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EMM: Supply Chain Management
Assignment Question No. 2
You have been appointed by a company as the consultant / PIC to study
the existing supply chain system and its associated problems. You are to
table them in a report to the Management and to recommend changes
for improvement. Your paper must be based on a logical approach
using practical supply chain methodologies.
Table of Contents
No. Title Page
1) Introduction 2
2) Business Scenario and Competition Analysis 3
3) Comparative Analysis 9
4) Recommendation 17
5) Conclusion 18
6) Reference 19
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EMM: Supply Chain Management
1) Introduction
Axiata Group Berhad (Axiata), formerly TM International Berhad, is an investment
holding company. It operates in the telecommunications sector in Asia. The company
provides a wide range of telecommunication and consultancy services through its
subsidiaries in Asian countries. It has controlling interest in telecom companies in
Malaysia, Indonesia, Sri Lanka, Bangladesh and Cambodia. The company provides its
mobile communications services under various brands such as XL in Indonesia; Celcom
in Malaysia; Smart in Cambodia; Idea in India, and M1 in Singapore. Axiata
headquartered in Kuala Lumpur, Malaysia.
The Axiata Group, through Celcom, is planning to enhance its focus on mobile data and
digital services. The company initiated efforts to improve network quality and capacity to
enhance customer data experience.
Objective:
1. To determine the supply chain management strategy of direction of Axiata in the
local and international markets.
2. Identify segments within these markets.
Axiata vision, to be a Regional Champion by 2015 as Most Admired Company in
ASEAN / South Asia. There are:-
1. Profit – Best financial performance
2. People – Top employer / talent factory
3. Process – World class processes
4. Planet & Society – National / Social Contribution.
Strategic Approach to sustainability of Axiata is base on Holistic Four-pillar
Approach to Sustainability:
I. Beyond Short Term Profits
a. Long Term Investment
b. Services Beyond Commercial Motivation
c. Global Mobile Development
II. Nurturing People
a. Nurturing Future Leaders
b. Culture of Integrity
c. Inclusivity
d. Conducive Workplace
III. Process Excellence
a. Supply chain Management
b. Customer Centricity
c. Centre’s of Excellence
d. Strong Governance
IV. Planet and Society
a. Greener Operation
b. Contribution Towards Society
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2) Business Scenario and Competition Analysis
Axiata current situation is to created a tremendous opportunity to penetration and exploit
new market, in analyzing the market environment; market economy is improving
gradually as shown in the Macro & Micro analysis (PESTEL & Five Porter)
Micro Economic External Analysis
PESTEL Analysis
P – There is no political events related to telecommunications
E – Good economic growth and having a raise in GDP
S – The social networkers are also expanding as well
T – The technology changes is rapidly e.g. 4G/LTE
E – Go green society
L – The telecommunication law prohibits monopolistic practices and unfair completion
Porters Five Forces on the Axiata
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Internal Analysis: Axiata
By referring to the above BCG matrix show that relative revenue contribution to Axiata
group. Idea, Robi & Dialog are doing well in market; XL and Celcom are in competitive
situation to penetrate the market but in improvement trend. For M1. Multinet and MTCE
are low in market.
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Commitment to People Development
At Axiata, we are committed to help our people learn, develop and enhance their
functional skills, leadership capabilities as well as their personal effectiveness.
Functional skills development focuses on developing and sharpening the technical skills
of its people towards becoming the best-in-class in their areas of expertise - technology,
marketing, sales, finance, customer analytics, strategy, human resource, internal audit,
regulatory and legal.
The Leadership development (Competency) centres on nurturing leaders who think
before they act and act according to the values that the organisation embraces (learning
the process, know-how and facts), craft (acquiring the practical experiences) as well as
art (building the ability to draw insight and form visions).
The leadership development programmes address the dimensions of:
 science (learning the process, know-how and facts)
 craft (acquiring the practical experiences)
 art (building the ability to draw insight and form visions).
Axiata have 4 development platforms and activities for the people: -
 Education-Based Development is where there are classroom trainings or
workshops to equip people with specific skills and knowledge. The curriculum is
designed to blend timeless Asian philosophy with efficient Western methodology,
to cultivate the desired "think–act–embrace' leadership".
 Experience–Based Development is where we provide on–the–job experiences to
our people. Here, we emphasise the sharpening of the "craft" of our people.
 Relationship–Based Development is where we organise network sessions for
our people to meet and learn from internal senior executives and peers from
across the region. The network sessions are carefully set up to enable our people
to learn and gain insights of key success factors of the business, leadership
journey of our leaders and/ or any other business and strategy-related topics.
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Internal Analysis: SWOT Analysis
Strengths
i. Good financial performance
ii. Large overall subscriber base
Weaknesses
i. De-centralized control over regional operations
ii. Lack of strong/cohesive differentiation with other operators
Opportunities
i. New verticals
ii. Well positioned in growing markets
Threats
i. Exposure to regulatory and foreign exchange risks
ii. OTT services that are viable substitute for core services
Strategic Direction of Celcom (Local Market)
Celcom is the oldest mobile telecommunication service in Malaysia, now moving into the
transformation phase where the company is fully geared to make mobile experience a
sailing breeze to their customers. Celcom vision is about pleasing their customer and
exceeding their expectations. It is celcom goal to empower them with choices and
innovative solutions that will give them greater control and freedom to live it to the
fullest. Celcom also participate in corporate social responsibility.
Segmentation & Target Market for Celcom
Demographic
• Age group 12 ~ 25
• Technology savvy, consumptive
• Offered Xpax prepaid service
Psychographic
• Active social life
• Communicate-friends, colleagues & families
• Celcom Blue prepaid service
Behavioral
• Usage rate
• Lite plan, basic plan & advance plan
Positioning
Good telecommunication service
• Celcom blue prepaid-lower rates
• Xpax prepaid – youth
• Celcom postpaid – corporate level
High speed Broadband
• Can be connected anywhere anytime
• Affordable and flexible to choose
• According to usage & financial needs
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Brand analysis
Brand products
• Postpaid services-celcom first
o Celcom First Prime, Premier and Elite
o Celcom First Biz Prime, Premier and Elite
• Prepaid services-Xpax
• Broadband services
• Blue Cube
• The Cube
Brand Identity
 Celcom broadband – you’ll have nothing but peace of mind from the moment you
sign up
 Celcom Biz- Maximize the reach of your business with celcom. Malaysia’s
leasing mobile network service provider with the widest nationwide coverage.
 Celcom First-Celcom postpaid plan will prove to be absolutely everything you
need and more.
 Xpax – Got X, Got it All.
Brand Extension
• School of X, University of X
• Broadband
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Brand Sponsorship
• Co-branding with Citibank, AirAsia
• Event Sponsorship
SWOT analysis
Strengths
• Establish Brand
• Quality Products
Weakness
• Low market share
• Poor marketing efforts
Opportunities
• Growth in telecommunications service industry
• Promotion Opportunity
Threats
• Competitive Industry
• Technological Advancements
Strategic Plans to increase market share
Improve Advertising & Promotions to deliver the value to customers
 Attract new customers
 Increase in sales
 Establishment of a loyal customer base
 Brand exposure
 Creates visibility
 Attract investors
Improve Customer Care
 Competitive advantage
 Increasing image of the company
 Improve market share
 Increase the customer loyalty
 More referrals
Continue delivering good product and maintain loyal customers
 Save time
 Save cost
 More time focusing on loyal customer
Short Term Plan
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i. Review targeting and positioning
ii. External competitive analysis & consumer analysis
iii. Launch advertising campaign
Mid Term Plan
i. Testing and feedback
ii. Close the sale
Long Term Plan
i. Market research & Evaluation
ii. Set a standard
Contingency Plan
Improve customer care
i. Training for staff
ii. 24/7 customer support
iii. Quick response increase customer satisfaction
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3) Comparative Analysis
Axiata Main Competitor (Maxis/Digi)
Objective:
1. To conduct SWOT analysis on Axiata’s competitors.
2. To determine competitors competitive advantage
3. To determine competitors short, mid and long term plans
SWOT Analysis of Maxis
A SWOT analysis is a structured group activity that is useful in identifying the internal
and external forces that drives an organization competitive in its markets. SWOT is an
acronym for Strength, Weakness, Opportunities and Threats.
Strengths
1. Good network coverage around Malaysia.
2. Have strong brand image and as merge as the market leader in Malaysia.
3. Good deals and special offers for different age groups and also target groups.
4. The oldest and biggest in terms of size and technology.
5. Provides reasonable plans and packages for all users.
6. Always the first to introduce new mobile plans
7. All type of telecommunication and internet technology services.
Weaknesses
1. Interruption of the line at certain areas.
2. Bad customer services.
3. Deals and offers are limited to certain time and area only.
4. Lack of Maxis centers(suburban areas) to enquire information or to pay bills
5. For broadband, speed is good during the first 7 days after activation, and then the
speed goes slower later on.
Opportunities
1. New technology is developing like mushrooms, so when there are new
telecommunication gadgets, there will be opportunities to explore in.
2. Growth of people using smart phones and LTE internet services provides more market
opportunities.
3. Expanding their business to overseas.
4. Building more maxis centers especially suburban areas.
5. New events and occasions to be sponsored.
Threats
1. Competitive Pressure causing pressure on margins
2. Rapid Technology Changes needing capital
3. Global Economic Slowdown impacting growth
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Maxis Competitive Advantage
Being the oldest and most experienced amongst the three, Maxis has many competitive
advantages against its major rivals DiGi and Celcom. They currently posses the highest
trend in the market share, giving the highest coverage, many products features and having
the highest customer size in the Malaysian market. They are applying many future
strategies to maintain their position as the market leader in the Malaysian market like
niche marketing, business package development, intercontinental and international
service expansion.
Determine the Short / Mid / Long Term Plans for Maxis
To sustain the competitive in Telco market share, Maxis are continue its expansion into
the prepaid mobile data segment with additional features to its self-serve app, Hotlink
Red Application, which will be introduced in the third quarter of this year.
Initial features have been running steadily and user feedback for the app has been good so
far. Maxis first launched the app earlier in May 2014.
Maxis is targeting 200,000 to 300,000 downloads of the Red App by year-end from its
prepaid user segment. At its initial launched, the app had garnered some 5,000
downloads. Maxis target is intact. There are very happy with what have attracted so far.
The app will bring in a higher number of mobile data users from the youth segment.
The app gives customers access to year-round #LiveLifeLoud rewards as well as a new
and easier way for prepaid users to track their balance and data usage, top up and
purchase mobile internet services. Some of the new features will include sharing and
purchasing functionality.
The Red App is part of Maxis’ long-term plan to grow its mobile data market,
particularly among its younger users. Maxis noted that about 10 million of Maxis’ 13
million users are in the prepaid segment, the bulk of who are youth.
“The prepaid segment is a very price-conscious category, simply because most of them
are in the younger age group. To make it easier for them to stay connected to the Internet
at all times.
Maxis had launched the #Hotlink prepaid plan last year to encourage users to stay
connected to the internet at a flat rate. According to maxis, it’s no pay-per-use charges
address a major pain point in the mobile data market, whereby smart phone users have
their data quota drained by automatic updates.
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The introduction of the Red App provides prepaid users with a convenient platform to
manage their accounts, which further encourages them to stay connected.
And its latest effort is #LiveLifeLoud, which gives its prepaid customers a chance at
enjoying a money-can’t-buy experience. The #LiveLifeLoud campaign also enables
Maxis to engage its customers.
“From the beginning, maxis had a clear proposition. Mobile data is a growing segment
and maxis want to grow that. So maxis have launched a series of efforts to encourage
connectivity all the time particularly with the prepaid segment. We are really excited with
the level of engagement we’ve got so far for #LiveLifeLoud,”
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SWOT Analysis of Digi Telco (Celcom competitor)
SWOT analysis is an assessment technique to analyse strengths and weaknesses
comprising of positive and negative internal influences; and opportunities and threats
which are positive and negative external influences of an organisation. An accurate
SWOT analysis is important for effective organisational planning and goal setting.
Strengths
Great Value Plans
DiGi has one of the lowest price plans in the market. The table below illustrates DiGi’s
price plans for the iPhone 5S as compared to its competitors. On top of cheaper rates,
DiGi has a superior loyalty program called ‘Digit Rewards’ where they give out rebates,
free talk time, mobile data and SMS
Source: Celcom Axiata Bhd, 2014; DiGi, 2014; Maxis Bhd, 2014
Table 1: Comparison of Maxis, Celcom and DiGi price plan for iPhone 5S
Innovation
DiGi has a good track record in product innovations. For example, DiGi was the first
Malaysian mobile operator to co-brand Opera Mini featuring a compression technology
that allows non-smart phone users easy access to internet. In 2012, DiGi established
‘Partnership with WhatsApp’ which offers subscribers unlimited access to WhatsApp at
an affordable rate.
Attractive career development
DiGi provides attractive career development prospects for employees. They have many
initiatives and programs for all levels across the organization. For example, in 2012,
targeted coaching and development programs were launched to address key skills and
leadership deficiencies of their employees.
Weaknesses
Poor network coverage
DiGi’s lack of base stations as compared to its competitors causes poor network and
broadband coverage which leads to dissatisfaction among subscribers and give DiGi a
bad reputation. Based on Malaysian Wireless (2013), both Celcom and Maxis have about
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80% 3G coverage with more than 7000 3G base station compared to DiGi’s 2000-3000
3G sites causing poor indoor coverage.
Unsatisfactory customer service
Based on several online forums, there evidence show that DiGi has poor customer
service. Customers complain about the long waiting time in service centres and call
centres, slow e-mail responses and unfriendliness of DiGi sales representatives
(Complaints Board, 2014). As stated by a DiGi subscriber in Lowyat.net, civic noob
mentions that he had to call DiGi many times to settle a simple phone billing issue.
Slow dissemination of new products’ information to customers
DiGi lacks marketing activities which delays the dissemination of new products’
information to publics. As a result, the lack of information has caused DiGi to lose out on
potential customers and market share.
Opportunities
Globalization
The world is now borderless due to technological advancements causing an increase in
global movements and interactions of people, goods and services. Globalization has
provided DiGi with an opportunity expand their business reached in order to provide a
platform to meet these demands.
Higher standard of living
The rising standard of living in Malaysia is increasing the demand for telecommunication
devices. According to the 2012 Household Income Survey, the average monthly
household salaries have risen by 7.2% since 2009. It has become common for people to
own at least one mobile device providing DiGi an opportunity to increase sales revenue.
Influx of foreign workers and international students
According to national statistics, the influx of foreign workers and international students is
increasing. Since 2011, there are 1.5 million foreign workers and 90,000 international
students and continuously rising. Ministry of Higher Education aims to attract at least
200,000 international students to education institutions in Malaysia by 2020. Foreign
workers seek low international calling rates while international students demand cheap
mobile internet service to stay connected to with their loved ones back home providing
DiGi an opportunity to enter this new market segment.
Threats
Government regulations
According to Deputy Prime Minister Muhyiddin Yassin, Malaysia's Education Ministry
will continue to ban mobile phone usage in schools (The Straits Times, 2012). The policy
decreased demand for mobile phones and less usage by students causing a negative
impact on DiGi’s sales revenue.
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Industrial rivalry
Within the industry, Maxis, Celcom and DiGi continue to compete on product and
service differentiation through improvement and introduction of new innovative features
(Malaysian Wireless, 2011). The need to gain and maintain competitive advantage over
its competitors might place a heavy burden on DiGi’s bottom-line.
Bargaining powers of suppliers
The telecommunications industry in Malaysia is dependent on imports for its network
components. Most equipment cannot be sourced locally resulting in high bargaining
powers of suppliers (Malaysian Wireless, 2011). This has resulted in an increase in
DiGi’s cost, hence reducing profit margin.
Determine the Short / Mid / Long Term Plans for Digi
Based on the S.W.O.T analysis, the following were identified and a strategy is developed
to address each influence:
1. Opportunity: Influx of foreign workers and international students in Malaysia.
2. Weakness: Unsatisfactory customer service.
Low Price Plan
The first strategy is to take advantage of the opportunity of influx of foreign
workers and international students in Malaysia, Porter’s generic competitive strategy of
focus is proposed. The focus strategy emphasizes on cost advantage targeting a growing
niche segment which is the low priced mobile plan catered for foreign workers and
students.
The increase of foreign workers and international students has created a demand
for low International Direct Dial (IDD) calls and mobile internet service. To serve the
targeted segment better, a mobile plan is designed to suit their needs, which includes
lower IDD rates and higher data usage for mobile internet service while reducing other
services like SMS and talk time as it is not prioritized by them. Subscribers can choose to
tailor their mobile plans according to their preferences. For example, a subscriber who
does not use the mobile internet service can transfer the credits into IDD minutes. This
allows subscribers greater flexibility to manage their mobile plans, thus improving
customer satisfaction.
According to a research done, the advantage of cost focus strategy is having the
highest performance on sales. This strategy allows DiGi to increase revenue and market
share. In addition, the implementation of this strategy will make DiGi the leader of the
new emerging market segment.
The disadvantages are that DiGi sacrifices economies of scale which would be
gained by serving a wider market. The ever changing consumer preference is also a risk
as DiGi has to undertake for serving a niche market. Lastly, with the focus on non-local
consumers, DiGi runs a higher risk of default payment in monthly bills.
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EMM: Supply Chain Management
Quality Customer Service
The second strategy is to rectify DiGi’s weakness of unsatisfactory customer service.
Porter’s generic strategy of differentiation is proposed which focuses on creating a
product or service with distinctive attributes that sets itself apart from the competition.
The strategy is to provide superior customer service to DiGi’s subscribers to differentiate
itself from competitors.
During S.W.O.T analysis, poor customer service was one of the major weaknesses of
DiGi. DiGi’s customer’s listed long waiting time at service centres and slow response
time for enquires as their main dissatisfactions. In order to provide quality customer
service, front line staff will be sent for customer service training programs. More service
centres and retail outlets will be established to provide more location options and reduce
waiting time. Feedback channels like online chat and forums will also be developed
allowing to interaction with subscribers.
The advantage of this strategy is the improvement of brand image. In the long run, DiGi
may be able charge a premium for its products or services. Another advantage is that
DiGi is able to increase customer loyalty. Having loyal customers stabilizes the
company's revenue and lessens the impacts of market downturns.
The major disadvantage of executing a differentiation strategy is the high cost required to
implement the necessary measures to differentiate the organization from its competitors.
The increase in retail outlets/service centres and shorter response time to customers’
enquires more manpower. Together with the increase in feedback channels, the strategy
requires significant capital outlay for implementation. Another disadvantage is that it
takes time to change the mindset of consumers to create a strong brand image in
consumer’s minds. During the process, the company may not have sufficient customer
demand to offset its higher costs, which may lead to a loss.
Conclusion
DiGi Telecommunication has several internal and external influences that effect the
organization. Hence, strategies need to be imposed to address these influences to improve
the organisation’s overall position. The appropriate strategy to implement is the ‘Low
Price Plan’ focus strategy which targets the international students and foreign workers, a
growing niche market in Malaysia. For successful implementation, the organising and
leading aspects have to be set to ensure a smooth flow of execution. This will bring more
profits and growth to the business of DiGi Telecommunications.
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4) Recommendation
A. Own brand Over The Top (OTT) Services
1. Build an Axiata branded, Mobile OS agnostic app-store that integrates with the
handset’s native ecosystem, supported by a network specific cloud storage
service.
2. Provide enough incentives for developers (both established and aspiring) to
develop applications for Axiata’s App Store, with a particular focus on localized
applications.
B. Differentiated Vertical Diversification
1. Negotiate payment settlement agreements with popular online digital content
stores (e.g. Apple iTunes, Google Play, Blackberry App World, etc) by leveraging
on subscriber base size
2. Develop interfaces with these stores to enable customers to pay for their
purchases using their mobile subscriptions (post-paid and prepaid)
3. Develop fraud management policies to cater for the potential for increased bad
debts by post-paid subscribers
4. Extend the payment solution to other products and services by working with
selected vendors and merchants
5. Develop a framework for the provision of micro-financing services with reputable
financial institutions and a network of individual agents
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5) Conclusion from Analysis
• External Analysis
The business environment for Telco’s is changing rapidly, and Axiata has
to change accordingly to stay relevant and vital in the new Telco paradigm
• Internal Analysis
Axiata's current strategy has been successful so far, but it needs to:
i. Diversify its service offerings
ii. Leverage on its large subscriber base
iii. Focus more on engaging the under-served bottom-of-the-pyramid market
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6) Reference
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hits RM5,000. Retrieved from http://www.theborneopost.com/2013/03/28/average-
monthly-malaysian-household-income-hits-rm5000/
Celcom Axiata Berhad. (2014). Get huge savings with your choice of the perfect Celcom
First Plan to suit your needs. Retrieved January 12, 2014 from
https://www.celcom.com.my/personal/devices/iPhone/overview/iPhone-5S
Chi, M. (2011, September 13). Government aims to attract 200,000 international students
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200000-international-students-by-2020
cIvIc_noob. (2011). DiGi bad customer service, service centre to helpline cust-service.
Retrieved January 13, 2014 from https://forum.lowyat.net/topic/1734400
Complaints Board. (2014). DiGi complaints & review. Retrieved January 15, 2014 from
http://www.complaintsboard.com/bycompany/digi-a35353.html
Courtright, J. A., Fairhurst G. T. & Rogers L. E. (1989). Interaction patterns in organic
and mechanistic system. Academy of Management Journal, 32(4), 773-802.
David, F. R. (2011). Strategic management concepts: A competitive advantage approach
(14th
ed.). Pearson Education Australia.
Dess, G. G. & Davis, P. S. (1984). Porter's (1980) generic strategies as determinants of
strategic group membership and organizational performance. Academy of Management
Journal, 27(3), 467-488.
DiGi. (2012). DiGi’s sustainability report 2012. Retrieved from
http://www.digi.com.my/sustainability/pdf/DiGiSR2012.pdf
DiGi. (2014). iPhone 5S: iDiGi. Retrieved January 6, 2014 from
http://new.digi.com.my/ecomm_C/smartphone_main_product/default/iphone5s
DiGi.com Berhad. (2012). Making internet for all a reality: Annual report 2012.
Retrieved from http://www.digi.com.my/aboutus/resources/files/DiGiAR2012.pdf
DiGi Telecommunications Sdn Bhd. (2014). About DiGi. Retrieved January 6, 2014 from
http://www.digi.com.my/aboutus/corporate_overview/information.do
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Ewen, R. B., Smith, P. C., Hulin, C. L. & Locke, E. A. (1966). An empirical test of the
Herzberg two-factor theory. Journal of Applied Psychology, 50(6), 544-550.
Groves, K. S. & Larocca, M. A. (2011). An empirical study of leader ethical values,
transformational and transactional leadership, and follower attitudes toward corporate
social responsibility. Journal of Business Ethics, 103(4), 511-528. doi: 10.1007/s10551-
011-0877-y
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Lam, S. Y., Shankar, V., Erramilli, M. K. & Murthy, B. (2004). Customer value,
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MalaysianWireless. (2011, April 25). DiGi telecommunication forms “regional network”
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MalaysianWireless. (2013, February 6). About 10.5 million DiGi subscribers as of end
2012 [business]. Retrieved January 6, 2014 from
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MalaysianWireless. (2013, January 3). DiGi LTE ready tomorrow but Maxis & Celcom
LTE ready now. Retrieved January 12, 2014 from
http://www.malaysianwireless.com/2013/01/digi-lte-ready-maxis-celcom/
Maxis Berhad. (2014). Save on the iPhone 5s with an iValue plan. Retrieved January 12,
2014 from http://new.maxis.com.my/content/maxis/en/personal/devices/all-
phones/apple/iphone5S.html
Najam, A., Runnalls D. & Halle, M. (2007). Environment and globalization: Five
propositions. International Institute for Sustainable Development. Retrieved from
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News/2013/10/28/DiGi-rings-in-RM448-net-profit-in-Q3.aspx/
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Zakariah, Z. (2013, July 11). 2.8 million legal, illegal foreign workers in Msia. New
Straits Times. Retrieved from http://www.nst.com.my/latest/2-8-million-legal-illegal-
foreign-workers-in-msia-1.317515
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Supply chain management For Axiata

  • 1. EMM: Supply Chain Management Assignment Question No. 2 You have been appointed by a company as the consultant / PIC to study the existing supply chain system and its associated problems. You are to table them in a report to the Management and to recommend changes for improvement. Your paper must be based on a logical approach using practical supply chain methodologies. Table of Contents No. Title Page 1) Introduction 2 2) Business Scenario and Competition Analysis 3 3) Comparative Analysis 9 4) Recommendation 17 5) Conclusion 18 6) Reference 19 1 | P a g e
  • 2. EMM: Supply Chain Management 1) Introduction Axiata Group Berhad (Axiata), formerly TM International Berhad, is an investment holding company. It operates in the telecommunications sector in Asia. The company provides a wide range of telecommunication and consultancy services through its subsidiaries in Asian countries. It has controlling interest in telecom companies in Malaysia, Indonesia, Sri Lanka, Bangladesh and Cambodia. The company provides its mobile communications services under various brands such as XL in Indonesia; Celcom in Malaysia; Smart in Cambodia; Idea in India, and M1 in Singapore. Axiata headquartered in Kuala Lumpur, Malaysia. The Axiata Group, through Celcom, is planning to enhance its focus on mobile data and digital services. The company initiated efforts to improve network quality and capacity to enhance customer data experience. Objective: 1. To determine the supply chain management strategy of direction of Axiata in the local and international markets. 2. Identify segments within these markets. Axiata vision, to be a Regional Champion by 2015 as Most Admired Company in ASEAN / South Asia. There are:- 1. Profit – Best financial performance 2. People – Top employer / talent factory 3. Process – World class processes 4. Planet & Society – National / Social Contribution. Strategic Approach to sustainability of Axiata is base on Holistic Four-pillar Approach to Sustainability: I. Beyond Short Term Profits a. Long Term Investment b. Services Beyond Commercial Motivation c. Global Mobile Development II. Nurturing People a. Nurturing Future Leaders b. Culture of Integrity c. Inclusivity d. Conducive Workplace III. Process Excellence a. Supply chain Management b. Customer Centricity c. Centre’s of Excellence d. Strong Governance IV. Planet and Society a. Greener Operation b. Contribution Towards Society 2 | P a g e
  • 3. EMM: Supply Chain Management 2) Business Scenario and Competition Analysis Axiata current situation is to created a tremendous opportunity to penetration and exploit new market, in analyzing the market environment; market economy is improving gradually as shown in the Macro & Micro analysis (PESTEL & Five Porter) Micro Economic External Analysis PESTEL Analysis P – There is no political events related to telecommunications E – Good economic growth and having a raise in GDP S – The social networkers are also expanding as well T – The technology changes is rapidly e.g. 4G/LTE E – Go green society L – The telecommunication law prohibits monopolistic practices and unfair completion Porters Five Forces on the Axiata 3 | P a g e
  • 4. EMM: Supply Chain Management Internal Analysis: Axiata By referring to the above BCG matrix show that relative revenue contribution to Axiata group. Idea, Robi & Dialog are doing well in market; XL and Celcom are in competitive situation to penetrate the market but in improvement trend. For M1. Multinet and MTCE are low in market. 4 | P a g e
  • 5. EMM: Supply Chain Management Commitment to People Development At Axiata, we are committed to help our people learn, develop and enhance their functional skills, leadership capabilities as well as their personal effectiveness. Functional skills development focuses on developing and sharpening the technical skills of its people towards becoming the best-in-class in their areas of expertise - technology, marketing, sales, finance, customer analytics, strategy, human resource, internal audit, regulatory and legal. The Leadership development (Competency) centres on nurturing leaders who think before they act and act according to the values that the organisation embraces (learning the process, know-how and facts), craft (acquiring the practical experiences) as well as art (building the ability to draw insight and form visions). The leadership development programmes address the dimensions of:  science (learning the process, know-how and facts)  craft (acquiring the practical experiences)  art (building the ability to draw insight and form visions). Axiata have 4 development platforms and activities for the people: -  Education-Based Development is where there are classroom trainings or workshops to equip people with specific skills and knowledge. The curriculum is designed to blend timeless Asian philosophy with efficient Western methodology, to cultivate the desired "think–act–embrace' leadership".  Experience–Based Development is where we provide on–the–job experiences to our people. Here, we emphasise the sharpening of the "craft" of our people.  Relationship–Based Development is where we organise network sessions for our people to meet and learn from internal senior executives and peers from across the region. The network sessions are carefully set up to enable our people to learn and gain insights of key success factors of the business, leadership journey of our leaders and/ or any other business and strategy-related topics. 5 | P a g e
  • 6. EMM: Supply Chain Management Internal Analysis: SWOT Analysis Strengths i. Good financial performance ii. Large overall subscriber base Weaknesses i. De-centralized control over regional operations ii. Lack of strong/cohesive differentiation with other operators Opportunities i. New verticals ii. Well positioned in growing markets Threats i. Exposure to regulatory and foreign exchange risks ii. OTT services that are viable substitute for core services Strategic Direction of Celcom (Local Market) Celcom is the oldest mobile telecommunication service in Malaysia, now moving into the transformation phase where the company is fully geared to make mobile experience a sailing breeze to their customers. Celcom vision is about pleasing their customer and exceeding their expectations. It is celcom goal to empower them with choices and innovative solutions that will give them greater control and freedom to live it to the fullest. Celcom also participate in corporate social responsibility. Segmentation & Target Market for Celcom Demographic • Age group 12 ~ 25 • Technology savvy, consumptive • Offered Xpax prepaid service Psychographic • Active social life • Communicate-friends, colleagues & families • Celcom Blue prepaid service Behavioral • Usage rate • Lite plan, basic plan & advance plan Positioning Good telecommunication service • Celcom blue prepaid-lower rates • Xpax prepaid – youth • Celcom postpaid – corporate level High speed Broadband • Can be connected anywhere anytime • Affordable and flexible to choose • According to usage & financial needs 6 | P a g e
  • 7. EMM: Supply Chain Management Brand analysis Brand products • Postpaid services-celcom first o Celcom First Prime, Premier and Elite o Celcom First Biz Prime, Premier and Elite • Prepaid services-Xpax • Broadband services • Blue Cube • The Cube Brand Identity  Celcom broadband – you’ll have nothing but peace of mind from the moment you sign up  Celcom Biz- Maximize the reach of your business with celcom. Malaysia’s leasing mobile network service provider with the widest nationwide coverage.  Celcom First-Celcom postpaid plan will prove to be absolutely everything you need and more.  Xpax – Got X, Got it All. Brand Extension • School of X, University of X • Broadband 7 | P a g e
  • 8. EMM: Supply Chain Management Brand Sponsorship • Co-branding with Citibank, AirAsia • Event Sponsorship SWOT analysis Strengths • Establish Brand • Quality Products Weakness • Low market share • Poor marketing efforts Opportunities • Growth in telecommunications service industry • Promotion Opportunity Threats • Competitive Industry • Technological Advancements Strategic Plans to increase market share Improve Advertising & Promotions to deliver the value to customers  Attract new customers  Increase in sales  Establishment of a loyal customer base  Brand exposure  Creates visibility  Attract investors Improve Customer Care  Competitive advantage  Increasing image of the company  Improve market share  Increase the customer loyalty  More referrals Continue delivering good product and maintain loyal customers  Save time  Save cost  More time focusing on loyal customer Short Term Plan 8 | P a g e
  • 9. EMM: Supply Chain Management i. Review targeting and positioning ii. External competitive analysis & consumer analysis iii. Launch advertising campaign Mid Term Plan i. Testing and feedback ii. Close the sale Long Term Plan i. Market research & Evaluation ii. Set a standard Contingency Plan Improve customer care i. Training for staff ii. 24/7 customer support iii. Quick response increase customer satisfaction 9 | P a g e
  • 10. EMM: Supply Chain Management 3) Comparative Analysis Axiata Main Competitor (Maxis/Digi) Objective: 1. To conduct SWOT analysis on Axiata’s competitors. 2. To determine competitors competitive advantage 3. To determine competitors short, mid and long term plans SWOT Analysis of Maxis A SWOT analysis is a structured group activity that is useful in identifying the internal and external forces that drives an organization competitive in its markets. SWOT is an acronym for Strength, Weakness, Opportunities and Threats. Strengths 1. Good network coverage around Malaysia. 2. Have strong brand image and as merge as the market leader in Malaysia. 3. Good deals and special offers for different age groups and also target groups. 4. The oldest and biggest in terms of size and technology. 5. Provides reasonable plans and packages for all users. 6. Always the first to introduce new mobile plans 7. All type of telecommunication and internet technology services. Weaknesses 1. Interruption of the line at certain areas. 2. Bad customer services. 3. Deals and offers are limited to certain time and area only. 4. Lack of Maxis centers(suburban areas) to enquire information or to pay bills 5. For broadband, speed is good during the first 7 days after activation, and then the speed goes slower later on. Opportunities 1. New technology is developing like mushrooms, so when there are new telecommunication gadgets, there will be opportunities to explore in. 2. Growth of people using smart phones and LTE internet services provides more market opportunities. 3. Expanding their business to overseas. 4. Building more maxis centers especially suburban areas. 5. New events and occasions to be sponsored. Threats 1. Competitive Pressure causing pressure on margins 2. Rapid Technology Changes needing capital 3. Global Economic Slowdown impacting growth 10 | P a g e
  • 11. EMM: Supply Chain Management Maxis Competitive Advantage Being the oldest and most experienced amongst the three, Maxis has many competitive advantages against its major rivals DiGi and Celcom. They currently posses the highest trend in the market share, giving the highest coverage, many products features and having the highest customer size in the Malaysian market. They are applying many future strategies to maintain their position as the market leader in the Malaysian market like niche marketing, business package development, intercontinental and international service expansion. Determine the Short / Mid / Long Term Plans for Maxis To sustain the competitive in Telco market share, Maxis are continue its expansion into the prepaid mobile data segment with additional features to its self-serve app, Hotlink Red Application, which will be introduced in the third quarter of this year. Initial features have been running steadily and user feedback for the app has been good so far. Maxis first launched the app earlier in May 2014. Maxis is targeting 200,000 to 300,000 downloads of the Red App by year-end from its prepaid user segment. At its initial launched, the app had garnered some 5,000 downloads. Maxis target is intact. There are very happy with what have attracted so far. The app will bring in a higher number of mobile data users from the youth segment. The app gives customers access to year-round #LiveLifeLoud rewards as well as a new and easier way for prepaid users to track their balance and data usage, top up and purchase mobile internet services. Some of the new features will include sharing and purchasing functionality. The Red App is part of Maxis’ long-term plan to grow its mobile data market, particularly among its younger users. Maxis noted that about 10 million of Maxis’ 13 million users are in the prepaid segment, the bulk of who are youth. “The prepaid segment is a very price-conscious category, simply because most of them are in the younger age group. To make it easier for them to stay connected to the Internet at all times. Maxis had launched the #Hotlink prepaid plan last year to encourage users to stay connected to the internet at a flat rate. According to maxis, it’s no pay-per-use charges address a major pain point in the mobile data market, whereby smart phone users have their data quota drained by automatic updates. 11 | P a g e
  • 12. EMM: Supply Chain Management The introduction of the Red App provides prepaid users with a convenient platform to manage their accounts, which further encourages them to stay connected. And its latest effort is #LiveLifeLoud, which gives its prepaid customers a chance at enjoying a money-can’t-buy experience. The #LiveLifeLoud campaign also enables Maxis to engage its customers. “From the beginning, maxis had a clear proposition. Mobile data is a growing segment and maxis want to grow that. So maxis have launched a series of efforts to encourage connectivity all the time particularly with the prepaid segment. We are really excited with the level of engagement we’ve got so far for #LiveLifeLoud,” 12 | P a g e
  • 13. EMM: Supply Chain Management SWOT Analysis of Digi Telco (Celcom competitor) SWOT analysis is an assessment technique to analyse strengths and weaknesses comprising of positive and negative internal influences; and opportunities and threats which are positive and negative external influences of an organisation. An accurate SWOT analysis is important for effective organisational planning and goal setting. Strengths Great Value Plans DiGi has one of the lowest price plans in the market. The table below illustrates DiGi’s price plans for the iPhone 5S as compared to its competitors. On top of cheaper rates, DiGi has a superior loyalty program called ‘Digit Rewards’ where they give out rebates, free talk time, mobile data and SMS Source: Celcom Axiata Bhd, 2014; DiGi, 2014; Maxis Bhd, 2014 Table 1: Comparison of Maxis, Celcom and DiGi price plan for iPhone 5S Innovation DiGi has a good track record in product innovations. For example, DiGi was the first Malaysian mobile operator to co-brand Opera Mini featuring a compression technology that allows non-smart phone users easy access to internet. In 2012, DiGi established ‘Partnership with WhatsApp’ which offers subscribers unlimited access to WhatsApp at an affordable rate. Attractive career development DiGi provides attractive career development prospects for employees. They have many initiatives and programs for all levels across the organization. For example, in 2012, targeted coaching and development programs were launched to address key skills and leadership deficiencies of their employees. Weaknesses Poor network coverage DiGi’s lack of base stations as compared to its competitors causes poor network and broadband coverage which leads to dissatisfaction among subscribers and give DiGi a bad reputation. Based on Malaysian Wireless (2013), both Celcom and Maxis have about 13 | P a g e
  • 14. EMM: Supply Chain Management 80% 3G coverage with more than 7000 3G base station compared to DiGi’s 2000-3000 3G sites causing poor indoor coverage. Unsatisfactory customer service Based on several online forums, there evidence show that DiGi has poor customer service. Customers complain about the long waiting time in service centres and call centres, slow e-mail responses and unfriendliness of DiGi sales representatives (Complaints Board, 2014). As stated by a DiGi subscriber in Lowyat.net, civic noob mentions that he had to call DiGi many times to settle a simple phone billing issue. Slow dissemination of new products’ information to customers DiGi lacks marketing activities which delays the dissemination of new products’ information to publics. As a result, the lack of information has caused DiGi to lose out on potential customers and market share. Opportunities Globalization The world is now borderless due to technological advancements causing an increase in global movements and interactions of people, goods and services. Globalization has provided DiGi with an opportunity expand their business reached in order to provide a platform to meet these demands. Higher standard of living The rising standard of living in Malaysia is increasing the demand for telecommunication devices. According to the 2012 Household Income Survey, the average monthly household salaries have risen by 7.2% since 2009. It has become common for people to own at least one mobile device providing DiGi an opportunity to increase sales revenue. Influx of foreign workers and international students According to national statistics, the influx of foreign workers and international students is increasing. Since 2011, there are 1.5 million foreign workers and 90,000 international students and continuously rising. Ministry of Higher Education aims to attract at least 200,000 international students to education institutions in Malaysia by 2020. Foreign workers seek low international calling rates while international students demand cheap mobile internet service to stay connected to with their loved ones back home providing DiGi an opportunity to enter this new market segment. Threats Government regulations According to Deputy Prime Minister Muhyiddin Yassin, Malaysia's Education Ministry will continue to ban mobile phone usage in schools (The Straits Times, 2012). The policy decreased demand for mobile phones and less usage by students causing a negative impact on DiGi’s sales revenue. 14 | P a g e
  • 15. EMM: Supply Chain Management Industrial rivalry Within the industry, Maxis, Celcom and DiGi continue to compete on product and service differentiation through improvement and introduction of new innovative features (Malaysian Wireless, 2011). The need to gain and maintain competitive advantage over its competitors might place a heavy burden on DiGi’s bottom-line. Bargaining powers of suppliers The telecommunications industry in Malaysia is dependent on imports for its network components. Most equipment cannot be sourced locally resulting in high bargaining powers of suppliers (Malaysian Wireless, 2011). This has resulted in an increase in DiGi’s cost, hence reducing profit margin. Determine the Short / Mid / Long Term Plans for Digi Based on the S.W.O.T analysis, the following were identified and a strategy is developed to address each influence: 1. Opportunity: Influx of foreign workers and international students in Malaysia. 2. Weakness: Unsatisfactory customer service. Low Price Plan The first strategy is to take advantage of the opportunity of influx of foreign workers and international students in Malaysia, Porter’s generic competitive strategy of focus is proposed. The focus strategy emphasizes on cost advantage targeting a growing niche segment which is the low priced mobile plan catered for foreign workers and students. The increase of foreign workers and international students has created a demand for low International Direct Dial (IDD) calls and mobile internet service. To serve the targeted segment better, a mobile plan is designed to suit their needs, which includes lower IDD rates and higher data usage for mobile internet service while reducing other services like SMS and talk time as it is not prioritized by them. Subscribers can choose to tailor their mobile plans according to their preferences. For example, a subscriber who does not use the mobile internet service can transfer the credits into IDD minutes. This allows subscribers greater flexibility to manage their mobile plans, thus improving customer satisfaction. According to a research done, the advantage of cost focus strategy is having the highest performance on sales. This strategy allows DiGi to increase revenue and market share. In addition, the implementation of this strategy will make DiGi the leader of the new emerging market segment. The disadvantages are that DiGi sacrifices economies of scale which would be gained by serving a wider market. The ever changing consumer preference is also a risk as DiGi has to undertake for serving a niche market. Lastly, with the focus on non-local consumers, DiGi runs a higher risk of default payment in monthly bills. 15 | P a g e
  • 16. EMM: Supply Chain Management Quality Customer Service The second strategy is to rectify DiGi’s weakness of unsatisfactory customer service. Porter’s generic strategy of differentiation is proposed which focuses on creating a product or service with distinctive attributes that sets itself apart from the competition. The strategy is to provide superior customer service to DiGi’s subscribers to differentiate itself from competitors. During S.W.O.T analysis, poor customer service was one of the major weaknesses of DiGi. DiGi’s customer’s listed long waiting time at service centres and slow response time for enquires as their main dissatisfactions. In order to provide quality customer service, front line staff will be sent for customer service training programs. More service centres and retail outlets will be established to provide more location options and reduce waiting time. Feedback channels like online chat and forums will also be developed allowing to interaction with subscribers. The advantage of this strategy is the improvement of brand image. In the long run, DiGi may be able charge a premium for its products or services. Another advantage is that DiGi is able to increase customer loyalty. Having loyal customers stabilizes the company's revenue and lessens the impacts of market downturns. The major disadvantage of executing a differentiation strategy is the high cost required to implement the necessary measures to differentiate the organization from its competitors. The increase in retail outlets/service centres and shorter response time to customers’ enquires more manpower. Together with the increase in feedback channels, the strategy requires significant capital outlay for implementation. Another disadvantage is that it takes time to change the mindset of consumers to create a strong brand image in consumer’s minds. During the process, the company may not have sufficient customer demand to offset its higher costs, which may lead to a loss. Conclusion DiGi Telecommunication has several internal and external influences that effect the organization. Hence, strategies need to be imposed to address these influences to improve the organisation’s overall position. The appropriate strategy to implement is the ‘Low Price Plan’ focus strategy which targets the international students and foreign workers, a growing niche market in Malaysia. For successful implementation, the organising and leading aspects have to be set to ensure a smooth flow of execution. This will bring more profits and growth to the business of DiGi Telecommunications. 16 | P a g e
  • 17. EMM: Supply Chain Management 4) Recommendation A. Own brand Over The Top (OTT) Services 1. Build an Axiata branded, Mobile OS agnostic app-store that integrates with the handset’s native ecosystem, supported by a network specific cloud storage service. 2. Provide enough incentives for developers (both established and aspiring) to develop applications for Axiata’s App Store, with a particular focus on localized applications. B. Differentiated Vertical Diversification 1. Negotiate payment settlement agreements with popular online digital content stores (e.g. Apple iTunes, Google Play, Blackberry App World, etc) by leveraging on subscriber base size 2. Develop interfaces with these stores to enable customers to pay for their purchases using their mobile subscriptions (post-paid and prepaid) 3. Develop fraud management policies to cater for the potential for increased bad debts by post-paid subscribers 4. Extend the payment solution to other products and services by working with selected vendors and merchants 5. Develop a framework for the provision of micro-financing services with reputable financial institutions and a network of individual agents 17 | P a g e
  • 18. EMM: Supply Chain Management 5) Conclusion from Analysis • External Analysis The business environment for Telco’s is changing rapidly, and Axiata has to change accordingly to stay relevant and vital in the new Telco paradigm • Internal Analysis Axiata's current strategy has been successful so far, but it needs to: i. Diversify its service offerings ii. Leverage on its large subscriber base iii. Focus more on engaging the under-served bottom-of-the-pyramid market 18 | P a g e
  • 19. EMM: Supply Chain Management 6) Reference Borneo Post Online. (2013, March 28). Average monthly Malaysian household income hits RM5,000. Retrieved from http://www.theborneopost.com/2013/03/28/average- monthly-malaysian-household-income-hits-rm5000/ Celcom Axiata Berhad. (2014). Get huge savings with your choice of the perfect Celcom First Plan to suit your needs. Retrieved January 12, 2014 from https://www.celcom.com.my/personal/devices/iPhone/overview/iPhone-5S Chi, M. (2011, September 13). Government aims to attract 200,000 international students by 2020. The Malaysian Insider. Retrieved from http://www.themalaysianinsider.com/malaysia/article/government-aims-to-attract- 200000-international-students-by-2020 cIvIc_noob. (2011). DiGi bad customer service, service centre to helpline cust-service. Retrieved January 13, 2014 from https://forum.lowyat.net/topic/1734400 Complaints Board. (2014). DiGi complaints & review. Retrieved January 15, 2014 from http://www.complaintsboard.com/bycompany/digi-a35353.html Courtright, J. A., Fairhurst G. T. & Rogers L. E. (1989). Interaction patterns in organic and mechanistic system. Academy of Management Journal, 32(4), 773-802. David, F. R. (2011). Strategic management concepts: A competitive advantage approach (14th ed.). Pearson Education Australia. Dess, G. G. & Davis, P. S. (1984). Porter's (1980) generic strategies as determinants of strategic group membership and organizational performance. Academy of Management Journal, 27(3), 467-488. DiGi. (2012). DiGi’s sustainability report 2012. Retrieved from http://www.digi.com.my/sustainability/pdf/DiGiSR2012.pdf DiGi. (2014). iPhone 5S: iDiGi. Retrieved January 6, 2014 from http://new.digi.com.my/ecomm_C/smartphone_main_product/default/iphone5s DiGi.com Berhad. (2012). Making internet for all a reality: Annual report 2012. Retrieved from http://www.digi.com.my/aboutus/resources/files/DiGiAR2012.pdf DiGi Telecommunications Sdn Bhd. (2014). About DiGi. Retrieved January 6, 2014 from http://www.digi.com.my/aboutus/corporate_overview/information.do 19 | P a g e
  • 20. EMM: Supply Chain Management Ewen, R. B., Smith, P. C., Hulin, C. L. & Locke, E. A. (1966). An empirical test of the Herzberg two-factor theory. Journal of Applied Psychology, 50(6), 544-550. Groves, K. S. & Larocca, M. A. (2011). An empirical study of leader ethical values, transformational and transactional leadership, and follower attitudes toward corporate social responsibility. Journal of Business Ethics, 103(4), 511-528. doi: 10.1007/s10551- 011-0877-y Hambrick, D. C. & Fredrickson, J. W. (2001). Are you sure you have a strategy?. The Academy of Management Executive, 15(4), 48-59. Herzberg, F. (1965). The motivation to work among Finnish supervisors. Personnel Psychology, 18(4), 393-402. doi: 10.1111/j.1744-6570.1965.tb00294.x Lam, S. Y., Shankar, V., Erramilli, M. K. & Murthy, B. (2004). Customer value, satisfaction, loyalty, and switching costs: An illustration from a business-to-business service context. Journal of the Academy of Marketing Science, 32(3), 293-311. doi: 10.1177/0092070304263330 Lunenburg, F. C. (2011). Goal-setting theory of motivation. International Journal of Management, Business, and Administration, 15(1), 1-6. MalaysianWireless. (2011, April 25). DiGi telecommunication forms “regional network” consortium with 23 parties. Retrieved January 12, 2014 from http://www.malaysianwireless.com/2011/04/digi-regional-network-consortium/ MalaysianWireless. (2013, February 6). About 10.5 million DiGi subscribers as of end 2012 [business]. Retrieved January 6, 2014 from http://www.malaysianwireless.com/2013/02/more-than-10-5-million-digi-subscribers/ MalaysianWireless. (2013, January 3). DiGi LTE ready tomorrow but Maxis & Celcom LTE ready now. Retrieved January 12, 2014 from http://www.malaysianwireless.com/2013/01/digi-lte-ready-maxis-celcom/ Maxis Berhad. (2014). Save on the iPhone 5s with an iValue plan. Retrieved January 12, 2014 from http://new.maxis.com.my/content/maxis/en/personal/devices/all- phones/apple/iphone5S.html Najam, A., Runnalls D. & Halle, M. (2007). Environment and globalization: Five propositions. International Institute for Sustainable Development. Retrieved from http://www.unep.org/gc/gc24/docs/FivePropositions.pdf The Star Online. (2013, October 28). DiGi rings in RM448.7m ner profit in Q3, dividend 5.7 sen (update). Retrieved from http://www.thestar.com.my/Business/Business- News/2013/10/28/DiGi-rings-in-RM448-net-profit-in-Q3.aspx/ 20 | P a g e
  • 21. EMM: Supply Chain Management Zakariah, Z. (2013, July 11). 2.8 million legal, illegal foreign workers in Msia. New Straits Times. Retrieved from http://www.nst.com.my/latest/2-8-million-legal-illegal- foreign-workers-in-msia-1.317515 21 | P a g e