Strategic Analysis: BAT Nestle GP

PRESIDENCY UNIVERSITYCOURSE CODE – MGT 493

COURSE INSTRUCTOR- SHAHRIAR KABIRSUMMER 2011

Strategical Analysis: Multinational Company

British American TobaccoNestle

Grameenphone Ltd.

Md. Abul Hasnat 081091025Nusrat Ali 081031025Kamal Hasan 093097065Nazmul Hasan 092165065Alamgir Kabir 092167065 Razib 092015065

7/23/2011

Executive Summary

During past 30 years, much attention has been focused on how companies would formulate new strategies for sustainable advantages. In this report on strategies of 3 multinational company’s strategically analysis will be shown off. Here we will explore the key steps that establish foundation for formulating strategy, from defined mission, vision, and values to strategic analysis.

Strategic analysis in a global setting involves competition in industries that extend across national boundaries and among firms with different national home base that may tap into strategic resources in more than one location. This note provides frameworks for global strategic analysis at four levels: the geographic scope of the industry, the competitiveness of various locations, the geographic reach of the firm, and the global integration vs. local focus of specific activities. This multi level approach makes it possible to “zoom in” on a particular strategic setting, taking into account the most important factors at each level.

This report has been formulated to explain and analyze 3 multinational company of Bangladesh. These are:

Nestle Bangladesh British American Tobacco Bangladesh Grameenphone

The strategies they follow and the market mixing competitive advantages they have will be briefed in this report for better understanding of the approaches analyzing the SWOT analysis.

Company: British American Tobacco

Industry: tobacco

COMPANY OVERVIEW

British American Tobacco (BAT) is the second largest tobacco producer in the world. BAT operates through 81 factories in 64 countries, producing over 853 billion cigarettes and using more than 660 million kilos of tobacco per year. The Group also has nine other tobacco product (OTP) factories in 7 countries which manufacture cigars, roll-your-own cigarettes (stix) and pipe tobacco. It is headquartered in London, United Kingdom and employs about 90,200 people. The company recorded revenues of £31,811 million during the fiscal year ended December 2004, an increase of 31.7% over 2003. The increase was primarily attributable to strong performances in Europe and Africa and the Middle East. The operating profit of the company during fiscal 2004 was £1794 million, an increase of 1.0% over fiscal 2003. The net profit was £1224 million during fiscal year 2004, an increase of 55.3% over 2003.

Strategic Imperatives:

1. Focused brand portfolios communicated through state-of-the -art adult smoker engagement programmes.

2. Industry leading product portfolio, designed to address consumer needs and societal expectations.

3. Optimum product availability through world-class customer service.

4. Leading positions in priority markets.

5. Recognition as a responsible company in an industry seen as controversial.

6. Wired for # 1: Aim to reduce blockages to efficient, effective and timely operations by connecting network of people, places, processes and business partners.

7. A winning environment inspiring passion for the business, talented people and personal fulfillment.

SWOT ANALYSIS

BAT is the second largest tobacco producer in the world. With more than 300 brands in its portfolio, the company holds robust market positions in each of its operating regions and has leadership in more than 50 of the 180 markets where it does business. The company’s strong market position is further strengthened by its wide global presence. However, the company’s revenues may be adversely affected due to rising health concerns and public opinion against smoking.

strengths Weakness Strong market position

Geographically diversified

Control over tobacco leaf

Declining profitability

Falling revenues from major operating segments

Decreasing operating cash flows

Threat Opportunity Light cigarettes

Market potential in China

Rising popularity of smokeless tobacco

Increasing health concerns

Competitor strategies

Contraband and counterfeit cigarettes

Strengths

Strong market position

BAT is the second largest tobacco producer in the world, with a market share of 22.1% and more than 300 brands in its portfolio. BAT holds robust market positions in each of its regions and has leadership in more than 50 of the 180 markets where it does business. The company processes some 660 million kilos of tobacco leaf and producing some 853 billion cigarettes in 2004. Due to the addictive nature of tobacco products, BAT’s products enjoy a built in high level of demand, and the company’s vast array of popular brands mean that it is in a position to consistently take advantage of this demand. The strong market position of the company is a key strength for BAT.


BAT is very well diversified geographically. The company operates through 81 factories in 64 countries. However, the company’s largest market, Europe accounts for only 41.4% of its net revenues. Geographically balanced in its operations, BAT is not overly dependent on any of its operating regions. The America-Pacific region accounted for 21.3% of the company’s net revenues in 2004; while the Asia-pacific region accounted for 13.1%. In 2004, Africa and the Middle East contributed 12.4% of BAT’s net revenues and Latin America contributed another 11.8%. The company has strong market position in North America, Western Europe and Eastern Europe, three of the strongest markets for tobacco products in the world. However, this has not stopped BAT from expanding into emerging markets like China where the sheer size of the smoking population presents a significant opportunity for the company. The company’s wide geographical spread has provided it growth opportunities in diversified markets.

Control over tobacco leaf

BAT’s tobacco leaf business is large, with the group purchasing about 517,000 tons of leaf tobacco annually. Subsidiary companies operate leaf growing programs through which they provide direct agronomy support to farmers if it is not otherwise available. BAT purchases on average about 65% of its leaf through these programs, mainly through directly contracted farmers. In 2004, BAT’s subsidiary companies operated 22 leaf programs in 22 countries, covering about 254,400 hectares under cultivation. This gives the company an assured supply of tobacco leaf and insulates it from demand and price fluctuations for tobacco leaf.

Weaknesses

Declining operating profitability

Despite a 31.7% increase in total revenues during 2004, the operating profit of the company increased a mere 1.0% over fiscal 2003. As result, the company’s operating margins decreased from 7.4% to 5.6%. Profit from the America-Pacific region was £795 million, a decrease of £200 million from the same period last year. This was the result of lower profits in Canada and Japan. In Latin America, profits from Brazil were slightly down from 2003 due to lower volumes requiring higher marketing expenses. Profits in Chile also declined. These declines in profitability were further accentuated by the translation of US, Canadian and Latin American results into pounds sterling. The decline in profit in these two operating regions caused the overall profitability of the company to decline and this reflects poorly on the company.

Falling revenues from major operating segments

Three of the company’s five operating regions witnessed declining revenues during 2004. Net revenues from the America-Pacific region reached £2294 million in 2004, a decrease of 35.6% from fiscal 2003. At the same time, the Asia-Pacific region’s net revenues declined by 4.6%. Latin America, which accounts for 11.8% of the total revenues, witnessed a 2.5% decline in revenues during 2004. In the Asia Pacific region, the company witnessed a decline in Indonesia and Malaysia while in the America-Pacific region, Imperial Tobacco Canada witnessed declining volumes and deteriorating sales mix. In Latin America, regional sales volume at 148 billion was down by 2 billion mainly as a result of increased pressure from growing illicit trade. Falling revenues from major operating segments could lead to a loss of market share for BAT.


For fiscal year 2004, BAT’s cash flow from operations was £2677 million, a decrease of 14.0% from 2003. The free cash flow for the company was £2412 million, 10.4% less than the free cash flow in 2003. The decline in the company’s operating cash flow and free cash flow is largely attributable to an increase in working capital requirements. Declining cash flows from operations are indicative of the company’s poor cash management.

Opportunities

Light cigarettes

The demand for tobacco products with lower nicotine content has been rising in the past few years due to increasing health concerns. As a result, most tobacco companies have shifted focus from manufacturing strong cigarettes to manufacturing ’lighter’ ones, with low nicotine content. Considering the fact that adult women smoking population presents opportunities for growth, most tobacco companies have introduced light cigarettes for the market. BAT has a strong position in the market for light cigarettes and these are marketed under some of the company’s strongest brands. The company can thus leverage the growing popularity of light cigarettes toincrease its sales volumes.


China is potentially a huge market for BAT. While the majority of the market remains under the control of China National Tobacco (CNTC), a state tobacco monopoly, there is a growing demand for international brands in China in all product categories. With 2003 volumes of 1.75 trillion cigarette sticks (one-third of the total global market), China is the large volume prize for all the international majors, who currently have barely a foothold in the market. However, of all major international players, BAT is the best-placed as far as taking advantage of this is

concerned since, the Central Government of China and the relevant government departments approved the Group’s strategic investment in China in the year 2004. The new factory is being established by BAT in a joint venture with China Eastern Investments Corporation, and will reach a manufacturing capacity of 100 billion cigarettes (State Express 555 and other brands) per year. The venture will also allow BAT to distribute and sell its brands all over China.

Rising popularity of smokeless tobacco

The world market for smokeless tobacco is worth an estimated $2 billion of which the US accounts for approximately 65%, followed by Sweden with sales of $480 million in 2003. Other markets with a strong smokeless tobacco tradition include India, Algeria, Pakistan, South Africa and Norway. The European market for snus has been witnessing increasing sales. Norway and Sweden especially enjoy a lively snus market, with sales increasing rapidly over the past few years as consumers turn to reduced-risk nicotine consumption. During the five years ended 2004, Sweden’s market for snuff increased by 30%. In May 2005, BAT started test-marketing smokeless snus for the first time and the company has put two of its best-known brands (Lucky Strike and Peter Stuyvesant) behind it. With the market for SNUS increasing in Europe, the company’s largest market, BAT could have found a new area for growth.

Threats

Increasing health concerns

Due to increasing health concerns worldwide, there has been a general decline in theconsumer preference for tobacco products. While active smoking leads to a number of respiratory and heart ailments, even passive smoking has been proven to cause certain diseases. The frequency of consumers who have suffered irreparable damage to their health is slowly increasing as also the incidence of such people taking cigarette companies to court for punitive damages. BAT is no exception to this, and should this trend continue, it may be the single largest factor leading to a decline in the company’s revenues.


Major cigarette manufacturers like BAT, which are subject to pending lawsuits worth billions of dollars, are facing competition from smaller manufacturers who are not subject to litigation. The bigger companies are being forced to set aside substantial amounts of their profits to pay

for damages they might have to pay in future. Smaller companies are trying to take advantage of this by tying up with each other and offering very-low priced but quality tobacco products. As a result, they are gaining market share from established players who cannot afford to price their products below a certain level, in order to maintain the premium image of their products.

Contraband and counterfeit cigarettes

BAT is also threatened by the increased availability of contraband and counterfeit cigarettes. The company plans to tackle this by working in partnership with governments. It is playing a major role in The Global Business Leaders Alliance Against Counterfeiting, a group whose aim is to increase political awareness of the risks and impact of counterfeit. The company has also been experiencing falling growth volumes because of the planned action taken to restrict the supply of duty-free products. Approximately 15% of all cigarettes sold in the UK are expected to becontraband / counterfeit. In 2002-03, the company’s Benson and Hedges brand accounted for 19% of all seizures of illicit cigarettes made by the UK customs. Of these, 90% were counterfeit. The company has also witnessed counterfeit products in East European and Asian markets. Since these cigarettes are cheaper (due to not being taxed), an increase in the availability of such illicit cigarettes could deprive BAT of potential customers.

Company: Nestle

Industry: Consumer Goods ( Food and Nutrition products)

Company Overview

Nestle, headquarters in Switzerland, was founded by Henri Nestle in 1866. It is renowned as the world’s leading nutrition and health based company. Nestle grows is product line through

innovation as well as renovation and maintains a balance on its geo-environmental activities and product lines. They opt for long term performance rather than short term goals. The Company prioritizes in bringing the most relevant products to the consumers according to their needs that will prove valuable throughout their life.


1. Focused brand portfolios communicated through state-of-the -art customer’s engagement programmes.

2. Industry leading product portfolio, designed to address consumer needs and societal expectations.

3. Optimum product availability through world-class customer service.

4. Leading positions in priority markets.

5. Recognition as a responsible company in an industry seen as controversial.

6. Wired for # 1: Aim to reduce blockages to efficient, effective and timely operations by connecting network of people, places, processes and business partners.

7. A winning environment inspiring passion for the business, talented people and personal fulfillment.

SWOT ANALYSIS

is the largest food and nutrition company in the world, founded and headquartered in Vevey, Switzerland. Nestlé originated in a 1905 merger of Anglo-Swiss Milk Company, established in

1867 by brothers George Page and Charles Page, and Farine Lactée Henri Nestlé, founded in 1866 by Henri Nestlé. The company grew significantly during the First World War and following the Second World War, eventually expanding its offerings beyond its early condensed milk and infant formula products. Today, the company operates in 86 countries around the world and employs nearly 283,000 people.



Control over production raw materials

Strongest R & D in Food indeustry globally

Declining profitability ( oraganic food)

Weak retailing channels in poverty based countries


Opportunity Threats Increasing health concerns


Middle class share in most of the economies are growing much larger

Contamination of products


Contraband and counterfeit food products.

Strengths:

• Globally recognized as one of the largest and powerful food producers, covering almost every country (factories and plants).

• Employs approximately 280,000 people globally.

• Powerful brand positioning in the consumers mind.

• It has a vastly diversified product portfolio containing approximately 6000 brands (beverages, ice creams, frozen food items, chocolates and biscuits, pet care nutrition items, etc.)

• It has established joint ventures with giants like Coca Cola, General Mills and L’Oreal that are helpful in providing knowledge on different technological aspects.

• Consistently ranked as largest bottled water corporation that operates in an environmental friendly manner.

• Top 50 list of Fortune’s ‘America’s Most Admired Food Companies’, and ranked on top on Consumer Food Products.

• Strong internal growth and emphasis on innovation internally.

• Strong cultural environment, that acts as a loyalty carrier for the employees.

• Nestle has taken a visionary step as being one of the many companies that represent and encourage globalization that has also become an identity for its logo.

• Quality is a vital element regarding nestle products.

• Largest consumer products organization that operates globally.

• It also sells professional brands to different customers such as colleges, hotels, restaurants etc.

• Powerful marketer, and never seizes any opportunity to embed the brand image in the mind of the consumer. The quality of the Nestle products embeds an element of trust in the mind of the consumer that makes Nestle one of the powerful brands to be followed.

• Produces low cost products that give them an edge to their competitors. It also has low operating costs.

• Globally, biggest ice-cream producer, having a market share of approximately 17.5% (2006).

• The name Nestle also visualizes the high standard and quality of the product.

• Customer base loyalty for Nestle is very vast and powerful.

• The decentralized culture in the organization encourages employees.

• It has a dynamic and innovative approach when it comes to new trends regarding the technology.

Weaknesses:

• Hovering over the stats of 2008, the food industry grew 8.9% but Nestle lacked the potential to raise their sales in the organic food division that lay flat.

• Regulators like FDA and AMA (American Medical Association) are pressing on the firm for removing tags that hold no ground such as ‘low cholesterol’ or ‘heart healthy’. Parents have also reported diabetic epidemic due to the consumption of such goods, in children especially. Promoting infant milk products comparing to breastfeeding. Slaves in African countries that are working under it. It holds up a negative effect regarding the whole brand.

• Retailers do not get to set high margins to indulge more in sales.

• Logistics cost is quite high.

• Many products are not understandable in different countries. It did not make much of an impact in France with their LC-1 (food commodity).

• Coordination between country specific plants with the Center, due to which some plants are running exceptionally smooth while operations in other countries lack effectiveness.

• Transportation as well as storage (proper warehousing) problems.

• Supply Chain having a complex stature (India plant transitional traceability).

• The immense diversification portfolio of the firm makes it impossible to run every division smoothly.

• Russia being an unstable market for Nestle which cuts a big chunk from Nestle’s bite.

• It is also perceived that Nestle puts profit first.

Opportunities:

• Due to the high intensity of the health conscious awareness in the society, more health based products are required especially with incompromisable quality.

• Can go into the anti-allergy products that are very common, such as peanut free or gluten free products.

• They can also invest in snacks that would further diversify its product portfolio.

• Provide incentives to the retailers to increase sales volume.

• Open cafes that would exclusively provide Nestle products.

• LC-1 having the opportunity of having a greater impact in Germany (2 years had them go for 60% of the market share), and being the established market leader, they can establish more brands in the market.

• Middle class share in most of the economies are growing much larger.

• Nestle India may hold the position of being the export hub due to the low cost of labour comparatively to developed countries.

• In Asian countries like India, Pakistan, Bangladesh; consumers are mostly price conscious rather than health conscious. Nestle has an opportunity to have extensive strategies implemented to gain the market in such countries.

• Developing countries have a higher rate of GDP than those of developing countries, Nestle should enter in such markets as well.

• Recession has created such an impact that the market is struggling and has almost got out of that recession that will surely increase the cycle of cash flow which will be profitable for Nestle to cash in on such a time.

Threats:

• Contamination of products should be regarded strictly (Cookie Dough, March 2009).

• The company has a not so pretty history with the FDA. Pet Food contamination 2007 (imported from China, the vegetables contained rat poison).

• Inflation rise is giving birth to high prices. Raw chocolate prices are jumping, along with the Dairy costs; which leaves heavy cuts in the margin in order to make the customers brand loyal. They have also shrink the packaging which is not really noticeable, so the customers are paying the same amount for a lesser product.

• Competitors like Cadbury Schweppes, Hershey’s, Quaker, Heinz, Del Monte, Kellogg’s, and Kraft Foods are also well established. It’s a tough market with a tougher competition for gaining market share.

• Market is quite mature and the competitors specialize in a certain product that can hit hard on Nestle. (Yogurt Market US: General Mills)

• In the Indian market, fresh food is preferred than ready-to-eat meals.

• In still developing countries as well as underdeveloped countries, Nestle will face a large competition in market both domestic and unorganized sectors.

• Poverty sector in developing countries is also a lacking that must be watched over for.

• Malnutrition and obesity are yet another burden faced by the developing countries.

Company: Grameenphone Ltd.

Industry: Telecommunication

Company Overview

Grameenphone Ltd., the largest telecommunications service provider in Bangladesh, received

its operating license in November 1996 and started its service from Mar 26, 1997, the

Independence Day of Bangladesh. Grameenphone provides services to rural and urban

customers across Bangladesh, where mobile telephony is acknowledged as a significant driver

of socio-economic development, both for individuals and the nation. The company vision is “We

exist to help our customers get the full benefit of communications services in their daily lives.

We want to make it easy for customers to get what they want, when they want it.”


1. Concentration of suppliers: Grameenphone have sufficient wholesaler around the country, so they have a strong supply chain management. Customers can easily buy the product different SIM selling shop and customer care centers.

2. Branding: GP is the highest mobile usage brand of Bangladesh. It has a strong supply and chin management.

3. Profitability of suppliers: Suppliers can’t force to price rising. GP fixed the price and suppliers can only supply the products.

4. Role of quality and service: GP always provide their services as maintain highest quality standard as their role.

5. Concentration of buyers: Grameenphone have sufficient wholesaler around the country, so they have a strong supply chain management. Customers can easily buy the product different SIM selling shop and customer care centers.

6. Differentiation: Products are high standard. Business people can use Blackberry and Business Solution package.

7. Profitability of buyers: Buyers can easily get the packages which they want.

8. Role of quality and service: Buyers always seek the quality full products. From the buyer’s need, GP can easily fulfill the quality service.

9. Switching costs: It is easy to switch the suppliers. Because it depends on buyers behavior.

SWOT Analysis

Telecommunication industry in Bangladesh is in emerging stage, experiencing robust growth.

The monopoly in the field was demolished and perfect competitive market emerged. Since then

the entire cell phone companies are trying to attract their subscribers through various lucrative

offers. As with advance technological advancement, the mobile telecommunication industry

proved to be competitive. Now Bangladesh has stepped into the world of first communication

and communication has been made easy through the introduction of cellular (mobile)

telephones.

The existing Cellular phone companies in Bangladesh are CityCell (Pacific Bangladesh Telecom

Limited), Grameenphone Ltd, Robi., Banglalink and TeleTalk & AirtelTelecom ltd. Among these

company Grameenphone, AkTel Banglalink, Airtel and TeleTalk adopted GSM technology and

Citycell the market pioneer started with CDMA technology.


Highest Brand Value.

Control over the Technological Sectors (Network Base, GSN Gate etc)

Low start up cost

Declining profitability ( voice service)

Weak retailing channels in poverty based countries

Market follower

Opportunity Threats Helpful attitude from GP

personnel. People want pampering

Market potential Data service Technology Upgradation ( 2G to 3G)

Middle class share in most of the economies are growing much larger

Changing Regulations


Contraband and counterfeit Voice products.

STRENGTHS:

Being the largest player in the market, GP has a considerable amount of hold in the market. The

strengths of GrameenPhone are as follows:

Established Brand: The branding activities have led GrameenPhone to build a strong

brand. The mother brand is placed on the same platform another renowned brands like

British American Tobacco, Citicorp etc in Bangladesh.

Low start up cost: A low start up cost required to reach out to the public.

Individualism: Although GrameenPhone has close affiliation with its multinational parent

company, GrameenPhone has an independent brand identity in the market.

Experience in telecom market: Most of the Point of Sale (POS) i.e. the GP outlets has

experience on selling telecom product. GP has the largest distribution channel in

Bangladesh, which enables to offer their product in every corner of Bangladesh.

Well located Point of Sales (POS): All the POS’s are situated in good location, which

ensures easy access for all the consumers of the product.

Economies of scale: GP has now reached a stage where it enjoys economies of scale to

the fullest extent. If any new punk, i.e. any new entrant tries to dig its way in by low

tariff, then GP can easily counter that problem by following suit but without any losses

as they are low cost producers already. Attractive profiling of POS which attracts the

customers.

Wide Acceptability: The branding activities and the service of GrameenPhone have

earned 69% of the market share.

Market Awareness: GP has wide distribution network and good knowledge of this and

therefore serves the market demand accordingly.

Widest Coverage: GP has covered all over the country. Extensive Market presence

(availability): To make telecommunication accessible to the mass market, GP has set up

its POS in the most convenient areas of the districts under the GP network.

Customers Trust: Wide connectivity, easy communication and affordable price have

earned customer confidence and made people depended on GP on a day to day basis.

WEAKNESS:

Every company has its weak points and GP is no exception to that rule. The weaknesses of GP

are:

No Copyright: The GP brands are not protected by copyrights, which has led to the

misuse of the branding attributes and bears the risk of such misusage in future as well.

Market follower: GP is not market leader as they follow others. GP is good at following

suit rather than innovation. The proof of this can be seen now, as its rivals reduce tariffs

and increase the increased validity of the prepaid service, GP immediately followed suit.

In fact it came up with a whole new package called DJUICE, consisting of reduced call

rates. This attitude of GP is a very big weakness as new subscribers are immediately

attracted to the price cut of GP’s rivals and by the time GP follows suit, it would have

lost the potential subscribers to its rivals.

Lack of innovation: GP still now does not have the latest mobile Internet technology,

which by the way is quite old and did not start MMS, i.e. multimedia messaging. This is a

major setback for GP as new funky stuff always attracts young and enthusiastic

subscribers and thereby increasing the revenue for GP.

Lack of working capital for Outlet and Individual agents: This is a major setback for GP as

most of the retailers cannot provide optimum service and thereby hurting GP’s image to

some extent.

Lack of well-trained personnel: Because of this, the sales personnel lack the convincing

power to convince people to use GP’s connection.

Sub brands are not well established.

Billing System: The abrupt barring of connection due to a complicated billing system

confuses the customers. Such hassles lead to an unfavorable impression for the

company.

Network Limitation: Call drop, congestion, and poor connectivity with BTTB result in bad

image of the company.

OPPORTUNITIES:

Opportunities for GP are endless. They have the money and experience to diversify.The main

opportunities for GrameenPhone would be:

o Brand Value of GP: GP products are well known for its services and quality. Because of

this goodwill many potential subscribers might be attracted to GP.

o To have continuous presence of GP all over Bangladesh.

o Helpful attitude from GP personnel. People want pampering.

o Marketing support provided by GP. The sales and distribution channel is supported by

GP, which gives the channel a wider opportunity.

o New licenses complementing GSM telephony.

o Strategic alliances with airtime vendors (service providers) would bring opportunities for

further development.

o More international roaming partners.

o Good pre paid service would bring more revenue.

o Ownership of distribution partners.

o Stock return facility. Many retailers are attracted to sell GP products as GP has a policy

to take back unsold stock.

o Stock receiving facility on credit. Retailers also appreciate this facility to getting stock on

credit and pay later.

o Hand set and Kit lifting from the same point. GP sells all cellular related products at the

same place. So it is convenient for the consumer to get everything under one roof.

o Better utilization of IT resources which would give GP the opportunity for faster growth

o Sophisticated and flexible billing system.

o Introducing rental phones.

o Increased sale of village phone through Grameen Banks infrastructure.

o Automation of routines and procedures.

o Availability of concern contact point of GP. No matter what the time is, there is always

someone at GP to answer all the subscribers’ queries.

THREATS:

No matter how big or small, companies will always have threats that question their very

existence. However some threats remains within the company itself rather than from its

rivals or the anticipated newcomers. These threats could arise from the strategies

adopted by the company, in this case GP, which prohibit GP to function smoothly.

The threats for Grameenphone would be:

Public demand for discount on price. Everyday consumers are demanding lower tariffs

and better quality. This might pose a threat to GP.

GP is anticipating a possible threat from the new entrant BTTB. The state owned fixed-

line monopoly BTTB has entered the market with extremely low tariffs. It is thought that

the competitive environment that prevails today might be destabilized as BTTB starts

operating at full potential. Currently BTTB poses very little threat to GP as they have just

started their operation.

Fluctuations in the foreign exchange market as another area of concern while possible

changes in fiscal policies like the tax regime may also have a negative growth of the

mobile phone sector. The import duty on Handsets has been re-fixed at BDT 3000 for a

handset costing over BDT 10000 and BDT 4000 for a handset costing over BDT 10000.

This would replace the existing BDT 2500 flat rate of import duty on handsets.

According to recent study, even the existing cost of doing cellular telecom business in

Bangladesh is relatively much higher than that of the neighboring countries because of

the higher cost of leasing infrastructure, regulatory hindrances, high import duty on

handsets, and high cost of interconnection. For example, the infrastructure leasing cost

from BTTB perE-1 PCM in Bangladesh is about 10 times higher compared to that in other

countries of the south Asian Region.

Split sale. Day by day consumers are spread out to many other competitors in the

market.

Higher commission provided by the competitor cellular phone providers. This

discourages the various sales agent selling GP products

Lack of interconnection with fixed network

Inadequate information flow regarding future planning of GP. If the consumer knows

the future packages or the coverage expansion of GP in the future, then many

subscribers can make decision in buying GP before they even think about other cellular

companies.

Change in regulations having negative effect on its business

Tremendous sales pressure from GP. The sales and distribution system of GP is under

severe pressure all the time to increase the sales figure. We all know that pressure

doesn’t always achieve the desired level of sales, but it might disrupt it.

Political favoritism to other operators.

Conclusion

A well-conducted external and internal analysis generates a host of information for the management team, much of which can be confusing when examined in totality. SWOT analysis help summarize this information into a succinct list that helps executive team understand the key issues that the organization must contend with when formulating its strategy. For example, strength can be leveraged to pursue opportunities and to avoid threats, and managers can be alerted to internal weakness and external threats that need to overcome by the strategy. Within each SWOT dimensions the list can be prioritize to reflect each elements overall importance to the organization. The SWOT strategy planning tool and the Balanced Scorecard strategy execution framework; the resulting single page summery provides a valuable reference point to the managers to assess the issues that addressed by their strategy, organized by results shareholders or customers, processes, and people.

All along in the strategic analysis, British American Tobacco, Nestle and Grameenphone these three companies are from different industry along with no match. But being a multinational they also have some similarities like the brand reputation, resource control and market upgradation opportunities. And always get threats from other competitor strategy. So it is obvious after the analysis in MNCs Strategies are the weapons to formulate and implement the tactics in the long term global market environment so we need to do the external and internal environment analysis very strategically.

Reference

Developing the strategy, vision, value gaps and Analysis, Robert S. Kaplan and David P. Norton, Harvard Business School Publications,

http//: newsletters.harvardbusinessonline.org

Nestle ® Reg. Trademark of Société des Produits Nestlé S.A.. All rights reserved.

http//: www.nestle.com

British American Tobacco PLC; Company Profile Reference Code: 269 .Publication Date: Aug 2005

http//: www.datamonitor.com

http://www.datamonitor.com/

http://www.nestle.com/

http://www.newsletters.harvardbusinessonline.org/

Strategic Analysis: BAT Nestle GP

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