Enterprise Specific Strategic Analysis: Robi Axiata Limited

Business Strategy (W650) Term Paper

Enterprise Specific Strategic Analysis: Robi Axiata Limited

Prepared for

A. K.M Saiful Majid Professor & Course Instructor

Business Strategy (W 650)

Submitted by Md.Tawhid-Bin-Tarek, MBA 44D, #86 Mustafa S. Salman, MBA 44E, #32

Institute of Business Administration University of Dhaka

June 13, 2013

June 13, 2013

A.K.M Saiful Majid, ProfessorInstitute of Business AdministrationUniversity of Dhaka, Dhaka-1000

Dear Sir:

It is our pleasure to submit the report ‘Enterprise Specific Strategic Analysis: Robi Axiata Limited’ which has been written for the fulfillment of Term Paper submission on Business Strategy (W650) course.

The members of this group have done their best for making this report. They have studied different books on several topics from Strategic Management. Different member has worked on different parts of this report. The individual efforts are summed and the report came into being.

We want to thank Sabbir Ahmed, Tawhidur Rahman and Ariful Mannan of Robi Axiata Limited for giving us the interview. The experience of working in this report was excellent. During the preparation of this report, we have learned many important aspects of Business Strategy. The knowledge we gathered during the preparation of this report will certainly help us in personal & professional life.

Sincerely YoursMd. Tawhid-Bin-TarekOn behalf of the students worked towards this report  

Table of Contents

Executive Summary.........................................................................................................................61. Introduction...........................................................................................................................71.1. Origin of the Report..............................................................................................................71.2. Objectives of the Report.......................................................................................................7a) General Objective.................................................................................................................7b) Specific Objective.................................................................................................................71.3. Scope of the Report..............................................................................................................81.4. Methodology.........................................................................................................................81.5. Limitations of the Report......................................................................................................82. Robi Axiata Limiter: At a Glance.........................................................................................82.1. History of Robi Axiata Limited............................................................................................82.2. Shareholders.........................................................................................................................92.3. Achievements of Robi Axiata Limited...............................................................................102.4. Identifying the Strategies of Robi Axiata Limited.............................................................112.5. Business Model of Robi Axiata Limited............................................................................123. Telecom Industry Life Cycle Analysis...............................................................................123.1. Growth in Telecom Industry in Bangladesh.......................................................................133.2. Customer of Telecom Industry in Bangladesh...................................................................143.3. Current Stage of Telecom Industry of Bangladesh.........................................................143.4. Comment and Findings on Overall Industry Life Cycle Analysis..................................154. Strategic Features of Robi Axiata Limited.........................................................................154.1. Vision statement..............................................................................................................15

Corporate Level (Axiata)................................................................................................15 Vision (Business Level – Robi)......................................................................................15

4.2. Mission statement...........................................................................................................15 Corporate Level (Axiata)................................................................................................15 Business Level (Robi).....................................................................................................15

4.3. Principles & Purpose.......................................................................................................154.4. Evaluation of Vision Statement of Robi Axiata Limited................................................164.5. Balanced Scorecard of Robi Axiata Limited......................................................................165. External Environment Analysis of Robi Axiata Limited...................................................175.1. Porter’s Five Factor Analysis on Robi Axiata Limited......................................................175.1. Strategic Group Analysis of Robi Axiata Limited.............................................................196. Strategic Resource and Competitive Position of Robi Axiata Limited..............................196.1. SWOT Analysis of Robi Axiata Limited............................................................................19 Strengths.............................................................................................................................19 Weaknesses.........................................................................................................................20

Opportunities......................................................................................................................20 Threats................................................................................................................................206.2. Value Chain of Robi Axiata Limited..................................................................................216.3. Key Success Factor (KSF) of Robi Axiata Limited...........................................................226.4. Competence Analysis of Robi Axiata Limited...................................................................23 Competencies of Robi.........................................................................................................23 Core Competencies of Robi................................................................................................23 Distinctive Competencies...................................................................................................247. Competitive Strategies Followed by Robi Axiata Limited.................................................248. Diversification Strategy of Robi Axiata Limited................................................................258.1. Current Diversification Strategies of Robi Axiata Limited............................................258.2. Comments and Findings on Diversification Strategies...................................................269. Ethics and Social Responsibility Maintained by Robi Axiata Limited..............................279.1. Current Scenario of Corporate Social Responsibility in Robi Axiata Limited..................27 Pure Drinking Water.......................................................................................................27 Zero Club Feet................................................................................................................27 Robir Alo.........................................................................................................................28 Basic Computer Training & Internet Corner..................................................................2810. Organizational Development in Robi.................................................................................2810.1. Basic Organogram of Robi.................................................................................................2810.2. Features of Organizational Development...........................................................................2911. Conclusion..........................................................................................................................30

Executive Summary

In the report enterprise based strategy of Robi Axiata Limited has been discussed. Robi Axiata is a joint venture of Axiata Berhad and NTT Docomo. Current strategy of Robi is to provide nationwide coverage with competitive pricing policy. In the report, external environment analysis of Robi has been done. The strategic group of Robi among the 6 operators has also been found out. In the SWOT analysis, strengths, weakness, threat and opportunity of Robi has been discussed briefly. Through competence and value chain analysis, we analyzed competitive strengths of Robi in the market. Different strategies of Robi Axiata has scrutinized in the report. We also discussed the current trend of CSR activities of Robi in the report. Current organizational organogram and different features of organizational developments of Robi has also described.

1. IntroductionThe basic function of telecommunication is to connect people through voice transfer and via Internet. Apart from this basic function, telecommunication has already started introducing some diversified areas with the help of its mobile network.

Mobile technology is presently providing various cheap solutions in people's daily life. The traditional thinking of connecting people through mobile phone is far behind in comparison with the present scenario. Information technology enables telecom companies to provide economic solutions with a very cheap and easily available access, which was earlier costly and not accessible to some extent.

Today, “The Globe is a village” and telecommunication has become a day-to-day necessity of the people. Nearly 35 million people own and use mobile phones as an important device and depend on these for their ultimate connectivity. Mobile phone is becoming a very common measure of communication in our country. The number of mobile user is increasing day by day. It is a very attractive market for the mobile connection providers. Presently there are six companies in the market. Each of them is trying to maintain and increase their market share. Among them Robi Axiata Limited is one of the leading companies in this sector.

1.1. Origin of the Report

Business Strategy (W650) is one of the major courses in MBA Program Institute of Business Administration (IBA), University of Dhaka. It is the capstone of courses where the students apply the learning of pervious 20 courses. This term paper serves the purpose of enterprise specific strategic analysis.

This report is a result of strategic analysis of Robi Axiata Limited throughout the whole semester. We have prepared the report titled as “Enterprise Specific Analysis: Robi Axiata Limited”. This report includes aspects of strategic analysis of Robi Axiata Limited which we have been taught in the course.

1.2. Objectives of the Report

The objective of the report can be viewed in two forms: 1. General Objective 2. Specific Objective

a) General Objective

To describe and analyze different strategic aspects of Robi Axiata Limited on an enterprise basis.

b) Specific Objective

More specifically, this study entails the following aspects: To discuss the strategy and business model of Robi Axiata Limited. To describe the internal and external factors that affects the strategy of Robi Axiata Limited. To write down different strategies followed by Robi Axiata Limited. To discuss competitive resources and strengths of Robi Axiata Limited. To scrutinize the ethical issues and corporate social activities followed by Robi. To find out the scope of organizational development for Rob. To prepare short and long term strategies of Robi.

1.1. Scope of the ReportThis main purpose of the report is to find out and analyze different strategic aspects of Robi Axiata Limited. There are several other operators under Axiata Berhad group. But this report only focuses on the strategic issues of Robi Axiata Limited. Strategic issues related with the shareholders have not been considered in the report.

1.2. Methodology

Primary Data

To find out the strategic aspects of Robi Axiata Limited, we have interviewed 3 employees of Robi Axiata Limited. They all work in Corporate Strategy Division and have expertise in designing and implementing the strategy of Robi Axiata Limited. From face to face interview, we have got a lot of valuable information regarding the strategies of Robi Axiata Limited.

Secondary Data

Internal sources- As one of our group mates (Md Tawhid-Bin-Tarek) works in Robi Axiata Limited, we have collected different unconfidential documents and newsletters through him.

External source- Different websites related to the telecom sector and online resources.

Nature of Research Followed in the Report

Explanatory research method has been followed in the report. Here, in the report, we have done studies which can be used as a basis of future conclusive research. In the report, we only discussed and analyzed certain strategic aspects of business strategies of Robi Axiata Limited but did not give conclusion based on any quantitative analysis.

1.3. Limitations of the Report

During analysis and preparation of report, we have faced some limitations. These are described below:

Some important documents can’t be extracted due to confidentiality. Interview of some more employees could not be conducted due to their busy schedule.

2. Robi Axiata Limiter: At a Glance

1.1. History of Robi Axiata Limited

Robi Axiata Limited is a joint venture between Axiata Group Berhad, Malaysia and NTT DOCOMO INC, Japan. Robi Axiata, formerly known as Telekom Malaysia International (Bangladesh), commenced operations in Bangladesh in 1997 with the brand name AKTEL. It started operation on 15 November 1997 in both GSM 900 and 1800 band.

Its founding chairman is Late Mr. Zahiruddin Khan, an ex-commerce minister. All along through its inception it was ranked as No.2 mobile operator and was placed far behind the industry leader Robi in terms of revenue and no. of subscribers. From the end of 2004, ROBI spent heavily to market its brand all over the media, outdoor and other marketing mediums. It was a huge success and the ROBI brand became well established. Credit was given to the then Chief Operating Officer Mr. Vijay Watson who is believed to be the mastermind behind the change and success of ROBI. After the entrance of Banglalink, the

competition in telecom market becomes fierce. With aggressive pricing and marketing policy, Banglalink takes the 2nd position by pushing AKTEL into 3rd in 2008.

In mid 2008 news broke out that A.K.Khan & Company was selling its 30% and Vodafone, etisalat and NTT DoCoMo were among the potential buyers. After months of negotiation, NTT DoCoMo sealed a deal with A.K.Khan & Company for US $ 350mln on June 2008.The deal was completed on September 19, 2008.

After the change of the shareholders, Robi gained new pace in the market. On 28th March, 2010 the company started its new journey with the brand name Robi.

On crossing 3rd year, Robi has now 21.43% of the current market share with subscriber base of 21.697 million in April, 2013. It has also improved its technical capability by expanding and renovating its BTS across the country. Robi now enjoys 98% of population coverage.

Robi is truly a people-oriented brand of Bangladesh. Robi, the people's champion, is there for the people of Bangladesh, where they want and the way they want. Having the local tradition at its core, Robi marches ahead with innovation and creativity.

To ensure leading-edge technology, Robi has the international expertise of Axiata and NTT DOCOMO INC. It supports 2G voice, CAMEL Phase II & III and GPRS/EDGE service with high speed internet connectivity. Its GSM service is based on robust network architecture and cutting edge technology such as Intelligent Network (IN), which provides peace-of-mind solutions in terms of voice clarity, extensive nationwide network coverage and multiple global partners for international roaming. It has the widest International Roaming coverage in Bangladesh connecting 600 operators across more than 200 countries. Its customer centric solution includes value added services (VAS), quality customer care, easy access call centers, digital network security and flexible tariff rates. Covering all 64 districts of the country, ROBI has become the first mobile operator to connect Tetulia and Teknaf, the northern and southern most points of Bangladesh and the first to provide seamless coverage along the Dhaka-Chittagong highway.

With its strengths and competencies developed over the years, Robi aims to provide the best quality service experience in terms of coverage and connectivity to its customers all over Bangladesh. Together with its unique ability to develop local insights, Robi creates distinct services with local flavor to remain close to the hearts of its customers.

1.2. Shareholders

Robi Axiata Limited is a Joint Venture company between Axiata Group Berhad (70%) and NTT DOCOMO INC. (30%)

Axiata Group Berhad

Axiata is an emerging leader in Asian telecommunications with significant presence in Malaysia, Indonesia, Sri Lanka, Bangladesh and Cambodia. In addition, the Malaysian grown holding company has strategic mobile and non-mobile telecommunications operations and investments in India, Singapore, Iran, Pakistan and Thailand. Axiata Group Berhad, including its subsidiaries and associates, has approximately 120 million mobile subscribers in Asia, and is listed on Malaysia’s stock exchange (Bursa Malaysia).

NTT DOCOMO INC

NTT DOCOMO INC is the world's leading mobile communications company and the largest mobile communications company in Japan. DOCOMO serves over 56 million customers, including 44 million people subscribing to FOMA™, launched as the world's first 3G mobile service based on W-CDMA in 2001. DOCOMO also offers a wide variety of leading-edge mobile multimedia services, including i-mode™, the world's most popular mobile e-mail/Internet service, used by 48 million people. With the addition of credit-card and other e-wallet functions, DOCOMO mobile phones have become highly versatile tools for daily life. With cutting edge technology and innovative services, DOCOMO is fast becoming a preferred lifestyle choice, continuously expanding its role in its users’ lives, growing globally throughout Asia, Europe and North America. NTT DOCOMO INC is listed on the Tokyo (9437), London (NDCM) and New York (DCM) stock exchanges.

1.3. Achievements of Robi Axiata Limited

Robi Axiata Limited, the leading mobile phone operator of the nation, has received “Star News HR EXCELLENCE AWARDS FOR INNOVATION IN HR”.

Leading mobile phone service provider Robi has been re-assessed and rewarded with ISO 9001:2008 certification. Robi received this internationally renowned Management Standard after complying with all requirements.

Robi has been conferred the prestigious Frost & Sullivan Asia Pacific ICT Award 2010 for "Emerging Market Service Provider of the Year".

Awarded the prestigious fund grant from GSMA MMU (Mobile Money for the Unbanked) in 2009. Crossing 10 million subscribers mark in 2009. Ranked within top 6 global comparable telcos in A.T. Kearney benchmarking exercise in 2009. Cost optimization project saved 2 times of what was projected. Bangladesh Mobile Phone Businessmen Association (BMBA) Award 2008-2009 as the best service

provider in Bangladesh The Weekly Financial Mirror –Samsung Mobile & Robintex Business Award 2008-2009 as the best

Telecommunication company. TeleLink Telecommunication Award 2007 TeleLink Telecommunication Award 2007" for its

excellence in service, corporate social responsibilities and dealership management for the year 2006 in commemoration of WORLD Telecommunication Day 2007.

Arthakantha Business Award Given by the national fortnightly business magazine of Bangladesh for its excellence in service in telecom sector.

Financial Mirror Businessmen Award given by the national weekly Tabloid business magazine. Deshbandhu C. R. Das Gold Medal for contribution to telecom sector in Bangladesh. Beautification Award for exceptional contribution to the Dhaka Metropolitan city from Prime Minister

Office on 13th SAARC Summit. Standard Chartered - Financial Express Corporate Social Responsibility (CSR) Awards 2006 for

contribution in Education, Primary Health, poverty alleviation and ecological impact.

Arthokontho Business Award 2006 for better telecom service provider in Bangladesh. Financial Mirror & Robintex Business award 2006 for its excellence in service, corporate social

responsibilities activities throughout Bangladesh. Desher Kagoj Business Award 2006 for Corporate Social Responsibilities activities. TeleLink Telecommunication Award 2005 for its excellence in service for the year 2005. Crossed the landmark of 2 crore (20 million) subscriber base in 2012.

Reassessed and rewarded with ISO 9001:2008 certifications 2012.

1.4. Identifying the Strategies of Robi Axiata Limited

Robi Axiata Limited's strategy is to effectively become the number 1 telecommunication service provider in Bangladesh. Instead of focusing on a high-end, niche market; it pursued a low tariff strategy designed to compete directly market leaders like Robi and Banglalink.

Continuously grow subscriber base

Robi’s strategy is to grow their subscriber base, while seeking to limit declines in APPM, by increasing the availability of their products and services throughout the Bangladesh and by aiming to improve customer retention.

Focusing on high value customer

Robi strive to provide superior network coverage, connectivity, quality and reliability, as well as to continue their product and service innovations through continued investment in their network and products. They are focusing on high value customer segment which they expect will grow as Bangladesh population becomes more affluent with their value-added services, in particular Internet access and selling of high quality smart phones with Robi SIMs. They intend to increase their focus on high value business segment customers, given the high usage of voice and non voice services by these customers.

Achieve capital and operational efficiencies to improve profit margins and cash flow generation

Robi’s strategy is to continue to exercise strong discipline over their operating costs and capital expenditure to achieve improved efficiency and productivity in their operations and leverage their existing capacity. They have also plan to reduce their operation and maintenance expense by, among other things, using solar power, controlling service agreement pricing and lobbying to reduce the SIM tax.

Increased Brand Awareness and reinforce brand values

Robi intend to support their brand by undertaking brand refreshment exercises from time to time. They have planned to increase brand awareness through various point of sales promotions.

Increased revenue from non voice services

Robi is offering a wide-range of non voice services, including SMS, MMS, games, information services, content download, ring back tones, Internet access and BlackBerry services. They plan to continue increasing their revenue from non voice services, developing additional services and further expanding their presence as one of the largest provider of internet access in Bangladesh.

Continue to expand their comprehensive distribution network

Robi new distribution model is to push sales to retailers by distributing their SIM cards, electronic recharge systems and scratch cards through a network of nearly 100 third-party distributors. Their objectives under this new distribution model are to improve their product availability throughout the country with the establishment of more points of sales, improve inventory management, accelerate distribution of product, provide better support to their customer base, create a strong channel of communication between Robi and subscribers and obtain better market data to allow them to be more dynamic and responsive to the market.

Key PartnersAxiata Group BerhadNTT DocomoEricssonHuaweiNSN

Key ActivitiesTelecommunication ServiceBroadband and Mobile InternetInternational Roaming

Key ResourcesBase Stations and Other Network Infrastructure.Experienced & Talented Workforce.Robi Walk in Centers.Different Advertising Materials.

Value PropositionLow Price.Prepaid & Postpaid.Corporate. Roaming.Recent Promotions likea) Gechang.b) Deshpremikc) Hut Hat Chomokd) Joy 21

Customer RelationsCustomer ServiceWalk in CentersCorporate AssistanceAssistance Through Phone/Email

ChannelsNewspaperTVC/FM RadioBillboardsSocial Networks

Customer SegmentFor the People who Wants to Ignite His Inner TalentBoth Male & FemaleEvery Age Group

Cost Structure of RobiOperational & Network Maintenance Cost

Marketing and Advertising CostProduct and Offer Development Cost

Sponsorship Cost in Different Occasions

Revenue Streams of RobiCharging (Scratch Card and itop-up) for service

Charging for internet serviceE-advertisement in Robi PortalNetwork Infrastructure Sharing

1.5. Business Model of Robi Axiata Limited

The business model of Robi Axiata Limited is described below:

Figure 1: Business Model of Robi Axiata Limited

2. Telecom Industry Life Cycle AnalysisIndustries evolve over time, both structurally and in terms of overall size.   The industry life cycle is measured in total industry sales and the growth in total industry sales. The industry structure and competitive forces shape the environment in which businesses operate. The industry structure and competitive forces change throughout the life cycle.

Figure 2: Industry Life Cycle

2.1. Growth in Telecom Industry in Bangladesh

44%

28%

18%

6%

2% 2%

Market Share

GPBanglalinkRobiAirtelCityCellTeleTalk

Figure 3: Market Share of Operators in Bangladesh

There is many ups and down in the mobile phone industry in Bangladesh. At present there are six mobile operators in our country. According to the number of subscribers and profitability Grameen phone Ltd is in the top position among six operators. Except teletalk though their local names are Grameenphone, Banglalink, Robi, Airtel, Citycell but their main companies are the world’s famous and big organization. They have invested a lot and also they have more plans for investment. There is no doubt that their key objective is to earn profit. Government should create an environment and principles for profit. Besides these government should preserve consumer’s right. At present there are six mobile operators in our country. According to the number of subscribers and profitability Grameen phone Ltd is in the top position among six operators. Except teletalk though their

local names are Grameenphone, Banglalink, Aktel, Warid, Citycell but their main companies are the world’s famous and big organization. They have invested a lot and also they have more plans for investment. There is no doubt that their key objective is to earn profit. Government should create an environment and principles for profit. Besides these government should preserve consumer’s right.

2.2. Customer of Telecom Industry in Bangladesh

GP Banglalink Robi Airtel0

5

10

15

20

25

30

35

Dec 2009Dec 2010Mar 2011

Figure 4: Number of active mobile subscribers (in millions)

2.3. Current Stage of Telecom Industry of Bangladesh

Figure 5: Industry Life Cycle Position of Robi Axiata

Currently the telecom industry in Bangladesh is in its mature stage. There are 6 players in an oligopolistic market and the network infrastructure covers almost the whole country (99% of it). Moreover, total number of telecom subscribers have crossed 10 crore. As such, there is really no option to increase revenue from voice service alone anymore.

2.4. Comment and Findings on Overall Industry Life Cycle Analysis

Even though the telecom services are in mature state, future depends a lot on how the big players and the regulatory bodies can cope up with the fast changing nature of this sector. There are still limitless opportunities in data-dependent services. The adoption of such can still cause potential growth of this industry.

3. Strategic Features of Robi Axiata Limited

1.1. Vision statement

Corporate Level (Axiata)

To be leading mobile operator in Asia

Vision (Business Level – Robi)

To be a leader as a telecommunication service provider in Bangladesh

1.2. Mission statement

Corporate Level (Axiata)

To expand our presence in the region by addressing the unfulfilled communication needs of our local populations with affordable and innovative product and service

To develop an operational excellence model to maximize growth and margin in a competitive environment

To be the leading mobile operator in South East Asia by 2015

Business Level (Robi)

Robi aims to achieve its vision through being number ‘one’ not only in terms of market share, but also by being an employer of choice with up-to-date knowledge and products geared to address the ever changing needs of our budding nation

1.3. Principles & Purpose

Robi Axiata Limited employees hold themselves accountable to the following guiding principles of the organization.

Emotional: passionate, creative, respectful, open Functional: Simple, ethical, transparent, ownership

No matter what they do in order to realize their purpose, they hold themselves accountable to the following overarching guiding principles of their organization:

1. Being respectful towards everyone2. Being trustworthy by action, Being passionate and creative in all we do3. Keeping things simple in the way we do things

4. Being ethical & transparent5. Demonstrating individual and collective ownership6. Practicing an open culture in communication and interaction

1.4. Evaluation of Vision Statement of Robi Axiata Limited

The organization is headed by its Chief Executive designated as Managing Director entrusted with overall responsibilities of business direction of the organization and leading dynamically towards the attainment of its vision, mission and goal.

Robi’s vision directly relates with the corporate vision. In both cases, the company wants to be the market leader in its operational region. Since Axiata operates in Asia, that’s why they said they want leadership in Asia. And to attain that target, each of the SBUs needs to be the market leader in their own region. And as a part of that, Robi operate in Bangladesh and they set the vision to be the leader in Bangladesh telecom market.

In the second point of corporate mission, Axiata wants to ‘develop an operational excellence model to maximize growth and margin’; and for that the company needs efficient team. And that has been reflected in Robi’s mission. Robi’s mission says, they will achieve this target by employing best talents.

1.5. Balanced Scorecard of Robi Axiata Limited

Figure 6: Balanced Score card of Robi Axiata Limited

FinancialA Joint Venture companyNot involved in capital market

CustomerLow cost provider

Learning & GrowthUp-to-date products and knowledge

Business ProcessDevelop and operational excellence model to maximize growth and margin

Vision, Mission & Strategy

2. External Environment Analysis of Robi Axiata Limited

2.1. Porter’s Five Factor Analysis on Robi Axiata Limited

Potential New entrants

Bangladesh government mostly welcomes foreign investments. It gives easy entry facilities and many friendly options to the foreign investment like tax free time frame, 100% profit sharing and 100% ownership possibility. Government does not interrupt the strategy making of a company as long as the strategy does not create any uncompetitive environment. Companies can have their own tariff plan within the range fixed by the government (minimum BDT 0.25- BDT 2.00 excluding VAT). Keeping the price low and product differentiation with a quality service can be a crucial strategy to capture the market immediately. Government is also taking new initiatives for taking care of foreign investment by establishing organization like BBBF. But in Telecom industry government keeps a very close eye and not gives any new company come to the industry very easily. However, since licenses must be acquired from BTRC and BTRC reserves the right to issue licenses when and to whom they see fit, entry is relatively restricted at the moment on the government regulatory fronts.

Rivalry among competitors

Bangladesh Telecom industry is growing very fast. The six big companies are trying to grab as much market share as they can through network coverage, innovative products and quality service at low price. So we can sense rivalry among competitors is high.

Substitute’s product

In Bangladesh telecom industry, substitute’s products exist in the form of government land lines and some upcoming PSTN operators. Wireless Internet providers such as WiMax based companies, Bangla Lion and Qbee also can be a substitute. However, it is safe to say that no direct, competitive substitutes exist at the present moment that can pose a threat to the industry. The availability of substitute’s product is very low.

Bargaining power of suppliers

Many big telecom related suppliers are present in the market. Some giant Swedish, German and many other multinational supplier companies have already established their business in the market. So the bargaining power of the suppliers is low.

Bargaining power of Customers

Bargaining power of customers is high in Bangladesh. If one company gives any offer another company gives more attractive offer within a very short period of time, so customer can’t avoid the better deal available to them. Nowadays we see customer’s uses more than one operators’ SIM; even they are using different plans for different set of people. Customers are also very sensitive about the cost. At present companies not only giving offer with different tariff but also providing different handsets with their offers, which show the power of the customers in the industry.

Interpretation of industry analysis from Porter’s 5 Forces Model

From Porter’s five forces model analysis we found the telecom industry of Bangladesh is as follows:

Potential New entrants Restricted

New Market Entrants, eg:Entry ease/barriersGeographical factorsIncumbent’s resistanceNew entrant strategyRoutes to market

Buyer Power, eg:Buyer choiceBuyers’ size/numberChange in cost/frequencyProduct/service importanceVolumes, JIT scheduling

Supplier Power, eg:Brand reputationGeographical coverage Product/service level qualityRelationships with customers

Product and TechnologyDevelopment, eg:Alternatives price/qualityMarket distributionchangesFashion and trendsLegislative effects

Competitive Rivalry, eg:Number and size of firmsIndustry size and trendsFixed vs. variable cost basesProduct/service rangesDifferentiation

Rivalry among competitors HighThreat from Substitute Products Very LowBargaining Power of Suppliers LowBargaining Power of Customers High

After analyzing on telecom industry of Bangladesh, we found it a very competitive but certainly not an attractive market for new company because if a new company is interested to enter into this market it has to come up with a big challenge and high risk. So Robi has still great potential to do good business in this industry.

Figure 8: Porter’s Five Factor Analysis for Robi Axiata Limited

Airtel

Teletalk

Citycell

Robi

GPBanglalink

1.1. Strategic Group Analysis of Robi Axiata Limited

For strategic group analysis of Robi Axiata Limited, we have considered two variables. These are: 1. Price Range and 2. Network Coverage. In terms of price offerings, Teletalk is in higher range. Citycell has a decent price range but still not better than other 4 operators. Robi and Banglalink have a close price offerings in the market. But Airtel and Robi have lowest price offerings in the current telecom market.

In terms of network coverage, Robi is leading the way. Banglalink and Robi are in close range in terms of coverage. Citycell has also a very good network for “Zoom” service. Airtel and Teletalk have the lowest coverage service in the market. Considering the variables, the strategic group map of telecom industry is:

High

Price

Low

Low Network Coverage High

Figure 9: Strategic Group Analysis of Robi Axiata Limited

2. Strategic Resource and Competitive Position of Robi Axiata Limited

2.1. SWOT Analysis of Robi Axiata Limited

Strengths

Strong Capital base. Experienced management team. Diversified funding sources. Outstanding market share Loyal customer base. Diversified business exposure Strong brand image to customers through advertising, posturing, sponsorship etc. Offerings of diversified products. Robi is using diversified network equipments throughout the network which reduces dependency

on only one vendor (unlike GP).

Good relationship with retailer.

Weaknesses

Not enough credentials for prevention of external issues. Developing advertising strategy with less output. Competitors are bigger threats. Lack of service production unit. Lack of customer support operations. Average revenue on customer life cycle is equal to the SIM tax. So, it is very difficult to take

out profit from operation. Robi does not have coverage in all rural areas which creates dissatisfaction among the

subscribers. Lack of effective brand positioning measures.

Opportunities

New technology like 3G. Coherence of brand image with culture of Bangladesh. Main competitor has a congested network due to unplanned customer growth. Growing middle class population. Products with very long life cycle. Economic Growth of Bangladesh: New and Better Interconnect Agreement: Increasing Demand for Telecom Services. Increased Cross Boarder Communication. Declining Prices for Handsets. New International Gateway. Flexibility of Mobile Phone.

Threats

More Rigid Government Upgraded Technology Used by Competitors Political Instability Devaluation of Taka Risky Position of Valuable Resources No Cooperation from Government

1.1. Value Chain of Robi Axiata Limited

The company value chain consists of the value chain of its’ own as well as the value chains of its suppliers and its distributions channel allies engaged in getting its products or services to its end users. The competitiveness in end users market requires that the company managers understand the entire value chain system for delivering a product or service to end users of the company’s own value chain.

Supplier Related Value

Chain

Company’s Own Value

ChainForward Channel Value Chain

Figure 10: Value Chain Analysis of Robi Axiata Limited

The supplier related value chain is a very critical factor for the success of the telecom companies. The suppliers are mainly the network providers like Nokia, Siemens, Huawei, Ericsson etc. who provide and maintain the network and the infrastructure. Forward channel of Robi are those allies and collaborating partners like the distributors and dealers who distribute the SIM cards, scratch cards all over the country, the handset providers like Nokia, Siemens, Motorola, Sony Ericsson etc. who jointly work with the mobile operators to provide user friendly and better attribute sets.

1.1. Key Success Factor (KSF) of Robi Axiata Limited

Company’s key success factors are their means to prosper in the market place. KSF includes product attributes, competencies, and market achievements with the greatest impact on future competitive success in the market. Key Success factors of Robi are listed in the following figure.

Suppliers of SIM Cards, Scratch

Cards And Network Provider

Technical Marketing Sales

and Supply Chain

Alliance and Collaboration with

Mobile Set Vendors,

Distributors or franchises

Consumers, Corporate and PCO

Figure 11: Key Success Factor of Robi Axiata Limited

1.1. Competence Analysis of Robi Axiata Limited

Competencies of Robi

Ensuring Nationwide Coverage

Robi has now coverage in all 64 districts of Bangladesh. It now covers 97% of the total population in the country.

Standard Recruiting Policy

Technology Related KSFs Technological Innovation: Robi is the 1st Bangla SMS Service Provider in the market.

Distribution Related KSFs Strong network of dealers/ wholesale retailers, like, Robi Customer Care Centers, Robi Touch Points etc.

Infrastructure and Network Related KSFs

Strong Infrastructure and Wide Network Coverage. Robi provides network coverage in 64 permitted districts of Bangladesh.

Marketing Related KSFs Better Product Quality and Broad Product Line.Faster and Efficient Customer Service.

Skills and Capabilities Related KSFs

Expert, talented and motivated workers to provide better customer service, faster delivery and high quality sproduct.

Financial KSFsStrong balance sheet to be able to invest in network expansion.Being the low cost provider in the market.

Robi has the viewpoint to recruit the best and most talented persons from the potential candidates. Human Resource department has established standard criteria for recruiting employees in Robi.

Providing Different Services

Robi has provided basic telecommunication in a smooth way. It also provides broadband and mobile internet services in the country. It has got a good variety of Value Added Services (VAS) to the customers.

Positive Corporate Social Responsibility Activities

Corporate Social Activities of Robi receives a positive response from the customers. It has setup water treatment plants in all the major railway stations of Bangladesh. Employees of Robi can do social activities sponsored by Robi which will be considered as a business tour. It has also distributed old desktop computers to the remote schools in Bangladesh.

Core Competencies of Robi

Rapid Network Growth

In recent times, the pace of network expansion of Robi is very gold. Before 2010, AKTEL (former Robi) was considered as Chittagong based mobile operator. But in three years, Robi has expanded in all the districts of Bangladesh and established nationwide network which is one of the core competencies of Robi.

Branding and Market Position

Robi is positioned in Bangladesh with the slogan “Ignite the power within”. Robi is for those people who has inner talents and wants to excel in life. The marketing strategies of Robi is always linked with our culture which is absent in most of the operators in the country.

Innovations

Innovation is one of the main features of Robi. It is the first operator that brings GPRS and bangla SMS in Bangladesh. First insurance policy for prepaid customer is another brainchild of Robi. These innovative approaches contribute to the success of Robi in a large extent.

Effective Advertising Policy

Robi’s advertising policy is somewhat different than other competitors. Through the advertisements, Robi revived the legacy of “Jamdani”. In recent times, “Deshpremik” advertisement also receives positives response from the customers.

Aggressive Pricing Policy

Robi’s package is the lowest packages in the current market. Robi’s aggressive low pricing strategy has brought them a considerable part of market share recently.

Distinctive Competencies

Closeness to Bengali Heritage and Culture

Robi

Robi is distinctive in the activity that it is always close to Bengali culture and heritage. The brand logo and alpona is a clear indication that Robi is the brand that is more close to the hearts of Bengali customers.

Employee Centric Management Team

Robi has a very experienced and employee centric management team. Robi’s management team believes that the prime factor for success in the industry is to recruit talented and potential employees and create positive environments for outstanding performance. Operators like Grameenphone and Banglalink has employee dissatisfaction issues whereas employee satisfaction level of Robi is much higher. The main reason behind the success is the employee centric thinking of management team.

Boosting Network Coverage in Coastal Areas

Robi is the first operator to provide network coverage from Taknaf to Tetulia. It is the first operator to establish network in Saint Martin’s Island, the southernmost part of Bangladesh. Robi is the only network in the country that uses booster technique to ensure long coverage in the coastal areas and in the sea.

2. Competitive Strategies Followed by Robi Axiata LimitedWe know that there are five competitive strategies in the current market. As in the 3 rd position in the telecom market, Robi follows overall low cost provider strategy

Figure 12: Generic Competitive Strategy Followed by Robi Axiata Limited

The main reasons behind Robi’s position in the low cost provider strategy segment are:

Vigorous Price Competition

In the current market, price competition is very high. Customer has the preference for the operator which has lowest tariff. In that case, it is best for Robi to capture the market share with favorable mobile tariff.

Standardized Products

Basic telecommunication service (GSM) is standardized in the country. Only Citycell uses CDMA technology for the coverage. So there has not been any major difference in the basic service scheme of telecommunication in our country.

Buyers’ Usage Pattern

Most of the buyers use telecommunication service for the same purposes: voice call and internet use. There has not been any major deviation of buyer behavior in this regard.

Low Switching Cost

Buyers can switch from one operator to other operator in a very low cost in Bangladesh. One SIM now costs 100-150 taka whereas operators have to pay large amount of SIM tax for that. Moreover, there is lot of benefit for the customer if they buy new SIM.

Customer Base

The growth of customer in telecommunication industry of Bangladesh is very large. From January, 2011 to April, 2013; telecom industry experienced 43.88% growth in terms of subscriber base. This huge amount of customers is price sensitive and chooses the operator with low tariff.

Strategy of Newcomers

Airtel is the last operator to enter the market of Bangladesh. Though the coverage scenario of Airtel is not that good, it has used low price as a introductory strategy to build a customer base. In the year 2012, Airtel is the 2nd operator in terms of customer growth whereas Robi is in the 1st position. Such measure from newcomer makes a signal for Robi to go for low cost strategy.

3. Diversification Strategy of Robi Axiata Limited

1.2. Current Diversification Strategies of Robi Axiata LimitedRobi Axiata Limited is a joint venture company between Axiata Group Berhad, Malaysia and NTT DOCOMO INC, Japan. Robi Axiata Limited, formerly known as Telekom Malaysia International (Bangladesh), commenced its operation in 1997 under the brand name Aktel among the pioneer GSM mobile telecommunications service providers in Bangladesh. Later, on 28th March, 2010 the company started its new journey with the brand name Robi.

In mid 2008 news broke out that A.K.Khan & Company was selling its 30% and Vodafone, etisalat and NTT DoCoMo were among the potential buyers.

70%

30%

OwnershipAxiata Group Berhad NTT DOCOMO INC.

Figure 13: Current Ownership of Robi Axiata Limited

Mr. AK Shamsuddin Khan, Chairman A.K.Khan & Company and Mr. Salahuddin Kasem Khan, former Chairman of ROBI and Managing Director of A.K.Khan & Co Ltd represented the sellers. After months of negotiation NTT DoCoMo sealed a deal with A.K.Khan & Company for US $ 350mln on June 2008.The deal was completed on September 19, 2008

1.3. Comments and Findings on Diversification Strategies

Axiata Limited has been diversifying their business with a vision of becoming the leading telecom service provider in South East Asia by 2015. They have diversified their business into Bangladesh through a joint venture between Axiata Group Berhad and NTT DOCOMO INC. This is a diversification into related business and given their resources and capabilities, it is an appropriate strategic fit in R&D and technology activity. The diversification in related business also resulted in economies of scope, which is cost reduction in certain value chain activity. To summarize, the corporate strategy of Axiata Limited is shows how to exploit the advantages offered by competitive edges successfully.

2. Ethics and Social Responsibility Maintained by Robi Axiata Limited

2.1. Current Scenario of Corporate Social Responsibility in Robi Axiata Limited

Picture 1: CSR Activities of Robi Axiata

Pure Drinking WaterThe landmark activity in the health front is the installation of purified drinking water supply facilities at key railway stations in the country. Robi in collaboration with Bangladesh Railway and the global organization WaterAid has set up water treatment plants at Kamalapur railway station and Airport railway station in Dhaka and also in the railway stations in Chittagong, Sylhet, Rajshahi and Khulna. These facilities with capacity of treating 5000 liters of water per hour are helping thousands of passengers.

Zero Club Feet

On the health front, Robi has also been conducting a wide range of activities like blood donation camps, primary health check-up sessions, safe drive campaign for the employees etc. The notable program in this field had been the treatment of hundreds of clubfeet children. In 2012, the program was concentrated in nine districts under Chittagong division aimed at treating over a thousand clubfoot children.

Robir Alo

In remote rural areas of Bangladesh, electricity is rarely available. People in these areas, particularly in the off-grid region, depend on kerosene or wax candles to meet their demands for light to beat darkness. Robi has intervened in this aspect and provided solar panels to 590 of homes in remote villages in Kurigram, Rangpur. This has not only infused a new lease of life amongst the poor villagers but that their carbon footprints have also been decreased significantly besides facilitating them with savings from buying fuels or candles.

Basic Computer Training & Internet Corner

In today’s world, information technology plays a dominant role in all aspects of our life. Right and access to information play a key role in augmenting knowledge. Considering this, Robi has installed computer corners at 72 colleges in far flung regions. This is facilitating the students with the window of opportunity to log on to internet and thus to the vast reservoir of information and knowledge. At the same time, Robi has established Internet Corners at all divisional libraries. This is adding value to the government’s vision of creating digital Bangladesh by 2021.

3. Organizational Development in Robi

3.1. Basic Organogram of Robi

Basic Organogram of Robi is shown below:

Figure 14: Basic Organogram of Robi Axiata Limited

There are departments and units under the concern CXOs. In the decision making policy, CXOs and the Vice Presidents (VP) and Executive Vice Presidents (EVP) designs the business strategy of Robi. Whereas, General Managers (GM) and Managers look after the functional strategies, Specialists and officers are in the bottom level of the hierarchy.

Managing Director

Chief Technical Officer

Chief Financial Officer

Chief Marketing Officer

Chief Human Resource Officer

Chief Strategy Offficer

Figure 15: Decision Making Hierarchy of Robi Axiata Limited

1.1. Features of Organizational Development

Creating a positive Atmosphere

As stated earlier, management of Robi Axiata Limited is employee centric. It has strong focus on recruiting the talented employees and retaining them by fair evaluation and compensation policy. The working atmosphere of Robi is considered as one of the bests among the MNCs in the country. Organizations like Grameenphone are recently facing issues like employee dissatisfaction and conflict between managers and executives. But due to positive environment and management measures, employees of Robi are in high spirit to implement the strategies taken by the management.

Emphasis on Cross Functional Activity

To perform better as a company, every department in the company must perform better. Robi management has recently emphasizes on cross functional activities for better performance. In annual Performance Management System (PMS), cross functional team KPI has been included to ensure communication between different functions and achieve the target.

Establishing Philanthropic Attitude among Employees

Positive perception towards a brand always helps a business to flourish. Besides doing CSR activities, Robi focuses on increasing the moral of the employees towards the welfare of the society. Robi encourages employees to take part in social activities fixed by them. Whole travel and operational cost is borne by Robi and this activity adds value in employee evaluation.

Business Strategies (CXOs, VPs,EVPs)

Functional Strategies (GMs and Managers)

Operational Strategies (Specialists and Officers)

2. Conclusion

As a major telecommunication service provider, Robi has established itself in a good position in the market. At present, Robi is expanding its network and coverage in a very good pace. It is estimated that in 2015 Robi will surpass Banglalink and become 2nd largest operator. It is very important for Robi to design a suitable short and long term business strategy to gain more market share. The future success of Robi will largely depend on efficiently Robi implements favorable strategy and execute them.