Challenges Facing the Chinese Telecom Firms in Their Expansion Strategies - Report Example

Statistics Project Affiliation Statistics Project A careful analysis of the Chinese telecom industry reveals that there are a number of marketing related challenges, such as stiff competition, changes in consumer tastes and preferences, poor communication strategies, and inadequate marketing research, facing the industry. By executing this study, the researcher will thus help in suggesting solutions for the purpose of improving the telecommunication industry growth rate. Pradhan, Bele & Pandey (2013) establishes that the telecommunication sector is a vital component of any economy. Through the growth of the telecom sector, economies such as the United States and India have experienced positive transformation. In order to achieve such economic growth in the Chinese economy, it is essential to focus on improving the major industries, such as the telecommunication industry. However, this cannot be achieved without solving the challenges hampering it from achieving the desired growth rate. Introduction The motive of this study is to establish and define challenges facing the Chinese telecom firms in their expansion strategies. The study will achieve this by examining the current market situation to identify the main challenges that firms in this industry are facing from a marketing perspective. The study will also attempt to suggest solutions that the Chinese telecommunication industry could adopt to solve these problems by assessing the solutions that have been employed in other countries. This study is intended to give a clear understanding of the challenges facing the Chinese telecommunication sector. It will focus on establishing why the telecommunication sector in China is growing at a lower rate compared to telecommunication sectors of other economies, such as United States and India. Through this research, the management of firms in the Chinese telecommunication sector will understand better the challenges that are limiting their expansion strategies from a different perspective. This will enable them devise better ways of dealing with these challenges in the future and ultimately boost the growth of the telecommunication sector. The hypotheses for this study are: Null hypothesis-: H0 –Chinese telecommunication firms exhibit a slow growth rate due to both industrial and customer based challenges. The alternative hypothesis-: H1-Chinese firms do not exhibit a slow growth rate due to industrial nor customer based challenges. These hypotheses enhance the empirical testing of the outcome of the research. Some of the challenges that will be looked at are the customer based challenges. The biggest concern for many businesses regards the criteria through which customer loyalty is measured. Several techniques for measuring customer loyalty exist. The model employed in this research will measure customer loyalty using three basic aspects: retention, advocacy, and purchasing. The three perspectives help organizations learn more about their customers and formulate better strategies that accelerate business growth (Liu, Guo & Lee, 2011). Interfirm competition will also be looked at keenly. The intensity of inter-firm competition is dependent on factors such as entry barriers, exit barriers, organization size, industry regulation and policies, and the organization’s brand image. Based on assumptions of game theory, inter-firm competition is a by-product of the rivalries between incumbent firms and new entrant firms (Trestian, Ormond, & Muntean, 2012). Target Population This study targets the management and employees of the main telecommunication service providers in China: China Netcom, China Telecom, China Unicom and China Tietong. The target population is spread out through Chinese main towns; hence, its selection ensures that the study is representative. In addition, this population was chosen since it possesses firsthand information regarding the topic of study. Sampling method The sample size was determined using a sample size determination formula proposed by Yamane n ═ N ⁄ [1+N (e)2 ] (Wilson, 2010).  Where, n→ the desired sample size N→the target population E →the degree of accuracy expressed as a proportion at .05 Using the formula for the target population, n ═ 56 / [ 1 + 56 (0.05)2] ═ 49 respondents The 49 respondents are to be selected randomly from the target population using the criteria shown in the table below Sample size selection Organization Population Sample size China Netcom 16 16/56×49 ═ 14 China Telecom 18 18/56×49 ═ 16 China Unicom 12 12/56×49 ═ 10 China Tietong 10 10/56×49 ═ 9 49 Methods of Data Collection Data used for this research was obtained using both primary and secondary sources. Primary data was collected from the target population using questionnaires. The questionnaire comprised of controlled and unstructured questions to ensure flexibility of responses. To ensure clarifications to unclear questions and responses, the questionnaires were administered orally. Moreover, this ensured that a thorough discussion of the problem area ensured that the topic is covered adequately. Secondary data was obtained from books; peer reviewed journals, newspapers, and online sources. Dependent and Independent Variables The dependent variable in the research was a competitive advantage. Elsewhere, the independent variable was the marketing mix that comprises of price, promotion, and place. These factors were ascertained to have a great influence on the level of growth of the telecommunication industry based on competitive advantage of the firm. Increase in application of marketing mix techniques in other firms showed that there was an influence on the Chinese telecommunication industry due to increasing competition. The variables are measured based on their application in respective firms. Increase in the application of these variables in the firm was found to have a great impact on the output of the telecommunication industry. Additionally, they were found to result in an increase in customer loyalty as well as ensuring retention of customers. The alpha value used for the research is 0.005 because it helped in the avoidance of cases where the null hypothesis would be rejected whereas it is true. Additionally, using this significance level ensured that the type one error was made 5 % of the times the test was carried out. Method used for Statistical Testing The study found paired sample t-test statistics as the appropriate statistical technique for testing the formulated hypothesis. The nature of the test included the mean, t-test statistic, and two-tailed p-value. The decision criterion was to reject the null hypothesis if the t-test statistic was greater than the critical value at 5% level of significance. Data Analysis and Presentation The collected data was analyzed by use of simple descriptive statistics. This made it possible for the research meaningfully to describe the distribution of scores or measurements using Statistical Package for Social Sciences (SPSS) and Microsoft Excel. The two were used to develop the analysis of the findings by generating graphs, tables, and charts to be used in the presentation of the findings. The interpretation of the data was based on the conceptual framework and literature review. Overall findings of the study were used to determine the challenges affecting the expansion of the Chinese telecommunication industry. This method was selected because it provided summaries that are simple about the measures and the samples. Test Statistic Value The statistic value was arrived at by use of the central tendency; mean, median and mode. The mean was arrived at by adding up the values and dividing by the number of value, which was 49/4 = 12.25. Median is the exact value found at the exact middle of the values after arranging all the values in numerical order. In this case, the middle values are 10 and 14. Adding 10 and 14 then dividing the answer by 2 will then arrive at the median and the answer will be 12. The mode will be arrived at observing the most frequent occurring value in the sample. In our case, there was no mode value. The mean and the median are almost equal to each other, which then prove that the distribution is truly normal. Given the value, I rejected the null hypothesis. Results and Discussion The results are that the Chinese telecommunication firms exhibit a slow growth rate due to both industrial and customer based challenges, such as customer loyalty, competition, and market concentration. The analysis provided showed that the telecommunication companies in China are affected by these challenges and in order for them to be competitive in the international market; they need to concentrate on alleviating these challenges. Practical Implications of the Results From the results, we have seen that the telecommunication companies need to improve on their competitive advantage and customer retention in order to be more profitable. This theory is relevant because they can use it to improve on their competitive strengths in the international market. This will then improve the economy of the country and improve their thus increasing market share. References Liu, C. T., Guo, Y. M., & Lee, C. H. (2011). The effects of relationship quality and switching barriers on customer loyalty. International Journal of Information Management, 31(1), 71-79. Pradhan, R. P., Bele, S., & Pandey, S. (2013). The link between telecommunication infrastructure and economic growth in 34 OECD countries. International Journal of Technology, Policy and Management, 13(3), 278-293. Trestian, R., Ormond, O., & Muntean, G. M. (2012). Game theory-based network selection: solutions and challenges. Communications Surveys & Tutorials, IEEE, 14(4), 1212-1231. Read More