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  • 1. Dialog telekom limitedDialog Telekom Limited:Leader in Mobile TelecommunicationOrganizational Back groundDialog Telekom, Sri Lankas flagship Telecommunications Company operates Dialog GSM, the countryslargest mobile phone network, and is a Subsidiary of the Axita Malaysia Group. The company is also akey player in the Internet Service Provision Market with its state of the art ISP, Dialog Internet, and alsooperates Dialog SAT, the countrys pioneer Mobile Satellite Service Provider. Following an aggressiveentry in to the International Services Market, Dialog Global has established itself as a premier provider ofInternational Services in Sri LankaAs espoused in its signature, "The Future Today", the company prides itself in its commitment to, andachievement trail in, Research, Development and New Technology introduction. Dialog GSM has thedistinction of placing Sri Lanka as the first in the country in the region and among the first 40 countries inthe world to support High Speed Packet Based Mobile Data Services with the launch of GPRS (GeneralPacket Radio Service) in 2001. GPRS - a key element of 2.5G GSM, is a major step towards 3G (3rdGeneration) technology, offering higher data speeds, packet based data communications and end to endIP (Internet Protocol) based connectivity. Dialog GSM extended its regional leadership in mobiletechnology with the introduction of Multi-Media Messaging (MMS) in 2002 placing itself among the first 35networks in the world to support this break through mobile telecommunications technology, enabling theexchange of multi-media content between mobile phones and even to/from the Internet.In addition to the above cutting edge service developments, the company was instrumental in extendingthe scope of mobile telephony to mobile data and a host of value added applications within the first fewyears of its operation. Mobile Banking, mobile email, Information on Demand services, interactive ShortMessaging services for entertainment as well as business applications were some of the Value AddedServices (VAS) which were in commercial operation in 1998 well ahead of regional networks. Thecompanys thrust towards the expansion of its portfolio of services continues with relentless momentum,the most recent additions being the Mobile-Wallet a state of the art mobile commerce application enablingsecure payment for a wide range of products and services via a mobile phone and location basedservices. The network also provides a range of Voice Portal Services providing voice basedentertainment services ranging from Sports news and greetings to the registration for medicalappointments.The company prides itself in a customer servicing infrastructure which is unrivalled by any other serviceprovider in the country. Powered by a dedicated staff of over 150 service professionals, the companyprovides 24x7 support for all its services to its customers. With the recent launch of its state of the artcontact centre, billed as a flagship installation in Sri Lanka, Dialogs service agents are available roundthe clock via person to person interaction, web based chat and/or email to support the companys everincreasing customer base.The company believes in, and attributes its success to, the skills, dynamism and bountiful potential of thepeople of Sri Lanka. Through the years during which the company grew to being a hall mark for SriLankan technology excellence on the global mobile telecommunications map, it has also workedaggressively towards developing the potential of several segments of the community. Centered on itsCHANGE - "Transforming Their Future Today" programme, a wide variety of community developmentinitiatives have been initiated by the company, ranging from support for nationally recognised initiatives
  • 2. directed at uplifting the Hearing and Speech impaired, the Disabled and the nations Children, through tothe sponsorship of sports enabling Sri Lankan talent to be showcased on the international stage.The companys research and development efforts have also been directed at the use of mobilecommunications technology for the benefit of the community. The company has been recognised as aworld leader in this respect and has the distinction of being the only operator in the world to win 3 GSMWorld Awards (from the world GSM body) for its innovations in the use of wireless technology. The last ofthese awards was won for the companys unique SMS based Blood Donation network established incollaboration with the National Blood TransfusionRead more: http://www.oxbridgegraduates.com/essays/business/dialog-telekom-limited.php#ixzz2DslhG2OqHistoryDialog GSM has spearheaded the mobile industry in Sri Lanka since the late 90s propelling it to a level oftechnology on par with the developed world. The company operates a 2.5G GSM network, supporting thevery latest in multimedia and mobile Internet services, and also provides International Roaming facilitiesin over 100 countries. Dialog GSM is the countrys largest cellular network providing services to over halfa million customers (as of 2002) across all nine provinces of the island.The relentless pursuit of excellence in high technology service provision earned the company thedistinction of being the first Telecommunications operator in South Asia to receive ISO 9001 certification.The Commitment of the company to excellence in business practices led to the winning of the NationalQuality Award (Large Scale Service Category) in 2001, followed closely by International recognition in theform of the (Malcolm Baldridge) Asia Pacific Quality Award in 2002.The company has pursued a strategy of broadening its portfolio of telecommunications services and in1999 launched Dialog Internet a fully fledged ISP connected through to the Internet Backbone of TelekomMalaysia within the Multi Media Super Corridor in Cyber Jaya.The company has pioneered a new dimension in mobile telephony in 2002, through the launch of SatelliteMobile Telephony Services under the brand name of Dialog SAT. Dialog SAT brings with it the extensivecoverage of the Thuraya Satellite Mobile Telephony Services, now available throughout the length andbreadth of Sri Lanka and reaching 3.2 billion people in 99 countries across 3 continents.The liberalisation of the International Telecommunications market in 2003 provided an opportunity for thecompany to launch its latest power brand - Dialog Global, a forerunner in the International Servicesmarket. With robust linkages in to the Global network of Telekom Malaysia Bhd., the company has addeda new dimension in International Service provisioning in the country with the commissioning of a state ofthe art gateway infrastructure providing access across the globe for retail, wholesale and Private Networkservices.Industry BackgroundFundamental economics describes that in order to grow you need investments and in order to invest youneed to save. However a popular trend in developing countries is to depend on foreign investment forgrowth. In a way this is a positive approach since the developing countries can improve their balance ofpayment problems through exports and consumers can benefit from high quality products and services
  • 3. offered at comparatively low prices due to cheap labour in developing countries. Hence economies areshaped by policies like tariff lowering, devaluation of currency, unification of exchange rates and removalof import export restrictions. These trends have brought fundamental changes in service orientedindustries such as Telecommunication, globally. Human capital development, technology transfer andincreased international trade are some positive impacts of foreign investments on the industry.The terrorist activities prevailing in the country though is a key decisive factor, has been constant for thepast twenty years. The exchange rate has decreased from Rs 50 per US dollar a decade ago to, Rs 108per US dollar. Nevertheless this was a result of a gradual process, not a result of a crisis. Hence arguablythese were not key decisive factors in the investment patterns (Rohan, 2005).The privatisation programs that were launched by the Sri Lankan government to attract foreigninvestment were a trial and error type approach. Significantly the partial liberalisation of thetelecommunication industry became the ground breaking transformation in this process (Asoka, 2006). In1980 the government split the then tightly coupled posts and telecommunication services into twodepartments. As a result the Department of Telecommunication was formulated. By 1989, nine yearsafter the industry was recognised as a separate entity the first private investment materialised whenCelltel a private mobile operator entered the market. In 1991 the department was transformed into acorporation naming it as Sri Lanka Telecom (SLT) through the enacting of the Sri LankaTelecommunications Act No. 25 of 1991. The act separated policies, operations and regulation andassigned responsibilities to the ministry, SLT and Sri Lanka Telecommunications Authority (STA), theregulator respectively. This was a major mile stone in the liberalization process after the initiation in1980s. However STA did not have the independence, power, structure, resources or accountability andwas performing unsatisfactorily. Hence, the Sri Lanka Telecommunications Act No. 27 of 1996 convertedSTA into Telecommunications Regulatory Commission of Sri Lanka (TRCSL).In 1997, SLT was partially privatised by sale of a 35% stake to NTT of Japan and Sri Lanka Telecom Ltd(SLTL) was formalised. Exhibit 1 displays investment details from 1993 to 2005. TRCSL has became thesole body to inquire into matters related to telecommunications industry in Sri Lanka. While protecting andpromoting the interests of consumers, purchasers and other users, TRCSL maintains and promoteeffective competition within the industry. It also promotes research and development activities for theindustry in order to make Sri Lanka the hub for international transit services in the region.The reforms were not solely initiated by the government but mainly imposed by the World Bank andInternational Monitory Fund through structural adjustment programs as conditions for support.International organisations such as World Trade Organisation and International Telecommunication Unionstimulate the telecommunication industry liberalisation.During the reign of government monopoly, investments in the industry was driven by governmentdecisions on how much revenue the state owned institute can reinvest and on the nature and extent offoreign credit and aid facility. With the adoption of competition-oriented regulations during mid 90s overgovernment funded investments there have been positive indicators of a more natural market. Forexample in 2002, investments by private operators exceeded that of SLTL for the first time indicating thestart of a normal market-based industry. Since 1991 the teledensity (number of telephones per 100persons) for both fixed and mobile sectors has increased (fixed lines from 0.7 in 1991 to 5.1 in 2004 andof mobile phones from 0.1 in 1991 to 11.4 in 2004). Exhibit 2 displays the annual growth in the industry.Exhibit 3 describes the turnover from 1994 to 2005. The turnover for mobile operators comprises ofincome received from rental income, interconnection revenue, value added services, other service
  • 4. income, and sale of handsets. The turnover for fixed line operators comprise of income received fromsources such as, rental income, domestic call revenue, receipts from other network operators-domestic(interconnection) and international, Telex, data transmission and other telephony services.Sri Lanka compared to its neighbouring countries has many advantages apart from most favourablepolicies towards foreign investors. Factors include better social conditions (high literacy rate, low infantmortality rate and long life expectancy), strategic location and an educated and trainable work force.However, in comparison Sri Lanka has not attracted significant private investments into the sector. SriLanka despite its many advantages and early opening up of the economy is lagging behind India, whichhad followed relatively closed economic policies until recent but after mid 90s has aggressively attractedand dominated foreign investments.Some of the reasons for slow growth can be aggregated to decisions taken by TRCSL. The fixed lineprivate operators were restricted to wireless operations putting the wire-line exclusivity on SLT and theoperations of international telephone services were solely vested on SLT. The tariff rebalancingpermission, given to SLT at privatization for five consecutive years added the situation to a furtherdeterioration by the regulator. However, competition in the mobile sector is positive for a number ofreasons such as, competition among operators, affordable initial price (prepaid systems), constantimprovements in mobile phone technology, quick supply, expansion of coverage, declining number ofpublic payphones, shortage of fixed line supply, opening up of new market segments (war-torn areas) dueto peace building efforts etc. However, quality of mobile services in Sri Lanka appears to be low becausesome operators have been insufficiently capitalized to maintain network capacity in the face of rapiddemand (Asoka, 2006). Again discriminatory type responses by TRCSL have led to slow growth in thesector. For example LankaBells request to utilise CDMA technology was approved only in 2002 after along hold. Suntel faced a similar problem and they were allowed to use the technology only in 2004.Read more: http://www.oxbridgegraduates.com/essays/business/dialog-telekom-limited.php#ixzz2DsyflVMvVisionTo be the undisputed leader in the provision of multi-sensory connectivity resulting always, in theempowerment and enrichment of Sri Lankan Lives and Enterprises.Mission"To lead in the provision of technology enabled connectivity touching multiple human sensors andfaculties, through committed adherence to customer driven, responsive and flexible business processes,and through the delivery of quality service and leading edge technology unparalleled by any other,spurred by an empowered set of dedicated individuals who are driven by an irrepressible desire to workas one towards a common goal in the truest sense of team spirit."Corporate Values Total commitment to our customers Dynamic & human centered leadership Commitment to task & team work Uncompromising integrity Professionalism and accountability
  • 5. Foremost concern for respect & careOrganizational Goals The deliverance of industry best return on investment to the shareholders of the company, and financial market recognition as the highest valued mobile communication operator in Sri Lanka. The deliverance of the best product in the market place through leadership in customer service, product quality, provision and adaptation to emerging technologies and convergence with the internet. Achievement of leadership in terms of (economically) effective subscriber base, brand recognition, consumer first choice and ownership of heart and mind share of Sri Lankan consumers The achievement of leadership in term of management practices, internal strengths, competitive resilience and quality of empowered resources, through adaptation of best practices and the active pursuit in new business in which corporate strengths could be exploited in the interest of growing the value of the companyCultureDialog Telekom Organization culture can be summarized as a performance-driven culture, where goodwork result in more work and more rewards and benefits.Organizational StructureThe operations of the Company are managed through a faculty of Strategic Management Committees(SMC), focused on the delivering of corporate targets within the core functional areas of ServiceDelivering, Technology, Business and Finance, Information System, Sales Marketing and SupportServices.The primary role of an SMC is to provide strategic and operational leadership in all functions of theCompany.Board Of Directors Non - Executive Director/Chairman Executive Director/Chief Executive Non - Executive Director Independent Non - Executive Director Non - Executive Director Non - Executive Director Independent Non - Executive DirectorSenior Management Director / Chief Executive Chief Financial Officer General Manager - Engineering, Planning and Development General Manager - Corporate Planning, Quality Systems, Corporate Development, Management Information Systems and Enterprise Risk Management General Manager - Engineering Operations and Information Technology General Manager - Legal, Regulatory Affairs, Administration and International Business / Company Secretary General Manager - Sales and Marketing Head - Network Operations and Fundamental Network Coordination Head - Customer Service
  • 6. Head - Human Resources Management and Development Head - Network Planning Head - Corporate Finance and Internet Business Head - Information Technology Head - Corporate Planning and Quality ManagementProducts & ServicesDialog Telekom product and services are distributed across the following business areas;MobileDialog entered in to Sri Lankan market as the first GSM (2G) operator of South Asia and currently theyhave launched the 3G Technology again as the first operator in the South Asian region.As a GSM Operator apart from Call Origination and Termination, Dialog provides various value addedservices for its customers. Call Diversion Call Conferencing Missed Call Alert Call Hold Call Waiting Voice Mail CLI IDD Roaming SMS Star callIn addition as referred in the following diagram, Dialogs mobile telephony portfolio tries to make a rightbalance between prices against provided products and services.ISPDialog Internet was launched in 2001, In addition to act as a Internet Service provider, Dialog providesservices in the following areas using their ISP backbone. GPRS (mainly an enhancer of the core GSM service Dialog Offers) WiFi Solutions. Web Billing.GlobalDialog acts as a global operator providing the following services to the global market. International call Terminating. International call Originating. Transferring (switching) Global IPLC.BroadbandAfter acquiring Dialog Broadband (Pvt) Ltd. formerly known as MTT, Dialog received the ability to work asa transmission and communication operator. This enabled them to provide customer specific voice, dataand video solutions using their country wide transmission backbone.Dialog SAT
  • 7. Dialog SAT technology provides access disregarding the location and this was implemented as anintegration of Thuraya and Dialog Technologies.Rewards ProgramsDialog Telekom supports a comprehensive portfolio of customer rewards programs focused on rewardingcustomers for loyalty and continued usage of Dialog Telekom services. Based on the wide spectrum ofconsumer segments addressed by the Company, several rewards/loyalty programs have been designedwith specific focus on key segments. Star Point scheme Club Vision/Priority customer Nexus PointsOperationsCoporate Social ResposibilitiesCorporate Social Responsibility (CSR) is a culture by itself for Dialog Telekom that drives them onvisioning to empower all Sri Lankans equitably, integrating resources, values and ethics across economic,social, cultural and traditional boundaries. It is integral part of their business in whatever they do, plan andbelieve. Their CSR initiatives are applied within a local context, which implies that they balance their corebusiness case with community needs. They also embed CSR across fundamental business processesinternally and as well as external project oriented CSR such as Social Investments and the CompanyChange Trust Fund initiatives.There are four dimensions of strategic CSR thrust at Dialog Telekom to which all these CSR initiativescan be categorized into. Business Integral CSR which challenges Dialog Telekom to integrate CSR in business planning and decision making. Corporate Philanthropy which is channeled through the Change Trust Fund Action Oriented CSR which spans within local communities in times of need and disaster. Technology for CSR to create services and products with high social valueThere are so many successful and effective CSR projects that have been initiated by Dialog Telekom.Few of those are; The first ever research lab for Telecommunication Technologies Research opened at the University of Moratuwa, named as Dialog - University of Moratuwa Research Laboratory. The Disaster Management Centre, together with Dialog Telekom Limited, is currently piloting Sri Lankas first mass alert early warning system. The Disaster and Emergency Warning Network (DEWN) uses GSM communication technologies and devices, and transmits alerts through the GSM network. It can be used to issue customized alerts to selected recipients instantaneously, and is compliant with the internationally accepted alerting protocol - CAP. Dialog Telekom Limited has identified a great opportunity to use its infrastructure and core competencies to bridge the divide in level of education between the urban and rural areas. As an entirely non-commercial exercise Dialog partnered with the Ministry of Education to build the Digital Bridge. The Digital Bridge enables lectures conducted at a central location to be transmitted live to remote schools, and for the teachers and students to interact, creating a virtual classroom. A teaching studio has been established at the ministry specifically for the purpose. The Dialog scholarship program go beyond the short-term gain to develop the intellectual capital of Sri Lankas future leaders. they support interaction between the scholars and their employees,
  • 8. which facilitates mentoring, internships and soft skills development to prepare these scholars for a position of community leadership and service.Few awards that Dialog Telekom has received in recognition of the CSR initiatives are;GSM World Award 20012001 GSM World Award for the idea behind the Change Trust Fund initiative, a unique system whereDialog post-paid customers are given the opportunity to donate half a percent (0.5%) of their monthly billup to a maximum of SLRs. 25/= with the company matching the contribution, which would be used forcharity.GSM World Award 20022002 GSM in the Community Award on Wireless Accessibility for SMS 112, a SMS based emergency callfacility for the hearing and speech impaired.GSM World Award 20032003 GSM in the Community Award on Best Use of Wireless in Emergency Situations for Dialogs bloodappeal, matching and donor management systemReferenceRohanSamarajiva&AnupamaDokeniya with Sabina Fernando, Shan Manikkalingam&AmalSanderatne(2005). Regulation and Investment: Sri Lanka Case Study (Report on the World Dialog on Regulation)Asoka Fernando (2006). Regulation and FDI: Sri Lankan Telecommunications IndustryCase AnalysisDialog Telekom LimitedExecutive SummaryThis is a case analysis for Dialog Telekom Limited, the Premier Mobile Telecommunication Company inSri Lanka, based on the strategic management perspective.It starts by giving a basic overview of Dialog Telecom Limited, its operations and performance. Then theinternal environment analysis gives a view of its resources, structure and processes while financialanalysis included in the same shows the current standing of the company in terms of financials. Next theexternal environment of Dialog Telkom has been analyzed based on PESTEL factors and Five ForcesModel. All these are used to perform the SWOT analysis to derive strategies to be developed to suitDialog Telekoms environments keeping alive its objectives.Finally all levels of strategies have been recommended together with programs required to implementthose. It also includes evaluation steps required to assess the success of strategy implementation inDialog Telekom and how controlling can take place.Read more: http://www.oxbridgegraduates.com/essays/business/dialog-telekom-limited.php#ixzz2DszUtwO7IntroductionDialog Telekom Limited is the largest mobile operator in Sri Lanka with over 3 Million subscribersrepresenting over 60% market share in the mobile communication sector. Dialog Telekom is also thelargest listed company on the Colombo Stock Exchange in terms of Market Capitalization with a marketcapitalization (as of 30 September 2006) of SL Rs 161 Billion.
  • 9. Dialog Telekom Limited is a subsidiary of Telekom Malaysia International and a member of the TelekomMalaysia Group. In addition to its core mobile telephony business, the company provides internationalservices, supporting an International Gateway infrastructure providing retail and wholesale internationalvoice and data services under the brand name of Dialog Global. The company also provides Internetservices throughDialog Internet - a fully-fledged Internet Service Provider (ISP). Dialog Telekom also operates DialogSAT, a mobile satellite service.Dialog Telekom has clearly defined vision, mission, corporate values and goals as given below.VisionTo be the undisputed leader in the provision of multi-sensory connectivity resulting always, in theempowerment and enrichment of Sri Lankan Lives and EnterprisesMissionTo lead in the provision of technology enabled connectivity touching multiple human sensors andfaculties, through committed adherence to customer driven, responsive and flexible business processes,and through the delivery of quality service and leading edge technology unparalleled by any other,spurred by an empowered set of dedicated individuals who are driven by an irrepressible desire to workas one towards a common goal in the truest sense of team spiritCorporate Values Total commitment to our customers Dynamic & human centered leadership Commitment to task & team work Uncompromising integrity Professionalism and accountability Foremost concern for respect & careOrganization Goals The deliverance of industry best return on investment to the shareholders of the company, and financial market recognition as the highest valued mobile communication operator in Sri Lanka. The deliverance of the best product in the market place through leadership in customer service, product quality, provision and adaptation to emerging technologies and convergence with the internet. Achievement of leadership in terms of (economically) effective subscriber base, brand recognition, consumer first choice and ownership of heart and mind share of Sri Lankan consumers The achievement of leadership in term of management practices, internal strengths, competitive resilience and quality of empowered resources, through adaptation of best practices and the active pursuit in new business in which corporate strengths could be exploited in the interest of growing the value of the companysome more needed to be addedInternal Environment Analysis7S model has been used as a primary tool to analyse the internal environmentStrategyDialog strategies are visible in the companys corporate, business and functional levels. They havealready diversified their business across many areas during the last few years. For instance, by acquiringMTT, Dialog managed to strengthen its transmission backbone. Also recent past it has acquired
  • 10. CBNSAT, a sattelite TV transmission company, and DERANA TV Channel with along term objective of avalue chain convergence. In addition to reach the customer, Dialog has created many alliances with otherbusiness corporations. Cargills-Dialog alliance to allow Cargills customers to settle Dialog bills is just onesuch example.The business plan is formulated at the beginning of the year considering main objectives of the company.The progress of each project is monitored in a monthly basis through different strategic committeemeetings.On the other hand, Dialog tries to introduce latest technologies into the market considering global megatrends (refer diagram) through its comprehensive Research & Development wing.Among them, the Dialogs initiative to setup the Dialog Research Lab at the University of Moratuwa is ofimportance, because it effectively enabled Dialog to provide tailor made solutions to the local market.Nokia phones with Sinhala language support and Tsunami warning system for mobiles are just to name afew such examples. These technology initiatives can be considered as a strategy used to capture themarket by effectively saying ahead from the competition in the technology and innovation sphere.StructureThe Companys business and operations are managed under the supervision of the Board of Directorscomprising of five (5) non executive directors and one (1) executive director. The Board has the power toappoint executive directors including the CEO. Divisional structure can be identified in company level butperformances of the divisions are measured through different strategic committees.SystemsApart from the technical back bone, Dialog uses several systems to execute their business strategiessuccessfully. For instance; SAP ERP (Enterprise Resource Planning) - This was launched in 2006 January to integrate identified key process in the company . CCBS (Customer Care Billing system) - Currently existing billing system is going to be migrated in to a new system to provide more customer centric services. HRIS - Used for human resource management and all the day to day functions are carried out through this system.StyleThe management style always depends on targets and objectives. Strict deadlines are imposed whileperformance and progress are very closely monitored at all levels of the organizational structure.Rewards and benefits schemes are in line for the top performers and better achievements.All the employees will have a number of recreational opportunities such as trips, get-together, sports...etcto take some time off from busy work schedules.StaffThe Company currently employs a workforce of 2500 who in turn are considered pivotal to theorganizations growth and success. Annual manpower planning and recruitment is carried out in parallelwith the business plan preparation. The capabilities required by potential employees are based on therequirements of the business plans applicable to respective departments of the Company in any givenyear. Recruitment to the Company is governed by several policies. The core policy on filling vacanciesspells out the Companys intention to attract the best with the aim of exploiting the individuals potentialwhile providing career development opportunities irrespective of communal or gender differences. Sevenpercent (7%) of the total HR cost is devoted to training and development. The training needs for
  • 11. individuals and teams are identified from the competency requirements arising from the Companysbusiness plan and employees annual performance review.Superordinate GoalsAll individuals with different backgrounds, different ethnics and nations are teamed up and driven towardsa common set of goals and objectives at Dialog Telekom. The company has been successful in focusingthe entire team towards a single vision by incorporating all individuals goals and personal objectivestogether.SkillsDialog team consists of number of individuals with distinctive capabilities and competences from top tobottom. Dialog is proud to have a very energetic and talented CEO in the caliber of Dr Hans Wijesuriya. Inaddition to that Dialog is served by a team of top class individual in the Sri Lankan Industry with lot oftalent and exposures.Financial AnalysisExternal Environment AnalysisPESTELPoliticalSri Lanka has very positive foreign investment policies. However, though Sri Lanka identified importanceof liberalisation early as in 1977, due to political direct intervention, bureaucratic attitudes inherited fromcolonial reign and poor governance, the country as a whole and specifically the industry has not grown asit was foreseen at the time of liberalisation. During the past two decades, terrorist activities haveremained constant as well.EconomicalUnstable macro economic environment and trade policy regime has a negative impact on the industry.The fall of the exchange rate over the years happened on a gradual pace.Since the inception of liberalisation policy it has undergone massive reforms in this sector. However SriLanka lags dynamics incorporated by India to attract foreign direct investments. The attitude towardsforeign direct investments needs to be improved.Socio-CulturalSri Lanka has better social conditions for example, literacy rate is high, infant mortality rate is low and lifeexpectancy is long. The country also has an educated and trainable work force.Nevertheless Sri Lankans inherit a bureaucratic attitude from the colonial administration that results ininefficiencies and discrimination.TechnologicalSri Lanka depends on technology transfers from foreign direct investments. However TRCSL encourageslocal research and development.The country comparatively has not performed well enough to adapt technological changes on a timelymanner. For example the shift from analogue to digital and the adoption of CDMA technologymaterialised in a slow pace.EcologicalLegalTRCSL, the regulatory body takes up multidimensional roles. It ensures fair enforcement of Governmentpolicy, hold operators accountable for performance, address consumer issues, monitor changing industryneeds, and provide feedback to the policy making units.
  • 12. However TRCSL has been criticised over the years for information asymmetry, inefficiency anddiscrimination.Read more: http://www.oxbridgegraduates.com/essays/business/dialog-telekom-limited.php#ixzz2DszkexarFive forcesThreat of New EntrantsThe most awaited fifth mobile operator license for Sri Lanka has been awarded to AIRTELL, Indiaslargest mobile operator. With this the threat of competition increases. However as per TRCSL there willnot be any further licenses issued which creates an entry barrier for any others to the market.Bargaining Power of BuyersIn Sri Lanka buyers/customers are not strong as compared to customers in Western countries. Thenumber of customer groups to protect themselves is almost non-existing in the Sri Lankan context. This isquite evident from the demanding nature of customers in the Western countries. Hence quality, standardsand support are comparatively not major concern if they exist to a basic level.However people are very cost conscious, as such when switching costs are fewer, buyers tends to go forthe lowest rates. As there are four other operators and switching cost is negligible, bargaining power ofbuyers will increase. But with the increasing number of Value Added Services (VAS) provided by DialogTelekom, they are able to keep certain segment of buyers tied to them.Threat from SubstitutesIn strict Mobile Telecommunication sense there is no substitute technologies like VOIP over wirelesswhich is popular here in Sri Lanka. However in general, fixed line communication operators (SLT,Suntel&Lankabell) create the substitution effect, particularly with the award of CDMA licenses.SLT, Lankabell and Suntel are the substitute telecommunication providers which one can go for if he/sheis looking at connectivity without mobility (eg. for home usage). However this is still a smaller market ascompared to the total market.Bargaining Power of SuppliersThere are suppliers both local as well as international for Dialog Telekom in various operations itperforms. For network connectivity back haul is critical. Dialog Telekom does not own a nationalbackbone hence has to depend on local providers. It is only a few like SLT, MTT and few other VSAToperators who have direct access to the national back bone. Hence these suppliers are quite powerfuland certain suppliers are indirectly competitors as well. For this reason Dialog Telekom has recentlyacquired MTT and now it is part of the group and operates as a subsidiary known as Dialog BroadbandNetwork.Sri Lanka being a small country with a comparatively smaller number of data/voice users the trafficgenerated is quite low. With this the bargaining power of upstream providers (eg. specially InternationalISPs), Content Providers for VAS and peering partners are high.Rivalry among Competing FirmsEven though the competition is high in the Sri Lankan mobile communication market, there are fewfactors which have given the edge to Dialog Telekom over others. The product and service characteristicsoffered are different to most other operators. They have a variety of Value Added Services like Star Call,
  • 13. e-Channeling via mobile, RingIN Tones, Push N Talk, Photo Technica& D-Services are to name a few.These are becoming popular among the users and most operators provide only basic services.Also the amount of investment for the new services as well as expanding the coverage and capacity isquite high. This is also another differentiator which gives Dialog Telekom the competitive edge. Thediversity of the rivals in the industry is another factor. As such Dialog Telekom competes on valueaddition and differentiation, while most other operators compete on rates and coverage.Hence Dialog has surpassed all the mobile operators as well as it has gained more subscribers thanincumbent SLT, which reflects how it stands apart from others due to above factors.SWOT AnalysisStrengths1. As the first mover of GSM in Sri Lanka technology, has a greater competitive advantage.2. Strong infrastructure and hence the mobile telecommunication coverage is one of the widest and best in Sri Lanka.3. Relationship with a telecommunication giant in the region; Telekom Malaysia Group.4. With numerous collaborations with other Telecom Corporations, has enabled Dialog to have a global reach with services such as High Roaming and Satellite Coverage.5. Aggressive marketing strategy allowing Dialog brand name to be carried to every corner of the country and hence to have a good and stable Brand Equity.6. As reflected in the financial analysis the financial stability of the organization with all the current investments.7. Strong Public Relations that has been built up over the years.8. Greater CSR involvement, reflected via the CSR initiatives that has taken place.9. Technology leadership with high technical innovation. This is powered by there Applied Research & Development initiatives in areas such as GPRS, MMS, EDGE, Intelligent network services, SMS, GPRS/WAP, IVR....etc.10. Boosting company image through investors confidence reflected via share prices.11. Strong island wide distribution network.12. Greater level of customer satisfaction via high quality customer support.13. Well established customer base.14. Extended breath of product range.15. Skilled and dedicated Management Team16. High level of corporate business knowledge retention through low employee turnover (exception is the front- office staff).Weaknesses1. No Clear focus for a broader market even though there is a huge investment on advertising and value addition through technical innovation.2. Poor performance as an ISP.3. Lack of pricing innovations compared to the competitors.4. Distributed nature of the Head Office in the city of Colombo due to non-expandability of current location.5. Decreasing level of motivation of internal employees due to multiple strategies of very high impact being deployed simultaneously without managing the resulting confusion and disillusionment.6. Decreasing trend in Quality of Service due to the rapidly growing customer base.7. Employee turnover is high in the front-office (Call Centre and Help Desk).Opportunities
  • 14. 1. Telecom, is one of the fastest growing sectors in Sri Lankas 19.5 million people and the Central Bank estimates that 4.5 million users have mobile phones as at end 2006.2. Continuous development of the communication industry.3. Low fixed line penetration.4. The acceptability of the Value Added Services (VAS) by the users hence increasing the probability of success of any new VAS initiative.5. The strategic partnership with Vodafone UK.6. Potential to reap benefits of Value Chain Convergence.7. Technology advancements especially in the realms of mobile multimedia technologies and the advent of the next (3rd) Generation of mobile communications.Threats1. All 3 other existing GSM Mobile service providers pose a threat at different magnitudes.2. The 5thMobile operator license in Sri Lanka has been offered to Indias BhartiAirtel Ltd to launch the 2G and 3G services in 2007.3. All 3 existing CDMA service providers too pose a different kind of threat.4. Strongest Competitor, the Mobile wing of fixed line telecom giant SLT is focused on cost-leadership competitive advantage strategy through its low cost pre-paid product to the mass market. (Remember more than 80% of Dialog subscribers are low income pre-paid users.)5. Volatile changes in the political, social and economical conditions and the laws and regulations and their interpretation (Eg : TRC regulations)6. Changes in currency exchange rates and high inflation which is badly effecting the global business.7. Due to customer awareness the rapid change in customer preferences and their growing needs.8. Changes in technology.9. Uncertainty due to the escalating counter terrorist campaign. For instance Dialog had to switch off all base station in northern province during the last few months due to military operations by the Sri Lankan government forces.Strategic Alternatives & RecommendationsCorporate StrategyConsidering the current performance, the Key Success Factors and the SWOT analysis the directionalstrategy alternatives would be as follows. Growth strategy to expand the activities of Dialog Telekom further would be the first alternative. Since the current product lines have real growth potential concentration of resources on those would be ideal. In concentration Dialog Telekom can follow the vertical growth strategy to take the benefit of the value chain convergence opportunity that is existing in Sri Lankan context. Stability strategy to continue with current activities without any changes to the direction would be the second alternative. Here Dialog Telekom can utilize pause/proceed with caution strategy to have only incremental improvements while the weaknesses stated are overcome. It can use this time to stabilize the organization due to the changes took place due to multiple strategies it adopted earlier such as acquisitions and investing on innovative developments, which will help to get back the loosing internal employee motivation.The first alternative will move Dialog Telekom further away from the competition and create a monopolytemporarily for converged industries of telecommunication, content & media and retail. Howeverunfocused highspeed growth to capture the market without stabilizing the existing acquisitions can
  • 15. disassemble everything. The second alternative will give Dialog Telekom and its employees muchneeded breathing space.The recommendation would be to implement the second alternative initially to stabilize the organizationwithout any other drastic change in the direction. And after some time they can adopt their long-termbeneficial value chain convergence option depicted in first alternative.Business StrategyThe business strategy alternatives available for Dialog Telekom to improve the competitive position in theindustries it operates would be as follows. The first alternative for the competitive strategy would be to improve on the current strategy of differentiation. It can improve this by having unique value added services for each of its current strategic business units DBN, CBNSAT and Dialog Telekom itself. This can improve the customer loyalty and thereby can charge a reasonable premium rate than competitors. The second alternative which Dialog Telekom can try to implement is cost leadership to overcome the threat of lower rates provided by competition, Mobitel. Since the VAS are less in Mobitel the switching from Dialog to Mobitel is not much in urban people who use these VASes. But people who are using purely as a voice/SMS only are shifting as most of them are cost conscious and there is no much of a different in coverage. Hence if Mobitel improves on its VASes it would become a serious threat, at which stage it would be only the rates which decides the attraction of that segment of the market.Typically the differentiation strategy is more likely to generate higher profits than low-cost strategy.However differentiation strategy implementation may involve higher investment than low cost strategy.Competitive scope is an important factor when considering competitive strategies. The recommendedalternative depends on the competitive scope in this situation.. Considering both alternatives and therepros and cons of each, most ideal should be to have culmination of both differing from the segment of themarket. Dialog Telekom should have a focused differentiation strategy in the market where people arevaluing the VASes and cost focus in the market where usage is purely for voice/SMS.Simultaneously Dialog Telekom should look at strategic alliances as a corporative strategy to gaincompetitive advantage by working with other organizations. Currently they have stated this with somebanks and some supermarket chains as mentioned above. However this can be vastly improved toinclude alliances with Insurance Companies, Stock Brokers, Popular Food Chains etc.Functional StrategyMost of these functional strategies are developed considering Dialog Telekom operations, hence theycannot be applied directly to Dialog Telekoms other strategic business units like DBN and CBNSAT.Functional strategies based on the strategic choice of corporate and business strategies should be asfollows. TheMarketingstrategycurrently followed by Dialog Telekom should be slightly modified to accommodate the business strategy of cost focus. There should be new packages to attract new customers as keeping existing customers who require basic voice & SMS. This product/package development for the existing market can be supported by improving the current "pull" marketing strategy for advertising and promotion. Dialog Telekom should not do any changes to therecurrentFinancialstrategyas they are going to have pause/proceed stability corporate strategy. Hence they could further improve there financial stability as there are no major growth strategies to be implemented.
  • 16. Dialog Telekom being a technological leader,R&D/Technology strategyis critical for its performance. They should further improve R&D capabilities by having strategic alliances with their major technology vendors. This is because most of these vendors are the pioneers in developing latest technological developments. This will be mutually beneficial to both the parties. TheOperationalstrategyof Dialog Telekom should be streamlined to have a common, more efficient and effective operations flow with all business units. This requirement has arisen from the recent expansions and acquisitions. Also change management would be required in creating a common culture among Dialog Telekom, DBN and CBNSAT. TheHuman Resource Management strategyis another key functional strategy for Dialog Telekom. It should review its programs and procedures to suit the new stabilizing corporate strategy. It should improve on its current team based working environment to self-managing work teams which is more suited for an organization where rapid growth is anticipated in future. The currentInformation Systems strategyshould also be changed to handle enterprise ICT development in much more strategic level. The Information Systems developed should be aligned with corporate and business level objectives. And also there should be an integrated approach among business units as much as possible. Apart from this Dialog Telekom should outsource certain operations such as legal, IS/IT infrastructure support, Advertising, 1st level Call Center operation etc apart from the already outsourced operations like cleaning and transportation. This is mainly because there is no major distinctive and/or core competencies of Dialog Telekom in the above areas. Dialog Telekom is known for its quality innovations due to their high emphasis on Research & Development. However these precious research and their development work needs to be protected by patents, copyrights and other legislative means. Hence if applicable, Dialog Telekom should aggressively follow these protective legislations.Read more: http://www.oxbridgegraduates.com/essays/business/dialog-telekom-limited.php#ixzz2DszwLWYGImplementationEvaluation & ControlConclusionPresentation SlidesSlide : External Environment Analysis1. PEST Analysis2. Porters Five Forces Analysis3. SWOT AnalysisSlide : PEST AnalysisPolitical1. Positive foreign investment policies.2. However, political direct intervention, bureaucratic attitudes and poor governance exists3. Terrorism & counter-terrorism
  • 17. Economical1. Unstable macro economic environment has a negative impact on the industry.2. The gradual fall of the exchange rate over the years.3. Inflation has reached more than 20%.Socio-Cultural1. Better social conditions than other developing countries.2. High literacy rate.3. Low infant mortality rate4. Long life expectancy.5. Educated and trainable work force.6. Bureaucratic attitudes, inefficiencies and discrimination exists.Technological1. Sri Lanka depends on technology transfers from foreign direct investments.2. TRCSL encourages local research and development.3. Poor adaptation of technologies in a timely manner - Risk averse.Legal1. Telecommunications Regulatory Commission of Sri Lanka (TRCSL).2. Ensures fair enforcement of Government policy,3. Hold operators accountable for performance.4. Addresses consumer issues,5. Monitor changing industry needs, and provide feedback to the policy making units.Five forcesThreat of New Entrants1. Fifth mobile operator license awarded to AIRTELL,2. However as per TRCSL, there wont be any more licenses awarded.3. This creates an entry barrier for any others to the market.Bargaining Power of Customer (Buyer)1. Consumer protection groups are almost non-existing.2. Compared to Western countries, customers are not very strong in their demands.3. Quality, standards and support are comparatively not major concerns if they exist at a basic level.4. Switching costs are low.5. Customers are very cost conscious.Threat from Substitutes1. Very minimum.2. Alternatives are fixed line and the more recent CDMA connectivity.3. However this is still a smaller market as compared to the total market.Bargaining Power of Suppliers1. Local & International Suppliers for Dialog2. Depends on SLT, MTT and a few other VSAT operators to access the national backbone.3. Hence these particular suppliers are very powerful.4. Acquisition of MTT and the creation of the new subsidiary known as Dialog Broadband Network.Rivalry among Competing Firms1. Very high competition with continuous price/coverage wars.
  • 18. 2. Dialog has an edge because of their VAS & differentiation strategy and the huge customer base.3. Value Added Services becoming very popular among the consumers.4. VAS examples: Star Call, e-Channeling via mobile, RingIN Tones, Push N Talk, Photo Technica& D-Services.SWOT AnalysisStrengths1. First Mover of GSM Technology in Sri Lanka.2. Strong Infrastructure, Alliances and Global Coverage.3. Aggressive Marketing Strategy & Stable Brand Equity.4. Strong Public Relations & Greater CSR Involvement5. Technology Leadership through Applied Research & Development.6. Strong Island Wide Distribution Network.7. Well Established Customer Base & High Quality of Customer Support.8. Wide Product Range.9. Skilled and Dedicated Management Team.Weaknesses1. Lack of Focus for a Broader Market.2. ISP woes.3. Lack of Pricing Innovations Against Competitors.4. Real Estate Issues.5. Confusion, Disillusionment & Decreasing Motivation of Employees.6. High Employee Turnover - Front Office7. Gap in Quality of Service Against Growing Customer Base.Opportunities1. Telecom, a Fastest Growing Sector in Sri Lanka.2. Low Fixed Line Penetration.3. The acceptability of the Value Added Services (VAS).4. Strategic Partnerships.5. Value Chain Convergence.6. Technology AdvancementsThreats1. Competition.2. Volatile Changes in the Political, Social, Economical, Technological & Legal Spheres.3. Managing Customer Expectations.4. Terrorism & Counter-Terrorism.Read more: http://www.oxbridgegraduates.com/essays/business/dialog-telekom-limited.php#ixzz2Dt09b9re