Describe about the Strategic Management Report for Broadband Media Services.
Singapore and Indonesian telecommunication market is dominated by three major telecommunicating companies; Singtel, Starhub and MI. According to the macro economical facts in the global markets of Singapore and Indonesia the reports searches and analyses the key factors of success for Singtel in the telecommunication market. The report is majorly divided into five parts to answer five important questions to describe the efficiency and competency factors of the major brand in the global and local telecommunication market. The first question analyses the value chain of Singtel according to the financial report and return of investment for 3-5 years. The next question identifies major competency factors of the major telecommunication brand and justifies its capitalistic strengths for competitive advantage in the market of Singapore. Third question in the report scans the macro environmental key factors in the market of Indonesia. The next question searches strength factors of three major telecommunicating companies in Indonesian market and compares the factors with the strength factors of Singtel. Furthermore the fourth question explains how these strength factors of Singtel help the brand in market level competition effectively. The fifth and last question checks different modes of available entries for the telecommunicating firm and identifies the best mode of entry for Singtel with proper justification.
According to the Porter’s Theory of Competitive advantages Value chain analysis separates growth activities from the waste activities to define the overall progress of a brand (Gereffi and Fernandez-Stark, 2011).. The growth activities add values in important sectors of the firm. The activities may include:
Growth activities are further divided into primary/fundamental and support/secondary functions. The fundamental functions analyse the basic operations of the firm like internal structure, monitoring and maintenance of quality, brand factors and economic culture etc. The secondary functions are useful for supporting the basic operations (Dedrick et al. 2011). They can be the different communication levels like management and human resource, brand’s action in various economic and technical situations, feeders of marketing strategies etc.
The Value chain analysis of the telecommunication brand Singtel depends on four major chains, according to the financial reports of previous years. They are mobile marketing, digital network marketing, Secure Broadband and service management. The support functions here are inputs from business and shareholder discussions, materiality documentation of working members and detailed desktop research documents (Bengtsson and Berggren, 2008). The outputs of the fundamental functions show the weakness, strength, threat and opportunity factors for future planning and mission. Therefore the outputs give the return of investments for the firm.
From 1971 to 2016 the telecommunication company reflects its innovative nature from the first satellite building to first 4G connections in Singapore. Stable ROE and free cash flow have increased the net profit of the company by 2% in 2016. In the highly competitive telecommunication market Singtel’s strength factors are robust cyber security, unity in business teams instead of geographical diversity and data –centric planning for core business in Singapore and Australia. The overall analysis in given below:
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Value chain factors |
Financial report (Singtel) |
ROI |
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1. Internal logistics: 2. Basic operations: 3. External logistics: 4. Sales and marketing: |
1. The internet, cloud and smart city security use integrated data-centric network. 2. The corporate governance depends on the audit, nomination, execution ,GCEO , risk and management teams 3. Digital services as final products depend on OTT service, Geoanalytics and digital marketing 4. Communication and channel management is based on proactive system. Safety and equality depend on social hotspots and team-wide cycle |
According to the financial and audit reports of 5 years the return of investment includes: Critical factors like: · Revenue recognition timing · New product and price introduction · Long term arrangement for ICT projects · ATO audit issues · Broadband equipment vendors like fiber/submarine cables · VPN/ data center maintenance But the infrastructure factors show that net profit after tax is increased by 2% while the operational expenses is decreased by 3%. Moreover the basic earning per shareholder shows a upward graph by 2.35%. Finally 8.2% investor inclusion proves high customer and data growth in the firm. |
Key or core competency of a business identifies the major strength and technical factors to stand firm in competitive market (Guillén and García-Canal, 2009). The key competency factors with justification for Singtel are discussed below:
Long term investing strategy: The 130 year old Telecommunication Company use long term planning in collaborative and distributive business network (Tipton, 2009). The long term investing strategy includes multimedia planning, reforming social structure, innovative digital communication like Dataspark, cellphone video streaming (HOOQ) etc.
Organization Infrastructure: The supreme level of the organization in under a group of CEOs and they get the immediate reports from the audit, management and finance department. The distributive tree structure of the BOD is an advantage in this case (El-Wahid and Su’ad Husnan, 2011 ). The local and international market boards are under different CEOS and unit level work distribution can save troubles like sudden planning and strategy changes.
Corporate Governance: The corporate culture depends on the specific post definitions and the proper distribution of work load in team identifies with proactive management system. Six independent and three non-independent directors in BOD are responsible for long term planning and value added services to the shareholders (Borio, 2014). The CGNC review team and low gender diversity level are other success factors for the brand.
Target consumer group: The consumer support is under strong observation. The technical interruption in the network has changed the old voice centric network into data centric network. Moreover the customer strategy is increasing the application of seamless network with excellent coverage. The rapid changes in digital market are adopted efficiently as Singtel is focusing on the IOT and 5G services (Medudul et al., 2016). The international consumers are also under equal observation. The success of Optus retail is the proof in Australia. Extended data pool and prepaid connections are eyeing the ‘customer first’ slogan. 400 million satisfied customers are increasing the network every day.
Technology: The spectrum band and radio technology provider Singtel is always flexible with the idea of new technologies. Using 1800 MHZ band range in Australia the telecommunication firm introduces Wi-Fi talk in limited coverage areas and increase the use of 4G network in customer. Singtel also encourages the transformation of3G digital service into 4G introducing new technical services like smart cities, satellite communication and cloud services. Moreover the strong cyber security applications like VPN and partnership with ‘FireEye’ have decreased the communication threats for enterprise consumers.
Risk management: The risk management platform depends on the integration control from the unit level in all the work teams. The 28 divisions of risk factors from internal environment to functional level are viewed under COSO. The risk tolerant factors depend on the daily risk management reports and senior management communicates the stakeholders with high level of transparency (Ardyan and Aryanto , 2015). Shareholders participation in regular meetings and electronic polling maintain the standard of transparency. SGX policies and ethical standard maintenance are strict and consistent.
3: Pestle or Pest analysis finds the market environment factors for a business in practical scenario. Using the business tool the external macroeconomic factors are identified and the word ‘Pestle’ introduces six factors using the initials of each word (Novianti, 2008). The factors are politics, economics, society, technology, law and environment respectively. In this case the Pestle analysis identifies the macro economic factors of Indonesian market.
The business tool answers certain questions considering the macro economic factors. The first factor checks the recent political situation and its effect on the industry/market. Economic factor identifies the type of market (open/ oligopolistic) and type of competitions, entry and exit levels in the industry as well as factors like GDP, NNP etc. The third or social factor searches customer interests, ethics and the cultural effect on the market (Al-Kaabi et al., 2010). The technological factor checks the result of new technological innovation/ changes in the domestic and international segments of the market. The fifth factor or law identifies the specific rules and policies effecting the industry as well as the industry’s effect on certain policies. The last macroeconomic factor environment finds the effects of nature (weather/ natural calamities/ farming) over the industry.
The scanned result for macroeconomic factors of Indonesian market is given below:
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Macroeconomic factors : Indonesian market |
Analysis |
|
Politics |
Two affiliations are formed among 12 political parties in 2014 and the development strategy is receiving mixed review from the recent splits among the parties. The minor changes can benefit the Jokowi and the market is somehow stable under the condition. |
|
Economics |
The recent recovery from the 2014 inflation rate of 6.4% probably get a recovery using the increasing rate of economic growth by 6%. The US dollar demand rate has decreased while BPO level is still more than 10% of the total population (Ojala , 2009). Market is under rigid monetary policy. |
|
Society |
Gender diversity shows stable value whereas domestic market depends on the major Muslim culture and minor Hindu Buddhist culture. The population has high intensity (Aidi, 2012). |
|
Technology |
Agricultural sectors shows application of updated technology whereas the other industry uses old systems. However telecommunication only includes e-booking/payment method is hospitality industry. The technological demand is high as the country is one of the largest users of social networking medias (Facebook/Twitter). |
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Law |
Uncertain Foreign invest and negative investment graph in energy and transportation segment of the market. Legal policies take long time to be active due to different views of political parties and affiliations (Munoz et al., 2010). |
|
Environment |
Moderate level of environment pollution but high level of deforestation and greenhouse gas production. The source of pollution indicates the actions from energy and manufacturing sectors. |
The top 3 telecommunication companies in Indonesia considered for this report are:
Strength factors of the Indonesian telecommunication companies:
Telkomsel: The Company is a private sector telecom firm under state owned group Telkom and provides GSM and mobile phone network service in Indonesia.
The strengths factors are:
XL Axiata: Another important cellular network provider of Indonesia which covers the large areas like Bali, Java, Sumatra. The major services of the company include Broadband internet and mobile data communication.
The strength factors are:
This major telecommunication brand of Indonesia is popular for providing service to the Enterprises and Government sectors. The services include multimedia internet and prepaid/postpaid mobile services.
The strength factors are:
Explanation of Singtel’s competitive effectiveness against the brands:
According to the Pestle analysis of Indonesian telecom market, the market has a high demand of technology but the market structure is scattered. Therefore a robust organization culture like Singtel can be very effective in this case. From the technological point of view the company has high data centric network and spectrum structure for application in Indonesia. Moreover the satellite, smart city application can be beneficial too. The cloud service with high level of security can manage the data traffic in Indonesia. Singtel is a large telecommunication brand with 13 cloud center in Asia and 46 international offices all over the world. The robust investor can easily update the telecom infrastructure in Indonesia. The high demand of networking media proves that upgraded service in Indonesia can increase Singtel’s global market and profitability.
According to the International theory of entry modes in market the entry mode is selected considering the following factors:
When a firm choose a foreign market (in this case Indonesia), its main goal is to avoid the transaction cost failure in the global market. Therefore the globalization of the foreign activities of a telecom brand depends on the following activities:
Export as entry mode: When the export is the entry mode factor then the firm is dealing in free trading and in specific regional factors. However the free trade is a hypothesis. Therefore in practical cases there is a slight modification and the mode chooses the customer, product demand and value in foreign country/land (Burton and Soboleva , 2011).
FDI as entry mode: In case of firms specializations like sales and marketing strategies, production, type of business units the entry mode is foreign direct investment. The local market may show a rigid and low profitable nature. As an example, in Indonesia telecom services have high demand but no integration in infrastructure.
License agreement as entry mode: If the firm has expertise and experience but no required capital and marketing strategy then to earn a particular amount of return the License agreement is chosen as the entry mode.
In case of imperfect competition in market FDI is the preferable entry mode for a telecom brand. Other important entry modes are:
According to electric paradigm political issues in a country are important factor in choosing entry mode. As the Muslim culture and community is the major factor in Indonesia Singtel must check the ethics and successful marketing strategies here (Kim et al. 2007). Moreover three basic rules of entry mode selection include Naïve, pragmatic and strategic rules. The first rule applies same strategy for all foreign market but different views and socio-economic structure can fail this rule. Pragmatic rule considers any practical and important factor to choose the entry level. The rule also checks the time and business level of the market. The last rule evaluates all the entry levels and chooses a strategy considering factors like capital, resources and time.
As Singtel is one of the major brands with 130 years expertise, the company must consider its brand value before taking any venture. Indonesian telecom market lacks the new technology and infrastructure Joint venture probably the most suitable approach. In this case the local company can take care of marketing, sales and economic strategies and Singtel can invest in technical and infrastructure issues.
Conclusion:
The report identifies the major factors for growth in telecommunication sector of Singapore via real time analysis of leading telecommunication brand Singtel. According to the financial reports and internal audit reports the discussion provides a detail analysis of various telecommunication keys to understand the market competency of telecommunication sectors in Singapore and Indonesia. This discussion answers some important questions for the overall growth including the threat, risks and positivity in the rapid changing digital sector. Moreover the value chain analysis considers the financial condition of Singtel in the highly competitive South -East Asian market using the summary of previous five years’ financial report. The ROI collects the critical factors and performance issues of Singtel to check the practical scenario. The major competency factors answer the second question of the report to identify Singtel’s position in the global competitive market. The third step of the report uses Pestle analysis to find out the macroeconomic marketing conditions for telecommunication sector in Indonesia. Using the answers of the third question the report compares three highly competitive telecommunication brand of Indonesia with Singtel. The search checks Singtel’s competitive effectiveness in Indonesian telecommunication market. Finally the last question concludes the report searching the most suitable entry mode for Singtel.
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