Strategic Management for Different Aspect of Business

Question:

Describe about the Strategic Management for Different Aspect of Business.

Answer:

Introduction

The main purpose of this report is to discuss the strategic management of the company Singtel. This report talks about the company’s way of working through an effective value chain and the strategies used by the company to excel in the market of Singapore. A macro environmental analysis has been done for the company for its Indonesian market along with the company’s strategies in different aspect of business.

Value chain of SingTel

The value chain of SingTel is vested in its production strategies, marketing programs and customer support concerned with the products and services facilitated by the company. The value chain of SingTel can be described aptly in terms of individual analysis of its activities which contribute value to its products. The industry of telecommunication in Singapore is escalating gradually with everyday and therefore the major companies are striving to achieve substantial competitive advantage in the market (Bettis et al., 2016).Value chain analysis can be carried through identification of products and the role of marketing mix in development of the value of products.The production of SingTel is primarily reliant on the technology owing to its involvement in the domain of telecommunications. The products of SingTel range from mobile communications to data and internet alongside IT and Engineering services. The organization derives its major revenue from these three products and these elements serve as formidable contributors to the value chain of SingTel. The value chain of SingTel is also dependent on customer satisfaction (Barney &Hesterly, 2015). Customer satisfaction is crucial to the development of product value of SingTeland hence the organization implements incentives for its customers in the form of SingTel Rewards Program. Theproliferation of such initiatives enables the organization to retain its customers through establishment of value of their products from the perspective of customers.The value chain derives efficiency from the increment in value of product and customer satisfaction deserves the credit of being a crucial addition to the value chain of SingTel. Employees also form an integral aspect of SingTel’s value chain as their proficiency contributes to development of the product value. The technical expertise of the employees enables SingTel to derive maximum performance in all of its products especially the three components which facilitate maximum revenue i.e. Mobile communication, data and internet and IT and Engineering services (Bettis et al., 2014). SingTel assumes credible measures such as SingTel Management Associate Program which enables employees to develop their skills in the technical aspects of the production process as well as theoretical aspects of organizational management (Dobbin and Baum, 2014). The theoretical aspects of organizational management refer to a brief impression of the organizational structure alongside the various processes associated with the value chain such as marketing, product delivery and customer support. The marketing strategies of SingTel also form a significant part of the value chain of the organization. The key strategy implemented by SingTel is market segmentation as it tries to appeal to its target audience through different price plans intended for different classes of customers. The provision of distinct price planshas enabled the organization to acquire higher market in the industry of telecommunication (Evans, Stonehouse & Campbell, 2012). The appropriate implementation of marketing mix can also be perceived as a plausible attribute to the value chain of SingTel. The marketing mix of SingTelcomprises of its technical efficiency in its products, efficient and flexible pricing, adequate sources for distribution and marketing activities through apt promotional channels (Goetsch, D.L. and Davis, 2014). The flexible coordination of each of the components of the marketing mix enables SingTel to enhance its brand value and sustain customer retention levels through customer satisfaction. Finally the stakeholders concerned with the company are also responsible forcontributing to the value chain of SingTel. The stakeholders of SingTel include customers, investors, telecom regulators and global vendors. These stakeholders are responsible for contribution to the production, marketing as well as customer support (Hill, Jones & Schilling, 2012). The services of global vendors help the company in gathering necessary technical support such as hardware and digital device vendor services. The association with telecom regulators is also essential for identifying key aspects in regulatory factors of business environment and ensuring consistent development in the domain of telecommunication.

SingTel’s key components and justification of how it uses its strength for gaining a competitive advantage in Singapore

The definition of core competencies can be perceived from the diverse annotations mentioned in research pertaining to business strategy and strategic management. The core competencies of SingTel are vested in the various products and the skills which the company implements to gain competitive advantage in the market. SingTelis established as the largest telecommunication company in Singapore and hence the huge capital reserve serves as a primary resource which is applied as an attribute to core competencies of the company (Hill, Jones & Schilling, 2012). The organizational resources which were implemented for the core competencies of the company include the structuring of the organization in the form of a multidivisional structure which emphasizes on the distinct operational sectors of the organization such as production, marketing, customer satisfaction and service quality (Hill, Jones & Schilling, 2012). The services of various subsidiaries provide an additional competitive advantage to SingTel in terms of mobile, fixed line and satellite and internet services. National Computer Systems, a subsidiary of SingTel provides the required capability to SingTel for exploring further platforms for growth in the business of telecommunications. Since this capability serves as a unique identity of SingTel, it can be perceived as one of the core competencies of the organization. The infrastructural investments of SingTelhave provided the organization a much needed reputation in domestic as well as industrial domains. The investments are meant for satisfaction of customer requirements since the telecom industry is characterized by consistently growing demand from customers. The initiatives of the company to address the requirements of multinational clients, corporate customers and the general population through its organized physical resources can serve as a core competency unique to SingTel (Goetsch, D.L. and Davis, 2014). Technological investments of SingTel can also be perceived as one of the organization’s core competencies. The association of the organization with various countries for assistance in technical training and expertise in technological developments has helped SingTel to attain a significant competitive advantage in the market. Human resource management is led in SingTel through the principle of management and union. The management strives for the union of employees which has led to initiatives such as reduction insalaries of senior managers during the economic crisis of 1998 which has helped employees build a bond with the organization and hence they commit their expertise to SingTel. This element can also be termed as a core competency of SingTel (Evans, Stonehouse & Campbell, 2012).

The justification of the process through which SingTelacts on its strengths and derives competitive advantage can be apprehended only through an estimation of the strengths of the organization. The reputation of SingTel as a renowned telecommunication in Singapore allows customers to identify their association with one of the largest brands as a privilege. SingTel has diversified its services over the years for customers and hence it has been able to derive adequate market share and competitive advantage through utilization of this factor (Dobbin and Baum, 2014). The capital reserves of SingTel serve as strength for the organization and the company can acquire competitive advantage through appropriate facilities for investments and development of creative strategies which would be meant for sustainable development.Thus the strength of finance enables the company to garner competitive advantage over other competitors such as Starhub and MI. The proficiency of the organization in human resource management has enabled it to acquire strength in its production and marketing strategies. The company was able to diversify its services into other sectors apart from core business of mobile communication such as IT and engineering services. The company also capitalizes on its impression as a provider of durable and reliable products. The standard of products provided by the organization isperceived as strength in the market environment. Despite the justification of contribution of the strengths to competitive advantage of SingTel, critical reflection requires attention to the gaps such as the possibilities for duplication of technologies implemented by SingTel, political factors and other environmental factors which can affect the strategic management of the organization (Hill, Jones & Schilling, 2012). The requirement of innovation resources and the association with joint ventures for acquiring technical assistance can serve as major limitations observed in the strengths of the organization. Furthermore, the huge capital reserve of the company requires effective management through appropriate utilization of equity or assets. Formulation of relevant measures for addressing these limitations can assure sustainable competitive advantage to SingTel.

Macro-environmental analysis of Indonesian Market

The market research for SingTel’s entry into the Indonesian market should be analyzed from the perspective of the telecommunications industry. The telecommunications industry in Indonesia forms an integral aspect of the macro environment of Indonesia with respect to SingTel. The macro environmental analysis of Indonesia can be conducted through a PEST analysis which reviews the different aspects of the external environment for a business in Indonesia. The telecommunication industry in Indonesia is characterized by the presence of three major companies Telekomunikasi Indonesia, XL Axiata and Indosat. These companies have control over majority of market share and are also accountable for the gradual increase in the number of mobile phone users though the evolution of internet and smartphone services and access was not evident till the recent times.Now the shift in focus of companies towards data services which proved to be a significant attribute to the development of technologies such as 4G long term evolution. The evident increase in number of mobile subscribers in Indonesia and the prominence of prepaid services in the telecom sector account for the validation of the same. The development of internet services has also accounted for possibilities of number of internet users increasing

(Mellahi&Frynas, 2015).The growth in number of internet users is perceived as exponential in nature and presently the existence of technology such as multiple SIM cards and frequent use of e-mail services and e-commerce imply the requirement for a formidable technological infrastructure which can meet the requirements of the customers. The extent of wireless penetration and the association of the telecom industry with other sectors such as ICT and BPO enable cumulative development of the industries (Goetsch, D.L. and Davis, 2014). Mobile internet services and wireless broadband form the major services of the telecom industry in Indonesia. The illustration of the Indonesian Telecom industry must be followed by a PEST analysis of the Indonesian market as follows.

Political: Indonesia follows the democratic system of governance and a parliament serves as the institution of government in the country. The parliamentary regulations of Indonesia are derived from the Roman-Dutch law. The president and vice-president of the country are elected at an interval of five years. The president holds the authority to select cabinet members depending on the votes of the public. The political system of Indonesia is also characterized by corruption and excessive influence of bureaucracy therefore the democracy of Indonesia can be perceived as primitively developed.

Economy: The economic aspects of Indonesia are accentuated by the events such as the country’s explicit growth of 6% in GDP during the global economic crisis. The Indonesian economy has developed since 2010 with an average economic growth rate of 5.9% annually. The devaluation of the local currency Rupiah and the demand of US dollars in the country serve as major limitations in the Indonesian economy. The monetary and fiscal policies of Indonesia are handled by the Central Bank and the government generally implements regulations for tax to GDP ratio to be maintained within presumed scales.

Social: The population increase rate in Indonesia is steadily growing. The official estimates of 2014 indicate the population of the country at 253,609,643 and the growth rate in population was estimated at 1.13%. The average life expectancy in Indonesia is estimated at 72 years. The literacy rates of Indonesia as reported among people within the age group of 15-24 was estimated at 99.5% which accounts for complete literacy in the population. The major ethnic groups which inhabit the country include Javanese, Sudanese and Malay people. The concentration of the Indonesian population is observed in major cities such as Surabaya, Medan, Bandung, Palembang, Jakarta and Semarang (Mellahi&Frynas, 2015).

Technological: The country is technologically suitable for business owing to its cumulative developments in the domain of transportation facilities through airports, waterways and railways. Indonesia has utilized its geographical location to establish marine trade with various countries. The gradual rise in prominence of communication systems such as smartphones and internet services has led to the increase in feasibility of Indonesia as a market for technological and telecommunication services.

The characteristic features which can be noticed in the PEST analysis of Indonesian market provide a lucid impression of the macro environment in Indonesia and can be utilized for deriving a suitable method and mode of market entry for a business organization.

The strategies used by SingTel to compete against the incumbents of the 3 telecommunication companies in Indonesia

The telecommunicating market in Indonesia is currently being dominated by the three top players which are Telekomunikasi Indonesia, Indosat and XL Axiata. In order to enter the Indonesian telecom market, SingTel must evaluate the strengths of each of the companies and critically reflect on them to obtain remedial measures.

Telekomunikasi Indonesia: The prominent telecom service provider in Indonesia is Telekomunikasi Indonesia and its strengths are primarily vested in the massive consumer base of around 130 million customers. The increase in cellular subscribers and subsequent revenues also serves as an augmentation for the company’s strategic management. The workforce of the organization is managed through apt human resource management initiatives such as promising retirement plans. The strong operating margin enables the company to sustain development of revenue growth (Ward &Peppard, 2016). The company also engages in explicit CSR activities and corporate relations management which can be termed as functional attributes to the company’s strengths.

Indosat: The experience of the organization in management of telecommunications business on an international scale serves as a prolific strength for Indosat. The diverse assortment of products provided by Indosat also account for a formidable reputation inthe Indonesian telecom market. The acquisition of contemporary technology and utilization of proficient production techniques enable Indosat to address the requirements of a global market. The organization emphasizes its human resources through provision of adequate services to employees as well as customers. Proficient customer support is also a formidable strength of Indosat which is possible through the efficient human resource of the organization (Hill, Jones & Schilling, 2012).

XL Axiata: Along with the above mentioned telecom companies, XL Axiata also stand as one of the leaders in the Asian telecom market. The company owes its strengths primarily to its competitive pricing techniques especially in the south East Asian region. The employee base of the organization is estimated at 20000 and the operations of XL Axiata are diversified into various categories for the convenience as well as efficiency of outcomes. The research and development initiatives of the organization are implemented in unison with the evolving trends in the domain of telecommunication. Furthermore the brand image of the organization has helped it acquire a strong market presence. Hence XL Axiata is able to capitalize on its strengths and garner competitive advantage (Barney & Hesterly, 2015).

SingTel must review the strengths of the three top companies in the telecommunication sector and formulate strategies which can be used for flexible entry into the Indonesian market. The resource and competencies of SingTel serve as the major contribution to the development and sustenance of the company in a foreign environment. For example the association of SingTel with Telekomunikasi is a prominent example of utilization of strength to deal with the present market (Hill, Jones & Schilling, 2012). The proficiency of Telekomunikasi in its customer base and support facilities can be capitalized on by SingTel to address the existing market environment. The human resource management and technological developments of SingTel can serve as key contributors to the strategic development of the company in the Indonesian telecom market in presence of the three major brands.

SingTel’s most desirable mode of entry

The different types of entry modes for organizations to enter foreign marketsare dependent on the resources as well as capabilities of the organization with respect to the market as well as the industry. SingTel has to identify the major modes of entry into foreign markets and thereby prepare a suitable plan for entering the Indonesian market. The notable methods for entering foreign markets are classified into various categories depending on the term of entry in a foreign market or the outcomes of the entry process however the commonly cited method includes exporting, licensing, joint ventures, franchising, wholly-owned subsidiaries and foreign direct investments (Ward & Peppard, 2016). Exporting can be defined as the sale of products across international boundaries. The scope of exporting is diversified through classification of exporting techniques which are cooperative exporting, indirect exporting and direct exporting. The use of exporting as a prime step in foreign market entry can be validated by the minimal risk evident in the mode. Indirect exports serve as an effective tool to apprehend the perception of the foreign market about the products or services of the organization. Cooperative exporting is observed in situations where a foreign company is utilized for distribution purposes in the foreign market.

Licensing has also been implemented as an alternative to organizations for entering foreign markets. The implementation of licensing as a foreign market entry mode can be validated by the low risks, high return on investments, and preference of local governments and minimal exposure to political and economic aspects of the foreign market environment. However licensing has also been associated with noted limitations such as reduction in control and brand image as well as provision for developing future competitors. Examples of Walt Disney Co. and Microsoft have depicted the feasibility of licensing as a prolific market entry mode (Dobbin and Baum, 2014).

Franchising is the mode of market entry in which the owner company allows the franchisee to utilize the intellectual property as well as brand name of the organization to sell its products and services in the foreign market. The franchisee is supposed to pay a certain amount of royalty to the company according to the terms and conditions agreed upon by both sides.Franchising involves mitigation of risks for the franchisor as they would not be subject to the impact of the macro environmental factors in Indonesia.However this mode of market entry also has its own share of disadvantages in the form of lack in control over the brand quality and the limitations on development of revenue.

Alongside the above mentioned market entry modes, joint ventures, FDI and subsidiaries are also preferred modes for entering foreign markets. SingTel can assume the prominence of the three popular telecom service providers in Indonesia and prefer joint ventures as the suitable mode of market entry as it would enable the company to distribute risks as well as mutually benefit from each other’s strengths (Hill, Jones & Schilling, 2012). The joint venture method of market entry would be appropriate for SingTel owing to the common goals of the Indonesian telecom market and SingTel i.e. development of the telecom sector and acquisition of higher revenue.

Conclusion

SingTel has used different strategies to sustain in the market. The above report explains the different strategies used by the company in the different aspect of the business to succeed. It explains the value chain of the company and justifies the strategies that it uses in order to achieve a better competitive stage in the markets of Singapore. It also gives a clear perspective of the company’s different mode of entry strategies that it will use to enter into a new market.

References

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