1 | P a g e

MAPA INSTITUTE OF TECHNOLOGY School of Industrial Engineering & Engineering Management

A Strategic Management Paper

For

Submitted by:

Rabe, Geraine Anne Zarene S.

As partial fulfilment of the requirements of

EMG166 A1 Strategic Planning and Management

2nd Quarter SY 2014 - 2015

2 | P a g e

EXECUTIVE SUMMARY

Tata Communications is currently a Market Challenger in the telecommunication industry

who owns and operates data centres on three continents and occupies approximately 1 million

network to offer maximum traffic capacity into and out of facilities. Today, Tata Communications

is the market-leading provider of Telepresence services. The service includes public

Telepresence rooms located in hotels and business centres in all major cities, a growing private

room customer base and hosted and managed services. On top of this robust backbone, sits

Tata Communi -national

corporations and large & medium-sized enterprises globally. Tata Communications currently

carry 40 billion minutes of international wholesale voice traffic annually and 1,600 Petabits of

Internet traffic, with offerings ranging from very high speed connections and global MPLS virtual

private networks to managed Telepresence services and media and entertainment solutions.

Tata Communications is currently the backbone of PLDT for the outbound and inbound calls.

There are 3 major competitors of Tata Communications, the 1st on the list and has the

biggest market share is the AT&T, the other competitors were Telstra and Hutchison Global

Communications. The different frameworks used were EFE, IFE, I-E, CPM, 7S, 8-SIT, and

Balanced Scorecard. Based on the CPM, Tata Communications is leading in the market

compared to Telstra and Hutchison Global Communications as it got a total score of 3.55. EFE

Matrix is based on the evaluation of economic analysis of the external factors affecting the

business in getting the potential opportunities and minimizing threats for Tata Communications.

The EFE Matrix of Tata Communications is based on the evaluation and analysis of the

opportunities and threats or the external factors affecting the business The result of the EFE

Matrix is 2.69 which is above average and means that the company is doing well with the

factors and the effects were positive. International Market has the highest rate because it is the

most important factor that companies are considering. The highest rating of the threat external

factors is the entry of new rivals because as time passes by, many companies enter into the

telecommunication industry.

The IFE Matrix analysis identified the internal strengths and weaknesses of Tata

Communications. The highest weight for the internal strength is the Ethernet Provider Backbone

Bridge. In the Philippines, it is the reason why International calls can be made. It is new to the

Tata Communications and has shown great contribution in the revenue of the company.

due to tight competition, head-to-head. Especially at PLDT because there are a lot of

telecommunications provider under it. At the same time, the number of subscribers from

different corporations or businesses in the Philippines that they cater. The total weighted score

is 2.64, which is above average.

The researcher recommends Market Penetration as a result from the QSPM Matrix.

Based on every single strategy and matrix that was used to identify what type of strategy, it all

boils down to Market penetration. They should establish a strong relationship with its suppliers

3 | P a g e

and also with the customer offering them a high quality of service. The use of corporate

communications strategy is also essential in improving its internal functional strategies in

implementing the new strategy.

Growth in voice

revenue and data

revenue

Strong Market

Penetration

Increase market

Share

Customer

Internal Business

Processes

Improve Shareholder value

Innovations

Product Development

Customer Intimacy

Customer Loyalty

High Quality Services

Internal Business

Processes

Customer Relation

Management Improve Marketing Provide trainings for

employees

Learning and

Growth

High Employee

Retention

High Knowledge

Management Technology Innovation

4 | P a g e

TABLE OF CONTENTS

LIST OF TABLES AND FIGURES 6

I. INTRODUCTION 8

II. EXTERNAL ANALYSIS

A. Industry Definition and Overview 11

B. Industry Analysis 14

1. Driving Forces 14

2. Macro-Environmental Analysis 14

3. Analysis of Task Environment 17

4. Threats and Opportunities 23

C. Market Analysis 24

1. Market Size/Major Players/ Strategic Group Map 25

2. Competitor Analysis 26

3. Possible Strategic Moves of Competitors 28

4. Key Success Factors 28

D. Assessment of Industry Attractiveness 29

III. INTERNAL ANALYSIS

A. Nature of Business 30

B. Value Chain Analysis 32

C. Financial Analysis 33

D. Strengths and Weaknesses 35

E. Competitive Strength Assessment 35

F. Values, Ethics, and Corporate Social Responsibility 36

G. Evaluation of Present Corporate Strategy/ Business Strategy 38

5 | P a g e

1. Existing Company Vision and Mission 38

2. Generic Strategy Being Pursued 38

3. Source of Competitive Advantage 39

IV. STRATEGY FORMULATION

A. Strategic Choices 47

B. Evaluation and Prioritization 49

C. Proposed Vision and Mission 50

D. Proposed Corporate Strategy/ Business Strategy 50

E. Goals and Objectives 51

F. Strategy Map 52

V. FUNCTIONAL AREA STRATEGIES 53

VI. IMPLEMENTAION 56

56

B. Managing Internal Organization for Strategy Execution 59

C. Balanced Scorecard 61

VII. FINANCIAL PROJECTIONS 64

A. Detailed Assumptions 64

B. Financial Tables 66

C. Financial Analysis 68

VIII. APPENDICES and REFERENCES 70

6 | P a g e

List of Tables and Figures

List of Tables

Table 1- Mobile Phone Subscriptions 12

Table 2- Market Share 17

Table 3- External Factors Evaluation Matrix 23

Table 4- Major Players 25

Table 5- Financial Ratios 33

Table 6- Ratio Comparisons 34

Table 7- Internal Factors Evaluation Matrix 34

Table 8: Competitive Profile Matrix 35

Table 9: TOWS Matrix 41

Table 10: Space Matrix 42

Table 11: Boston Consulting Group Matrix 44

Table 12: Internal-External Matrix 46

Table 13: Quantitative Strategic Planning Matrix 48

Table 14:

List of Figures

Figure 1- Proportion of households with computer 13

Figure 2- Port -Forces of competition 17

Figure 3- Strategic Group Mapping 25

Figure 4- Tata Business Excellence Model 31

Figure 5- Primary Value Chain 32

Figure 6- Support Activities Value Chain 32

Figure 7: Space Matrix Quadrants 43

Figure 8- Overall Revenue Mix 45

Figure 10- Grand Strategy Matrix 46

Figure 11: Strategy Group Map 52

7 | P a g e

Figure 12: Different Levels of Strategy 53

Figure 13: The 7-S Framework 56

Figure 14: The 8-SIT Framework 59

Figure 15: The Balanced Scorecard 61

Figure 16: Corporate Communication Strategy 63

Figure 17: Telco Carrier Challenges in Various Market Stages 63

8 | P a g e

I. Introduction

Tata Communications, part of the $67.4 billion Tata Group, is a leading global

communications provider that has undergone a critical transformation over the past

three years to globalize its innovative service offering.

The Tata Communications brand, launched in February 2008, encompasses VSNL,

VSNL International, Teleglobe, CIPRIS and Tata Indicom Enterprise Business Unit into

one umbrella brand.

As one of the leading Indian conglomerates, the Tata Group has a long and

highly respected history of achievement and contribution to the many markets,

industries and communities it serves.

Tata Communications acts as the flagship global telecommunications and

technology solution leader, leveraging its track record of successes, global investments

and emerging market strengths to continue to forge new global ground and create

additional successful ventures as part of the Tata Group success story. In 2003, Tata

Communications (then VSNL) decided to pursue international expansion and in 2003

formed a wholly-owned subsidiary, VSNL America. The company built its first

international cable between India

expansion strategy was to grow through acquisitions:

In 2004, VSNL acquired the narrowband and broadband businesses of Dishnet's ISP

division

In 2005, it acquired Tyco Global Network (US) submarine cable network, and in 2006

acquired Teleglobe (Canada) an international mobile, data and voice network company,

and also acquired the Indian ISP, Direct Internet Ltd

In 2007, the VSNL's name was changed to Tata Communications Limited (Tata

Communications) Subsequent global strategic investments were made in operators in

South Africa (Neotel), Sri Lanka (Tata Communications Lanka Limited), and Nepal

(United Telecom).

9 | P a g e

In 2008, Tata Communications launched the first truly global CDN service on a

state-of-the-art, single ASN global IP network throughout Europe, Asia, North America

and India. Tata Communications' next-generation CDN service, powered by BitGravity's

technology, delivers the highest performance and reliability in the industry while

providing immediate access to content, including High-Definition Video, without delay or

jitter, and the highest levels of throughput for end users. Following this, Tata

Communications acquired BitGravity in February 2011 as part of its long term media

and entertainment strategy.

Today, Tata Communications is the market-leading provider of Telepresence

services. The service includes public Telepresence rooms located in hotels and

business centres in all major cities, a growing private room customer base and hosted

and managed services. Each public and private Telepresence room is then linked to a

wider Tata Communications Telepresence network via its Global Meeting Exchange

(GMX). The GMX enables meetings to take place between any private or public room

on its network; a -

Exchange partners, BT and Telefonica, and the National LambdaRail network, which

links leading US universities.

The company is constructing a new TGN Eurasia System linking Mumbai directly

strategic significant capacity ownership on other cable systems and its privately owned

TGN Atlantic and TGN India Asia systems, the TGN Eurasia System will enable the

company to offer seamless and diverse connectivity between India, South East Asia,

South Africa, Western Europe and the USA.

Tata Communications owns and operates data centres on three continents and

occupies approximately 1 million square feet of space. The co

capabilities integrate directly into its global IP network to offer maximum traffic capacity

into and out of facilities. Most recently, in 2010, Tata Communications added two new

state-of-the-art data centre facilities located in Singapore and Pune to its global

portfolio. These global data centres are centrally managed to provide consistent service

delivery allowing customers to scale seamlessly as their needs develop.

10 | P a g e

Also in 2010, Tata Communications launched its next-generation Ethernet network in

Backbone Bridging (PBB) on a global scale.

This paper would want to identify both the internal and external analysis of Tata

Communications and to identify what strategy could be implemented in order to improve

the current market position they have. At the end of this paper, the researcher is

expecting to have conclusion of the problem or issues the company is encountering and

recommend a solution or strategies the company can use in order to gain a competitive

advantage against rivals.

The researcher recommends market penetration as a result from the QSPM

Matrix. Based on the QSPM, Tata Communications should improve its services that it

offers to customers.

11 | P a g e

II. EXTERNAL ANALYSIS

A. Industry Definition & Overview

Modern telecommunications and information technology infrastructure are

vital to the economic growth of the Philippines, serving multifarious purposes in daily life

and enabling the rapid growth of the BPO sector,

overall efficiency. Land lines, mobile telephones, Internet, and various cable and

satellite technologies that carry voice and data connect Filipinos and foreigners alike,

within the archipelago and around the globe. In recent years, Filipinos including

presidential candidates have even become heavy users of social media

communications.

In a country where change comes slowly, reform in telecommunications during

the last 15 years has occurred very quickly. In only a decade, Philippine

telecommunications advanced from a backward, monopolistic, high-cost, and inefficient

public utility to a sector with considerable competition, enabling a majority of the

population to communicate at home and abroad at much reduced cost.

Almost 18 years ago former Singapore Prime Minister Lee Kuan Yew,

Philippines, 98% of the population is waiting for a telephone, while the rest are waiting

In one of the most consequential reforms initiated by former President Ramos,

the control of Philippine Long Distance Telephone Company (PLDT) of Philippine

domestic and international telecommunications was broken in 1993 by two executive

orders, one mandating interconnection and the other requiring phone companies (in

addition to PLDT) to install specified numbers of landlines and cellphones in their

assigned areas. The executive orders were followed two years later by Congressional

passage of a telecommunications reform law.

12 | P a g e

Today two large and two smaller companies are active in the local

telecommunications market. All four companies provide mobile and landline telephone

service as well as Internet broadband. Each holds a public utility franchise granted by

Congress, as required under the colonial era Public Utilities Act. Their foreign partners

have invested substantial equity in the sector.

In addition to increased competition and consumer choice, another critical factor

technological change. Landlines have been overtaken by mobile phones, and postpaid

telephone accounts by prepaid. Today Filipinos have twenty times as many mobile

subscriptions as landlines. The Philippines, called the text message capital of the world,

is the world leader in Short Messaging Service (SMS) with almost one billion daily

messages.

While the country lags in many competitiveness indicators, mobile phone

penetration is not among them. In 2009 the penetration rate per 100 inhabitants of the

Philippines (81) was higher than China (56), India (44), and Indonesia (69), while lower

than Malaysia (110), Singapore (140), Thailand (123), and Vietnam (101) (see Table 1).

Table 1: Mobile phone subscriptions

http://www.investphilippines.info/arangkada/wp-content/uploads/2011/06/Part3-T42.jpg

13 | P a g e

Digital fiber connects the Philippines inexpensively to the far corners of the globe,

providing what American columnist Tom Friedman once termed the equivalent of an oil

pipeline moving services of skilled Filipino workers to North American markets. The

newest Voice over Internet Protocol (VoIP) telephone service via computers has

brought the cost of communicating on the Internet almost to zero.

As the cost of accessing the Internet falls, the next new technology for the

Philippines is the high-speed wireless broadband revolution. Although less than 5% of

mobile phones in the Philippines have 3G today, within a few years many millions more

could have cheap Internet access on their cellphones. In Asia, 3G penetration already

exceeds 50% in Australia, Hong Kong, Japan, Korea, and Singapore. One presidential

candidate in 2010 suggested providing Filipino students with mobile digital reading

devices, a visionary yet highly practical proposal.

The benefit for national competitiveness of these changes will be enormous.

Most Filipinos will be able to avail of global SMS and email communications on mobile

ehold computer penetration in the

Philippines of 13% (see Figure 1.1).

Figure 1: Proportion of households with computer

The following provides a brief overview of the four major telecommunication companies in the

country. The public sector role in the sector is limited to regulation through the National

Telecommunications Commission (NTC).

http://www.investphilippines.info/arangkada/wp-content/uploads/2011/06/Part3-Fig91.jpg

14 | P a g e

B. INDUSTRY ANALYSIS

1. DRIVING FORCES

Telecommunication industry changed in the last 50 years. The driving forces are

government regulation, customers, technology and innovation. The government

regulation is to ensure good pricing, fair competition and good service for the customer.

In the Philippines telecommunications industry was once a monopoly of the Philippines

Long Distance Telephone Company (PLDT) overseen by the Philippines government.

The tariff was high and the service was bad. In 1995, the government decided to

privatize the industry and created the Public Telecommunications Policy Act of 1995

(RA 7925) to overcome these issues. The mission is to set up and implement a fair,

flexible, efficient telecommunications regulatory framework that will develop the industry

through a market-driven environment, ensure accessibility of all kinds of services within

limits to all, and balance the interests of all stakeholders.

The other driving forces behind telecommunication industry change are

customers, technology advances and innovation.

changes. For example, young generations want to use their mobile devices as

Walkman. The mobile companies provide service to download songs, play movies and

store photos in mobile. In addition, customers demand better service. Such

requirements forces telecom companies improve their service or they will lose the

customer.

Technology is another reason for telecommunication industry to change. A good

example is IP phone. It is mirage between two technology data and voice. Companies

forced to adapt this change or they will lose their market shares.

The third reason is innovation. New product creates new business and new

customers. The telecommunication industry has to change to adapt new requirements.

2. MACRO-ENVIRONMENTAL ANALYSIS

Demographic Analysis

An increasing number of subscribers would also stimulate the development of its

related industries. An example would be the growing number of mobile phone users,

which results directly on the demand for both hardware and software products.

can be

15 | P a g e

related to the strength required to compete with existing competitors. Another potential

benefit that results from the steady growth of number of subscribers in the telecom

industry is that, it gathers crucial customer related information. Operators maintain

databases with personal information and choice, which is collected during the

registration and cancellation processes. This information is valuable for the company

d

segmentations, which provides necessary statistics in order to improve the efficiency in

marketing analysis. The changing demographic profile of Philippines has contributed to

the growth of number of subscribers. A large young population, a burgeoning middle

class, with growing disposable incomes, and also urbanization, which is increasing

literacy levels and higher adaptability to technology, characterizes the changed profile.

Economic Analysis

Intense competition has lowered the prices of hardware and services in the

telecom industry. This helped in lowering the entry barrier into the market and thus

made it affordable to a large percentage of the population. At the same time,

competition among multiple operators also reduced tariffs, particularly in the Philippines

telecom industry, which is characterized by intense competition, has witnessed

continuous price wars. The expansion of wireless networks and growth in subscriber

base, both in urban and rural areas has led to a boost in the sale of mobile handsets

across Philippines.

Natural Forces

Foreign telecommunications company heavily rely on fiber optic cable which is

used for long distance telecommunication are laid cables into the sea bed via remotely

operated vehicles (ROVs). Thus, if any natural calamity occurs and these cables got

damaged, this will greatly affect their operations and which becomes unable to those

who needs to conform to the agreed service levels.

Technological Forces

Technology innovation over the last decade has enabled the expansion of

telecom infrastructure from metropolis to rural areas where the majority of Philippines

population is located. Hence, telecommunication services become easily accessible and

subscribers. Today telecommunications is a highly technical industry, which is

http://en.wikipedia.org/wiki/Telecommunicationhttp://en.wikipedia.org/wiki/Remotely_operated_vehiclehttp://en.wikipedia.org/wiki/Remotely_operated_vehicle

16 | P a g e

constantly evolving, and inventing technologies to improve the cost, coverage and

quality of communication. A good example is IP phone. It is mirage between two

technology data and voice. Companies forced to adapt this change or they will lose

their market shares.

Political Legal Forces

The Government is set to release a new three pronged telecommunications

policy focusing on competitiveness and viability, the encouragement of mergers and

support of interconnection. This way Government can actively mediate to bring about

conditions that will attract new investors and keep existing ones happy by stepping in to

assure a level playing field and ensuring the condition needed for a competitive market.

Under the regulatory framework, NTC is mandated to set rates and tariffs which are fair

and reasonable and which provide for the economic viability of telecommunications

entities and fair return on their investments considering the prevailing cost of capital in

the domestic and international markets. The industry is currently facing a serious

problem because of failure of the regulatory framework to achieve smooth

interconnection between the incumbent PLDT and the new entrants. Interconnection or

access policy plays a critical role in fostering competition and reducing market

dominance in the telecommunications industry. Opportunities for completion can be

realized only if smooth interconnection among various telecommunications services is

possible. New industry players and smaller firms complained that it was difficult for them

to negotiate favorable interconnection deals with PLDT as, being the incumbent

operator, it has a stronger bargaining position. Some are also complaining that PLDT

has been charging them unreasonably higher interconnection fees. Other complaints

include insufficient interconnection, unequal access settlements or revenue sharing

arrangements, and the use of interconnection as leverage in other commercial

negotiations.

17 | P a g e

3. Analysis of the Task Environment -Forces Model of

Competition

Philippines has a total of 6.782 million telephone subscribers, 103 million SIMs in use,

320 internet service providers, and 29.8 million internet users.

Market Structure (2013)

Average revenue per user for big players is around PHP 70Million.

Hutchison has lesser market share because of small consumer market.

Table 2: Market Share

Market leader AT&T

Market Challenger TATA, TELSTRA,

Market Follower HGC, Reliance

Figure2: -Forces Model of Competition

Threat of Substitute Products or Services

-Cable TV and satellite operators now compete for buyers

Threat of New Entrants

-Capital Requirements

Bargaining Power of Suppliers

-Many vendors are available

-Limit on personnel, talented managers and electronics engineers

Bargaining Power of Buyers

-Cost of product relative to total cost

-low product differentiation

-Size and concentration of buyer relative to products

-Competition between buyers

-

-

-

RIVALRY

A Cut Throat to the voice products

Large number of vendors

Low product differentiation

18 | P a g e

1. Threat of New Entrants

Level: High

Capital Requirements

Access to finance is a big threat to a capital-intensive telecom industry.

The entrant must cover high fixed cost by having a large number of current

asset. When capital markets such as stock market and bond market are

generous, the threat of new entrants will rise. When there are less financial

opportunities, the entrants become slow in their gaining their market share.

In owning a telecom license here in the Philippine, it can slow down the

corporation because it must comply with all the legal entities. New entrants

should have a number of experienced and dedicated employees, also to

comply with the requirements for approval.

Lastly, there should be a lot of connections and built relationships among

the supplier and clients for profitability.

2. Bargaining Power of Suppliers

Level: Moderate

The suppliers bargaining power is moderate but influences the profitability

of the company. The increase in the bargaining power of the supplier will lead

to a decrease in profit, or increase in the price of the services offered. It

depends on the suppliers they have gotten and the margin they will make in

order to gain profitability.

At first, it might look like telecom equipment suppliers have large

bargaining power over telecom operators. Indeed, without high-tech

broadband switching equipment, fiber-optic cables, and billing software,

telecom operators would not be able to do the job of transmitting voice and

19 | P a g e

data from place to place, client to client. But there are actually a number of

large equipment installers and makers around. Due to the large number of

suppliers, not only here in the Philippines but also around the globe, they can

get higher switching costs for larger business customers, especially those that

rely more on customized products and services.

Many vendors are available

Vendors of fiber optic cables, infrastructure, software and the like are so

many here in the Philippines. To win the client, it depends on the best cost.

There are two types of companies in the Philippines, the telecoms who own

towers or infrastructures, and the telecoms who outsource and partner with

agreement and they are partner when it comes to the infrastructure.

Limit on personnel, talented managers and electronics engineers

Many companies lack personnel and talented managers. In this instance,

planning and executing strategies will rely on their employees and managers

based on the performance of their personnel. It is a challenge to the human

resources professional tasked with talent management and recruiting. Many

of the managers here in the Philippines are already hired, and some still lacks

experience. They are required to stay abreast of the latest recruitment

methodologies and processes to deliver the most effective solutions to their

clients.

3. Bargainer Power of Buyers

Level: High

Buyers in Telecom Industry generally land in two categories: Personal and

Enterprise Customers like BPO Companies, IT, Banks, etc. There are ample

number of telecom providers in the market with big service and product mix

20 | P a g e

and cheaper prices which gives the buyer a lot of choices to select operators

and thus have a large bargaining level.

e sensitivity is high when considering the cost of product

relative to the total cost. The relative bargaining power also is high because of

the size and concentration of buyers relative to the services offered. There is

a low switching cost, high level of buyer information and low ability of the

buyer to backward integrate.

Cost of product relative to expenses

Telecom products and services offered to the enterprise market

cost 100& of the total cost of the service and buyers are more sensible to

pricing.

Product Differentiation

Telstra, TATA, HGC and all other telecommunications companies

have similar prices for similar products and services. They are less likely to

maintain product differentiation thus buyers have the option to switch over.

Competition between buyers

Enterprise customers like BPO or banks generate a major part of

the revenues for any telecom companies like AT&T, HGC or TATA which

means higher buyer power. But this is not significant for the new entrants or

the companies who deal with individual costumers.

Size and concentration of buyer relative to products

The customers of the companies analyzed here in this study

focuses on their enterprise customers. They are a big size and big

concentration of consumption accrues high buyer power.

21 | P a g e

Low switching cost but high buyer power. With better services

offered from one another, switching has become easier.

products and services has become high. Their buyers are big corporations

and enterprises, thus having a good connection and relationship with these

can have a high buyer information.

Not much intermediaries between the producer and the consumers.

High investment is required for backward integration. It is less likely to have a

backward integration, thus has lower buyer power.

4. Availability of substitutes

Level: Moderate

Products and services from non-traditional telecommunication industries

pose serious substitution fears. Cable TV and satellite operators now

compete for buyers. The cable guys, with their own direct lines into homes,

offer broadband internet services, and satellite links can substitute for high-

speed business networking necessities. Just as worrying for telecom

operators is the internet: it is becoming a viable vehicle for to cut the rates of

voice calls, meaning that the voice is cheaper than the internet. Delivered

by ISPs - not telecom operators - "internet telephony" could take a large

revenue of telecom companies' core voice revenues.

22 | P a g e

5. Competitive Rivalry

Competition is "cut throat", meaning that the players are fierce or relentless in

competition. The movement of industry deregulation together with the receptive

capital markets of the late 1990s paved the way for a rush of new entrants. New

technology is prompting a raft of substitute services. Nearly everybody already

pays for phone services, so all competitors now must attract their customers with

lower prices and more exciting services. This tends to drive industry profitability

down. In addition to low profits, the telecom industry suffers from high exit

barriers, mainly due to its specialized equipment and large infrastructures.

Networks and billing systems cannot really be used for much else, and their rapid

uselessness makes liquidation pretty difficult.

23 | P a g e

4. Threats and Opportunities

Key External Factors Weight Rating Weighted Score

Opportunities

Technological Advancement

0.08 4 0.32

International Markets

0.15 4 0.60

Product Innovation

0.10 4 0.40

Merger and acquisitions

0.06 3 0.18

New customers to enter the market

0.10 3 0.30

Threats

Economic Issues 0.05 2 0.10

Intense competition in the market

0.09 2 0.18

Emerging Markets

0.08 2 0.16

Entry of new rivals

0.10 2 0.20

Natural calamities

0.06 1 0.06

Customer needs 0.06 2 0.12

Political instability

0.07 1 0.07

TOTAL 1.0 2.69

Table 3: External Factors Evaluation Matrix

The EFE Matrix of Tata Communications is based on the analysis and evaluation

of the external factors that affects the business in attaining the potential opportunities

and threats for Tata Communications. The result of the EFE Matrix is 2.69 which is

above average and means that the company is doing well with the factors and the

effects were positive. International Market has the highest rate because it is the most

important factor that companies are considering. The highest rating of the threat

external factors is the entry of new rivals because as time passes by, many companies

enter into the telecommunication industry.

24 | P a g e

C. MARKET ANALYSIS

1. Market Size/Major Players/Strategic Group Map

Market Size

Philippines has a total of 6.782 million telephone subscribers, 103 million SIMs in use, 320 internet service providers, and 29.8 million internet users. Also, the clients of the major players in the telecom industry are the BPO Sector. Below is list of the country's 36 biggest BPO firms, based on 2012 revenues.

1. Accenture Inc. (P28.104 billion in revenues); 2. Convergys Philippines Services Corp. (P17.281 billion); 3. JPMorgan Chase Bank N.A-Philippine Global Service Center (P10.805 billion); 4. 24/7 Customer Philippines Inc. (P7.711 billion); 5. Telephilippines Inc. (P7.241 billion); 6. TeleTech Offshore Investments B.V. (P6.978 billion); 7. Sutherland Global Services Philippines Inc. (P6.805 billion); 8. Stream International Global Services Philippines Inc. (P6.738 billion); 9. Sitel Philippines Corp. (P6.364 billion); 10. Deutsche Knowledge Services Pte. Ltd. (P5.754 billion); 11. Sykes Asia Inc. (P5.617 billion); 12. IBM Daksh Business Process Services Philippines Inc. (P5.516 billion); 13. Aegis PeopleSupport Inc. (P5.445 billion); 14. TeleTech Customer Care Management Philippines Inc. (P5.402 billion); 15. IBM Business Services Inc. (P5.211 billion); 16. Telus International Philippines Inc. (P4.962 billion); 17. Shell Shared Services (Asia) B.V. (P4.821 billion); 18. HSBC Electronic Data Processing (Philippines) Inc. (P4.700 billion); 19. ePLDT Inc. (P4.147 billion); 20. SPi CRM Inc. (P3.501 billion); 21. ACS of the Philippines Inc. (P3.492 billion); 22. VXI Global Holdings B.V. (P3.266 billion); 23. Emerson Electric (Asia) Ltd. (P3.230 billion); 24. StarTek International Ltd. (P3.094 billion); 25. IBM Solutions Delivery Inc. (P3.019 billion); 26. Sykes Marketing Services Inc. (P2.760 billion); 27. SPi Technologies Inc. (P2.626 billion); 28. Genpact Services LLC (P2.552 billion); 29. Macquarie Offshore Services Pty. Ltd. (P2.522 billion); 30. Thomson Reuters Corp. Pte. Ltd. (P2.265 billion); 31. AIG Shared Services Corp. Philippines (P2.357 billion); 32. Hinduja Global Solutions Ltd. (P2.194 billion); 33. Lexmark Research and Development Corp. (P1.956 billion); 34. ANZ Global Services and Operations (Manila) Inc. (P1.869 billion);

25 | P a g e

35. Maersk Global Service Centers (Philippines) Ltd. (P1.859 billion); and 36. Manulife Data Services Inc. (P1.745 billion).

MAJOR PLAYERS

AT&T PHP 74.5 Million 26.71%

TELSTRA PHP 60.8 Million 21.80%

TATA

Communications

PHP 60.5 Million 21.69%

Reliance PHP 51.6 Million 18.50%

Hutchison Global

Communications

Limited

PHP 31.5 Million 11.29%

Table 4: Major Players

me

of 2013 was used.

Figure3: Strategic Group Mapping

Reliance

HGC

TELSTRA TATA

AT&T

Ma

rket

Sh

are

Number of Services

STRATEGIC GROUP MAP

26 | P a g e

2. COMPETITOR ANALYSIS

Hutchison Global Communications, Ltd.

Hutchison Global Communications, Ltd. Hutchison Global Communications

Limited (HGC), a full-fledged international telecommunications operator, is a subsidiary

of Hutchison Telecommunications Hong Kong Holdings Limited (HTHKH, Stock Code:

215). HTHKH is a member of the Hutchison Whampoa group (Stock Code: 13). Since

its establishment in 1995, HGC has been fully committed to building its own state-of-

the-art network infrastructure. It owns a robust and resilient international network with a

widespread footprint in Asia and span into the Americas, Africa, the Middle East and

Europe.

The company also provides prepaid phone card, Internet access, local and

international data, telephone and fax line, wholesale and carrier data and voice, and

international direct dial services; and a cloud computing service that comprises

Infrastructure-as-a-Service and Bandwidth-as-a-Service, as well as value-added cloud

services, such as Dedicated Bandwidth-as-a-Service and On-demand Virtual Leased

Lines. It operates optical-fiber networks in Hong Kong, Mainland China, Cambodia,

Indonesia, Malaysia, the Philippines, Singapore, Japan, South Korea, Taiwan, Vietnam,

Thailand, Myanmar, the United Kingdom, and the United States.

Today, HGC runs an extensive coverage of fibre-optic network in Hong Kong, it

also provides network routings that span the globe via submarine and terrestrial cable

facilities offering a high degree of resilience. HGC's advanced voice, data and IP

network today links its home market with the rest of the world and carries traffic

between internationally-dispersed geographies.

A top global network service provider, HGC strives to ensure its customers total

network quality and assurance through provision of standard and customized service

pledge. Its 24-hour International Network Operations Centre also provides its customers

with around-the-clock network monitoring and immediate service support.

customer with the delivery of advanced fixed-line network technologies and

27 | P a g e

Tata Communications

Tata Communications connects each race location to the world's

largest Tier-1 network the Tata Global Network, thereby powering Formula One

Management's diverse global operations

Their superior connectivity solution ensures that Formula 1 gets

ten times faster than before, at every race circuit across the globe. Tata

Communications have the world's largest network footprint linking 240 countries

with city-to-city connectivity that delivers faster time-to-market and lowers costs.

As part of the $100 billion Tata Group, we have invested to become:

World's #1 international wholesale voice provider

World's #1 submarine network

World's #1 video interconnect

With over 7,500 employees in 31 countries we have the scale and reach

footprint is spread across the Formula 1 race locations, giving us the scope and

strength to take complex solutions to challenging locations, be it the streets of

Monaco or the deserts of Bahrain.

Tata Communications deliver quality connections repeatedly around the

world, allowing vital real-time content to travel quickly and reliably and

continuously power innovation for the sport and its multiple stakeholders

Telstra

Despite this complexity, Telstra have to keep close to the customers, develop

new products and services, get new customers, ensure that the staff are as efficient and

productive as possible and deliver a good return to the shareholders.

IT helps them do that by fitting the right solutions into the right business strategy,

whilst demonstrating cost efficiencies and improvements in productivity.

Telstra measure success by cost savings, profitability and improved sustainable

growth. And they create this success by providing customers with innovative and

flexible global communications and IT solutions that help fuel growth and enhance the

business agility to, in and from key growth regions such as Asia.

As a network-based services provider, Telstra can foster responsiveness and

agility by providing flexible, solutions that are embedded in our networks, which include

one of the largest and most diverse in Asia Pacific.

28 | P a g e

Telstra is committed to providing people with the depth and breadth of resource,

expertise, technology and solutions to help them overcome global business challenges,

now and in the future. And whatever Telstra commit to, they fulfil. This means that the

business needs are always met or exceeded, even during times of disaster recovery.

3. Possible Strategic Moves of competitors

One possible strategic move of the rival firms against each other is having lower

costs same goes with the implementation. Another possible strategic move of

competitors is acquiring or other companies or activities in order to compete and

implement the best cost strategy considering they are all a solution provider in the

telecommunications industry. Lastly, outsource manpower and find local personnel who

are culture-driven so that, it can reduce cost and focus more on the critical or internal

activities of the value chain.

4. Key Success factors

The Key Success Factors of a Telecommunication industry were:

4.1 Network Quality: One of the key differences between the old generations

PSTN (Public Switched telephone network) used by telecom companies versus the

generation IP networks used by both the cable providers, VoIP providers is the ability to

receive phone calls on the PSTN networks when the power is out. There is difference in

quality of the voice transmitted; however the gap is closing fast.

4.2 Economies of Scale: Telecom is a huge fixed cost business; most of the

costs go into installing and maintaining the network. The marginal cost of adding a new

customer is very small.

4.3 Customer Service: Considering that the competing industries were all

solutions provider, satisfying customers are essential. In this industry, although the

customer contact with the firm is minimal, it is very critical and can define customer

experience. Customer mostly comes into contact with the employees of the firm only

during installation and service outages, the expectation of the customer is that the

service be always available and the problems be immediately fixed.

4.4 Brand Name: This will always play an important role for the customer in

choosing their desired product or service. It will take time and huge effort for a company

to be able to counter the strong brand names.

29 | P a g e

4.5 Data Speeds: The growth of internet has created so much impact on the

measurement of the ability of an electronic device or system to send and receive

information an enormous amount or wha

who has the biggest amount of bandwidth with the last mile connectivity will have

competitive advantage over the rest of competition.

4.6 Convergence: Convergence is the ability for customers to access any data

seamlessly without restrictions and the networks and the devices to get to that data. In

future the success of the telecom companies is dependent on how effectively they can

provide converged services.

4.7 Financial Strength/Resources: With high fixed costs in this industry and

frequent network up gradation and licensing costs, it is essential for the firms in this

industry to have a strong balance sheet. The ability to raise money at cheaper rates

compared to the competition provides a significant competitive advantage

D. Assessment of Industry Attractiveness

As one of the leading Indian conglomerates, the Tata Group has a long and

highly respected history of achievement and contribution to the many markets,

industries and communities it serves.

Tata Communications acts as the flagship global telecommunications and

technology solution leader, leveraging its track record of successes, global investments

and emerging market strengths to continue to forge new global ground and create

additional successful ventures as part of the Tata Group success story.

30 | P a g e

III. Industry

A. Nature of Business

The Tata Group

The Tata Group comprises over 100 operating companies in seven

business sectors: communications and information technology, engineering, materials,

services, energy, consumer products and chemical. The group has operations in more

than 80 countries across six continents, and its companies export products and services

to 85 countries, employing over 450, 000 people worldwide. The major Tata companies

are Tata Steel, Tata Motors, Tata Consultancy Services (TCS), Tata Power, Tata

Chemicals, Tata Global Beverages, Tata Teleservices, Titan, Tata Communications and

Indian Hotels.

Tata Communications

The Tata Communications owns and opera

network measuring 240, 000 km. It is the leading global provider of telecommunications

solutions serving voice, data and next-generation service needs of carriers, enterprises

and consumers across the world. It is also the number one global international

enterprise data and internet services.

Tata Communications, part of the 64.7 Billion dollars Tata Group is leasing

global communications provider has undergone a critical transformation over the past

three years to globalize its innovative service offering.

Tata Communications businesses are broadly divided into three categories:

1) Wholesale Voice Business consisting of International Long Distance and

National Long Distance services

2) Carrier and Enterprise Data Business Consisting if IPLC, ILL, MDNS, VPN,

Video Conferencing, Inmarsat, ISDN, Corporate Dial-up, TV Uplinking , Data Center

and other services.

31 | P a g e

3) Retail (other) Business consisting of internet dial-up, broadband and calling

cards.

Tata Business Excellence Model (TBEM)

The Tata Business Excellence Model (TBEM), introduced in 1995, has played a

major role in bringing the companies together, helping to define their common purpose

and philosophy, and strengthening the Tata brand. The model has provided Tata

companies with a framework for assessing their businesses holistically, and adopting

measures to improve their competitive strength, financial performance and operational

efficiencies.

Based on the Malcolm Baldridge Model. This model shows how to bridge the gap

between expectation and capability through a series of inter-linked approaches.

The common vision and philosophy that the Tata Business Excellence Model

provides, has been an effective enabler in easing the integration of newly acquired

entities into the group fold.

Figure 4: Tata Business Excellence Model

32 | P a g e

Logistics

Inbound operations

Logistics

Outbound

Marketing and Sales

Service

B. Value Chain Analysis

Primary Value Chain

Figure 5: Primary Value Chain

Support Activities:

Figure 6: Support Activities Value Chain

organization performs and links it to competitive position. The primary activities that

need to perform internally were: operations, logistics, Marketing and Sales, and Service.

It also has the support activities which are: Procurement, Technological Development,

Human resources and Infrastructure.

Procurement Technological Development

Human Resources

Infrastructure

33 | P a g e

C. Financial Analysis

Financial Ratio Analysis of Tata Communications

2014 2013 2012

Liquidity Ratios

Current Ratio 1.49 1.33 1.39

Quick Ratio 1.45 1.32 1.32

Asset Management

Ratio

Fixed Asset Turnover 0.51 0.53 0.47

Total Assets Turnover

Ratio 0.50 0.51 0.39

Debt Management

Ratio

Debt-to-equity-ratio 0.11 0.10 0.13

Long-Term Debt-to-

equity ratio 0.07 0.08 0.11

Times Interest Earned

Ratio 13.5 5.49 1.29

Profitability Ratio

Net Profit Margin on

Sales (%) 11.20 9.90 4.08

Gross Profit Margin on

Sales (%) 7.25 5.38 6.86

Return on Total Assets

(ROA) (%) 3.25 2.91 1.23

Return on Common

Equity (%) 10.08 9.25 5.19

Table 5: Financial Ratios

34 | P a g e

Ratio Comparisons (Base year: 2013)

Current

Ratio

FA

Turnover

TA

Turnover

Debt

Ratio

TIE Net

profit

Gross

Profit

ROA RCE

Tata

Communications

1.49 0.51 0.50 0.11 13.5 0.1120 0.0725 0.0325 0.10

Hutchison

Global

Communications

0.56 0.68 1.13 0.85 7.40

0.09 0.10 0.10 0.10

Telstra 1.05 0.85 0.67 0.67 1.54 0.15 0.59 0.10 0.31

Table 6: Ratio Comparisons

D. Strengths and Weaknesses (IFE)

Rating: 4-Major strength 3-Minor Strength 2-Minor Weakness 1-Major Weakness

Key Internal Factors Weight Rating Weighted Score

Internal Strength

Reliability/Robust

Wireless Network

0.04 4 0.16

Brand Awareness 0.06 4 0.24

Advancement of Fibre

Network

0.09 3 0.27

Access to Infrastructure

optical network and

satellite links

0.07 4 0.28

Market Positioning 0.04 4 0.16

High performance 0.05 4 0.20

Financial Positioning 0.04 3 0.12

Advanced Telepresence 0.04 3 0.12

Solution Provider 0.05 4 0.20

Ethernet Provider

Backbone Bridge (PBB)

0.10 3 0.30

Internal Weaknesses

Declining access lines 0.05 2 0.10

Geographic

Concentration

0.04 2 0.08

35 | P a g e

High competition in the

telecom industry

0.08 1 0.06

On time service delivery 0.06 1 0.06

Number of Internet traffic

of major competitors

0.06 2 0.16

Subscribers Loyalty

Strategies

0.13 1 0.13

TOTAL 1 2.64

Table 7: Internal Factors Evaluation Matrix

The IFE Matrix that was obtained above, the weights was given to the specific

internal strengths and internal weaknesses. The highest weight for the internal strength is

the Ethernet Provider Backbone Bridge. In the Philippines, it is the reason why International

calls can be made. It is new to the Tata Communications and has shown great contribution

in the rev

competition in the market are the biggest due to tight competition, head-to-head. Especially

at PLDT because there are a lot of telecommunications provider under it. At the same time,

the number of subscribers from different corporations or businesses in the Philippines that

they cater. The total weighted score is 2.64, which is above average.

E. Competitive Strength Assessment

Wt. Rating Score Wt. Rating Score Wt. Rating Score

Service Quality 0.20 4 0.80 0.20 3 0.60 0.20 4 0.80

Price Competitiveness 0.20 4 0.80 0.20 4 0.80 0.20 4 0.80

0.15 2 0.30 0.15 4 0.60 0.15 3 0.45

Financial Position in the 0.10 4 0.40 0.10 3 0.30 0.10 3 0.30

36 | P a g e

market

Market Share 0.05 3 0.15 0.05 2 0.10 0.05 3 0.15

Global Expansion 0.10 3 0.30 0.10 2 0.20 0.10 3 0.30

Network Quality 0.20 4 0.80 0.20 3 0.60 0.20 3 0.60

TOTAL 1.00 3.55 1.00 3.2 1.00 3.4

Table 8: Competitive Profile Matrix

The Competitive Profile Matrix had shown above among the major players in the

Telecommunications Industry shows that Tata Communications is considered to be the

most competitive.

F. Values, Ethics and Social Responsibility

Every employee of a Tata company, including full-time directors and the chief

executive, shall exhibit culturally appropriate deportment in the countries they operate

in, and deal on behalf of the company with professionalism, honesty and integrity, while

conforming to high moral and ethical standards. Such conduct shall be fair and

transparent and be perceived to be so by third parties.

Every employee of a Tata company shall preserve the human rights of every

individual and the community, and shall strive to honour commitments.

Every employee shall be responsible for the implementation of and compliance

with the Code in his / her environment. Failure to adhere to the Code could attract

severe consequences, including termination of employment.

Note: (1) The ratings values are as follows: 1 = major weakness, 2 = minor weakness, 3 = minor strength, 4 =

major strength. (2) As indicated by the total weighted score of 3.2, Competitor 2 which is the Hutchison Global

Communications Limited is the weakest. (3) Only seven critical success factors are included for simplicity; this is too few in

actuality.

37 | P a g e

Tata Code of Conduct

The ethical road map for Tata Employees and companies, and

provides the guidelines by which the group conducts its

businesses.

Set of principles that guide and govern the conduct of Tata

Companies and their employees in all matters relating to business.

Lays down the ethical standards that Tata employees have to

observe in their professional lives, and it defines the value system

at the heart of the Tata Group and its many businesses and

entities.

The modifications have reinforced the Code, and enable it to reflect

the diverse business, cultural and other factors that have bearing

on the health of the Tata Brand.

Core values

Tata has always been values-driven. These values continue to direct the growth

and business of Tata companies. The five core Tata values underpinning the way

we do business are:

Integrity: We must conduct our business fairly, with honesty and transparency.

Everything we do must stand the test of public scrutiny.

Understanding: We must be caring, show respect, compassion and humanity for

our colleagues and customers around the world, and always work for the benefit of

the communities we serve.

Excellence: We must constantly strive to achieve the highest possible standards in

our day-to-day work and in the quality of the goods and services we provide.

38 | P a g e

Unity: We must work cohesively with our colleagues across the group and with our

customers and partners around the world, building strong relationships based on

tolerance, understanding and mutual cooperation.

Responsibility: We must continue to be responsible, sensitive to the countries,

communities and environments in which we work, always ensuring that what comes

from the people goes back to the people many times over.

G. Evaluation of Present Corporate Strategy/Business Strategy

1. Existing Company Vision and Mission

Mission:

Tata Communications is a leading global provider of IP, telepresence and

wholesale communications services. With a leadership position in emerging markets,

Tata Communications leverages its advanced solutions capabilities and domain

expertise across its global and pan-India network to deliver managed solutions to multi-

national enterprises, service providers and Indian consumers.

Vision:

Unified under a single brand, Tata Communications is committed to

spearheading innovation and value in global services.

As an agile, fast-reacting partner, we are dedicated to proactively maintaining

strong client communications and forward-thinking products and solutions.

Supported by the financial stability and vertical intelligence of the 29 Billion

Dollars Tata group, Tata Communications Is focused on driving growth and expansion

of value-added services to consumer, enterprises and providers worldwide.

2. Generic Strategy Being Pursued

39 | P a g e

Diversification (Acquisition of an existing company)

Recently, Tata Communications have been acquiring companies from

different countries. These were the acquisitions that they made:

Jan 2011

Stake acquired: 100%

Neotel, South Africa Jan 2009

Stake acquired: 30%

China Enterprise Communications, China Jan 2008

Stake Acquired: 50%

First Mover in implementing a highly scalable native Ethernet WAN

network.

Backward Integration

3. Source of Competitive Advantage

strong presence in the emerging markets, its portfolio of IP and Cloud

Services, its strategic partnerships and its transformation to a Managed

Services Business Model.

-provider network and is supporting

reaching service offerings for mobile broadband enablement.

Tata Communications owns and operates the only wholly owned

fibre optic sub-sea network ring around the whole globe, the Tata

40 | P a g e

IV. Strategy Formulation

A. TOWS Analysis

STRENGTHS WEAKNESSES

Reliability/Robust

Wireless Network

Brand Awareness

Advancement of Fibre

Network

Access to Infrastructure

optical network and

satellite links

Market Positioning

High performance

Financial Positioning

Advanced Telepresence

Solution Provider

Ethernet Provider

Backbone Bridge (PBB)

Declining access lines

Geographic

Concentration

High competition in the

telecom industry

On time service delivery

Internet Traffic

Opportunities

Technological

Advancement

International Markets

Product Innovation

Merger and Acquisitions

New customers to enter

the market

SO Strategy: Maxi-Maxi

Because Tata

Communications were

reliable and customers

were aware of the brand

as strengths, it has an

opportunity of Joint

Ventures with other

telecom companies for

new products so it can

increase their market

share.

Market Penetration of the

WO Strategy: Mini-Maxi

Improve technical

assistance to overcome

declining access lines

Acquire companies to

improve market share rather

than rivals.

Develop new products

and services to gain

competitive positioning.

41 | P a g e

customers in the

Philippines in Ethernet

WAN.

Market Development in

voice services

Research, develop, and

improve new

technologies

Threats

Economic Issues

Intense Competition in

the market

Emerging markets

Entry of new rivals

Natural calamities

Customer needs

Political instability

ST Strategy: Maxi-Mini

Increase brand

awareness to attract

customers

High performance

products and services to

provide customer needs

Development and

improvement of Ethernet

Provider Backbone Bridge

(PBB) to gain competitive

advantage.

WT Strategy: Mini-Mini

Promotion of company

image

Adopt latest online

technologies

Product development

Blue Ocean Strategy

Conduct benchmark based

on competitor deployment

strategies

Table 9: TOWS Matrix

42 | P a g e

B. Space Matrix

Internal Strategic Position (X axis): -1 highest, -6 lowest

Competitive Advantage

Tata Communications is competitive -1

Market Share -1

Control Over Suppliers and Distributors -2

Customer Loyalty -4

Technological Know-How -1

TOTAL: -9

AVERAGE: -1.8

Internal Strategic Position (Y axis): 6 highest, 1 lowest

Financial Strengths

Cash Flow +4

Revenue Growth rate, declining +4

Net Income Growth rate, declining +5

Risk in business +3

TOTAL: +16

AVERAGE: +4

External Strategic Position (X-Axis): Quadrant I: 1 Lowest 6 Highest

Industry Strengths

Profit Potential +6

Ease of entry into telecom Industry +5

Growth Potential +6

Financial Stability +5

Technological Know-How +6

Resource Utilization +5

TOTAL: 33

AVERAGE: 5.5

External Strategic Position (Y-Axis): Quadrant IV: -1 highest -6 lowest

Environmental Stability

Global Rapid Technological Changes -1

Price change by competitor -6

Rate of Inflation and High Interest rates -2

Expensive Infrastructure -3

Customer Switching -6

TOTAL: -18

AVERAGE: -3.6

Table 10: Space Matrix

In the Space Matrix given, both internal and external strategic position was weighted.

The Internal strategic position (x-axis) and eternal strategic position (Y-axis) both

considers -1 as the highest and -6 as the lowest rating. Meanwhile, the internal strategic

position (y-axis) and internal strategic position (x-axis) considers +6 as the highest and

+1 as the lowest rating. Having the total and average computed, the following values for

the coordinates were obtained:

43 | P a g e

x-axis: -1.8 + 5.5 = +3.7

y-axis: 4 3.6 = +0.4

The coordinate (3.7, 0.4) is obtained after getting the sum of x-axis and y-axis

respectively. It will result to the following matrix:

Conservative FS Aggressive

CA IS

Defensive Competitive

ES

Figure 7: Space Matrix Quadrants

Tata Communications is in the 1st quadrant, the aggressive quadrant. It

entails that the company should be is a risk taker, it should aggressively opt for a

growth strategy. They have a strong financial strength and competitive advantages

in a growing and stable industry.

Recommended Strategies:

Market Penetration

Market development

Product Development

Backward Integration

Forward Integration

Horizontal Integration

Conglomerate Diversification

Concentric Diversification

Horizontal Diversification

44 | P a g e

C. Boston Consulting Group (BCG) Matrix

Relative Market Share

HIGH Cash Generation LOW

STARS

Data Services

Service Providers

Enterprises

QUESTION MARKS

Neotel

CASH COWS

Voice Services

DOGS

Table 11: Boston Consulting Group Matrix

The Data Services which comprises the 39% of the total market share in

the products and services that Tata Communications offer is divided into 2 segments,

the service provider (51%) and Enterprises (49%). It has high relative market share in

high growth markets and offer high profit and high growth opportunities. It is in the

is neutral and needs further investments. Recently, Tata Communications added

another service that expands thru Asia in 2009, the Ethernet WAN and VLAN. Since it is

new compared to the other services that they offer, they need to invest for growth and

Ma

rket

Gro

wth

Ra

te

LO

W

C

ash

Usa

ge

HIG

H

45 | P a g e

Market Penetration can

different companies in the Philippines.

Figure 8: Overall Revenue Mix

50%

39%

11%

Overall Revenue Mix

Voice

Data

Neotel

46 | P a g e

D. Internal-External Matrix

The IFE Total Weighted Score

IFE = 2.64

EFE = 2.45

Strong (3.00-4.00) Average (2.00-2.99) Weak (1.00-1.99)

High (3.00-4.00) I II III

Medium (2.00-2.99)

IV

VI

Low (1.00-1.99) VII VIII XI

Table 12: Internal-External Matrix

Hold and Maintain.

The total Weighted score for the IFE is 2.64 which is on average in the internal

position while the EFE is 2.45 which lies in medium, which means that the company is

not the strong externally.

In this case, Tata Communications should focus on Market Penetration and

Product development.

Th

e E

FE

To

tal W

eig

hte

d S

co

re

47 | P a g e

E. Grand Strategy Matrix

Figure 10: Grand Strategy Matrix

The result in the SPACE Matrix of the Tata Communications lies in the 1st

Quadrant which is Aggressive. It means that the company has a strong financial

strength and competitive advantages in a growing and stable industry. The company

can use the following strategies:

Market Development

Market penetration

Product Development

Forward Integration

Backward Integration

Rapid Market Growth

Weak Competitive

Position

Slow Market Growth

Rapid Market

Growth

48 | P a g e

Horizontal Integration

Concentric Diversification

B. Evaluation and Prioritization (QSPM)

weight Market

penetration

Market

Development

Product

Development

Strengths AS TAS AS TAS AS TAS

Reliability/robust

Wireless network

0.02

3 0.06

2

0.04

4

0.08 Brand Awareness 0.02 3 0.06 2 0.04 4 0.08 Advancement of fibre

Network

0.03

4 0.12

3

0.09

2

0.06 Access to

Infrastructure

0.04

2 0.08

3

0.12

4

0.16 Market Positioning 0.05 4 0.2 3 0.15 2 0.1 High Performance 0.05 4 0.2 3 0.15 2 0.1 Financial Positioning 0.04 4 0.16 2 0.08 3 0.12 Advanced

Telepresence

0.05 3

0.15

4

0.2

2

0.1 Solution Provider 0.06 4 0.24 2 0.12 3 0.18 Ethernet Provider

Backbone Bridge

0.05 3

0.15

2

0.1

4

0.2

Weaknesses 0

0

0

Declining Access

lines

0.02 3

0.06

2

0.04

4

0.08 Geographic

concentration

0.02 3

0.06

4

0.08

2

0.04 High competition in

the telecom Industry

0.04 4

0.16

2

0.08

3

0.12 One time Service

Delivery

0.03 3

0.09

4

0.12

2

0.06 Internet Traffic 0.04 4 0.16 2 0.08 3 0.12

Opportunities 0

0

0

Technological 0.05 3 0.15 2 0.1 4 0.2

49 | P a g e

Table 13: Quantitative Strategic Planning Matrix

The analysis shown above is the 3 strategy alternatives; The Market Penetration,

Market Development, and Product Development. These strategy alternatives can be

Advancement

International Markets 0.08 4 0.32 0 0 Product Innovation 0.05 4 0.2 2 0.1 3 0.15 Merger and

Acquisitions

0.04 2

0.08

3

0.12

4

0.16 New customers to

enter the market

0.02 4

0.08

3

0.06

2

0.04

Threats

Economic Issues 0.02 4 0.08 3 0.06 2 0.04 Intense Competition

in the market

0.03 3

0.09

4

0.12

2

0.06 Emerging markets 0.05 3 0.15 4 0.2 2 0.1 Entry of new rivals 0.02 4 0.08 3 0.06 2 0.04 Natural calamities 0.03 2 0.06 4 0.12 3 0.09 Customer needs 0.02 4 0.08 3 0.06 2 0.04 Political instability 0.03 4 0.12 3 0.09 2 0.06

TOTAL

1.0

3.44

2.58

2.58

AS = Attractiveness Score

TAS = Total Attractiveness Score

Attractiveness Score:

1 = not Attractive

2 = Somewhat Attractive

3 = Reasonably Attractive

4 = Highly Attractive

50 | P a g e

used to improve the performance of Tata Communications in the head-to-head

competition of telecom operators here in the Philippines. In this case that the

Telecommunications sector is already maturing, it needs to have a good and fit strategy

to survive in the intense competition in the industry. In assessing Tata Communication

external and internal environment, Market Penetration Strategies should be done

aggressively in order to win against rivals.

C. Proposed Vision and Mission

Proposed Vision:

Being one of the most profitable sectors of the Tata Group, and the most reliable

and fastest and preferred solution provider in the Philippines, Tata Communications

should maintain its leadership in the industry by aggressively pursuing innovations for

while focusing on the customers, making them the market leaders in the future.

Proposed Mission:

The mission of Tata Communications here in the Philippines is to gain leadership

position in emerging markets, making technical innovations and development of the

competitive

edge to be the leading solution provider for all business communication needs while

delivering it in an outstanding customer service.

D. Proposed Corporate Strategy/Business Strategy

Based on the results that was obtained using the QSPM, the main strategy to

perform or should use is the Market Penetration. Tata needs to penetrate a market in

which current or similar products already exits. This can be achieved by gaining

Telecom

operator industry here in the Philippines. Tata Communications is in its growth stage in

the Philippines on being the solution provider or backbone of PLDT both in providing

internet services for corporate businesses and International calls, the manager must

decide whether to seek sales growth by acquiring existing category users from their

51 | P a g e

competitors or by expanding the total population of category users, attracting new

customers to the market. They should also improve the marketing and offer products

and services at a high quality, in order for them to do that by aggressive marketing

campaigns and distribution strategies.

E. Goals and Objectives

Strategic Objectives:

To continue to improve the Ethernet WAN and accelerated development.

To produce high quality solutions and recommendations quickly in response to

market demands.

Continuous adjusting to technological advances.

To become Global. Offer another line in a new Country across the globe. Make

calls available to another Country.

Aggressive promotions and marketing

Innovate special solutions in subscribers

Maintain high quality of customer and network service

Financial Objectives:

To increase their market share in the Philippines sector by 2%

52 | P a g e

E. Strategy Group Map

Figure 11: Strategy Group Map

xas

Improve shareholder value

Growth in Voice Revenue (Inbound and

Outbound)

Growth in Data Revenue

Strong Market

Penetration

Increase market

Share

Customer Intimacy

-Customer Loyalty

Innovations

Product Development

High Quality

Services

Customer Relation

Management

Penetration of newly covered

areas

Provide trainings for the

employees Improve Marketing

High Knowledge management

Enhance staff Skills

High Employee Retention Technology Innovation

Fin

an

cia

l C

usto

me

r

Pe

rsp

ecti

ve

Inte

rnal

Pers

pec

tive

L

ea

rnin

g a

nd

Gro

wth

53 | P a g e

V. Functional Area Strategies

Different levels of strategy

Figure 12: Different Levels of Strategy

Global and regional telecom operator players face increasing number of critical

challenges, from traffic monetization to capital and labor productivity in mature markets

to intensified competition in developing and emerging markets. Growth strategy in

telecom company with respect to customers, regulation, technology, and competition

and estimated the market potential for different segments in the Philippine telecom

market.

Functional strategies typically align with more narrow functional objectives. It is

used to focus on and manage parts. By developing

individual goals and objectives for specific functions in the company, business owners

and managers can assign the right people and resources to the right tasks.

Corporate Level

Business Level

Functional Level

54 | P a g e

purpose is to achieve a corporate

and business units objectives and strategies by maximizing resource productivity to

have a distinctive competence that will provide a company competitive advantage over

competitors.

Some of the Functional Strategy Objectives:

Profitability producing at a net profit in a business

Market Share It is about gaining and holding a specific share of a product

market

Human Talent About recruiting and maintaining a high quality workforce.

Product Quality - Producing high quality goods and services.

Innovation Developing new products or processes.

Tata Communications Ltd will be focusing on Marketing Strategy, Research and

Development Strategy, Human Resource and Management Strategy, Financial

Strategy, and Information Management Strategy. These functional strategies were

important aspect in developing a strategic business plan. These strategies will help the

company improve its current strategy and will depend in the planning for different

departments for specific functions. Differentiate from competitors and add value to the

customer. Instead of offering generic services, innovate to offer customized services.

Marketing Strategy Capture larger market share of an existing market-market

saturation or Market Penetration

Advertising and Promotion

Product development Strategy

Distribution System

Marketing, sales and customer relationship management are some of the areas

where the returns from analytics are the highest. Ideally, analytics-driven telecom

companies must have predictive analytics embedded in all their business processes,

thereby moving away from decisions based on gut feeling or intuition.

55 | P a g e

Financial Strategy Fundamental resource for starting and conducting a

business.

Centered around acquiring capital, reducing cost capital.

Human Resource Strategies

Manage the functions of employing, developing, compensating, and

utilizing human resources.

Utilize an able and motivated workforce and to accomplish the

basic organizational goals.

Combine human skills, financial resources, marketing/customer

needs, advertising agencies, innovations.

Performance appraisal

Research and Development

Product innovation

Process improvement

According to Porter, depending on the choice the company makes

it can either achieve

Differentiate

Overall low cost

56 | P a g e

VI. Implementation

The 7-S Framework

Hard Elements Soft Elements Strategy Shared Values

Structure Skills

Systems Staff

Style

Figure 13: The 7-S Framework

57 | P a g e

Strategy is it a plan developed by firm to achieve sustained competitive

advantage and successful compete in the market.

based on its strong presence in the emerging markets, its portfolio of IP and

Cloud services, it strategic partnerships and its transformation to a Managed

Services business model.

Structure The Company needs an organization that will implement a better

leadership among everyone. Since Tata Communications were big in the number

of employees in and out of India, it is important to have new positions or new

officers that share common values and has a voice among the others. All of

these are to be able to easily implement the new strategy.

System Having a new system is essential in the company as it would give

standards to all of its employees. The current system should be developed and

improved in order to have a new service development. It should have growth

opportunities to expand leadership capabilities, opportunities to develop and

have leadership and functional capabilities, an entrepreneurial environment

where people can pursue their dreams and lastly, competitive compensation.

Style/Culture Tata Communications follows the Tata Code of Conduct wherein

its ethics and values which are in turn reflected In its actions and people

practices.

implementation of the strategy especially Tata Communications handles a lot of

employees that contributes to the efficiency of the service that they offer.

Staff As they say, employees or staffs are the asset of the company, without

should be well-trained and should be good in interacting an negotiating with

customers. It consist of some of the most dynamic, motivated, and qualified

individuals to be found anywhere in the world. Highly trained individuals and

financial analysts to consistently check the profitability and especially, the

combination of bright minds in the business of Tata Communications.

Skills It is the distinctive capabilities or competences of persona or of the

organization as a whole. The company should select capable persons and well

trained persons. Should also be focused on creation and enhancement of

58 | P a g e

stakeholder value and a group of people dedicated to uphold the core values of

the group.

Shared Values Tata Communications follows the Tata Code of Conduct which

comprises of the Set of principles that guide and govern the conduct of Tata

Companies and their employees in all matters relating to business. Lays down

the ethical standards that Tata employees have to observe in their professional

lives, and it defines the value system at the heart of the Tata Group and its many

businesses and entities.

59 | P a g e

B. Managing Internal Organization for Strategy Execution

Figure 14: The 8-SIT Framework

Agenda:

Market penetration

Tata Communications should

build an organization with the

competencies, capabilities, and

resource strengths needed for

successful strategy execution

Prepare resources

needed; assign

someone for each team

to be able to do critical

activities

Establish strategy-

supportive policies

for the entire

company

Instituting best practices

and pushing for

continuous improvement

Exercise the strategic

leadership needed to

drive implementation

forward

Shaping the

work

environment and

corporate culture

to fit the strategy

Installing information, operating

systems that enable company

personnel to better carry our

strategic roles proficiently

Tying rewards and

incentives to the

achievement of key

strategic targets

60 | P a g e

The figure above, managing internal organization is one of the most important

decisions in order to successfully implement the strategy. First is to improve leadership

to drive implementation forward for the Tata Communications, good leadership and

management among employees would drive them to work efficiently and motivated, and

with this case it would be easier to implement new strategies. Next is by shaping the

work environment and corporate culture to fit the strategy, since Tata Communications

is Global and handles different cultures and practices in each Country, it is important the

they have a single norm to follow. Third is tying rewards and incentives to the

achievement of key strategic targets to drive employees to work or perform better.

Fourth is to install information and systems so that the employees will carry the strategic

goals proficiently. Fifth is instituting best practices and pushing for continuous

improvement in order to prevent the decline stage of their production life cycle, they

should always have a new strategy and development. Sixth is to establish policies and

regulations. Seventh is to secure important resources for critical activities. And lastly,

Tata Communications should build an organization with the competencies, capabilities,

and resource strengths needed for successful strategy execution.

61 | P a g e

C. Balanced Scorecard

Figure 15: The Balanced Scorecard

amongst our

leadership and TCS associates. Helping our associates direct their passions with

organizational objectives has enabled us to achieve a balance between long term

strategic thinking and (Abjd Ali Neemuchwala,

Global Head of Business process Services)

The Balanced Scorecard illustrates how Tata Communications can assess

different selected strategies on different perspectives; the customer perspective,

financial Perspective, internal business process perspective, and Learning and

Growth perspective.

business landscape, enterprises must revisit their approach to achieving

business growth, staying agile and maintaining their responsiveness to the

market.

Vision and

Strategy

Financial

To increase Market Share

Internal Business processes

Meet Customer's needds

improve marketing

Learning and Growth

To expand more and provide premium service and be the preferred telecom operator or provider.

Customer

Provide high Quality Services

Customer retention

Increase customer loyalty

62 | P a g e

A Corporate Communication Strategy

The focus lays on other departments that have their direct impact on a

budgets). The basis of corporate communication is all about the above four key

elements for getting your message across.

1. Identify the purpose of your communication: why do you want to communicate

and what do you expect to get out of it for your business?

2. Identify your target audience: to whom do you want to communicate? Which

target audience might benefit the most from your information?

3. Design your message: what do you want to talk about? What are the content,

mood and language of your message?

4. Identify the channels: reach your audience by placing your message where they

will read it.

Figure 16: Corporate Communication Strategy

63 | P a g e

Figure 17: Telco Carrier Challenges in Various Market Stages

Growth potential on the saturated markets can be developed solely through new

services and products such as IPTV, VoD, and fixed-mobile hybrid products. More and

more often, these services are being offered in bundled form as triple-play and

quadruple-play products from a single source. As telecommunication companies are

normally not media companies, these services and products need to be purchased. If

products can be contracted exclusively, a company can gain real advantages above the

increasing competition, as in the instance of the iPhone that had a monopoly-like

position from first being introduced in Germany until November 2010.