Telenor Final

Table of Contents INTRODUCTION....................................................................................................... ....2 STRATEGY FORMULATION...........................................................................................4 VISION................................................................................................ .....................4 MISSION................................................................................................................. ..4 VALUES.................................................................................................... ................5 EXTERNAL ENVIRONMENT.......................................................................................5 INTERNAL ENVIRONMENT........................................................................................7 LONG TERM OBJECTIVES......................................................................................... .7 STRATEGIES.................................................................................................. ...........9 STRATEGY IMPLEMENTATION.................................................................................... .10 OBJECTIVES.................................................................................. .........................10 POLICIES...................................................................................................... ..........10 A STRATEGY SUPPORTIVE CULTURE.......................................................................11 HUMAN RESOURCE STRATEGIES............................................................................13 DIVERSITY.............................................................................................................. 15 STRATEGY EVALUATION............................................................................................ .16

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INTRODUCTION Telenor Pakistan, a wholly owned subsidiary of Telenor ASA, launched its operations in March 2005. One of the leading telecom operators providing prepaid, postpaid and value-added services to seven million customers, it is spread across the country with a network of 15 company-owned sales and service centers, more than 200 franchisees and some 100,000 retail outlets selling subscriptions and refills. Differentiated packages include TalkShawk, Telenor Persona and Djuice.

Telenor took a big step seven years ago when it decided to expand in international markets. The key take points include: right time, targeting of emerging markets, policy of full management control (avoided joint ventures) and deployment of a repeatable methodology (for example the djuice brand). The success of the strategic focus can be understood from the following1:

1

http://telecompk.net/2008/12/30/telenor-emerging-market-strategy-success-swot/

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Telenor believes: “What matters most is the right strategy, at the right time and precision in execution.”

STRATEGY FORMULATION 3 | Page

VISION2

MISSION3 Telenor's primary goal is to create greater value for our shareholders, We exist to help our customers get the full benefit of communications services in their daily lives.

customers, employees and partners, and for society in general. We strive to be a driving force in creating, simplifying and introducing communication and content solutions to the marketplace.

VALUES4 EXTERNAL ENVIRONMENT

SEGMENTATION Market

Toda

Feature Year

Segment

y

Estimate

25%

27%

Youth/ Students 2

http://www.telenor.com.pk/about/visionValues.php

3

http://creativez.blogster.com/mission-statements-different

4

http://www.telenor.com.pk/about/visionValues.php

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Existing Product

Profitabi lity

Djuice, TalkShawk

29%

Women

10%

20%

TalkShawk

21%

Financially

40%

23%

TalkShawk, Telenor

20%

Constraint Corporate/ SME

Azadi 25%

30%

Postpaid Packages

30%

CPM CPM Critical Success Factor Advertisin g Product Quality Price Competiti on Managem ent Financial Position Customer Loyalty Global Expansion Market Share Total

Weight

Mobilink Rating Score

Warid Rating Score

Ufone Rating Score

Zong Rating Score

0.1

2

0.2

2

0.2

3

0.3

3

0.3

0.15

2

0.3

2

0.3

3

0.45

3

0.45

0.1

3

0.3

2

0.2

3

0.3

3

0.3

0.1

3

0.3

2

0.2

4

0.4

3

0.3

0.1

4

0.4

2

0.2

3

0.3

2

0.2

0.15

2

0.3

2

0.3

3

0.45

2

0.3

0.1

3

0.3

2

0.2

1

0.1

3

0.3

0.2

4

0.8

2

0.4

3

0.6

2

0.4

1.0

2.90

2.00

2.90

2.55

The intense competition in the telecom industry has made it really difficult to survive the financial crunch has added to the difficulties of the telecom service providers. The most important factors in that need to be considered while making a strategic plan are customer loyalty which generally is based on the quality of the service provided and this determines the market share of the firm. Advertising is a double edge sword; good promotion attracts the customer while bad one distracts them. In telecom industry a common 5 | Page

practice is to eat competitor’s market share by indulging into price wars but one must set a limit otherwise it could backfire and sunk the company. Company needs to plan all its operations depending on its financial health never ever pick up industry giants for one on one fight and avoid taking leverage position instead go for the cost cutting strategy. By looking at the matrix it is evident that Mobilink and Ufone are at the front while Warid is lagging behind in competition. On the other hand Zong’s performance is average in industry.

INTERNAL ENVIRONMENT

LONG TERM OBJECTIVES 1. To deliver increased profitable growth Telenor seeks to increase core mobile revenues. Telenor is also investing in adjacent markets such as basic financial services and machine-to-machine (M2M) communication. 2. To strengthen our performance culture Telenor will continue the successful practice of combining a local approach with global expertise. This means that the local management teams will build a unique performance culture based on their own initiatives and in line with the Telenor governance model, Codes of Conduct, vision and values and people policy. In terms of Health, Safety and Environment (HSE), their objective is to improve working conditions and environmental management by having clearly defined standards across the operating company and supply chain. 3. To make responsible business a competitive advantage 6 | Page

Corporate responsibility at Telenor will be part of managing risk and linked to the core business. Telenor has a strong track record when it comes to sustainable business: it was ranked top performer by the Dow Jones Sustainability Indexes (DJSI) in 2007 and 2008. 4. To provide a superior customer experience Faced with an increasingly competitive environment, Telenor needs to differentiate itself by providing a superior customer experience. In the vision and core values, they put customer experience at the top of the agenda. One of their ambitions is to reach a situation where end-users’ brand preference is higher than the Telenor market share. 5. To ensure best practice benchmarking A global objective is to achieve a higher reduction in the average operational cost per minute than the expected decline in average price per minute. Telenor aims to achieve considerable continued growth in operating cash flow from its operations. 6. To drive change and constant renewal To secure a strong industry position, innovation is paramount. Major areas identified are: •

Their long-term ambition is to achieve the same position in broadband (mobile and fixed) as they have in mobile voice today.

•

Telenor aims to establish itself as a significant player in parts of the financial

services

industry

in

select

under-serviced

markets,

establishing a platform for long-term growth. •

Telenor controls many valuable assets that can be further developed together with partners. Partner-driven innovation is a cost-effective way to create many new revenue-generating services. Objectives

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2006-07

2015

ARPU(Average Revenue Per

$4

$6- $8

10%

40%

Market Penetration

9%

30%

Market Share in terms of

7%

30%

5% – 6%

10%

20%

90%

User) Market Share in terms of Subscribers

Revenue EBITA(Earning Interest,

before Tax

and

amortization) Unprompted

Brand

Awareness

STRATEGIES •

Market Penetration

•

Diversification in new directions and regions

•

Focus on mobile internet

•

Acquiring a microfinance bank

•

Global expansion (Telenor has also entered the Indian market by taking a stake in Unitech Wireless)

•

Mix of differentiation and low cost

•

Lower capital expense investment due to recession/ slow market growth

•

Utilize 3G technology opportunity

STRATEGY IMPLEMENTATION 8 | Page

OBJECTIVES Prepaid- djuice, talkshawk Postpaid- persona Achieve a SIM penetration over 70% Attain a market share above 25% Maintain EBITDA in mid thirties Obtain a ratio of Capex/sales below 25% Capital expenditure was related to network roll-out to accommodate subscription growth and increased traffic Increase Subscription growth

POLICIES

A STRATEGY SUPPORTIVE CULTURE SOURCES OF CULTURE AT TELENOR PAKISTAN PEOPLE Telenor Pakistan consists of energetic, youthful and dedicated employees aged 27 to 28 on average. An appropriate match is required between the culture and employees at recruitment and hiring. If People Excellence (Human Resource Department) feels that a person will not be unable to adjust into the organization’s environment, even if he/she is performing functionally well, the person is rejected.

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Primarily the culture comes from the top management. CEO of Telenor Pakistan is humble and cooperative. The employees get the message that if the top management is so accommodating then the employees should behave similarly. What is important to the CEO becomes important for employees to identify completely with the organization. There are four foreigners in the top management but this does not create communication barriers. They are extra humble to others while individuals of a local origin are extra sensitive to them so no one feels alienated. The values of humbleness and free interaction in putting forth ideas lead to a harmonious culture and efficient communication. The management is easily accessible to discuss various issues. It is difficult to distinguish between them as the culture is so homogeneous that it keeps every one at par with others (no formal protocol is given).

ORGANIZATIONAL ETHICS While making any decision, Telenor Pakistan has been ethically conscious. Since Telenor (the parent company) has is origins in Norway, a society with a soft-oriented and feminine culture, Telenor Pakistan acknowledges its moral and ethical duty towards its stakeholders and society. Telenor Pakistan will not resort to bribery or illegal offers to accept any decision; values will not be compromised to get licensed. If the organization believes it is not ethically right, it will never take that decision. In most of advertisements they project themselves as the care taker of the values of Pakistani people, so they claim to cherish the core cultural norms and values of the Pakistani people. When the cartoon controversy arose, Telenor condemned such actions mocking religious beliefs and portrayed this on their building.

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ORGANIZATIONAL STRUCTURE The organic structure of Telenor Pakistan promotes cultural values that result in integration and coordination.

CEREMONIAL RITES AT TELENOR PAKISTAN Type of Rite Rite of passage

Instances of Rite Orientation Sessions

Purpose of Rite Learn and internalize

Rite of integration

Eid Milan Programs, Halloween

values Build and reinforce

Parties and announcements of

common values

Rite of

Telenor’s success Legends, Press Releases,

Integrate and

enhancement

Employee of the Year Rewards,

enhance cultural

Employee Promotion and

values

Rotation

At Telenor, People Excellence reinforces the culture through the concept of a ‘LEGEND’ for individuals who have performed outstandingly. These become role models for other people and their examples are quoted on various occasions (forum or ceremonies), so every employee is internally motivated to work harder.

The new recruits are given orientation sessions where they are made to familiarize with the values and norms of the organization and how they can contribute to the organization even better. They are also provided with a Joining Book that comprises of the code of conduct and complete structure of policies and values.

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HUMAN RESOURCE STRATEGIES The Human Resource at Telenor Pakistan is their core competency. The reason is that the employees create a culture and all the achievements of Telenor are attributed to its flexible culture. It is necessary to motivate and retain this asset of the organization. For this purpose, training and compensation is provided to employees along with other motivational techniques.

TRAINING The methods of training differ from function to function. On-the-job training is required in the Customer Relationship Department (CRD) and similar system training in the IT Department. Management Training Programs combine experiential learning with theory. Leaders are chosen according to the following role expectations: LEADERSHIP EXPECTATIONS FOR TELENOR PAKISTAN

COMPENSATION The core compensation includes: Base salary

LEADERSHIP EXPECTATIONS Bonus/commission

Long-term incentive plans

In addition, Telenor offers a total package that may include insurance, recreational activities and other benefits adapted to the local market and individual employee’s need. 12 | P a g e

Managers are rewarded according to the achievement of assigned goals. Apart from monetary rewards, such as variable pays/increments, other motivational tools such as recognition (Employee of the Year rewards) are used.

CAREER GROWTH Initially, qualifications are the defining criterion for fresh graduates. For career growth, the right mix of performance on the job and performance potential for the other level is imperative. Apart from the right attitude, knowledge also matters. If an individual from Finance gets a higher degree, for instance, becomes a chartered accountant then the chances of growth increase. There are no specific career paths: Vice President (VP) of Human Capital Division (HCD) became the next Chief Marketing Officer (CMO).

EMPLOYEE MOTIVATION Underperforming managers are encouraged through coaching and counseling by their respective directors or the director of People Excellence. The turnover is not high as compared to that of the industry. There is no defined employee exchange program. Employees performing exceptionally well are taken up to work in the Telenor Group.

Relocations

are

common

in

the

organization:

employees

are

transferred from People Excellence to Finance or from Procurement to Customer Relations. Investment per employee is placed at the higher end of the industry. 13 | P a g e

DIVERSITY Telenor Pakistan is keen to promote diversity and has achieved good results in this area. Telenor has developed requirements for diversity in both recruitment and our management development programs. There is an appropriate blend of less seasoned and experienced employees. No quota has been assigned; the best-fit candidate (according to the job requirements) is employed. At the office level or call centers, even fresh graduates are apt but the director level requires a masters degree and preferably some work experience.

Telenor Pakistan has a large proportion of females who are recruited for internal leadership development programs and executive positions on the basis of past performance. The organization is working on Day Care Centers to help female employees manage their responsibilities after settling down. Relocation issues are dealt cooperatively when female individuals move out of the city after marriage and wish to continue working. They are relocated and facilitated in the new city.

STRATEGY EVALUATION REENGINEERING: AFTERMATH OF FINANCIAL CRUNCH 14 | P a g e

Telenor has attained a competitive advantage in the market by aligning competences and strategies. Highly motivated employees and flexible culture enables them to achieve an edge over competitors. COMPETITIVE ADVANTAGES OF TELENOR PAKISTAN

Improving our performance management The Telenor Group aims to create a stronger link between the strategy process

and

performance

monitoring.

All

operating

companies

will

implement a new and improved management model where strategic objectives and ambitions are monitored closely at both the company level and the lower department level.

Since its launch of services in March 2005, Telenor Pakistan has exceeded all expectations: It has created the second largest mobile network and the largest and most advanced data network in the local market, turned into the second highest revenue-generating mobile player with the highest Average Revenue Per User (ARPU) in the market, and become the second largest mobile player in the market with 18 million active subscriptions in little more than 3 years of operations. During the first half of 2008, Telenor Pakistan added 3.24 million subscriptions against the industry average of 1.63 million, taking 33% of the market share of net additions over the period – the highest in the mobile sector in Pakistan. The company has created 2500 direct and more than 25000 indirect employment opportunities with 100,000+ retail outlets and 200+ franchises in addition. 99.9% of these employment opportunities belong to Pakistanis. Initiated with a relief effort worth 95 million rupees in the wake of the devastating earthquake of October 2005, Telenor Pakistan’s community contributions have extended over the years to include education, empowerment, enterprise, and environment - with special focus on bringing 15 | P a g e

the telecom promise within the grasp of the most disadvantaged sections of the society. Telenor Pakistan has received several awards for its solid performance in key areas of activities: Federation of Pakistan Chambers of Commerce & Industry’s Telecom Excellence Award in Foreign Direct Investment in June 2006 Central Board of Revenue’s High Tax Payer Award 2004-5 in January 2006 The Pakistan Society of Human Resource Management’s Preferred Graduate Employer Award for Most Preferred Telecommunications Company 2007 among MBA students SAARC Communication Industry Conference 2007’s Most Innovative Mobile Operator Award and Mobile Operator with the Most Consumer Pull Award Telenor Global Brand Award for the year 2007 All Pakistan Dawn Aurora Advertising Awards in three of five nominated categories in March 2007 The National Forum for Environment & Health’s Annual Environment Excellence Awards 2008 Lahore Chamber of Commerce & Industries’ Appreciation Award for the Largest FDI and Rawalpindi Chamber of Commerce & Industries’ Achievement Award 2008 The Helpline Trust’s 2nd Corporate Social Responsibility Award 2008 Telenor Pakistan is committed to bringing true mobile innovation to the under-served masses of Pakistan. The company has picked up two Universal Service Fund projects in order to provide connectivity to the yet unconnected in the remotest areas of Pakistan. It aims to invest strongly for further network expansion into the rural areas and for the rollout of third generation of mobile technology (3G) in Pakistan. 16 | P a g e

SWOT Analysis An overall evaluation of Telenor’s Strengths (S) Weakness (W) Opportunities (O) and Threats (T) are as follow: Strengths Network quality & design Superior customer care Financial Strength Excellent Coverage & Distribution. Commercial Launch of LDI & mobile services Contract with Siemens & Nokia Brand image of Quality PTA initiatives E-commerce usage. Weaknesses Relatively low market share Low profit margins Negative cash flows in the initial years Opportunities Favorable Macroeconomic indicators low cellular market penetration Inefficiency & poor performance of other mobile networks Co branding e.g. Ufone with ABN AMRO Strategic Alliances & Infrastructure Sharing Facilities International Mobile Equipment Identity System Threats 17 | P a g e

Rolling Customers Privatizations & deregulations- increased competitions. Grey Traffic MNP mobile number portability Wireless technology at boom Public pay phones & calling cards usage where network is not available Propagandas attacking brand image

Opportunities

Strengths

Weaknesses

SO Strategies

WO Strategies

• •

Introducing 3G

similar industries

Make the post

e.g. DSL services

more attractive ST Strategies •

Co branding with

pre-paid packages WT Strategies •

Protect image

other industries

CSR efforts •

Capitalize and

Use other

promote EDGE

mediums of

technology

than conventional advertising

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More attractive

through constant

promotion other

BCG

•

companies in e.g. Banks •

Diversifying into

service paid package Threats

•

Boston Consulting Group is used to help corporations with analyzing their business units or product lines. This helps the company allocate resources and is used as an analytical tool in brand marketing, product management, strategic management, and portfolio analysis. This BCG matrix is with respect to the competition that exists for Telenor in the telecom industry. This includes the following mobile operators: •

Mobilink

•

Ufone

•

Warid

•

Zong

The

reason

why all the companies are place in either question mark or star is that it is a

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growing industry and overall the market share is increasing however individual players may not be doing well. The reason why telenor and Ufone are placed in stars is that their relative market share is increasing which is visible by their sales and ARPU. Mobilink although very old in the market is now losing its relative market share to both Ufone and Telenor. Mobilink is now investing in its brands and have engaged in price wars to stay competitive and regain its market share. Same is true for Warid and Zong, the only reason why they are placed in question mark is that the overall industry is growing however their individual performance has been poor over the years. Ufone has changed its strategic policies. It has gone through rebranding and emerged as a more successful company. Now if we talk about Telenor ,it has gained a favourable position in the industry through effective advertising and packages. It can also be attributed to effective utilization of its Human Resource to gain a competitive advantage in the in the industry.

FUTURE OUTLOOK 20 | P a g e

Following can be the future plans of action that Telenor can pursue in order to ensure sustainable growth: Improve network quality to make it a sustainable competitive advantage Develop an employee exchange program for enhanced employee motivation Establish a coordination department/integrated IT system for effective communication Introduction of employee stock options Quota for the disabled people for greater CSR and diversity Building an organization with competency, capabilities and resource strengths Developing Technical Know How in Employees Developing budgets to steer ample resources into critical value chain activities Creating strategy supportive policies and procedures Instituting best practices and a commitment to continuous improvement Installing support systems and Value added Services

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Maintain low cost

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