59596108-SLT-Assignment-1-1
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c c Strategy is the direction and scope of the organization for a long term which achieve competitive advantage in a changing environment through the resource allocation with the aim of fulfilling stakeholder expectation (Johnson et al, 2008). The strategic planning is the process of achieving long term organizational objectives through the setting of strategies. Sri Lanka Telecom PLC (SLT is the premier telecommunication services provider in Sri Lanka. And one of the country¶s most valuable blue chip companies with an annual turnover in excess of Rs 40 billion. It is a biggest telecommunication company in Sri Lanka with about Rs. Eight hundred million profit and 32% market share. The Company provides a huge range of domestic and international services which includes fixed & wireless voice, internet and data services that cater to a wide audience comprising of both corporate and domestic customers. Sri Lanka Telecom now operating in 330 regional offices in Sri Lanka. Sri Lanka Telecom started its operations in1858 with the establishment of telegraphic circuit between Colombo and Galle. In 1991 Sri Lanka Telecom became a corporation. In 1997 it was privatised. In 2008 Sri Lanka Telecom listed in Colombo Stock exchange. Now 49.5% owned by the government. The achievements of Sri Lanka Telecom are: Long term foreign currency rating ³B+´ Long term local currency rating ³BB-³ National long term rating ³AAA´. "All Sri Lankans seamlessly connected with world-class information, communication and entertainment services." "Your trusted and proven partner for innovative and exciting communication experiences delivered with passion, quality and commitment"
c Customer Caring- We put our customers at the centre of everything we do. Trustworthy
- We are true to our promises.
Innovative
- We continuously invent new opportunities through creative thinking.
Responsive
- We are ready to listen and act promptly.
Teamwork
- We are one team with a common purpose to achieve common goals.
Excellence
- We are committed to exceptional performance.
Results Driven - We are committed to enhancing shareholder value. ! " Promoting profit and performance driven culture. # Share holders Secretary to the Treasury, Global Telecommunications Holdings, Employees' Provident Fund Board, Sri Lanka Insurance Corporation Limited, National Savings Bank, Bank of Ceylon, Employees' Trust Fund Board, Alchemy Heavy Metals (Pvt) Limited, Eagle Insurance Company Limited, Deutsche Bank, Ellawala Exports (Pvt) Limited, The Ceylon Chamber of Commerce.
Board of Directors Mrs. Leisha de Silva Chandrasena, Sumith Wijesinghe, Sidath Fernando, Sandip Das, Chan Chee Beng, Je_rey Jay Blatt, Yoga Perera. Investors SLT Service Ltd, Mobitel Pvt Ltd, SLT Hongkong Ltd, SLT Publication Pvt Ltd, SLT Manpower solution Pvt Ltd, SLT Vision com Pvt Ltd, Sky network Pvt ltd, NIT Communication Corporation.
Suppliers Capscan, Avocent
IT Operations Management Solutions, Absolute Software Security
Solutions for Mobile Computers and Smartphones,DataFlux Data Management Technology,
c Geodis Wilson High Tech Freight Management Services, Hitachi Data Systems - Storage Economics, M86 Security - Web and E-mail Security Products.
Bankers Bank of Ceylon, People¶s Bank, Commercial Bank, HSBC Bank, Hatton National Bank PLC, NDB Bank.
Competitors Dialog Telekom, Etisalat, Hutchision, Lanka Bell, Suntel.
Sri Lanka Government. Organizational Structure Chair Person
CEO
Chief Information Officer
Chief Finance Officer
Chief Marketing & Sales Officer
Chief HR Officer
Director HR
Data Communic ation assistant
Staff
Finance Manager
Marketing Manager
Technical Assistant
HR Assistant Manager Accountant
System & Network Engineer
Promotion Assistant Staff
Assistant Accountant Staff
Staff
Staff
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(Fig 1.1) Figure 1.1 showing the current existing organizational structure of Sri Lanka Telecom. It is a divisional form of structure which is providing who is responsible for whom under each division. Mainly there are four divisions shown in the figure 1.1 which are information, finance, marketing and sales and human resource division.
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c & ' ( ) * + , " ** + - ) " c ) Internal analysis provides the information about the organizations¶ ability to compete and deliver the strategy. Lewis introduced 6 factors to analyse the internal environment of the company. The internal environment analysis of Sri Lanka Telecom is as follows Management Capabilities The management team members in Sri Lanka Telecom have MBA. Most of them have masters in mass media and telecommunication. All of them have more than 10 years experience in that field. Marketing SLT has a good brand name and strong market position with 32% market share. It uses powerful advertising technique to reach everyone. It has opened more than 100 regional offices in Sri Lanka. It placed as one of the top 5 company among 50 top business entities. Product and Services SLT provides good quality product and services with lower rate. It has succeeded the digital quality so it added more than 80000 new customers this year. Information Technology SLT is a telecommunication industry so absolutely it has best technological facilities such as computer and internet etc. Also services include downstream speed up to 4Mbps. Finance
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c SLT is one of the largest capitalised companies in Colombo stock exchange with annual turnover more than Rs. 40 billion. Reserve capital is currently Rs. 46,599 million. Assets are available more than a limit to meet the obligations. Good financial and cash flow statement. Human Resources SLT has the largest workforce with experience. Employees are well trained and deployed for better productivity. Performance evaluations are introduced to motivate employees and online attendance monitoring system introduced to improve efficiency. Many rewarding and satisfying programmes for long term are available. /, ) PESTEL and porters 5 forces analysis are used to analyse the external environment of an organization. Porters¶ five forces include the supplier bargaining power, buyers bargaining power, threat of entry, threat of substitute and competitive rivalry (Robert, 2008). PESTEL provide the comprehensive list of factors in external environment which influence the success or failure of strategic planning. (Johnson et al, 2008). For the Sri Lanka Telecom external environment analysis I am going to use the PESTEL model. Political SLT is paying 35% tax to the government currently tax rate expected to increase it will reduce the profit of SLT significantly. (SLT Annual report, 2010). So SLT planned to promote it product and services effectively to increase the profit margin. SLT has more government support in its activity because 49.5% owned by the government. Economic Inflation in Sri Lanka in 2010 is measured to 5.9% (Central bank of Sri Lanka, 2010) it has decrease compare to last year. Last year inflation is about 23%. Improvement in economy increases the disposable income so SLT can increase it profit. It happens because of the end of ethnic war. And also share price of Colombo stock exchange rising rapidly so SLT has increase its market share in Colombo stock exchange. Social
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c SLT products are mostly used by the business people. Therefore, SLT introducing many features and facilities on its product which are useful for business people. In Sri Lanka literacy level recorded to 93% (Legatum institute, 2010) it will help to increase the sale because information technology used by mostly educated people and if people have education at least some extent only can use technological product.
Technology Because of technological change SLT facilitate online shopping for the customer. It has reserved some amount to adopt new technology changes because it is a telecommunication industry. It adapts and changes the speed of internet and other services. Legal According to finance act no 11 of 2001 international telecommunication operators required contribute US$0.038 per minute to the government. According to the gazette information levy will be credited as incoming local access charge. Environment SLT offers several programmes to preserve the environment because environment is unpredictable and uncontrollable by anyone. For example tsunami in 2004 was affected Sri Lanka and other countries economy severely. SLT focus on developing a spirit of environmental consciousness among the country¶s youth. Also it has been motivating to raise the awareness of endemic species amongst people.
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c & ' 2 *) ) ! + - + ** * , " Sri Lanka Telecom has launched SLT broadband service in 2007 due to the technology changes. Technology is a miracle external environment. It changes continually. As a telecommunication industry Sri Lanka Telecom is very much influenced by the technology changes. It has started with telegraphic circuit in 1858 then it launched cable service, telephone service, telex and wireless service etc. because of the technology changes. SLT broadband is a fast and permanent connection to the internet with high speed bandwidth. It also converts the regular phone into high speed digital link and translates voice and data. Nowadays everyone using internet for various purpose. It helps to make human activities easy and fast. (ADSL) Asymmetric Digital Subscriber Line facilitates and support to download in different speed. Normal analogue modem facilitate the internet with the speed of maximum 56 kbps but Sri Lanka Telecom broadband Asymmetric Digital Subscriber Line has the speed of above 512kbps. Also Sri Lanka telecom Provide 7 different types of broad band packages to the customer. Online advertising also we can take the changes in the Sri Lanka telecom promotional activity. It is also an effect of technological changes. World widely everyone using online services and internet facility so everyone used to advertise their brand in online. Sri Lanka Telecom also spends more in the online advertisement and it has facilitated the online shopping due the changes of information technology.
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) Current business strategy of Sri Lanka Telecom Sri Lanka Telecom¶s strategies are developed to drive its journey to the future. It has developed a market oriented strategy. Sri Lanka Telecom is building a relationship with the customer and facilitating individual as well as businesses, through different and price attractive product availability. Win the telecommunication market through the market convergence. Providing high speed broad band services. Sri Lanka Telecom now concentrating on increasing the penetration in all the customer segments by improving the sales mix to reduce the disconnections and moves. Sri Lanka Telecom has opened over 330 base stations to provide effective CDMA services to the customer. In broad band it has introduced many packages to different group of customer with attractive prices. It also maintaining high speed and superior ADSL access in broad band. Sri Lanka Telecom using the price reduction strategy in all its product and services. Also it used NGN architecture to improve the coverage. It providing 24 month contract internet service with low price to maintain the customer. Also providing free CLI and other value added features for its mega office customers. Current business plan of Sri Lanka Telecom Sri Lanka Telecom currently planned to increase the demand for fixed PSTN services so that, it has plan telecommunication infrastructure network to bridge the north and east part of the country. It has currently under discussion to introduce the SKA interconnection system between operators. Sri Lanka Telecom also planned to introduce the telecommunication services in the northern and eastern provinces of the country because the people in that province could not get telecommunication facility because of the continuous war about 30
c years. Sri Lanka Telecom aim to enter in to the global IP market by expanding business relationship. It has also planned to reduce the call charges to the Middle East country because of most of the Sri Lankan migrate to Middle East countries for employment. Sri Lanka Telecom also planned to introduce CDMA broad band to the local market. It is also planned for new tariff for CDMA telephone connections. Planned to took afford towards the business diversification strategy to increase the profit growth within a country.
Competitive Position of Sri Lanka Telecom We can review the company¶s competitive position by using various models and techniques such as Industry Life Cycle, Boston Consulting Group Matrix and Strategy Clock etc. I am going to analyse the competitive position of Sri Lanka Telecom by using Boston Consulting Group Matrix (BCG) and Industry Life Cycle. Boston Consulting Group Matrix It is classified all companies strategic business unit according to the growth rate and market share (Kotler, 2008). High relative market share High market growth rate Low market growth rate
Low relative market share
Stars
Question mark
Cash cows
Dogs
(Fig 2.1 ) The above chart showing 4 different level of competitive position. Stars ± High market share high market growth. Question mark ± Low market share high market growth. Cash cows - High market share low market growth.
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c Dogs ± Low market share low market growth. Accordi g to this Boston Consulting Group Matri anal sis Sri Lanka Telecom is in the position of cash cows because it has about 40% market share (SLT annual report 2010) in the telecommunication industry. SLT is number one telecommunication industry in Sri Lanka. But compare to last year it has show 2% revenue decline. Profit also decreased by 6%. So it shows the high market share and low growth rate. Industry Life Cycle
SLT
( Fig 2.2 sources from: quick MBA 2010) It considers the general development pattern of the industry. It examines the industry¶s structural changes in the long run (Robert 2008). There are 5 stages a industry passing through development or introduction, growth, shakeout, maturity and decline. First and second stage industry faces low rivalry and low entry barrier. The industry life cycle concept is proposes that the industries start with the beginning of development stage then go through the period according to the growth. It shows simply what are the stages its passes through in whole period it is existing. Each of these stages is the implication of the Porter¶s five forces analysis. The first one is development stage here company faces low competitive rivalry and high differentiation product. The five forces are weak in this stage. Next is high growth with rivalry. High market opportunity is there. There will be entry barrier. Next is the shake out stage. The growth rate of the company started to decline so increasing rivalry and some exit. The next is maturity stage here the entry barriers will increase buyers become strong and entry barriers. Final stage is decline. Extreme rivalry and high exit barrier.
c According to the industry life cycle (Fig 2.2) Sri Lanka Telecom¶s competitive position is in maturity stage. Because it has already passed through the development and also it achieve the growth now it has build its brand image to customer and catch up high market share but now the growth rate is started to decline. Now in this level it¶s needed a new strategy to increase its growth. Profit is in under pressure. Research and development strategy is also low in this stage (Richard, 2006).
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! " -- - * 4 ) According to the analysis of competitive position of the company I can suggest two possible alternative strategy options under ANSOFF matrix (Product market expansion grid). Before that we will look at about the ANSOFF matrix. It is a most popular method used by the organizations to attempt to grow their business. This Product ± Market expansion grid support to identify the possible Product and market strategy option available to the organization. It shows 4 possible options which are shown in the figure below. Product ± Market expansion grid (ANSOFF Matrix) Existing product
New product
Market penetration
Product development
Market development
Diversification
Existing market New market
(fig 3.1) Market penetration ± It means the firm selling more existing product in the existing market. To achieve this strategy it need heavy advertisement sales promotion and price reduction to increase the sales. It can be achieve through the economy of scale.
c Market development ± it means the firm selling its existing product but in the new market. New market can be a new market segmentation or new geographical area like other country. It is needed a market research to indentify a new market. Product development ± this is an approach of developing or modifying a product. It can be a completely new product or the existing product with some modification. Through that a company can strengthen its competitive position in the market. Diversification ± it is implies a new product to the new market. It is a very costly option. It is needed a high amount of investment and also it is very risky too. There are 2 possible alternative strategies to support Sri Lanka Telecom¶s goals and objectives which are Market development and product development. Let us evaluate both strategies. " - Suitability Sri Lanka Telecom has high market share but low market growth rate so to increase the growth it can enhance its market coverage. Through the market development it can increase the sales and so that it can increase the profit. In Sri Lanka at about 2.7 million populations in northern and eastern province had no telecommunication solution (SLT Annual report, 2010). It is because of the ethnic war. These areas were under control of LTTE but now 30 years ethnic war came in to end. Now those areas are under development process. So, there is a new market available to Sri Lanka Telecom within the country. It is not a very difficult task to cover these geographical areas. There is relatively very low political and legal requirement. According to Sri Lanka Telecom¶s vision mission statement it has mentioned to provide world class quality telecommunication services to the customer and become market leader in telecommunication service. So to achieve the vision and mission market development will support. So, this is a suitable strategy to Sri Lanka Telecom. Acceptability Sri Lanka Telecom can assure the profit growth through the market development because, of new market segment available and people will be use the telecommunication services as it is
c very much useful for the communication as well as education purpose. There is a very lower level risk in this strategy because it will take short time period to implement this strategy. It also involve low relatively cost as it already in a position to provide service in Island wide. Sri Lanka Telecom is a leading telecommunication service provider in Sri Lanka so people will believe the brand name. Market development also will create new employment opportunity in the market. Share holder will have positive reaction because it will not affect their ownership. Currently government spending high amount on these area, to develop the economy as well as living standard of the country. So Sri Lanka Telecom will also get government grants to provide service to those areas. So this is a acceptable strategy.
Feasibility Sri Lanka Telecom has a reserve capital of Rs. 46,599 million in its financial statement. Also it shows a good financial position with Rs. 778 million profit and Rs. 90,308 million total assets. It has the largest work force and experience management team. Effective and good cash flow statement is available. It has good will. Also it maintains good liquidity and equity. It has financial ability to spend on market research also. So this strategy is also feasible. " - Suitability Sri Lanka Telecom is currently providing telecommunication services. It has high market share as mentioned. Because of it has low market growth the other strategic option it can uses is product development. People¶s taste and perceptions are changing continuously according to the environment change. So customers prefer to experience new product. Generally consumers are crazy about new products with high value and low price. Sri Lanka Telecom can develop and provide completely new product or service or it can also provide the product and service by modifying by speed and with other new technological features. It has already create or maintain a good brand name so, that will support to market the new product in the market. Sri Lanka Telecom also created a good customer relationship already. Also Sri Lanka Telecom created brand and customer loyalty so this strategy is suitable to Sri Lanka Telecom.
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c Acceptability Under the industry life cycle analysis Sri Lanka Telecom coming under the maturity stage. Therefore, product development is acceptable in this stage. It will help to achieve the profit growth. Through the product development it can ensure the profit and success because technology is continuously changing if the product and service adopt the changes and improve the features and process according to the new technology only customer prefer to be a permanent customer of a company. In the telecommunication field changes are important to win the market. For an example Coca Cola Company has introduced diet cock. Diet cock is product development strategy of that company but it is not a completely a new product it is a modified product. Using this strategy coca cola still maintain its market share and market growth. This is because of the brand name. Likewise Sri Lanka Telecom also has the brand name so this strategy is also acceptable. Feasibility Sri Lanka Telecom has proved its financial ability through its financial statement. According to the Sri Lanka Telecom annual report (2010) it has recorded largest work force so the human resource and financial resource are in optimum level to support the product development strategy. As Sri Lanka Telecom is a telecommunication industry it has the information technology resource also. Favourable and good cash flow statement shown in the financial statement. Therefore this strategy is also feasible to Sri Lanka Telecom. According to the evaluation of the alternative analysis I can recommend that market development strategy is the most suitable strategy than the product development. There are many opportunities to the Sri Lanka Telecom to enter into the new market. Sri Lanka Telecom already has the brand name so, it is easy and possible the market development strategy. Also there is a huge market in Eastern and Northern provinces. In Sri Lanka at about 2.7 million population living without the telecommunication solution. So it is the opportunity for Sri Lanka Telecom to implement the market development strategy.
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Chair Person
CEO in East
CEO in North
Chief Information Officer
CEO in west
Chief Finance Officer
CEO in South
Chief Marketing & Sales Officer
Chief HR Officer
Director HR
Data Communic ation assistant
Finance Manager
Marketing Manager
Technical Assistant
Market Research & Development
Manager Accountant
HR Assistant Manager
Promotion Assistant
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Staff
System & Network Engineer
Staff
Staff Assistant Accountant
Staff
Staff
(Fig 4.1) Under the every provincial CEO the structure will be same as which is shown under the CEO in west that mean under the CEO East there will be a chief information officer, chief finance officer, chief marketing officer and chief HR officer likewise same structure will be there for CEO in North and CEO in south until the staff or the bottom line of the structure. When there is a change in a strategy it requires to change the structure of the organization according to the new strategy because to implement the new strategy effectively. There mainly four different types of organizational structures used which are functional structure, divisional structure, strategic business unit structure and matrix structure. According to the new strategy of Sri Lanka Telecom I have change the existing structure. The new structure is the divisional form of organizational structure. The new strategy I have recommended for Sri Lanka Telecom is market development that is existing product to the new market. So, I have right size the existing structure and restructure it. Here I have added three other CEO for other province of Sri Lanka. According to the existing structure one CEO controlled west and south part of Sri Lanka but, now there is an opportunity to enter into the east and north part of the area. Because, of the end of 30 year ethnic war. One CEO cannot control all the activities of all area. According to my market development strategy the market developed to cover all the part of Sri Lanka I recommend 4 CEO for four main parts that is East, West, South and north province of Sri Lanka. In the existing structure we can see that there is marketing manager under the responsibility of Chief marketing and sales officer. I have included another manager who is market research and development manager under the responsibility of Chief marketing and sales officer. Market research and development manager is required for the research the market and find out the market opportunity and also to find the opportunity to implement the market
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c development strategy. Marketing manager along cannot contribute for the new market development strategy so there is a requirement for new manger to implement the market development strategy effectively and efficiently. So that market research and development manager can work with the marketing manager to identify and implement the opportunity for the new market development strategy. Under staff there will be more staff recruit to implement the strategy. Because of the market of Sri Lanka Telecom going to be expand to all the area in Sri Lanka there is a requirement for more staff and also the management team. Because there will be separate CEO and other managers for other four part of the country. & % ( ) +4)4- * + - * ) + - - " **4 )- Strategy plan is the written document of the strategic planning process of the company. It includes the company¶s objectives as well as the strategy for achieving the objectives. It defines the strategic approach of the business. The strategic plan will be prepared by analysing the internal and external factors which have influence in the business. It will be mostly successful because it takes the participation of the organizational members. The key steps involve in the strategic planning are as follows:1. Defining corporate mission 2. Setting corporate objectives and goals 3. Designing the business portfolio 4. Designing the key business unit strategy 5. Functional plan. The strategy plan of Sri Lanka Telecom Corporate mission
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c Become a market leader of Sri Lanka in telecommunication service by providing a high quality services and provide the opportunity to experience the telecommunication service to the customer. Corporate objectives Create and develop brand recognition Achieving profit growth Increase the market share Providing best quality services with lower price.
Business portfolio Sri Lanka Telecom providing service under one business it providing telephone call service, postal service, internet services.
Business unit strategy Market development is the Sri Lanka Telecom strategy to achieve its objectives. Functional strategy Under marketing it has develop many promotional strategies to support the business strategy. And it has selected the north and east province to enhance its market. Strategy can be achieve through cost reduction, improved quality of product and services, through the enhancement of customer preference and the increase of competitive leverage (Henry et al, 2003). 3 3 : To implement the strategy of the business there is a requirement to allocate the resources. Because resource are limited so we have to allocate the scare resources to implement the plan there are four main resources required for the strategy implementation which are financial resources, physical resources, human resources and technological resources. Sri Lanka Telecom has proved their financial resource through its financial statement. It has favourable
c and enough reserve capital and also it has the ability to finance the business through the internal as well as external sources. Technological resources it has in optimum level because it is a telecommunication industry so it used to adapt new technology to provide quality services to the customer. It has sign an agreement and contract with other technology supplier to get technology resources in low price. Sri Lanka Telecom has high labour force. Sri Lanka is rich with labour force and labour is also very cheap in Sri Lanka so, Sri Lanka Telecom can get human resource from its country with lower rate and also there are many skilled labours who are highly skilled in information technology and other technical work. Sri Lanka Telecom also has physical resources to implement their strategy. So Sri Lanka Telecom needs to allocate these resources efficiently and effectively to support the achievement of its objectives through the implementation of the business strategy.
Timescale should be selected for the strategy implementation because if we set the time target then it is easy to control the strategy. Control is the final step in the strategy implementation if we set the time target we can check whether it is achieved or it is in the correct path of directing to achieve the objectives. So according to the Sri Lanka Telecom new strategy it has set the timescale for three years to achieve the objectives. It has to spend some time into the market research and it has to made technical work like setting coverage etc. So it will be take 3 years to achieve its new strategy.
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Central Bank of Sri Lanka (2010) . [Online]. Available from: http://www.cbsl.gov.lk/. [Accessed 26 January 2010]. Central Intelligence agency (2010) . [Online]. Available from: https://www.cia.gov/library/publications/the-world-factbook/geos/ce.html. [Accessed Grochels, L. (2010) .[Online]. Available from: http://www.quickmba.com/marketing/product/lifecycle. [Accessed 8th January 2010]. Henry, M. Et al (2003) . 4th ed. England: Pearson education ltd. Johnson, G. Et al (2008) . 8th ed. England: Prentice hall. Kotler, P. (2008) . 5th ed. England: Pearson education ltd. Legatum institute (2010) . [Online]. Available from: http://www.prosperity.com/country.aspx?id=SE. [Accessed 26 January 2010]. Richard, L. (2006) . 4th ed. London: prentice hall.
c Robert, M. (2008) . 6th ed. UK: Wiley. Robert, M. (2008) . UK: Johnwiley & sons Inc. Sri Lanka Telecom [no date] . [Online]. Available from: http://www.slt.lk/data/investor/index.asp. [Accessed 4 November 2010]. Sri Lanka Telecom Annual Report (2010) . [Online]. Available from: http://www.slt.lk/data/investor/pdf/annual_report_2009/annual_report_2009.pdf [Accessed 5 November 2010].
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