Post on 11-Feb-2018
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Final Project
Company:
Submitted to:
Sir Arif Vaseer.
Submitted by:
(Group Members)
Shafaat Ahmed.
Majid Khan.
M.Faraz Afzal.
Course:
Strategic Marketing.
Discipline:
MBA(1.5)
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Company Introduction
Telenor Pakistan
Telenor Pakistan is 100% owned by Telenor ASA of Norway and adds on to its operations in
Asia together with Thailand, Malaysia and Bangladesh. Telenor Pakistan launched its
operations in March 2005 as the single largest direct European investment in Pakistan, setting
precedence for further foreign investments in the telecom sector. The company has crossed
many milestones and grown in a number of directions, making Telenor Pakistan a leading
telecom operator of the country.
They are the fastest growing mobile network in the country, with coverage reaching deep into
many of the remotest areas of Pakistan. In the most difficult terrains of the country, from the
hilly northern areas to the sprawling deserts in the south, at times we are the only operator
connecting the previously unconnected. They are keeping ahead by investing heavily in
infrastructure expansion. The agreements, with a potential to result in USD750 million worth
of orders from Telenor Pakistan, are some of the biggest of their kind in the industry.
They are spread across Pakistan, creating 2,500 direct and 25,000-plus indirect employment
opportunities. They have a network of 23 company-owned sales and service centers, more
than 200 franchisees and some 100,000 retail outlets Telenor ASA is an international
provider of high quality telecommunications, data and media communication services. It
ranks as worlds 6th largest mobile operator above 170 million subscribers in its mobile
operations. Telenor Pakistan is 100% owned by Telenor ASA and adds on to its operations in
Asia together with Thailand, Malaysia and Bangladesh.
Telenor has a subscriber base of 24 million as of July 2010 (PTA figures).
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Industry Analysis
Telecom sector is playing a pivotal role in the economy of Pakistan in terms of providing
employment, contribution to national exchequer through taxes and attracting foreign
investment in the country. Pakistan's telecom sector remained the largest recipient of the FDI
during the last few years capturing more than one fourth of total FDI. During the last 5 years,
Pakistan attracted over US$ 19 billion FDI, of which 34% was in telecom sector. In the 2009,
the telecom sector received over US$ 815 million FDI, which is 22% of the total FDI in
Pakistan.(Source: State Bank of Pakistan)
The telecommunication sector of Pakistan was awarded the status of industry in 2005 and
since then it has been one of the fastest growing sectors of Pakistan. As the
telecommunication sector involves many sub sectors such as Cellular services sector, Mobile
phones, Internet service providers, Fixed Land lines and Broadband services. This report
focuses on the cellular services.
Pakistan is quite eminent from various factors such as the mobile density reaching 64.16 in,
2009-10 and the number of mobile subscribers reaching 100 million. (Source: PakistanTelecommunication Authority, Telecom Indicators 2010).
Although tremendous growth has taken place in the Pakistan telecom sector but most of it can
be attributed to the cellular growth. Fixed line is still awaiting a takeoff. Similarly Value
Added Services have grown but are still a drop in the bucket. Now that the competition has
been introduced in the telecom sector some very positive impact has been observed on the
growth of the sector in a short span of time. The annual report PTA for the year 2008-2009
has shown growth of 17% in revenue for the cellular industry overall reflecting that the
industry is involved in a healthy competition and its strategy to increase customer base as
well as revenues through value added services and call minutes has worked so far.
.
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Competitor Analysis
1. Who are existing and potential competitors?
Business Market Definition
Telenor Pakistan is a wholly-owned subsidiary of Telenor ASA. On 14 April 2004, Telenor
was awarded a GSM license to build and operate a mobile network in Pakistan. On 15 March
2005, a full multimedia platform for commercial mobile services was launched under the
name of Telenor Pakistan. Telenor has a subscriber base of 24 million as of July 2010 (PTA
figures). As in 2010 the mobile penetration and number of inhabitants in Pakistan were 58%
and 170 million, respectively according to official estimates Customers types etc.
2. What strategic groups can be identified?Competition is fierce; obviously the competitive rivalry will be at the highest level. The very
high level of competitive rivalry among the major players of the cell phone sector is clearly
observable. A look at the advertisement campaigns of the rivals and you can see how intense
the competition is. It looks like a battle for supremacy going on between the rivals. All means
of attracting new and potential switching customers are being used by all the competitors to
gain as much market share as they can. Exit barriers, industry growth, product differences,
brand identity, and diversity of rivals are the main reasons of very high competitive rivalry in
this case. As in July 2010, Telenor Pakistan had a market share of approximately 24%. In
addition to Telenor Pakistan, there are five other mobile operators in Pakistan: Mobilink,
Ufone, Warid, Zong .Based on PTA numbers as at July 2010, Mobilink was the largest
mobile operator in Pakistan with a market share of approximately 32%, Ufone had a market
share of approximately 20%, Warid had a market share of approximately 17%, and Zong had
a market share of approximately 7%.
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3. What are their sales, share and profits?Heres a brief description of the top mobile companies in Pakistan.
At the top MOBILINK, the Pakistani unit of Egypt-based telecom companyOrascom. It has been operating in Pakistan since 1994. They have 32 Million
Subscribers at the end of September 2010.
UFONE, a wholly owned subsidiary of Pakistan Telecommunication Co. Ltd(PTCL), is now under the control of Etisalat group of UAE. They have 20 21
Million subscribers by the end of 2010. For those in Pakistan it is the onecompany where they can easily invest locally.
WARID, owned by the Abu Dhabi group of the United Arab Emirates andsister of Wateen group is number 4 with 17% market share by 2010 PTA
Report.
PAKTEL was the latest target of foreign acquisition. After it got acquired byChina Mobile it was rebranded as Zong and launched one of the most
successful and aggressive campaigns. Within a matter of few months, Zonghas achieved a 7% market share by 2010.
(Source PTA Annual Report 2010)
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4. What are the growth trends?Every one of the 5 cellular players has had some interesting particulars. The attention
for Warid has not been in the good quality light. The Abu Dhabi Group-backed
company has not maintained to get its affairs inside order and while optimism appears
abound on its performances, the information have yet to give any credibility to the
cause. After the 2009 report of an acquisition by Telenor, the 2010 story that remains
alive because of date is an acquisition through another competitor. Even through
another attempt to re-package its product selection and market using a new
advertising movement, figures released by PTA for lively subscribers for Warid
exhibits a drop when as opposed to last year. The best estimate nowadays places the
company to take over 14 million subscribers by way of it keen on 2011. Zong, on the
other hand, has done the opposed of Warid. Rapid expansion of coverage with a 50%
increase inside cell places in the preceding two years, and a much targeted effort
toward align its manufactured goods portfolio towards an exacting market section, has
allowed the China Mobile piece to thrust up the subscriber numbers. It is estimated on
the way to close the year at immediately around eight million subscribers. Even on the
branding and promoting front, Zong has taken strides in the direction of a more
professional approach and move toward, portraying a good quality understanding of
the bazaar segment that they wish on the road to target with their offerings. Creation
of worth in this challenging economic condition remains the type to success for now;
Zong has maintained to draw this inedible quite reasonably.
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Market\Submarket Analysis
1) How attractive is the market or industry and its submarkets?The mobile density has reached 64.08 in Financial Year 2009-10 showing growth of 3.5%
since Financial Year 2008-09. The number of mobile subscribers reaches 100 million
subscribers in September 2010. In terms of subscribers, plus putting sideways the dispute
over the metrics used for the calculations, Mobilink has ended the year 2010 at No.1 with
approximately 32 million subscribers this demonstrates a superior effort on account of a
difficult couple of years for the company in the face of weighty competition. Telenor is at
No.2 within the order of 24 million subscribers, supplementing the optimistic trend that the
business has shown since its doorway to the bazaar over 5 years ago. Ufone has round out the
top 3, and has finished at 20-21 million subscribers. The overall outcome for the industry has
been improved than other sectors, with any great impact of the fiscal or financial pressures
not quite booming in the results. The major proof of this fact is the PTAs declaration in
September on the bridging of 100 million mobile customers in Pakistan. (Source: Pakistan
Telecommunication Authority, Telecom Indicators 2010)
(Source: PTA Annual Report 2009-10)
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(Source: PTA Annual Report 2009-10)
Market Potential
Telecommunications has become one of the most important infrastructures that are very
essential to the socio-economic well-being of any nation. The globalization of world
economy has further amplified the importance of telecommunications to the economy. The
telecommunication sector is one of the fastest-growing. Telecommunications is at a
crossroads, local telephone companies threatened by wireless communication. Voice over IP
challenges established structures of pricing and taxation.
Market share of operators is considered an important tool to gauge the level of competition in
any sector of the economy. During the year 2007-08, telenor has emerged as fastest growing
operator who has improved its market share from 17% in 2006-07 to above 21% slightly
higher than ufone who also has 21% market share. On the other hand the leading mobile
operator mobilink is losing its significant market power place rapidly and its share has
declined by about 5 percentage points and reached 36% in 2007-08 compare to 41% in 2006-
07. CMPak is also growing very fast and it has added 2.9 million subscribers, which is an
impressive number and one could hoped that in future it will grab more market share. Warid
dropped its share in relation to previous reported period although the company had beengaining the subscribers i-e from 17% to 18%.
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(Source: PTA Annual Report 2009-10)
2) What industry trends are significant to strategy?
Market Trends
A market trend is a putative tendency of a financial market to move in a particular direction
over time.These trends are classified as secular for long time frames, primary for medium
time frames, and secondary lasting short times.
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E-Banking:
Banking transactions made over internet or mobile (known as E-Banking or Mobile Banking)
are rapidly getting very common amongst businesses entities and masses in Pakistan. This
was reflected in a recent report prepared by State Bank of Pakistan, which read that E-
Banking has grown as high as 32 percent growth last year this significant growth in e-
banking is due to massive use of internet, especially high speed internet in Pakistan. Telenor
mobile banking (easy paisa) done a business of Rs. 17 Billion through 10 Million transactions
and it become the countrys biggest financial services network. Along with come the factors
such as increasing number of free launce workers in the country who work for overseascompanies tend to use E-Banking instead of paper banking. Furthermore, those who are
living abroad are also increasingly interacting with their bank accounts back in Pakistan from
internet. On the same note, We see that E-Banking is already given good feedback, along
with total number of credit and debit card holders reach 6.7 million, there is a dire need of E-
Commerce infrastructure layout in the country, and that too in quick time.
Competition to Cooperation:
No company is an island. At least thats what todays businesses are discovering as more and
more of them join forces to save operating and advertising costs. The cooperation trend is
sweeping through almost every industry, from communication to food to health care .the
good news for corporations; corporation will lead to better competitive stance. it is another
tool of compete more successfully.
For example: Wateen and Telenor customers can pay there Wateen bills and utility bills
from easy paisa.
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Education/Literacy:
The Literacy rate improved in Pakistan in last couple of years In 2009, literacy rate in
Pakistan was 57%., some sources show slightly lower and others show slightly higher
numbers, but all show numbers somewhere in 50s. This shows a tremendous increase of
40.7%. When it comes to women, their literacy rate in 2009 reached 45%. Women had
overall increase of 36.8%.It shows that there is more trend of getting education among the
people. So people are becoming more aware about the environment so business people should
consider this trend that has ultimate effect on their businesses.
For Example: If the literacy rate of a country is high then the people should be well aware
from the products offered by industries and they can enjoy the benefits of every product.
More Trend towards Fast Food trend.
Fast food influences our lives as well as our culture since the last few decades. Especially it
affects the most on younger generation like high school students and teenagers. The
relationship between fast food culture and teenagers is inseparable. In Pakistan there is fast
growing trend of fast food or hostelling so there is more competition as well as more
opportunities in this industry.
For example: Ufone and Warid are giving information about the new deals of different
restaurants like McDonalds and KFC. They offer free deals for their customers so they can
enjoy benefits of the fast food.
Customer oriented policy:
The capture and analysis of customer information about product/service use, needs, wants,
desires and behavior is mission-critical to the enterprise. Companies in todays environment
always try to think according to customer perception and try to develop their product and
services according to the requirement and want of the customer.
For example:ZONG has offered a new customer oriented package in the market M9. In
this package customer can design their own mobile usage plan
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.
3) What are the alternative distribution channels and their relativestrength?
From middle mass to extreme:
Manufacturers, hospitals, shopping malls and magazines all are profiteers of the shift from
the mass middle to extreme. In both business and society, the nations moving away from
middle size, middle quality, and middle price. MAKRO METRO is the example of this in
Pakistan
From technological complexity to technological Transparency:
Tomorrows technology will be so efficient that we wont even notice its there. This is thetrend toward transparency invisible technology thats so simple to use its taken for granted
spurning confusing gadgetry, consumers want products that use technology effortlessly.
Advancement in technology:
Increase in products better services advance channels to access customers etc are positive
signs of improved and advance technology.
Trend of twitter
Characteristics
1. A place where companies build brands2. Do research3. Send information to customers4. Conduct e-commerce5. Create communitiesfor users
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How twitter will affect telecom industry
According to LinkedIn Research network/ Harris Poll that evaluates advertisers' impressions
of Twitter, just under half of advertisers (45 percent) say that Twitter is in its infancy and its
use will grow exponentially over the next few years. This differs from the consumeraudience's impression: over two-thirds (69 percent) say they don't know enough about
Twitter to have an opinion.
Other survey results reveal that, among those who have an opinion regarding Twitter,
advertisers and consumers have moderate opinions about Twitter's effectiveness for
promoting products and ideas. Of advertisers surveyed, only 8 percent say Twitter is very
effective for promoting products and ideas, while 50 percent believe it's somewhat effective.
Consumer figures are similar:
Advertisers (%) Adults (%)
Very effective 8 8Somewhat effective 50 42Not that effective 24 31Not at all effective 8 19Note: Percentages might not add up to 100 due to
rounding.
Source: Harris Interactive Poll, 2009
(Source: Harris Interactive Poll, 2009)
Now, the telecom sector can use twitter advertisement to promote their new Packages, Rates,
information of the company and can have opinion of the customer on that ad by giving the
option of tweet in it. By this they can have all sort of information that customer are willing to
have in their service. This will be the fastest ways for having information from the customer
for implementing new strategies in the company by providing the CUSTOMER BASED
PRODUCT to the customer.
Twitter is still in early stage of developing but plenty of large corporations like
Starbucks (SBUX) are already using it as a marketing tool. Twitter will probably evolve into
both a community of individuals and a community of companies that provide goods and
services for those individuals
.
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24/7 Wall St. has come up with 10 ways in which Twitter will permanently change American
business within the next two to three years, based on an examination of Twitter's model, the
way that corporations and small businesses are currently using the service and some of the
logical extensions of how companies will use Twitter in the future. (Source: Future of Twitter
Article)
Micro blogging platform Twitter has 32 million users, an increase from about 2 million a year
ago, according to research mentioned in the Wall Street Journal. Some Internet measurement
services show that figures increasing 50% to 100% month over month. The company could
certainly have 50 million visitors by the end of the year. (Source: Future of Twitter Article)
As the twitter develops in future with more and more users it will help the businesses to
gather information from the customer for useful ways.
4) What are the current and future key success factors?PEST Analysis of Pakistan Telecom Sector:
PEST analysis looks at the external business environment and is an appropriate strategic tool
for understanding the big picture of the environment in which business operates, enabling the
company to take advantage of the opportunities and minimize the threats faced by business
activities. It measures the market potential and situation, particularly indicating growth or
decline, and thereby market attractiveness, business potential, and suitability of access
market potential andfitin other words. Its four perspectives gives a logical structure in order
to ensure that the market can see a longer horizon of time, and be able to clarify strategic
opportunities and threats that the organizations faces.
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Political Factors:
The government plays an important role in the operation, manufacturing products and
services in term of regulations. Following are some of the factors
Due to the unpredictable political and governmental changes rules and regulation arechanged quite frequently. Currently government has increased the taxes in the
telecommunication sector that will also a harder in the smooth operation of telecom
operation.
Before WTO implementation for deregulation of different sectors of the economy.Pakistan government had taken the step to regulate the telecom sector by the authority
of PTA. There are two types of Regulators held by PTA; the first is called the
Economy Wide Competition Regulator as the Monopoly Control Authority. Also the
political governmental rules cannot be completely applicable in this sector due to the
regulation authority of PTA.
Now a days Pakistani environment is instable due to political clashes among politicalparties. Inside country war and drown attacks in north frontier areas. This political
instability has led to uncertain environment in the country, which is a threat for any
business including all the companies of the Pakistani Telecom Sector.
Environment of telecom is investor friendly and have great potential to gain profit.Pakistan is quite eminent from various factors such as the mobile density reaching
64.16 in, 2009-10 and the number of mobile subscribers reaching 100 million.
Due to huge budget deficit and low growth of economy government has increased thetaxes in telecom sector. Pre-paid customers were charged 10 per cent withholding tax
on every new load, which was deducted in advance. The customers were also paying
16 per cent sales tax on every call. However, the 18 percent governments increased
the sales tax from 16 per cent to 21 per cent for mobile users by declaring the mobile
phone a luxury item.
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Economic Factors:
Marketers should consider long term and short term state of a trading market. Inflation is
controlling by state bank and under strict eyes but unemployment rate is going up and up with
the increase of level of poverty. Despite slow down in economy, telecom sector continued to
grow positively in terms of subscription, revenue and tele-density.
Tele density of the country jumped to 64% in 2009-10 showing a growth of over theprevious year. During the year 2008-09 the sector's financial health could not be
improved in accordance with the expectations owing to heavy taxes and falling
exchange rates, which placed unprecedented burden on the operators' import bills.
Despite these difficulties, the sectors revenue grew by 19% in 2008-09 which pose
confidence in Government and regulators' policies. (Source : PTA Annual Report
2008-2009)
Owing to economic slowdown, saturation in the market and global financial crisis, thetotal investment in the telecom sector during 2008-09 reduced by nearly 47%. During
the current year, a total of US$ 1.6 billion worth of investment has been made by all
the operators, of which the cellular mobile share is about 75%. The WLL has
marginally increased investment from US$ 52.8 million in 2007-08 to US$ 82.11
million in 2008-09.
Socio-Cultural Factors:
The socio cultural environment summarizes demand and tastes, which vary with
fashion and Disposable income, provide opportunities and threats to telecom
companies. As Pakistan is an Islamic country and people are very strict in case of
Islam anything against the philosophy of Islam on either print or electronic media are
treated as against Pakistan. Most of the people dislike anything extra-ordinary or 19
something which sabotage their culture or subculture. Pakistani society is largely
multilingual and multicultural.
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The Pakistani people are more social and want to remain in contact with other people.This will influence the demand for the product.
Increasing globalization has amplified the influence of "Western culture" in Pakistan.The lifestyle of Pakistani people is changing rapidly. People are more conscious about
status pat most all people purchase multimedia mobile phones. And also there is trend
for Black berry sets by youth which will help in enhancing their product and services.
The total population of Pakistan is approximately 169,248,500. The population isincreasing rapidly which increase the number of cellular usage and help in projecting
high profits.
In metropolitan cities women are doing work along with their other responsibilitiesbut other than metropolitan cities it is difficult for women to convince their parents
and spouses for work.
Technological Factors:
Advances in technology can have a major impact on business success. Technological change
impacts socio cultural attitudes as well as on economy.
Companies have technology with which they can compete in the Pakistan and nowcompanies are investing in their infrastructure to not only expand coverage but also to
upgrade their existing systems.
The current focus in cellular industry is coverage and establishing franchises whichhas a positive effect on the telecom industry.
Introduction of CDMA technology in the Mobile SIMS which is also an opportunityfor the mobile companies.
The latest technology of 3G mobile communications has been earmarked and PTAwill soon be inviting applications for 3G spectrum auction. This technology will
increase operating capacity and revenues by using HSPA technology.
Companies have technology with which they can compete in the Pakistan and nowcompanies are investing in their infrastructure to not only expand but also to upgrade
their existing structure.
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Porters five forces model
The model identifies five key structural features that determine the strength of competitive
forces within the industry. The telecommunication sector of Pakistan is rapidly changing
customer expectations are high and fast evolving, and product life cycles are short in terms of
new packages and services.
Threat of new Entrants
Determinants Defining Question Assess the power of Buyers
Circle one of the following.
1 = low, 5 = high, or N/A if it
doesnt apply to your industry.
Economies of Scale and
experience
Does successful entry require that
companies have significant economies of
scale or experience
5
Brand Identity Do new companies need to spend heavily
on brand identification?
5
Product Differentiation Do new entrants need to differentiate by
spending heavily on advertising, customer
services or product differences to overcome
existing customer loyalty?
4
Switching Costs Does the buyer have to pay to switch from
one supplier product to another?
2
Capital Required Does the new company need to invest large
financial resources?
5
Access to Distribution Does the new comer have access to
distribution channel for product or
services?
4
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Cost advantage Established companies have cost
advantages over new rivals.
4
Government policies Government policies can help to preserve
or limit competition.4
Expected Retaliation If industry leaders retaliate more for new
entrants then threat for new entrants will be
high.
5
It is not easy to enter in this sector because it requires huge investments. As setup cost are in
billions of dollars so threat of a new entry is very low. Market is saturated there are already
huge competition among existing competitors so threat of new entry is low. De-regulation of
the telecom sector brought about a sudden drop in tariffs as the intense. Competition from the
new entrants it encourage the new investor to invest in this sector. Threat of new entry is low.
Bargaining Power of suppliers:
Determinants Defining Question Assess the power of Buyers
Circle one of the following.
1 = low, 5 = high, or N/A if
it doesnt apply to your
industry.
Concentration Are your supplier are fragmented or
highly concentrated?
2
Presences of
Substitute inputs
Are there any substitutes for your
supplier products?
1
Product
Differentiation
Is the suppliers product or service
commodity?
2
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Switching Cost How costly is it for you to switch
from suppliers product?
2
Importance Relative
to Customer
Is your industry an important
customer the supplier group?4
Forward Integration Can the supplier produce the product
you make?
1
Impact on Quality/
Performance
Is your supplier product essential to
the quality or performance of your
business?
4
The bargaining power of suppliers is very low in Pakistan because of the nature of inputs
required. Switching cost is very low because almost every cellular company providing same
rates with the same quality so a customer will easy switched to another connection. The
primary suppliers to the long-distance telecommunications industry would include fiber
optics providers, hardware suppliers and employees. The suppliers possess minimal leverage.
Many of the hardware and fiber optics providers have been integrated either through
acquisitions, alliances or cooperatives. The labor force is unionized and there are periodic
labor disruptions within the organizations. Many of the jobs available do not require
"extraordinary" skills and therefore most of their labor force may be easily acquired or
replaced. The Bargaining power of suppliers in telecom industry is very low.
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Bargaining Power of buyers
Determinants Defining Question Assess the power of Buyers
Circle one of the following.
1 = low, 5 = high, or N/A if it
doesnt apply to your industry.
Concentration Buyer is fragmented because to industry
covers all Demographic segments.
3
Product Cost versus
Total Purchases
Does your product buyers purchase
represent a significant fraction of the
buyers cost? If so, buyer bargaining
power is typically high.
4
Product
Differentiation
Product is standard or undifferentiated
bargaining power is high.
4
Switching Costs If buyer faces few switching cost there
bargaining power is high.
5
Profits Profits within the industry for buyers are
if high then buyers power is high.
5
Backward
Integration
Can they make what you make
themselves?
1
Impact on Quality
Performance
Is the product you offer important to the
quality of the buyers product or
services?
4
Buyers Information Does the buyer have complete
information on the product he may
purchase?
5
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Telecommunications industry consumers possess significant leverage. Perhaps their most
threatening capability is the ability to switch to an alternative provider at little or no cost. If a
long-distance company is too "pricey" they will quickly loose clients, market share andrevenue. The bargaining power of buyers is very high because cost of switching from one
company to other is very low. Buyers are extremely well informed as to prices offered by
alternative providers. Marketing for long-distance service is intense. Frequent telemarketing,
TV advertising, celebrity endorsements, billboards, radio and bulk mail inform consumers of
the various long-distance rates and services that are available. There are many attractive
substitutes provided by the companies so that buyers have power to change their network
whenever they want. The bargaining power of buyers is very high
Threat of substitute products/services
Determinants Defining Question Assess the power of Buyers
Circle one of the following.
1 = low, 5 = high, or N/A if
it doesnt apply to your
industry.
Price performance Does the substitute offer a better
price performance?
3
Switching Cost Is it costly for buyer to switch to the
substitute product?
2
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Consumers have the option to e-mail, utilize wireless communication (cellular phones and 2-
way radio), switch to an alternative provider in the form of dial-around numbers or phone
cards, and use postal service. In 2010 the numbers of mobile subscribers have reached to 100million according to the PTA reports. Buyer inclination to substitute and price-performance
trade off are the most important to consider in determining the threat of substitutes.
Governments have also given wireless local loop licenses to different companies like PTCL
wireless local loop, world call Wateen etc they are also planning to offer many services. The
cost of switching to an alternative provider, if any, is relatively low and often times
insignificant. Threat of substitute is high.
Industry competitors
Determinants Defining Question Assess the power of Buyers
Circle one of the following.
1 = low, 5 = high, or N/A if it
doesnt apply to your
industry.
Industry growth How slowly or quickly is the industry
growing? Intense fight among rivals
for market share
5
Fixed Cost Does your business have a high fixed
cost?
5
Product
Differentiation
Is your product commodity? The
closer the product is to being a
commodity the higher intensity of
rivalry.
3
Switching Costs How costly is it for your buyer to
switch between providers?
2
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Intermittent
Overcapacity
How frequently is there a problem of
excess capacity in your industry?
3
Brand Identity Is branding critical for your Rivals
success? Brand identification by buyer
reduces the threat of rivals.
4
Concentration and
balance
Are there a large number of firms of
equal size and power, all chasing after
the same customer?
5
This describes the intensity of competition between existing firms in an industry. Highly
competitive industries generally earn low returns because the cost of competition is high. A
highly competitive market might result from: The telecommunications industry is a very
competitive environment. The major competitors are extremely large in terms of assets,
product distribution and brand name recognition like in Pakistan Mobilink have maximum
market share that is 32% (PTA source). Few strong competitors are successfully acquiring
consumers from Mobilnk market. There is no cost to switch to an alternative, therefore the
primary incentive for acquiring and retaining clients is to offer the lowest price. Telenor is on
2nd number in the market share having 24% Ufone is almost 20% and Zong having 7%. and
Warid having 17%.Competition is fierce within this industry and the providers primary
efforts are focused on minimizing cost in order to offer the lowest priced service.
Customer Analysis1.Who are the major segments?
The number of mobile subscribers reaches 100 million mark with mobile penetration of
60.4%.In the following 100 million subscribers 15% to 20% are GPRS/EDGE users that are
the 15 to 20 million people who have access to internet on their devices. Pakistani broadband
internet subscribers crossed one million mark in the country by totaling 1.052 million
broadband subscribers in October 2010, up from 994,911 subscribers in September 2010,
according to the recent most data by Pakistan Telecommunication Authority (PTA).The
remaining chunk is the users of cellular services. They are using cell phone services of callingand texting. There are many packages available for the SMS and Calling
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Company Analysis Telenor
Telenor Pakistan is a wholly-owned subsidiary of Telenor ASA. On 14 April 2004, Telenor
was awarded a GSM license to build and operate a mobile network in Pakistan. On 15 March
2005, a full multimedia platform for commercial mobile services was launched under thename of Telenor Pakistan. Telenor has a subscriber base of 24 million as of July 2010(PTA
figures).
Telenor started its mobile-banking services with 2,500 outlets in October 2009. After a year
or so there are now a total of 12,000 mobile-banking points, outnumbering the total number
of bank branches and post offices in the country. Telenor Easy paisa promises empowerment
and convenience to the masses in carrying out financial transactions whether they live in the
urban area or rural communities of Pakistan. In 15 months Telenor easy paisa transferred Rs.
17 Billion against 10 million transactions.
Telenor Pakistan has won the High Tax Payer Award of Excellence from Pakistan Customs
for the year 2010-11. This is third time Telenor has won highest tax payer award.
Telenor Pakistan has pledged Rs. 100 Million in funding and telecommunication services,
towards relief and rehabilitation of flood affected. The amount will be used to facilitate
immediate relief efforts and longer term rehabilitation initiatives by Pakistan Red CrescentSociety.
Telenor Mission
Telenor is a customer focused business mobile service operator/telecommunications
Company that seeks competitive advantage in quality and valued added service in both
prepaid and postpaid categories through state of the art technology. Telenor relies on building
trusting relationships with customers, owners, employees and society in general
To achieve their mission statements objectives they have segmented their market on the basis
of different dimensions such as their djuice package is for the youth and Telenor talkshawk is
very low rate calling package. So they are customer focused mobile service operator. But in
terms customer relationships their customers are not fully served. Their customer care center
performances are not up to the mark.
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Vision
vision is simple: We're here to help
We exist to help our customers get the full benefit of communications services in their daily
lives.
The key to achieving this vision is a mindset where every one of us works together: Making it
easy to buy and use our services. Delivering on our promises being respectful of differences
Inspiring people to find new ways.
4-Ps
ProductTelenor provide products of two types
Prepaid Telenor prepay product is segmented for the youngster. They are
segmented on the basis of their age and status. They can recharge
through cards and Easy load whenever they feel comfortable. Telenor
offering Djuice and Talkshawk packages for their prepaid customerthey can select one of these services according to their needs.
Postpaid Telenor postpaid is designed for the business class and executives, who
require making Calls within the country or internationally for business
purposes. Business executives enjoy the benefits and value added
services connected with Telenor postpaid services. Telenor is offering
packages in Persona for their business class customers. They have
many packages according to their needs.
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Price As Telenor is targeting many customers so according to the customer demand
and prices offered by the competitors Telenor have different packages in their
pricing.
For Prepaid customers they have two major packages Djuice and Talkshawk.Different tariff rates are offered for the need of different targeted customers.
Customer can choose their package according to their need.
For Postpaid customers Telenor have Persona package. In this package theyprovide different rates as followed by the line rent that is fixed. Customers can
enjoy free minutes and SMS in different packages and select one of the
packages according to their need.
Promotion For the promotion of the product, print media, electronic media, billboards,
broachers and leaflets has been utilized for the awareness of various
customers. Time to time Telenor promote its products/services schemes to
their users and general public via using various types of promotion channels.
Through promotion customers get awareness of the product and can choose
best one for fulfill their requirement in Mobile Telecommunication.
Print Media Telenor is using print media for the advertisement of new packages
that are changing day by day due to heavy competition in the market.
Electronic Media Television is the major source for the advertising on the electronic
media. Huge amount is being applied on the advertisement throughtelevision. Aggressive advertisement is running the market so that is
why huge money is applied for television ads.
Billboards As per the market need and introducing new package to the customer
before the competitors billboards are also hired for the advertisement
purposes.
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Placement Market share of Telenor becomes 24% from 17% following the year 2007 to
2010. Its total cell size is also increasing from 3471. Telenor is the network
operator which operates with a network more than 356 Franchises and
company owned customer services centre along with the distribution network
of 143600 outlets nationwide. Telenor is covering 5442key destinations.
Telenor is the ultimate means to stay connected wherever business takes
customers allowing seamless roaming through the network providing the best
nationwide coverage.
Up gradation through easy paisa Telenor upgrade its function the easy paisa shops it is better
than the others customers can easy pay their bills through
Telenor easy paisa shops. And also can transfer their fix
amount of money from city to city in matter of a minute.
Telenor starts its work with Tameer bank.
Internal and External Analysis:1) What are the companys internal strengths and weaknesses and
external opportunities?
Strengths and Weaknesses of Telenor
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Strengths
Telenors Mobile Banking services (Easy Paisa) biggest financial services Network ofPakistan. Telenor mobile banking (easy paisa) done a business of Rs. 17 Billion
through 10 Million transactions. First one to bring the concept of "Mobile TV" in Pakistan. Customized packages available for every market segment e.g. Djuice for price
conscious class, smart calls for routine users, telenor persona for upper middle and
elite class.
State of art technology e.g. they are up with the latest networking underground fiberoptical network.
Widest network coverage. The first ones to provide free roaming facility during hajj program.
Weaknesses
Pakistan has no institute that provides formal education in this field regardingnetworking and other core technical competencies so they are required to have a
major chunk of their employees trained from foreign institutions.
Poor call center performance. Customer service center is not up to the commitmentand most of the customers' calls are not served.
Comparatively high prices in Telenor persona (postpaid) as compared to Warid andUfone.
Poor visual quality of Telenor mobile TV, as there is a buffering problem and stillsare received instead of the proper videos Franchise distribution system is not up to the
mark. This is the problem with almost every telecom company in Pakistan. Lack
quality in record keeping at franchises and other distribution networks.
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Competitor Analysis
A brief description of the Competitors of Telenor Pakistan:
At First MOBILINK, the Pakistani unit of Egypt-based telecom company Orascom. It has
been operating in Pakistan since 1994. They have 32 Million Subscribers at the end of
September 2010. UFONE, a wholly owned subsidiary of Pakistan Telecommunication Co.
Ltd (PTCL), is now under the control of Etisalat group of UAE. They have 20 21 Million
subscribers by the end of 2010. For those in Pakistan it is the one company where they can
easily invest locally. WARID, owned by the Abu Dhabi group of the United Arab Emirates
and sister of Wateen group is number 4 with 17% market share by 2010 PTA Report.
PAKTEL was the latest target of foreign acquisition. After it got acquired by China Mobile itwas rebranded as Zong and launched one of the most successful and aggressive campaigns.
Within a matter of few months, Zong has achieved a 7% market share by 2010.
CPM
IFE
Strengths Weight Rating
Weighted
Score
Exponential Growth 0.4 4 1.6
Strong international Brand image 0.4 3 1.2
Access to infrastructure 0.2 2 0.4
1 3.2
Weaknesses Weight Rating
Weighted
Score
Low revenue per user (ARPU) 0.45 4 1.8
Customer retention 0.3 5 1.5
No research and development programs 0.25 1 0.25
1 3.55
6.75
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EFE
Opportunities Weight Rating
Weighted
Score
Huge market size 0.35 1 0.35Data services has shown an upward trend 0.4 3 1.2
Making technology accessible to all (e.g. broadband) 0.25 4 1
1 2.55
Threats Weight Rating
Weighted
Score
Recession in economy 0.3 2 0.6
Inconsistent and adhoc decisions from regulatoryauthorities. 0.4 3 1.2
Adverse shifts in trade policies of government 0.3 1 0.3
1 2.1
4.65
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SWOT ANALYSIS OF TELECOM INDUSTRY
Strengths Weaknesses
Exponential growth. Skilled Human Resource at low-cost. Access to Infrastructureoptical
network and satellite links.
Favourable policies (to some extent)and regulator.
Strong international brand names
Quality of Service. Low revenue per user (ARPU). Customer retention. No clear strategic direction. Poor organizational structure. No research and development
programs.
Employee skill inconsistency. Very low employee morale
Opportunities Threats
Huge market size. Data services has shown an upward trend Local handset manufacturing. Making technology accessible to all
(e.g. broadband). Adopt latest technologies. Removal of international trade barriers.
Recession in economy. Inconsistent and adhoc decisions
from regulatory authorities. Adverse shifts in trade policies of
government.
Competitors Strengths Weight Rating
Weighted
Score
Mobilink (They have Largest coverage and market share
in the industry) 0.25 1 0.25
Ufone (They have Cheap Sms Packages and largest SMSgenerator in Pakistan) 0.35 3 1.05
Warid (Their Post-paid packages are better than of
Telenor) 0.2
Zong(Data services are very cheap and growing their
market share with new packages such as M9. 0.2 4 0.8
1 2.1
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2. What are their motivation and unmeet needs?Market Segmentation and positioning
Segmentation is the process of dividing the total market for a good or service into several
smaller, internally homogenous groups. Since Telenor is a customer oriented and quality
driven company, it segments its market on the basis of various different dimensions.
Market dominated by low-end, low-ARPU customers (largely Untapped) Relatively large emerging middle class segment (Basic in Telenor Terminology) Strong youth culture with needs similar to other markets. Private postpaid almost non-existent. Small but profitable (high ARPU) Corporate/SME segment. Women a largely untapped segment.
Market Segmentation & Product Positioning Analysis
Market
Segment
Today Future 4 years
Estimate
Existing
Products
Profitability
%
Youth/students
25% 27% Djuice,Talkshawk
29%
Women 10% 20% TalkShawk 21%
FinanciallyConstraint
40% 23% TalkShawk,Telenor Azadi
20%
Corporate/SME
25% 30% Post Paid -Packages
30%
Segmentation Strategy
Telenor is using multiple segmentation strategy and developing separate marketing program
for each segment because different customers are looking for different benefits from different
services they purchase. Estimating the market potential of each segment includes asking how
many prospects with how much purchase power there is for each particular want.
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Market to Segment
Regarding Pakistan different markets are segmented by Telenor on the basis of:
1. Geographic
2. Demographic
3. Psychographic
4. Behavioral
Geographic (Area wise)
In Pakistan Telenor is segmenting the whole country region wise. There are different regions
in Pakistan. Telenor is providing service especially in Northern Areas and in rural areas ofSindh, Balochistan and Punjab where others are not providing services.
Demographic (Life style)
Age:
Telenor knows that needs and wants of customers changes as they go through life. So, with
change in age Telenor introduces different services. The main segmented market is the young
people of age 15-30.
Pre paid-mostlyStudents, youngsters and middle class
Post paid-Business Class, Industrialists
Pre paid:
Talkshawk
Talkshawk Her Second for 15-22 yrs
Talkshawk 30 Second for 20-27 yrs
Talkshawk Her Minute From 25- onward
Djuice
Djuice From 15-24
Djuice Jaagtay raho from 18-24
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Post paid:
Persona
This Post paid service targets the Business Class mainly. There are four different plans
which vary with the amount of monthly line rent.
Persona From 32-55
Income:
Telenor also segments the customers on the basis of income level. Different packages are
there for people of different income level
Pre paid:
Talkshawk
Talkshawk per Second for Students
Talkshawk 30 Second For Students and Job people (low income)
Talkshawk per Minute For Job people
Djuice
Djuice For SMS lovers Students
Djuice Jaagtay raho For SMS lovers & who like to talk them in night
Psycho graphically (Personality)
Psychographic segmentation goes beyond demographic. Telenor doing segmentation on the
basis of customers mind set. Telenor is segmenting the customers as they are giving different
packages for different personality. There are seven packages of Telenor on the basis of
different call & sms rates.
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Behavioral
Telenor is segmenting the customers according to their behavior, mind set and thinking.
Different people have different behavior; different mindset different thinking Telenor is
segmenting behaviorally by offering different package in pre paid and different plans in post
paid. Singers are liked by people the singing culture is being promoted in our country so they
hire singers for their promotions to hit customers mind.
Objectives.
INCREASE ROI INCREASE MARKET SHARE BUILD MORE BRAND IMAGE MAXIMIZE PROFIT INCREASE REVENUE PER USER
Target Market
As we are going to launch 3G technology in the market for by using early in Strategy somainly our Target market is existing users of internet or broadband. During the past two years
rapid growth had been seen in the internet usage in Pakistan. There are 15 to 20 millionpeople who are using GPRS/Internet on their mobile devices. It also includes the users ofBlackberry which is already offered by the Telenor and other competitors. Therefore most ofthe users already have 3G enabled handsets. Pakistani Internet Service Providers crossed onemillion mark for broadband internet subscribers in the country by totaling 1.052 millionbroadband subscribers in October 2010, up from 994,911 subscribers in September 2010,according to the recent most data provided by Pakistan Telecommunication Authority (PTA)3G technologies will bring the fastest wireless internet technology in the country whichdelivers improved and faster data to support a suit of multimedia and rich cellular callapplications.
Positioning
It will be positioned for everyone using internet and mobile internet. They can make videocall and other rich cellular call applications on their mobile phones. The 3G USB is a portabledevice which will provide fast speed internet on the go so we will position it by 3G forLife. 3G mobile services will not affect general consumers because most of the hand sets are3G enabled and the consumer did not need to purchase new handsets.
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Strategy Development
What is their strategy development process and steps?
Marketing Strategies
To deliver Increased Profitable Growth To strengthen our performance culture across the globe To make a strong competitive advantage. To provide a superior Customer Experience
To ensure best practice benchmarking across the group To improve our performance management.
Price Strategy
As we are going to be first in the market so we can use the high prices because costof 3G technology is high and we have to overcome that cost in the introduction phaseof product life cycle.Promotional strategy
For the promotion of the product, print media, electronic media, billboards,broachers and leaflets has been utilized for the awareness of variouscustomers. Time to time Telenor promote its products/services schemes totheir users and general public via using various types of promotion channels.Through promotion customers get awareness of the product and can choosebest one for fulfill their requirement in Mobile Telecommunication.
Print Media Telenor is using print media for the advertisement of new packages
that are changing day by day due to heavy competition in the market. Electronic Media
Television is the major source for the advertising on the electronicmedia. Huge amount is being applied on the advertisement throughtelevision. Aggressive advertisement is running the market so that iswhy huge money is applied for television ads.
Billboards As per the market need and introducing new package to the customer
before the competitors billboards are also hired for the advertisementpurposes.
Social Networking Websites As now a days trend of social networking websites had becoming
more and more popular so they are the best way to target the youth andgiving them latest information about the packages and services.
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Recommendations
They should launch new mobile phones on contract They should launch APPLE and BLACK BERRY with connection packages as it is
happening all over the world.
It will increase their market share Services will be improved by this new technology They should introduce a new plan that makes their services not to be jammed at
occasions like EID etc.
Also took some responsibility for some social work They should also promote their wireless internet USBs. so people should be aware of
their value added services
They should hire skilled and knowledgeable employees at their franchises.
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References
Accessed Growth Trends in Telecom Sector from theURL:http://www.pta.gov.pk/index.php?option=com_content&task=view&id=706&scid=150&Itemid=1
Accessed Telecom Indicators from theURL:http://www.pta.gov.pk/index.php?option=com_content&task=view&id=1413&Itemid=687
Accessed Annual Report2008-2009 fromURL:http://www.pta.gov.pk/index.php?option=com_content&task=view&id=361&Itemid=590
Accessed Telecom Sector Showing Positive TrendsPTA Annual Report 2008-09
From the URL http://telecomnewspk.com/2010/01/telecom-sector-showing-positive-trend-pta-annual-report-2008-09/
Accessed Source Future of twitter from
URL:http://www.time.com/time/business/article/0,8599,1901196,00.html#ixzz12XknVPUQ
Accessed Source: Harris Interactive Poll, 2009
URL:http://www.clickz.com/clickz/column/1703011/more-twitter-advertising-opportunities
http://www.paktelecom.net/pakistan-telecom-news/ptcl/market-potential-of-mobile-operators-versus-wireless-operators-in-pakistan/
http://telecompk.net/2009/08/20/swot-analysis-pakistan-telecom-industry/http://propakistani.pk/2011/01/21/easypaisa-transferred-rs-17-billion-10-million-transactions/
http://www.telenor.com.pk/about/history.php
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