Formulating Company Strategy

8/7/2019 Formulating Company Strategy

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Amity Network

Amity Network is the Fast and Reliable internet service provider in Bangladesh. We believe thateveryone should be able to enjoy trouble-free access to the internet and the opportunities that it

brings. We also believe that in the internet world, speed is happiness so we offer fast and reliabledownload backed up by customer service that never sleeps.

To provide fast and uninterrupted internet, AMITY NETWORK is using WiMAX technology,which is the latest 3G wireless solution.

We arent just making the internet work; were making life easy for our customers. And now it

can be yours to enjoy.

Vision

We make life easy

Mission

The internet is one of the most liberating, exciting features of life in the 21st century. Whatever

youre into music, news, views, video, information, chat, and contact, research, for business,pleasure or education we think you should be able to enjoy uninterrupted access to it, wherever

you are, whenever you want.

Key Objectives

To provide high speed Internet connectivity

To provide Virtual Private Network (VPN) service to the broadband customers

To provide a means to bill for the abovementioned services by either time-based orvolume-based billing. It shall provide the customer with the option to select the

services through web server

To provide both pre-paid and post paid broadband services
http://bd.cms.dev.kilo75.com/contact-ushttp://bd.cms.dev.kilo75.com/contact-us


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The External Environment STEP Analysis

S SociologicalThis can refer to demographics, lifestyles, social values, cultures.

T TechnologicalThis relates to research, development and operations. The emergence of a new technology candramatically impact upon an industry.

E EconomicThis refers to the nature and direction of the economy in which a business operates. It can bebasic up/downswings in the general level of economic activity, or changes related to structural

change within relevant sectors.

P PoliticalThis can be formal or informal. Formal refers to government and regulations. Informal refers to

areas outside of government where political activity occurs.

Sociological

Life style

Reluctance to accept new/foreigntechnology

Geography: urban/rural

Technological

Rapidly changing technologies & services

Regulation on technology transfer

Skilled labor force

Economic

GDP

Structural change since telecoms

Recession: Fewer computers bought

Less spent by consumers and providers

Political

Low regulation now

Responsibility for content

Access to schools, libraries, hospitals


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SWOT Analysis

Amity Network definitely requires redefining its strategies. What is required is to identify thepotential opportunities and threats implied by this changing environment for the Amity

Network. In changing trends, situations, and events gaining an accurate understanding ofAmity Networks strengths and weaknesses will help in better strategic management of

organization. The SWOT analysis for Amity Network is as follows

STRENTHS WEAKNESSES

Optical Fiber network and associated

bandwidth Customer Relationship

Transparency in billing

Easy deployment of new services

Poor marketing strategy

Inflexibility in mind set Limited number of value added services

Lack of strategic alliances

OPPORTUNITIES THREATS

Tremendous market growing

Capture market through deep penetration

and low cost advantage

Broaden market expected from convergence

of broadcasting, telecom and entertainment

industry

Competition from private operators

Keeping pace with fast technologicalchanges

Multinational eyeing BD telecom market

Decreasing per line revenues due to

competitive pricing


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Industry Matrix analysis

The ISP Market

The nature of competition in an industry is a huge determinant of strategy, especially business-

level strategy. The profit potential of an industry is determined by competitive interactions.Where these interactions are intense, the profit earned is narrowed by the activities of competing.

Where they are mild, profit tends to be high. Michael Porter of the Harvard Business School has

identified five basic forces, which together describe the state of competition in an industry

1. Threat of new entrants

2. Rivalry Among Existing Firms3. Threat of Substitute Products or Services

4. Bargaining Power of Buyers

5. Bargaining Power of Suppliers

1. Threat of New Entrants

Due to the nature of the ISP market, the threat of new entrants is reasonably strong. There arelow barriers to entry - all that is needed to become an ISP is a small amount of capital and some

technical know-how.

2. Rivalry among Existing Firms

In the basic access services arena, many companies are offering the same deal, and so those thatare doing it more cheaply than others will attract customers. Otherwise, ISPs will have to offer

something special to differentiate them from others i.e. Introduction of WiFi service by

iconnect by connecting most of the part of the city under WiFi zone.

3. Threat of Substitute Products or Services

There is a tremendous attraction for companies other than ISPs to offer Internet access and

services. They can provide similar services, and sometimes at a reduced rate. They can offer

bundled services which are most convenient to some customers. Telecom industries giants

provide internet services which are not part of ISPs such as GP, Robi, Banglalink etc.

4. Bargaining Power of Buyers

Although an individual consumer has little or no say about how much an ISP charges, due to the

rivalry within the market, ISPs generally have to offer their services at reasonable prices. They will


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lose their customer base if they charge more for a service someone else provides more cheaply. Ex:ZIP has lost almost 40% of its customers due to higher charge.

5. Bargaining Power of Suppliers

The suppliers to ISPs are those that own the networks. Suppliers generally own what is the absolute

backbone of the Internet, and control routing and switching of traffic.

IFAS Table:

The internal environment analysis mainly involves the strength and weaknesses of anorganization. Here the strength and weaknesses are found according to Amity Networks current

situation.

Internal Strategic Factors Weight Rating WeightedScore

Comments

1 2 3 4 5

Strengths

S1 Optical Fiber network andassociated bandwidth

0.25 4 1.0 Amity Network has the set up of hugeoptical fiber network And also has

bandwidth to match with customers

expectation.S2 Transparency in billing 0.15 3 0.45 Amity Networks bills exactly the

customer uses. There is no hidden

charge.

S3 Easy deployment of newservices

0.1 3 0.3 New services can easily deployed

S4 Customer relationship 0.15 4 0.60 Trained employees are always ready toserve in outlets

Weaknesses

W1 Limited number of valueadded services

0.2 3 0.6 Number of value added services islimited compare to other competitors.

W2 Lack of strategic alliances 0.15 3 0.45 Strategic alliances is missing for thiscompany

Total 1.0 3.4


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EFAS Table

The external environment analysis involves the opportunity and threats of an organization. Here

the opportunities and threats are chosen according to Amity Networks current situation and

future possibilities.

External Strategic Factors Weight Rating WeightedScore

Comments

1 2 3 4 5Opportunities

O1 Tremendous market growing 0.2 4 0.8 Rapid growth in number of users.

O2 Capture market through deeppenetration and low cost

advantage

0.15 3 0.45 Compare to other operators AmityNetworks cost is lower.

O3 Broaden market expectedfrom convergence of

broadcasting, telecom and

entertainment industry

0.1 4 0.4 Good chance of expanding business

areas.

ThreatsT1 Competition from private

operators

0.2 4 0.8 Local companies are also sharing

total market

T2 Keeping pace with fasttechnological changes

0.1 3 0.3 New technologies and features are

inventing almost in every day.

T3 Multinational eyeing BDtelecom market

0.15 3 0.45 Different multinational companies

want to start their business here.

T4 Decreasing per line revenuesdue to competitive pricing

0.1 4 0.4 Buyers have the bargaining power

dues to availability of ISPs.

Total 1 3.6


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SFAS (Strategic Factor Analysis Summary) Matrix:

Strategic Factors Weight Rate Weighted

Score

S

hort

I

ntermediate

L

ong

Comments

S1 Optical Fiber network andassociated bandwidth.

0.25 4 1 Will keep Amity Network successfulin the long run

S3 Easy deployment of newservices.

0.1 3 0.3 Helpful for intermediate run.

W1 Limited number of valueadded services.

0.2 3 0.6 Only focus for revenue

O2 Capture market through deeppenetration and low cost

advantage.

0.15 3 0.45 Ongoing process as technology isbecoming more popular

O3 Broaden market expectedfrom convergence of


entertainment industry.

0.1 4 0.4 Using latest technologies expandingbusiness areas

T2 Keeping pace with fasttechnological changes.

0.1 3 0.3 People want new things.

T4 Decreasing per line revenuesdue to competitive pricing.

0.1 4 0.4 It effects with in 2to 3 years.

Total 1 3.45

Notes:

1. List each of the most important factors developed in the IFAS and EFAS tables in Column1.

2. Weight each factor from 1.0 (Most Important) to 0.0 (Not Important) in Column 2 based on that

factors probable impact on the companys strategic position. The total weights must sum to 1.00.

3. Each factor rates from 5.0 (Outstanding) to 1.0 (Poor) in Column 3 based on the companys

response to that factor.

4. Column 4 is the factors weighted score obtained by each factors weight times its rating.

5. For duration in Column 5, short term- less than 1 year; intermediate- 1 to 3 years, long term- over

3 years.


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6. Column 6 is the rationale used for each factor.

TOWS Matrix

It illustrates how the external opportunities and threats can be matched with internal strengths

and weaknesses to result in 4 possible strategic alternatives

Internal Factors

External Factors

StrengthsS1:Optical Fiber network and

associated bandwidth

S2:Customer Relationship

S3:Transparency in billing

S4:Easy deployment of new

services

WeaknessesW1:Poor marketing strategy

W2:Inflexibility in mind set

W3:Limited number of value

added services

W4:Lack of strategic alliances

OpportunitiesO1:Tremendous market

growing

O2:Capture market through deep

penetration and low cost

advantage

O3:Broaden market expected

from convergence of


entertainment industry

SO strategies

Amity Network has optical

Fiber network and associatedbandwidth so it can broaden

market expected from

convergence of broadcasting,

telecom and entertainment

industry.

WO strategies

Not Applicable

ThreatsT1:Competition from private

operatorsT2:Keeping pace with fast

technological changes

T3:Multinational eyeing BD

telecom market

T4:Decreasing per line revenues

due to competitive pricing

ST strategies

By deploying new services thecompetition from private

operators can be eliminated.

WT strategies

By keeping pace withtechnological changes Amity

network can provide valued

added services to its

customers.


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Position in BCG Matrix

Amity Network has four packages available for its customers. Customer can choose his or her

desired or required package as per monthly use. The packages are Amity 1, Amity 2, Amity 3,

and Amity 4.

Amity 1: 5 GB @ tk.400 (256 kbps)Amity 2: 12 GB @ tk.1400 (512 kbps)

Amity 3: Unlimited usage @ tk.1600 (256 kbps)

Amity 4: Unlimited usage @ tk.3500 (1 mbps)

Star:Amity 1 package has both high relative market share and growth rate. This is the most popularpackage of Amity Network

Question Mark:

MarketGrowthRate Market Share

High Low

High

STAR

Amity 1

QUESTION MARK

Amity 4

Low

CASH COW

Amity 3

DOGS

Amity 2


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Though the market share of Amity 4 package is low but market growth rate is high. Most of the

corporate houses use this package.

Cash Cow:Basically the customers of this package are home users. The market share is high but currently

the growth rate is low of this package.

Dogs:It seems that Amity 2 package doesnt fulfill the expectations of the users. For this package boththe market share and growth rate is low.

Challenges and Recommendations

Having analyzed the external environment and assessed the internal strengths and weaknesses of

Amity Network, the key issues can be summarized as follows:

1. Innovative products based on convergent technology in order to acquire dominant market

position. Amity Network can achieve by

Replacement of all the outdated technologies

Redeployment of unutilized capacities should be considered first.

Increasing the capital investment in technologies.

2. Amity Network should initiate Customer Orientation Strategyto retain existing customers aswell as to attract new customers by

Creating a Service-Oriented culture within the organization by linking incentives to

customer satisfaction.

Introducing flexible Registration Terms so that new customers are attracted.

Promoting/Introducing user-friendly service systems such as Electronic Clearing system,

internet or E-seva for bill payment

3. Strategic Alliances

Strategic alliance to capture market through The combined operations will also

ensure several other sustainable advantages such as deeper and stronger pockets

and greater marketing influence.

Amity Network should have strategic alliance with content providers,international long distance operators and cable operators.


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4. Marketing strategy needs to be redefined

Marketing Strategy of Amity Network should be defined and should focus around

Value Added Services, building strong distribution chain and differential

treatment to corporate customers.

5. Restructuring of organizational on business type model

Amity Networks organization structure still remains more or less functional in structure.

The with each product/segment considered as a separate business will help in

Better management

Improved organizational communication

Better performance monitoring

6. Cost Management Strategies

As a result of slow growth in revenues and maintaining market share, focus is

simultaneously required on cost control measures like

Integrated financial software is essential for the management to be able to monitor costs.

There is need to assess the core competencies of Amity Network and outsource the non-

core activities like bill printing, call center management etc. by transformational costcontrol.


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Conclusion

Amity Network should change its strategy of acting as follower to that of leader. Instead of

reacting to other operators move it should start acting proactively. Amity Network should adapt

greater standardization and flexibility in systems. Only then new service rollouts will be faster,and ideas will be converted into revenue streams. The overall strategy of Amity Network can be

of concentrating on the broadband business in future. At the same time capital investments can

be made in next generation networks where stress should be on advanced technologies, contentbased data services. Emphasis on organizational restructuring coupled with customer orientation

and operational efficiency can help Amity Network to be the best internet service provider in

Bangladesh.

Documents

Formulating Company Strategy