr the service pr viders
t make sure the quality f the technlgy equipment, yet it makes the supplier
grup becme mre pwerful.
1.1.4.3 Determinants f Buyer Pwer

A grup f buyers will be cnsidered as pwerful when they able t f rce

dwn prices, demand higher quality and play cmpetitrs ff against each ther.
Nwadays, there are mre demanding f high speed bradband and after sale service,
and it create relatively high cmpetitive amng cmpetitrs. Every entrant will
aspirate t gain the largest market share, hence t gain mre market shares entrants
will want t get the cnsumers attentin by bring ut a series f attractive
prmtins packages. This is t help firm t absrb mre and mre market shares,
and yet prmte their branding als. As cnsequences, cmpetitin amng each
ther will benefit the cnsumers wh can enjy the lwer price bradband service,
and therefre, cnsumers becme mre pwerful due t the cmpetitin amng the
service prviders.

1.1.4.4 Substitute Prducts

Substitute prduct is an alternative chice fr cnsumers t chse t

purchase. Substitute prduct cmes int play when there is high grwth industry r
high cmpetitive industry. As mentin earlier, cnsumers have becme mre
demanding in quality bradband service and this create an pprtunity fr new
entrants t prvide a substitute prduct fr cnsumers in lwer price r better
perfrmance than the existing ne.

1.1.4.5 Degree f Rivalry

Rivalry amng existing cmpetitrs takes the familiar frm f jckeying fr

psitin. Intensity f rivalry may arise when the cmpetitrs want t lead in a high
grwth industry such as telecmmunicatin industry. Prduct that lack f
differentiatin is assciated with high intensity f rivalry. Thus, cmpetitrs must be
able t differentiate its prduct cmpare t ther cmpetitrs. Indeed, brand
identificatin f a prduct tends t cnstrain a rivalry. This means that ppularity f
a brand name f a prduct will prbably make the prduct differentiatin even the
perfrmance is just equal. Fr example, mst f cnsumers will prbably think f
TMNet Streamyx when they wuld like t subscribe a br adband service. This is
because ppularity f the brand name which makes cnsumers feels mre reliable.
Thus, high level f prduct differentiatin r maybe brand identificatin can cnfine
the intense rivalry and t lead in the industry.
1.2 Maxis Cmmunicatin Bhd

1.2.1 Backgrund

Maxis Cmmunicatin Berhad is the leading telecmmunicatins service

prvider that started in the year 1993. Maxis Cmmunicatin Berhad is the s n
Cmpany f Usaha Tegas Grup Hlding Berhad, majrity stake f the cmpany,
70%, wned by Malaysian tycn Tatparanandam Ananda Krishnan (richest man in
Malaysia) Maxis have pssessin f 40% market share f telecmmunicati n
industry which cnverts t 10 millin f users ut f 28 milli n f ppulatin f
Malaysia.

Since the cmmencement f cmmercial peratins, Maxis prvide varieties

f mbile telecmmunicatin prducts and services such as bradband, internatinal
raming, MMS and s n. They started with the phne number starting with the
prefix 012. Later they purchased Timecel which is anther mbile services prvider
and that is when they started ffering phne number starting with prefix f 017.

In 1999, they intrduce the prepaid service. As cmpetitrs such as Digi,

Celcm Telecmmunicatin which ffer lwer prices and lts f ffers and
prmtin, this frced Maxis t sell their prepaid starter pack as lw as RM8.

In additin, the cmpany als perates in internatinal gateway services. Its

gegraphical peratins spread acrss Malaysia, Indnesia and India. In2006, Maxis
achieves prestigius frm the public. The readers f the Wall Street Jurnal Asia have
rated Maxis as Malaysias mst admired cmpany in The Wall Street J urnal Asia
200 survey in 2006.

1.2.2 Visin & Missin

VISIN T bring the future t ur custmers lives and businesses in a

manner that is simple, persnalized and enriching, by efficiently and creatively
harnessing leading-edge technlgy and delivering a brand f service experience that
is reliable and enchanting.

MISSIN T remain the natins premier integrated cmmunicatins service

prvider.

1.1.3 SWT Analysis

1.1.3.1 Strength

i. High netwrk quality and custmer service

ii. Market leadership and effective branding
iii. Strng and effective distributin netwrk
iv. Capitalist in fast grwing bradband and data pprtunities
v. Experience management team
vi. Cash flw generatin, financial discipline and crprate gvernance
vii. Premium branding and custmer care cntinue t attract and retain
subscribers. This is further supprted by lng-term iPhne plans.
viii. Much wider 3G/3.5G cverage than Digi and similar cverage as
Celcm
ix. Largest subscriber base in Malaysia with c. 39% share.
x. Largest pstpaid subscriber base f c. 43% is critical t future market
trend twards mre pstpaid subscribers.
xi. Managements track recrd fr its transparency and ability t deliver
perfrmance.
xii. Gd lyalty prgrammed with, perhaps the best family plan in
Malaysia in ur view.
xiii. The deal gives Maxis an pprtunity t mve int a rapidly grwing
market place, equipped with full management cntrl and bard
representatin.
xiv. Gaining cntrl f Aircel will give Maxis access (i) t the number ne
mbile peratr in Tamil Nadu and the city f Chennai, (ii) new
peratins in five mre circles and (iii) a further ptential five circles.
xv. Prfitable as at Mar05, with net prfit f RM464.9mn (US$123.0mn).
N.1 mbile peratr in Tamil Nadu and Chennai
xvi. Credible Indian partner (the Reddy family f Chennai), expected t
cntribute in terms f business peratins
1.1.3.2 Weakness

i. Rural area cannt reach the netwrk

ii. Need t pay fr maxis custmer service
iii. Have hidden charges fr pstpaid and bradband
iv. The rate higher than thers.
v. The mbile Internet is limited.
vi. Maxis d nt ffer triple play f mbile, bradband, and pay TV.
vii. Grwing enterprise business may entail mre capex and Maxis can
nly selectively grw its enterprise business.
viii. Earnings dilutive expected fr the first tw years, with break-even
estimated in year three and prfitable nly in year fur r five
nwards.
ix. Netwrk capacity expansin t cnsume sizeable amunt f prfit at
the initial stages with high financing csts.

1.1.3.3 pprtunities

i. New mbile devices e.g. iPhne (4G) and recently launched iPad drive
demand fr bradband services.
ii. Under-served bradband ppulatin ffers great grwth pprtunities.
iii. Selective enterprise pprtunities as Maxis build backhaul capacity mainly
fr wireless bradband; it can target sme f the lucrative enterprise business
using the same backhaul netwrk
iv. Ptential fr triple play if tie-up with cntent prvider/bradcaster, e.g. Astr
v. Yung demgraphics that is data hungry. 32% f the Malaysian ppulatin is
under 15 years ld, which is a prime target fr bradband services ver the
next 15 years.
vi. Unique psitin t tap int ne f the wrlds fastest grwing ecnmies (3-
yr GDP grwth rate f 7-8%) and mbile telecmmunicatins market space
(CAGR f 34% p.a., 15% penetratin rate by 2010)
vii. Ability t expand int ther parts f Tamil Nadu state and subsequently
acquire new licenses t perate utside the area

1.1.3.4 Threats

i. Aggressive bradband prmtins by wireless cmpetitrs, including

WiMAX players.
ii. Under cmpetitive pressures.
iii. Adjustments t intercnnect rates may pressure Maxis earnings, as the
cmpany is a net receiver f calls.
iv. Cmpetitive perating landscape with large and mid-size players having
advantage f, (i) Market leadership; (ii) Ecnmies f scale, and (iii)
Strnger netwrk capacity
v. Regulatry hurdles, such as future allcatin f spectrum and licenses, which
may nt favr Maxis.

1.2.3 Evaluatin f Business Level Strategies

Business level strategy is a plan which sets ut hw a business deplys its

resurces t achieve its gals. The cmpanys values set the tne fr the decisin
making prcess. Generic strategies are charecterized by an individual retailers
respnse t the industry structure. Fr ne f telecmmunicatin prvider in
Malaysia, Digi.cm Bhd, t btain a sustainable cmpetitive advantage they fllw
ne f three generic strategies, develped by Prter.
1.3 Digi.cm Bhd

1.3.1 Backgrund

DiGi is the third largest mbile peratr in Malaysia. DiGi.Cm Berhad

(DiGi) cmmenced peratins in Malaysia in May 1995 when it launched its fully
digital GSM 1800 MHz services, the first digital mbile cmmunicati ns service
ffering in Malaysia. DiGi ffers mbile vice, raming and value-added services n
bth prepaid and cntract bases. DiGi is currently ne f the leading peratrs in the
prepaid segment, which is the largest cnsumer segment in the Malaysian mbile
market. n 7 May 2008, DiGi btained a 3G spectrum licence with all f its rights
and benefits via a transfer frm TIME dtCm (TdC) fr a cnsideratin f 27.5
millin new shares. In March 2009 DiGi launched 3G bradband services f r PCs,
while 3G vice and data services fr mbile phnes were intrduced in ctber
2009.

In 2001, when Telenr increased its sharehlding in DiGi frm 32.9% t

61.0% thrugh a vluntary partial take-ver ffer, the transactin was apprved by
the Freign Investment Cmmittee and the Ministry f Energy, Cmmunicatin and
Multimedia n the fllwing cnditins:

a. Telenrs equity interest in DiGi must be reduced t 49% within five

years; and
b. DiGi must have at least 30% Bumiputra (indigenus Malays) equity
sharehlding befre 31 December 2006.

The deadline t cmply was later extended t 30 June 2008. As a result f the
3G spectrum transfer in May 2008 and an earlier placement exercise, TdCs
sharehlding in DiGi at that pint in time increased t 10%, which later has been
reduced t 3.5%. At the same time, Telenrs wnership interest in DiGi was reduced
t 49%. As a result, DiGi is nw in cmpliance with the 49% freign equity
cnditin and has been exempted frm the need t cmply with the 30% Bumiputra
equity cnditin impsed by the Freign Investment Cmmittee. In the Ecnmic
Transfrmatin Prgramme update n 16 Nvember 2012, the Prime Minister f
Malaysia annunced that up t 70% freign equity wuld be allwed f r individual
class Netwrk Facilities Prvider (NFP) and Netwrk Service Prvider (NSP)
licences. As at 31 December 2013, DiGi had 11.0 millin mbile subscripti ns and
the estimated mbile penetratin (SIM cards) and number f inhabitants in Malaysia
were 144% and 30 millin, respectively.
1.3.2 Visin & Missin

DiGis Visin is t be seen as stars in excellent custmer experience by

enhancing cmmunicatins timprve custmers' quality f life, at hme, wrk and
play.

DiGis Missin is t:

a. Prvide custmers specific slutins t meet individual needs fr

cmmunicatins, cnnectivity,and access t infrmatin and security;
b. Prvide an envirnment where ur emplyees can grw and be
fulfilled;
c. Prvide superir returns t sharehlders; and,
d. Cntribute t imprving life in Malaysia.

1.1.3 SWT Analysis

1.1.3.1 Strength

a. Great Value Plan

DiGi has ne f the lwest price plans in the market. The table belw
illustrates DiGis price plans fr the iPhne 5S as cmpared t its cmpetitrs. n
tp f cheaper rates, DiGi has a superir lyalty prgram called DiGi rewards
where they give ut rebates, free talk time, mbile data and SMS (DiGi.cm Berhad,
2012).

b. Innvatin

DiGi has a gd track recrd in prduct innvatins. Fr example, DiGi was

the first Malaysian mbile peratr t c-brand pera Mini featuring a cmpressin
technlgy that allws nn-smartphne phne users easy access t internet. In 2012,
DiGi established Partnership with WhatsApp which ffers subscribers unlimited
access t WhatsApp at an affrdable rate.
 c. Attractive career develpment

Digi prvides attractive career develpment prspects fr emplyees. They

have many initiatives and prgrams fr all levels acrss the rganizatin. Fr
example, in 2012, targeted caching and develpment prgrams were launched t
address key, skills and leadershipdeficiencies f their emplyees.

1.1.3.2 Weakness

a Pr netwrk cverage

DiGis lack f base statins as cmpared t its cmpetitrs causes pr

netwrk and bradband cverage Which leads t dissatisfactin amng subscribers
and give DiGi a bad reputatin. Based n Malaysian Wireless (2013), bth Celcm
and Maxis have abut: 80% 3G cverage with mre than 7000 3G base stati n
cmpared t DiGis 2000-3000 3G sites causing pr indr cverage

d. Unsatisfactry custmer service

Based n several nline frums, there evidence shw that DiGi has pr
custmer service. Custmers cmplain abut the lng waiting time in service centres
and call centres, slw e-mail respnses and unfriendliness f DiGi sales
representatives (Cmplaints Bard, 2014). As stated by a DiGi subscriber in
Lwyat.net, cIvIc_nb (2011) mentins that he had t call DiGimany times t settle
a simple phne billing issue.

e. Slw disseminatin f new prducts/ infrmatin t custmers

DiGi lacks marketing activities which delays the disseminatin f new

prducts infrmatin t publics (DiGi, 2012). As a result, the lack f inf rmatin
has caused DiGi t lse ut n ptential custmers and market share.
1.1.3.3 pprtunities

a Gvernment regulatins

Accrding t Deputy Prime Minister Muhyiddin Yassin, Malaysia's Educati n

Ministry will cntinue t ban mbile phne usage in schls (The Straits Times,
2012). The plicy decreased demand fr mbile phnes and less usage by students
causing a negative impact n DiGis sales revenue.

f. Industrial rivalry

Within the industry, Maxis, Celcm and DiGi cntinue t cmpete n

prduct and service differentiatin thrugh imprvement and intrductin f new
innvative features (MalaysianWireless, 2011). The need t gain and maintain
cmpetitive advantage ver its cmpetitrs might place a heavy burden n DiGis
bttm-line.

g. Bargaining pwers f suppliers

The telecmmunicatins industry in Malaysia is dependent n imprts fr its

netwrk cmpnents. Mst equipment cannt be surced lcally resulting in high
bargaining pwers f suppliers (MalaysianWireless, 2011). This has resulted in an
increase in DiGis cst, hence reducing prfit margin.

1.2.3 Evaluatin f Business Level Strategies

1.2.3.1 Prpsed alternative strategies

Based n the S.W..T analysis, the fllwing were identified and a strategy is
develped t address each influence:

1. pprtunity: Influx f freign wrkers and internatinal students in

Malaysia.
 2. Weakness: Unsatisfactry custmer service.

a Lw Price Plan

The first strategy is t take advantage f the pprtunity f influx f freign

wrkers and internatinal students in Malaysia, Prters generic cmpetitive strategy
f fcus is prpsed. The fcus strategy emphasizes n cst advantage targeting a
grwing niche segment which is the lw priced mbile plan catered f r f reign
wrkers and students (Rbbins et al., 2012).

The increase f freign wrkers and internatinal students has created a

demand fr lw Internatinal Direct Dial (IDD) calls and mbile internet service. T
serve the targeted segment better, a mbile plan is designed t suit their needs, which
includes lwer IDD rates and higher data usage fr mbile internet service while
reducing ther services like SMS and talk time as it is nt priritized by them.
Subscribers can chse t tailr their mbile plans accrding t their preferences.
Fr example, a subscriber wh des nt use the mbile internet service can transfer
the credits int IDD minutes. This allws subscribers greater flexibility t manage
their mbile plans, thus imprving custmer satisfactin.

Accrding t a research dne, the advantage f cst fcus strategy is having

the highest perfrmance n sales grwth (Dess & Davis, 1984). This strategy all ws
DiGi t increase revenue and market share. In additin, the implementati n f this
strategy will make DiGi the leader f the new emerging market segment.

The disadvantages are that DiGi sacrifices ecnmies f scale which wuld
be gained by serving a wider market. The ever changing cnsumer preference is als
a risk as DiGi has t undertake fr serving a niche market (David, 2011). Lastly, with
the fcus n nn-lcal cnsumers, DiGi runs a higher risk f default payment in
mnthly bills.

h. Quality Custmer Service

The secnd strategy is t rectify DiGis weakness f unsatisfactry custmer

service. Prters generic strategy f differentiatin is prpsed which fcuses n
creating a prduct r service with distinctive attributes that sets itself apart fr m the
cmpetitin (Rbbins et al., 2012). The strategy is t prvide superir custmer
service t DiGis subscribers t differentiate itself frm cmpetitrs.

During S.W..T analysis, pr custmer service was ne f the maj r

weaknesses f DiGi. DiGis custmers listed lng waiting time at service centres and
slw respnse time fr enquires as their main dissatisfactins. In rder t pr vide
quality custmer service, frnt line staff will be sent fr custmer service training
prgrams. Mre service centres and retail utlets will be established t prvide mre
lcatin ptins and reduce waiting time. Feedback channels like nline chat and
frums will als be develped allwing t interactin with subscribers.

The advantage f this strategy is the imprvement f brand image. In the lng
run, DiGi may be able charge a premium fr its prducts r services. An ther
advantage is that DiGi is able t increase custmer lyalty. Having lyal custmers
stabilizes the cmpany's revenue and lessens the impacts f market dwnturns (Lam,
Shankar, Erramilli, & Murthy, 2004)

The majr disadvantage f executing a differentiatin strategy is the high cst

required t implement the necessary measures t differentiate the rganizatin frm
its cmpetitrs (Hambrick & Fredricksn, 2001). The increase in retail
utlets/service centres and shrter respnse time t custmers enquires mre
manpwer. Tgether with the increase in feedback channels, the strategy requires
significant capital utlay fr implementatin. Anther disadvantage is that it takes
time t change the mindset f cnsumers t create a strng brand image in
cnsumers minds. During the prcess, the cmpany may nt have sufficient
custmer demand t ffset its higher csts, which may lead t a lss.

1.2.3.2 Selectin f best strategy

After careful evaluatin, it was decided that the fcus strategy, Lw Price
Plan will be implemented as it requires less mnetary lss risks. The strategy all ws
DiGi t direct resurces t value chain activities in rder t build a cmpetitive
advantage. With innvatin as ne f DiGis strength, DiGi has the ability t identify
the needs r preferences f the narrw segment t create a prduct t serve the
targeted market efficiently and effectively. If implemented successfully, DiGi will see
an increase in revenues in the shrt term while secnd strategy requires a lnger time
hrizn t have an impact n its revenues which may incur great lsses t DiGi.
Mrever, first strategy aligns with DiGis missin f delivering affrdable
telecmmunicatin packages fr all (DiGi, 2012). Despite DiGis reputatin f pr
custmer service, its subscriber base has increased steadily in recent years (The Star
nline, 2013). As such, custmer service has nt impeded DiGis sales grwth. Thus,
the fcus strategy is mre apprpriate as it allws DiGi t increase its revenue and
market share.
2.0 Cmpetitive Prfile Matrix

Critical Weight Maxis DIGI Telekm

Success
Rating Scre Rating Scre Rating Scre
Factr

Advertisin 0.20 3 0.60 3 0.60 2 0.4

g

Prduct 0.15 4 0.60 2 0.30 3 0.45

Quality

Custmer 0.20 3 0.60 3 0.60 3 0.60

Lyalty

Market 0.15 3 0.45 2 0.30 3 0.45

share

Financial 0.10 3 0.30 3 0.30 3 0.30

psitn

Innvati 0.20 3 0.60 2 0.40 3 0.60

n

Ttal 1.0 3.15 2.50 2.80

This table prtrays the cmpetitive scenaris f these 3 cmpanies, Telekm

Berhad, Maxis and Digi, the cmpetitrs in the telecmmunicatin industry in
Malaysia. Frm this table, it is fund that the cmpany Maxis sc res better
(strengths) in innvatin, prduct quality, advertising, custmer lyalty and assumes
minr strength in custmer service, price cmpetitiveness, and in technlgical
cmpetence. Albeit, Maxis cmpany has minr weakness in market share and
financial psitin. As a whle, it shw that Maxis enj ys mre c mpetitive
advantages s ttal scre is 3.15 and n the ther hand, Digi and Telekm ttal scres
are 2.50, and 2.80 respectively.
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