The Mobile Phone And Network Service Providing Industry In Bangladesh: Grameenphone Ltd - Essay Example

In today’s competitive business environment, knowledge and understanding of market place is essential. Market is the set of actual and potential buyers. From the very beginning the market has created by its own needs. And to satisfy buyers needs and wants industries was established. In everywhere in the world industry establish depends up to the market. Beside land phone the needs of mobile telecommunication is very high in Bangladesh. There fore the mobile phone and network providing industry takes place in Bangladesh. This report discuss about the Mobile phone and network service providing industry in Bangladesh, present a background and introduction of Grameenphone Ltd. Market trends, market environment analysis, competitor analysis has conducted to understan the market situation. Based on these analysis a SWOT analysis on Grameenphone (GP) has done. And to the end some recommendation has given with indicating the appropriate strategy. Telecommunication Industry in Bangladesh Access to the Internet is creating a new distinction in society. Those who have access to the Internet have access to all kinds of information. This puts them into an advantageous position in society, vis-à-vis others who do not have such access. Internet access is built upon the basic telecom network. While the telecom infrastructure in advanced countries is well developed, allowing them to move rapidly towards universal telecom and Internet access, the infrastructure in Bangladesh is very poor and inadequate. Like other developing countries, Bangladesh is facing the question of how best to develop its telecommunications and information infrastructure to provide access to "advanced" telecommunications and information services in order to remain competitive in the world of information technology. There is a tremendous amount of potential for growth in areas like fixed wireless networks, optical fiber networks, cable networks, Internet telephony, etc. (to name a few) in Bangladesh. This paper addresses the concerns and prospects of growth in telecommunication infrastructure in Bangladesh. Bangladesh, future targets and methods of attracting finance. The sector, particularly which of mobile phones, is one of the fastest growing areas of the economy. The growth potentials will continue to remain robust for the foreseeable future. Major Market Players In Telecommunication Sectors In Bangladesh The existing Cellular phone companies in Bangladesh are CityCell (Pacific Bangladesh Telecom Limited), GrameenPhone Ltd., AkTel Ltd., Banglalink and TeleTalk. Among these company GrameenPhone, AkTel, Banglalink and TeleTalk adopted GSM technology and Citycell the market pioneer started with CDMA technology. Historical background of the company (Grameenphone) Grameenphone (GP) is the single largest cell-phone operator in Bangladesh. GP was given the cellular license in 28th November 1996 by the ministry of Posts and Telecommunications, Later in March 26th 1997, GP offered their service in Dhaka city and gradually covered the entire country.1 After approximately eight years of operation, GP has managed to get a subscriber base of 3 million. It seems that GP is playing a dual-purpose role towards the Bangladeshi society. First and foremost is its profit objective. Its aim is to receive an economic return on its investments and to contribute to the economic development of Bangladesh where telecommunications can play a critical role. This is why GP, in collaboration with Grameen Bank, is aiming to place one phone in each village to contribute significantly to the economic uplift of those villages. GP’s basic strategy is coverage of both urban and rural areas. In contrast to the “island” strategy followed by some other companies, which involves connecting isolated islands of urban coverage through transmission links, GP builds continuous coverage, cell after cell. While the intensity of coverage may vary from area to area depending on market conditions, the basic strategy of cell-to-cell coverage is applied throughout GP’s network. GP employ’s a large number of employees who are young, dedicated and energetic. All of them are well educated at home or abroad, with both sexes (genders) and minority groups in Bangladesh being well represented. They know in their hearts that GP is more than just about phones. This sense of purpose gives them the dedication and the drive, producing – in about eight years – the biggest coverage and subscriber-base in the country. GP knows that the talents and energy of its employees are critical to its operation and treats them accordingly. The technology used by GP can only be described as state of the art. GP’s Global System for Mobile (GSM) technology is the most widely accepted digital system in the world, currently used by over 300 million people in 150 countries. GSM brings the most advanced developments in cellular technology at a reasonable cost by spurring severe competition among manufacturers and driving down the cost of equipment. Thus consumers get the best for the least. GP is best known for its service rather than its low tariff and value added services. GP believes in service, a service that leads to good business and good development. Telephony helps people work together, raising their productivity. This gain in productivity is development, which in turn enables them to afford a telephone service, generating a good business. Thus development and business go together. As a result GP is delivering the digital revolution to the doorsteps of the poor and unconnected. By being able to connect to urban areas or even to foreign countries, a whole new world of opportunity is opening up for the villagers in Bangladesh. Grameen Bank borrowers who provide the services are uplifting themselves economically through a new means of income generation while at the same time providing valuable phone service to their fellow villagers. The telephone is a weapon against poverty. Grameenphone Limited, the number one and leading mobile phone company in the area of telecommunications in Bangladesh. Of four mobile operators, GP managed to grab 69% of the market share only by providing cost-effective & best service available in the market of mobile telecommunication. GP has made its expansion not only in the urban areas, but also it stretched its network in the rural areas for the economic empowerment of the rural people. Introduction of Competitors: 1. Pacific Bangladesh Telecom Ltd. (PBTL): City Cell (Pacific Bangladesh Telecom Limited) is Bangladesh’s pioneering mobile communications company and the only CDMA network operator in the country. Among the five mobile phone operation companies who are running their businesses in the private sector, Pacific Bangladesh Telecom Ltd. (PBTL) is the pioneer. IN 1990 Hutchison Bangladesh Telecom Ltd. was formed as a joint venture of Bangladesh Telecom (BTL) and Hutchison Whampoa of Hong Kong. The company began their operations as the analog cellular operator using the CDMA technology in 1993. In 1996 this company was renamed as pacific Bangladesh Telecom Ltd. (PBIL) with brand name of City Cell.2 2. Telecom Malaysia International Bangladesh (Aktel) AKTEL is the dynamic and leading end-to-end countrywide GSM mobile communication solutions of TM International (Bangladesh) Limited. It is a joint venture company between Telekom Malaysia Berhad and A.K. Khan & Co. Limited, which was established in the year 1996, and services launched in 1997 under the brand name AKTEL. It is a company incorporated in Bangladesh with the objective of offering the state-of -art and modern telecommunications services to the people of Bangladesh at competitive prices. TMIB received license to operate GSM cellular phone services in Bangladesh in 1996. TMIB, a joint-venture company formed between Telecom Malaysia Berhad holding 70% of the equity capital and 30% local shareholding by M/s A. K. Khan & Co., Limited.3 3. Orascom Telecom Ltd (BANGLALINK): Orascom Telecom Holding purchased 100% of the shares of Sheba Telecom (Pvt.) Limited (“Sheba”) in September 2004. OTH operates a GSM network in Bangladesh and provides a range of prepaid and postpaid voice, data and multimedia telecommunications services. As of June 30, 2005, Banglalink served approximately 0.5 million subscribers.  Banglalink estimates that it had a 7.3% market share of total mobile subscribers in Bangladesh. Banglalink’s license is a nationwide 15-year GSM license that expires in November 2011. It was acquired for US$ 60 million and re-branded and launched its services under “Banglalink” in February 2005.4 4. Teletalk Bangladesh Ltd. Teletalk Bangladesh Limited is a public limited company, registered under the Registrar of the Joint stock companies of Bangladesh. Total shares owned by the Government of the Peoples Republic of Bangladesh. It continue to grow and engage our customers through our clear commitment to offering high quality products and services as well as leading customer retention and loyalty programmers. Teletalk continues to be a part of the revolution that’s connecting millions of Bangladeshi people and around the world. Teletalk Bangladesh limited was established keeping a specific role in mind. Teletalk has forged ahead and strengthened its path over the years and achieved some feats truly to be proud of, as the only Bangladeshi mobile operator and the only operator with 100% native technical and engineering human resource base, Teletalk thrives to become the true people’s phone – “Amader Phone”.5 2.3.4 Perceived Relative Position of Mobile Operators Operators May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Nov Dec Nov Dec GP 13.24 13.97 15.73 14.84 15.14 15.65 16.01 16.48 48% 48% 30% 47% Aktel 5.55 5.05 6.67 6.62 6.7 6.62 6.53 6.4 20% 19% 8% -13% Banglalink 5.53 6.04 6.61 5.88 6.02 6.27 6.51 7.08 19% 21% 14% 57% Citycell 1.27 1.3 1.31 1.32 1.32 1.35 1.38 1.41 4% 4% 0% 3% Teletalk 0.87 0.89 0.91 0.66 0.68 0.7 0.72 0.85 2% 2% 2% 13% Warid 0.2 0.47 1.14 1.4 1.56 1.74 1.95 2.15 5% 6% 16% 20% Total 26.66 27.72 32.37 30.72 31.42 32.33 33.1 34.37 100% 100% 70% 127% Market size and customer The total market size of the mobile industry is 34.37 million approximately, as of DEC 2007. Of this 48% of the market share is occupied by Grameenphone, 19% by Aktel, 21% by Banglalink, 4% by CityCell; 6% by Warid and 2% by TeleTalk. Environment analysis of the market: Micro Environment: 1. Suppliers: Available numbers of supplier exist in the market. Basically their task is to supply cell/ Mobile phone. Such as: Nokia, Samsung, Phillips, Sony-Ericson, Mottorola. All the suppliers have a good alliance with the service (network) provider. 2. Marketing intermediaries / Retailers: A huge number of intermediaries are existing in the market. Two types of retailer are in the market. One type whose retail only specific brand and another type whose retail at least two or more brand. Retailers have a great influence on service provider’s decision making such as pricing strategy, promotional strategy. 3. Stake holders: The stakeholders’ such as consumer, media publics, government publics, and citizen- action publics have a greater power to influence the business strategy. As an example, After getting a complain from customer that Tele service providers are charging a huge price for per call, after research, government impose a call charge range at 0.25 to 2 taka (BDT) per minute. Companies have no way but to obey it. Macro environment: 1. Demographic environment: The demographic environment is highly in favor of the industry. Such as the population rate of this country is too huge and above 75% people use mobile service. 2. Economic environment: The economic situation of this county is growing. As a result income level is increasing which is a green signal for the industry. Peoples are willing to spend money against getting something, will be beneficial for them. 3. Natural environment: Bangladesh is always facing the natural disaster such as cyclone, flood, over raining etc. that are really a great barrier for the growth of this industry. 4. Political environment: Sometime political unrest put this industry in rivalry situation, which is unpredictable. 5. Technological environment: The technological environment is rapidly changing and as an outcome of this changing the safety regulations results in higher research costs. Based on the discussion a SWOT analysis of Grameenphone (GP) has given below: Strengths: Good Owner Structure. Availability of Backbone Network (Optical fiber). Brand Name / Grameen Image Skilled Human Resource. Largest Geographical Coverage. Good Human Resource and Infrastructure Installation all over the country through Bangladesh Railway and Grameen Bank. Access to the widest rural distribution network through Grameen Bank. High Ethical Standard. Weaknesses: Different departments not working together. Inadequate interconnection with BTTB (Bangladesh Telegraph & Telecommunication Board). Sometimes a tendency to be arrogant Complicated price structure No long-term Distribution/Channel strategy. High employee turnover. Advertising is not too creative. Opportunities: Economic growth of Bangladesh. New and better interconnection agreement Huge need for telecom services Declining prices for handsets New international gateway Demand for inter-city communication. Threats: More rigid government regulations. More influence of competitors on the fixed network Change of government might lead to competitors having more clout Non-co-operation of government and fixed PSTN (Public Service Telephone Network). Price war. Recommendation: The recommendations are given here for three different stages based on duration such as: Short term (1-3years), Midterm (3-5) and Long term (5+) on the basis of analysis’s outcome. Short term: To reduce the inconsistency in customer service all the department should work as a team. Interconnection should increase with the legislative body. Provide “Trade-in allowance”6 for retailers to foster the sales. As all the competitors are large in infrastructure GP should not follow the “Market skimming”7 pricing strategy but “Going rate” pricing strategy will the better one for them. “Performance based reward”8 strategy should follow by the Human Resource Department of GP to lessen the employee turnover. To satisfy the stakeholders they should perform more “Corporate Social Responsibility”. To capture the “age based segment”-youth generation they should invest in entertainment sector. Mid term: They should implement the “Product differentiation” strategy as like as they provide Internet service they should broadcast some TV channels, as the technology is already existed in the first world country. To develop the supply chain and to weaken the competitors, GP should use “Flank Attacking” strategy. By using this strategy GP will be able to capture the suppliers of its competitors. Long term: The next generation will be more aware about their environment. At the time of purchasing product buyer should think the product comes from the organization, how much environment friendly, what they are doing to protect the environment and how much they contribute to the society and the answer of these question will influence buyers buying decision strongly. GP should transform itself to a green organization. They may perform social audit and will publish report frequently to the people to capture the market niche. And their marketing strategy might rely with the corporate social responsibility and performing corporate social responsibility, will be a mode of advertisement for the business organization References: 1) Information about Grameenphone is available at “www.grameenphone.com”. 2) Information about Pacific Bangladesh Telecom Ltd is available at “www.citycell.com/” 3) Information about Aktel is available at “www.aktel.com/”. 4) Information about Banglalink is available at “www.banglalinkgsm.com”. 5) Information about Teletalk is available at “www.teletalk.com.bd/”. 6) Kotler, Philip & Armstrong, Gary, 2005, “Principles of Marketing, 11th edition”, Printice Hall of India publish Ltd, M-97, Connaught Circus, New Delhi 7) Kotler, Philip & Keller, Kevin,Lane, 2005, “ Marketing Management, 12th edition”, Printice Hall of India publish Ltd, M-97, Connaught Circus, New Delhi. 8) Charles W. L Hill & Gareth R. Jones; 2004, “Strategic Management” Sixth Edition (Indian Adaptation); Kolkata, India. 9) Bangladesh statistics beauro, March,15, 2008 “Growth of Mobile phone industry” 10) Grameen Phone Ltd: Annual Report 2006-2007. Other references: (indirectly used) http://essay2review.com/cause-and-effect-essay.html http://essay2review.com/sample-essay.html “The Harvard writing style” available in :www.aresearchguide.com/styleguides.html Read More