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XYZ communication as a mobile operator wants to enter one of the countries in the GCC

XYZ communication as a mobile operator wants to enter one of the countries in the GCC

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  • Gulf Cooperation Council
  • 16.5% Emirati, 83.5%South Asian, Indian,Pakistani, Bangladeshi,Chinese, Filipino, Thai,Iranian, (Westerners) 
  • Compound annual growth rate
  • 1. Market development2. Market penetration3. Product development4. Forward integration5. Backward integration6. Horizontal integration7. Concentric diversification

Analysis Analysis Presentation Transcript

  • CASE STUDY : XYZ TELECOM ORGANIZATION ENTERING INTO UAE
    SUBMITTED BY:
    PRATEEK SIGH DHILLON
    prateekdhillon@gmail.com
  • AGENDA
    Three objectives :
    1. Secondary research for the XYZ organization.
    2. Create a Methodology for successful entry. 
    3. Provide a sustainable solution for business. 
  • GCCCOUNTRIES
  • GCC COMPANY COMPARISON
  • Mobile Penetration Rates in Middle East
  • Major Operators in GCC
  • Assumption
    XYZ is an Indian organization with a good financial for the development of infrastructure.
    Is looking to invest in UAE.
    Has considered all the legal consequences that are applicable in UAE.
    Company is looking for quick launch within 3 to 6 months time span.
    Research methodology used for the firm would be according to current scenario and it can have secondary data research.
    Company is having Approx $ 70 million for marketing Budget
    Company has a brand name that consumers perceive as value for money, quality, innovation and an aspiring degree of fun and competitive challenges.
  • U.A.E
  • UAE (Major City)
  • Telecom revenues breakdown in 1H09 (rounded figures)
    • The telecommunications sector in the UAE experienced dramatic growth between 2003 and 2008. Revenues tripled, reaching AED 27.72bn in 2008 vs. AED 9.2bn in 2003, whilst the telecoms sector contribution to UAE’s total GDP increased from 3.1% to an estimated share of 5.2%.
    • Even in 1H09, amidst a global economic slowdown, telecom revenues rose by 12%, reaching AED14.5bn. 59% of these revenues were generated from mobile services, whilst data services and fixed-line generated 14% and 13% respectively.
  • Market Structure
    Telecom market
    Mobile Segment
    Internet Segment
    •Introduction of competition
    •Inflow of expatriate
    •High GDP per capita
    •Dual SIM card usage
    •Intensification of
    competition
    •Network upgrade by
    operators
    Skilled citizens
    • Advanced IT
    infrastructure
    • Expanding
    broadband
    connectivity
    Fixed-line Segment
    • Real-estate roll-out in
    New Dubai
    • Competition on the
    international calling
    front
    • Spread of FTTH network
    • Provision of triple-play
    service
  • Subscriber 4-year CAGR by segment (2004-2008)
  • UAE mobile subscribers and YoY growth
  • Operators net additions and market share (quarterly)
  • MARKET OVERVIEW
  • Market
    Positives
    Negatives
    Mobile
    Fixed-line
  • Positives
    Negatives
    Internet
  • Porter analysis :
  • Pest Analysis
  • Competitive Analysis of Rivals
  • Market Share
  • SPACE Matrix Strategic Management Method 
  • SPACE MATRIX
    Y Axis
    Suggested
    Strategy Type
    2.75
    3
    25
    X Axis
  • S T P Analysis
    Segment :
    Age Structure:
    0-14 years: 20.4% (male 500,928/female 478,388)
    15-64 years: 78.7% (male 2,768,030/female 1,008,404)
    65 years and over: 0.9% (male 27,601/female 15,140)
    note: 73.9% of the population in the 15-64 age group is non-national (2009 est.)
    Target : Youth (12-29) 35% approx.
    Positioning :
    • Youth and Mobile:
    • Desire for personalization.
    • Love for Music.
    • Dynamic change of taste.
    • “They are the household chief technology officers” (enjoys figuring out new feature)
    • Impressed by viral application and use messaging to keep in touch.
    • How to position
    • Access to branded accessories andphones like Iphone, Google and BlackBerry and Brand accessories like MTV which represent hip-hop and youth culture.
    • Text messaging: this should be free between XYZ Customers.
    • Rescue Ring : A fake call at any time the customer wants with what ever massage the customer want to hear from us.
    • Online Real-time Billing
    • Wake up Call : Alarm for customer.
    • Ring tones : latest ring tones for various nationality.
    • The Hit List.
    • Fun Clips : Cartoon clips, youtube clips, Uploading clip to youtube.
    • Social networking Site features for the customer like facebook any myspace.
    • Music Messenger .
    • Movies : Online movie viewing on their Mobile set.
    • AirTime Earning Scheme : Call your friend on XYZ network and earn some air time.
  • Options for price structure
    Clone Industry Prices: contracts
    Set prices below competition: contracts
    A whole new plan: prepaid pricing
  • #1 Clone Industry Prices
    • Cons
    • May drive margins down if additional features are costly
    • Reduces competitive advantage
    • Difficult to penetrate saturated market with similar offer as competitors
    • Competitive with other cell phone providers and packages; does not support strong market differentiation
    • Pros
    • Give customers more features for the same price
    • Easy to promote, use current models
    • Limited spending power on promotion may be a justifiable factor
    • Viable with Virgin Mobile’s limited advertising budget
  • #2 Price Below Competition
    • Pros
    • Drive sales and market share
    • Accounts for limited spending power of target market
    • Cons
    • Margins and profitability will be driven down
    • Inconsistent with company goal of profitability
    • Cannot compete in price wars
    • Not a long term solution
  • #3 A Whole New Plan: Prepaid Pricing
    • Pros
    • Differentiate from competition
    • Cater to the needs of target market
    • Flexibility is attractive to target market
    • Profitability is key
    • Eliminates risk of missed payments
    • Cons
    • Risk of limited returns and loyalty
    • Churn rate may increase
  • MARKETING PENETRATION
    • Pricing Strategy : Option 3 from the above Strategies
    • Pricing Objective:
    • Sales Maximization
    • Demand Estimate:
    • Current market penetration of target market.
    • Create Demand amongst remaining.
    • Capitalize on Highly Elastic Demand of Target Market.
    • Cost Estimates:
    • Monthly Cost to Serve per Customer
    • Networking Cost
    • Customer Service Cost
    • Pricing Method :
    • Penetration Pricing
    • Costs per Unit is inversely related to Number of Subscribers
    • Reduce CCPU by increase in Number of Subscribers
    • Increase in Margin will follow
    LTV=Life Time Value.
    ARPU= Average Revenue Per Unit.
    CCPU=Cash Cost Per Unit= 45% of ARPU.
    M=Monthly margin =ARPU-CCPU.
    AC=Acquisition cost.
    r=Retention rate= 1- churn rate.
    i=interest rate.
  • Advertisement
    Marketing budget $70 million.
    Quirky and offbeat advertising, different from the competitors.
    Street marketing.
    Teens to be used for marketing.
    Youth magazines like The Complex, Vibe,…etc are to be used to publish “advertorials.”
  • CONT. Advertisement Example
  • References
    http://www.citc.gov.sa/NR/rdonlyres/ECC196FF-D3C1-4C88-B793-685C96CA0309/0/ICTSectorinKSA2009English.pdf
    http://www.tra.ae/annual_ICT_industry.php
    http://www.reportlinker.com/p0131813/Saudi-Arabia-Telecoms-Mobile-and-Broadband.html?request=news
    http://www.tra.gov.om/newsite1/Portal/Upload/Documents/398_Q4-2009.pdf
    http://www.tra.gov.om/newsite1/Portal/Upload/Documents/337_08AnnualReportEn.pdf
  • http://www.globalinv.net/research/GCCTelecom-112009.pdf
    http://www.zawya.com/printstory.cfm?storyid=ZAWYA20091228053738&l=053700091228
    http://www.tra.org.bh/en/pdf/TelecommunicationsmarketsindicatorsintheKingdomofBahrain.pdf
    http://www.tra.org.bh/en/marketstatistics.asp
    http://www.gulfbase.com
    http://www.mckinseyquarterly.com
    http://www.escwa.un.org/popin/members/uae.pdf
    https://www.cia.gov/library/publications/the-world-factbook/region/region_mde.html
    http://www.zawya.com
    http://www.ptc.com.sa
  • http://www.ft.com/home/middleeast
    http://www.gulfbase.com/site/interface/SpecialReport/Qtel_15102009.pdf
    http://www.reportlinker.com/p0189736/Saudi-Arabia-Telecommunications-Report-Q2-2010.html
    http://www.reportbuyer.com/telecoms/country_overviews_telecommunications/kuwait_telecommunications_report_q2_2010.html
    http://www.nbkcapital.com/BR/Research/MER/Telecom%20Sector/Kuwait/Wataniya%20Telecom/NBK%20Capital-Wataniya%20Telecom%20Initiation-02July2009.pdf
    http://www.itu.int/ITU-D/ict/newslog/Qtel+Subscriber+Base+Exceeds+Countrys+Total+Population+Qatar.aspx