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Strategic Analysts are concerned with strategy. These are the definitions
of strategy.
STRATEGY ANALYSIS:
Strategic Analysis is a process one can use to determine the best way to
achieve the result or organization desire, by choosing the path of least
resistance to bring about change. By doing a Strategic Analysis, the team
will create alternatives to bring about the desired result by emphasizing
the driving forces, and lessening the resistant ones. Many strategies fail
because managers may want to formulate and implement strategies
without a careful analysis of the overarching goals of the organization and
without a thorough analysis of its external and internal environment.
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Assessing the Internal Environment
Useful frameworks for analyzing a firm’s internal environment helps to
identify both strengths and weaknesses that can, in part, determine how
well a firm will succeed in an industry. Analyzing the strengths and
relationships among the activities that constitute a firm’s value chain
(e.g., operations, marketing and sales, and human resource management)
can be a means of uncovering potential sources of competitive advantage
for the firm.
Strategic Analysis is all about the analyzing the strength of businesses'
position and understanding the important external factors that may
influence that position. The process of Strategic Analysis can be assisted
by a number of tools, including:
1. PEST ANALYSIS
2. SCENARIO PLANNING
3. BOSTON GROWTH SHARE MATRIX
4. FIVE FORCES ANALYSIS
5. DIRECTIONAL POLICY MATRIX
6. SWOT ANALYSIS
1. PEST Analysis
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• Industrial safety regulations
• Product labeling requirements
Economic Analysis
• Type of economic system in countries of operation
• Government intervention in the free market
• Comparative advantages of host country
• Exchange rates & stability of host country currency
• Efficiency of financial markets
• Infrastructure quality
• Skill level of workforce
• Labor costs
• Business cycle stage (e.g. prosperity, recession, recovery)
• Economic growth rate
• Discretionary income
• Unemployment rate
• Inflation rate
• Interest rates
Social Analysis
• Demographics
• Class structure
• Education
• Culture (gender roles, etc.)
• Entrepreneurial spirit
• Attitudes (health, environmental consciousness, etc.)
• Leisure interests
Technological Analysis
• Recent technological developments
• Technology's impact on product offering
• Impact on cost structure
• Impact on value chain structure
• Rate of technological diffusion
The number of macro-environmental factors is virtually unlimited. In
practice, the firm must prioritize and monitor those factors that influence
its industry. Even so, it may be difficult to forecast future trends with an
acceptable level of accuracy. In this regard, the firm may turn to scenario
planning techniques to deal with high levels of uncertainty in important
macro-environmental variables.
2.Scenario Planning
Process of visualizing
• What future conditions or events are probable?
• What their consequences or effects would be like.
• How to respond to, or benefit from, them.
A technique that builds various plausible views of possible futures for
business.
According to Prof Azmi Scenario planning, also called scenario
thinking or scenario analysis, is a strategic planning method that some
organizations use to make flexible long-term plans. It is in large part an
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adaptation and generalization of classic methods used by military
intelligence.
The original method was that a group of analysts would generate
simulation games for policy makers. The games combine known facts
about the future, such as demographics, geography, military, political,
industrial information, and mineral reserves, with plausible alternative
social, technical, economic, environmental, educational, political and
aesthetic (STEEEPA) trends which are key driving forces.
In business applications, the emphasis on gaming the behavior of
opponents was reduced (shifting more toward a game against nature). At
Royal Dutch/Shell for example, scenario planning was viewed as changing
mindsets about the exogenous part of the world, prior to formulating
specific strategies.
Scenario planning may involve aspects of Systems thinking, specifically
the recognition that many factors may combine in complex ways to create
sometime surprising futures (due to non-linear feedback loops). The
method also allows the inclusion of factors that are difficult to formalize,
such as novel insights about the future, deep shifts in values,
unprecedented regulations or inventions. Systems thinking used in
conjunction with scenario planning lead to plausible scenario story lines
because the causal relationship between factors can be demonstrated. In
these cases when scenario planning is integrated with a systems thinking
approach to scenario development, it is sometimes referred to as
structural dynamics.
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Resources are allocated to business units according to where they are
situated on the grid as follows:
• Cash Cow - a business unit that has a large market share in a
mature, slow growing industry. Cash cows require little investment
and generate cash that can be used to invest in other business units.
• Star - a business unit that has a large market share in a fast growing
industry. Stars may generate cash, but because the market is
growing rapidly they require investment to maintain their lead. If
successful, a star will become a cash cow when its industry matures.
• Question Mark (or Problem Child) - a business unit that has a
small market share in a high growth market. These business units
require resources to grow market share, but whether they will
succeed and become stars is unknown.
• Dog - a business unit that has a small market share in a mature
industry. A dog may not require substantial cash, but it ties up
capital that could better be deployed elsewhere. Unless a dog has
some other strategic purpose, it should be liquidated if there is little
prospect for it to gain market share.
The BCG matrix provides a framework for allocating resources among
different business units and allows one to compare many business units at
a glance. However, the approach has received some negative criticism for
the following reasons:
• The link between market share and profitability is questionable since
increasing market share can be very expensive.
• The approach may overemphasize high growth, since it ignores the
potential of declining markets.
• The model considers market growth rate to be a given. In practice
the firm may be able to grow the market.
These issues are addressed by the GE / McKinsey Matrix, which considers
market growth rate to be only one of many factors that make an industry
attractive, and which considers relative market share to be only one of
many factors describing the competitive strength of the business unit.
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Five Forces Analysis helps the marketer to contrast a competitive
environment. It has similarities with other tools for environmental audit,
such as PEST analysis, but tends to focus on the single, stand alone,
business or SBU (Strategic Business Unit) rather than a single product or
range of products. For example, Dell would analyze the market for
Business Computers i.e. one of its SBUs.
Five forces analysis looks at five key areas namely the threat of entry, the
power of buyers, the power of suppliers, the threat of substitutes, and
competitive rivalry.
• This is high where there a few, large players in a market e.g. the
large grocery chains.
• If there are a large number of undifferentiated, small suppliers e.g.
small farming businesses supplying the large grocery chains.
• The cost of switching between suppliers is low e.g. from one fleet
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supplier of trucks to another.
• Where the switching costs are high e.g. Switching from one software
supplier to another.
• Power is high where the brand is powerful e.g. Cadillac, Pizza Hut,
Microsoft.
• There is a possibility of the supplier integrating forward e.g. Brewers
buying bars.
• Customers are fragmented (not in clusters) so that they have little
bargaining power e.g. Gas/Petrol stations in remote places.
Competitive Rivalry
• This is most likely to be high where entry is likely; there is the threat
of substitute products, and suppliers and buyers in the market
attempt to control. This is why it is always seen in the center of the
diagram.
specific market. This matrix measures the health of the market and your
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strength to pursue it. The results indicate the direction for future
investment. The recommendation may be to invest, grow, harvest or
divest.
6. SWOT Analysis
A useful summary technique for summarizing the key issues arising from
an assessment of a businesses "internal" position and "external"
environmental influences.
SWOT analysis is a simple framework for generating strategic alternatives
from a situation analysis. It is applicable to either the corporate level or
the business unit level and frequently appears in marketing plans. SWOT
(sometimes referred to as TOWS) stands for Strengths, Weaknesses,
Opportunities, and Threats. The SWOT framework was described in the
late 1960's by Edmund P. Learned, C. Roland Christiansen, Kenneth
Andrews, and William D. Guth in Business Policy, Text and Cases
(Homewood, IL: Irwin, 1969). The General Electric Growth Council used
this form of analysis in the 1980's. Because it concentrates on the issues
that potentially have the most impact, the SWOT analysis is useful when a
very limited amount of time is available to address a complex strategic
situation.
The following diagram shows how a SWOT analysis fits into a strategic
situation analysis.
The internal and external situation analysis can produce a large amount of
information, much of which may not be highly relevant. The SWOT
analysis can serve as an interpretative filter to reduce the information to a
manageable quantity of key issues. The SWOT analysis classifies the
internal aspects of the company as strengths or weaknesses and the
external situational factors as opportunities or threats. Strengths can
serve as a foundation for building a competitive advantage, and
weaknesses may hinder it. By understanding these four aspects of its
situation, a firm can better leverage its strengths, correct its weaknesses,
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capitalize on golden opportunities, and deter potentially devastating
threats.
Internal Analysis
The internal analysis is a comprehensive evaluation of the internal
environment's potential strengths and weaknesses. Factors should
be evaluated across the organization in areas such as:
• Company culture
• Company image
• Organizational structure
• Key staff
• Access to natural resources
• Position on the experience curve
• Operational efficiency
• Operational capacity
• Brand awareness
• Market share
• Financial resources
• Exclusive contracts
• Patents and trade secrets
The SWOT analysis summarizes the internal factors of the firm as a list of
strengths and weaknesses.
External Analysis
An opportunity is the chance to introduce a new product or service that
can generate superior returns. Opportunities can arise when changes
occur in the external environment. Many of these changes can be
perceived as threats to the market position of existing products and may
necessitate a change in product specifications or the development of new
products in order for the firm to remain competitive. Changes in the
external environment may be related to:
• Customers
• Competitors
• Market trends
• Suppliers
• Partners
• Social changes
• New technology
• Economic environment
• Political and regulatory environment
The last four items in the above list are macro-environmental variables,
and are addressed in a PEST analysis.
The SWOT analysis summarizes the external environmental factors as a
list of opportunities and threats.
SWOT Profile
When the analysis has been completed, a SWOT profile can be generated
and used as the basis of goal setting, strategy formulation, and
implementation. When formulating strategy, the interaction of the
quadrants in the SWOT profile becomes important. For example, the
strengths can be leveraged to pursue opportunities and to avoid threats,
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and managers can be alerted to weaknesses that might need to be
overcome in order to successfully pursue opportunities.
Multiple Perspectives Needed
The method used to acquire the inputs to the SWOT matrix will affect the
quality of the analysis. If the information is obtained hastily during a quick
interview with the CEO, even though this one person may have a broad
view of the company and industry, the information would represent a
single viewpoint. The quality of the analysis will be improved greatly if
interviews are held with a spectrum of stakeholders such as employees,
suppliers, customers, strategic partners, etc.
SWOT Analysis Limitations
While useful for reducing a large quantity of situational factors into a more
manageable profile, the SWOT framework has a tendency to oversimplify
the situation by classifying the firm's environmental factors into
categories in which they may not always fit. The classification of some
factors as strengths or weaknesses, or as opportunities or threats is
somewhat arbitrary. For example, a particular company culture can be
either strength or a weakness. A technological change can be a either a
threat or an opportunity. Perhaps what are more important than the
superficial classification of these factors is the firm's awareness of them
and its development of a strategic plan to use them to its advantage.
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CASE
STUDY
INTRODUCTION
Ufone GSM is a Pakistani GSM cellular service provider. It is one of the six
GSM mobile companies in Pakistan and it is a subsidiary of Pakistan
Telecommunication Company Limited. It has a subscriber base of 20
million as of June 2009.
The company commenced its operation under the brand name of Ufone
from Islamabad in January 29 2001. During the years, Ufone continued on
the path to success; the company has network coverage in more than
5885 locations and across all major highways of the country.
Company Profile
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Pakistan Telecom Mobile Limited (PTML) is a wholly owned subsidiary of
Pakistan Telecommunication Corporation Limited (PTCL) that started its
operations in January 2001 under the brand name ‘Ufone’. As a result of
PTCL’s privatization, Ufone became a part of the Emirates
Telecommunication Corporation Group (Etisalat) in 2006.
STRENGTHS
1. NETWORK COVERAGE
Ufone has a network coverage in more that 5885 locations and
across all major highways of the country.
2. INTERNATIONAL ROAMING
Ufone currently caters for International Roaming to more than 230
live operators in more than 130 countries. Ufone has introduced
International Roaming facility for prepaid subscriber in various
countries around the globe with the lowest call rates, featuring no
security charges and activation charges.
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3. GPRS ROAMING
GPRS roaming facility is available with more than 115 live operators
across 85 countries.
4. LICENSE FOR AZAD JAMMU KASHMIR AND NORTHERN AREAS
The company has also been awarded a new license for providing
cellular services in Azad Jammu and Kashmir and Northern Areas.
5. QUALITY COVERAGE
Ufone provides its subscriber with quality coverage and clear
connectivity.
6. VALUE ADDED SERVICES
Ufone is a host of value added services and data connectivity with
the best network in Pakistan.
7. LOWEST PRICES
Ufone offers the most reasonable prices for its users.
8. REPRESENTATIVE OF PTCL
Ufone acts as a representative of PTCL as it is its subsidiary
9. PIONEERS OF MMS AND GPRS
Ufone was the first to launch GPRS services and Multimedia
Messaging Service (MMS) and prepaid roaming in Pakistan.
The network also allows Ufone subscriber to have high speed
wireless data service.
10. SECOND LARGEST MARKET SHARE
Ufone is the second largest cellular operator in Pakistan with
subscriber base of around 6.5 million and a market share of nearly
25%.
Ufone’s Prepay brand is now considered to be one of the most
favorite brands by the youth market.
WEAKNESS
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It has many franchises in the whole country but as its customers are
increasing day by day so its present franchises are not enough to
fulfill the needs of it customers.
6. LACK OF INNOVATIVE SERVICES
Ufone though has some unique and distinct services but it has not
yet given many innovative services as compared to other cellular
companies.
7. NETWORK COVERAGE
Its coverage on Southern part of Pakistan is quite good but in
northern areas its coverage is a bit poor.
8. COMPETETION
When Ufone came into the seen in Pakistan cellular market Mobilink
was already prevailing in the market and it was all Mobilink
monopoly that time. Though with the passage of time Ufone took
many customers of Mobilink but still Mobilink has large number of
users because it was first to Pakistan’s cellular market and this is
the competitive disadvantage to Ufone.
9. INTERNAL PROBLEMS
Ufone is plagued with some internal problems like when it is
privatized to Etisalat being the part of the PTCL many employees
were not happy with the pay scale that they were offering.
OPPURTUNITY
1. CONTINUING TO EXPAND GLOBALLY
With the right marketing strategy they can acquire much more.
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5. DEVELOP FRANCHISE IN REMOTE AREAS
THREAT
1. GOVERNMENT INTERFERENCE
3. PENSION PAYOUTS
5. TOUGH COMPETETION
6. PRESSURE GROUP
7. ECONOMIC PROBLEMS
BCG MATRIX:
Detail of products:
Prepay
PREPAID
UFONE HAND SET
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Prepay
POSTPAID
PEST ANALYSIS OF UFONE
In PEST P stands for Political, E stands for economical, S stands for social
and T stands for technological analysis of industry with respect to their
environment. The organization's advertising surroundings is made up
from:
Political Factors
• Political environment of Pakistan is stable in the current situation
and country is doing excellent on economic front.
• Environment is investor friendly telecommunication sector is under
de-regulation.
• Monopoly of PTA will be going to end at the end of 2005.
• Before WTO implementation government already took steps in de-
regulation of telecommunication sector.
• Political trends also change the whole activity of business. If the
political situation is strong in the country it helps a lot to running a
business. For example the death of Benazir Bhutto and recently the
huge drama of advocates impact the whole business.
Economic Factors
• Marketers should consider long term and short term state of a
trading market.
• Inflation is controlling by state bank and under strict eyes but
unemployment rate is going up and up with the increase of level of
poverty.
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• Recently Govt. imposes taxes on messages of each and every
company of telecommunication which hurts a lot to all. Customers
did not accept this new regulation which is introduced in budget
2009 so Govt. has to drop it. So in this way this the little movement
in this factor of macro environment it changed the whole business of
Ufone.
Socio-Cultural Factors
• As Pakistan is an Islamic country and people are very strict in case
of Islam any thing against the philosophy of Islam on either print or
electronic media are treated as against Pakistan.
• Most of the people dislike anything extra-ordinary or something
which sabotage their culture or subculture.
• Companies who are targeting upper-end of market mostly published
and aired their advertisement in English language.
• In metropolitan cities women are doing work along with their other
responsibilities but other than metropolitan cities it is difficult for
women to convince their parents and spouses for work.
• Demographic changes have very important part in organization.
Ufone get share from all youngsters of the Pakistan. If the number of
youngsters reduces in the population then this thing change the
market share of all the telecommunication businesses.
Technological Factors
• Companies have technology with which they can compete in the
Pakistan and now companies are investing in their infrastructure to
not only expand but also to upgrade their existing structure.
• Currently Ufone is the only company who is providing Multi-media
Messaging Services (MMS), General Packet Radio Service (GPRS),
Virtual Private Network (VPN), Pocket Stocks, Conference Calling,
Wallpapers Animated pictures Polyphonic ring tones (WAP), and
Voice Mail at low price and an additional feature that one can see TV
channels on their cell.
• Ufone is shifting its whole network from 900 MHz to 1800 MHz with
the completion of this project within 2-3 months Mobilink will be
able in offering Value-Added Services like General Packet Radio
Service (GPRS), Multi-media Messaging Services (MMS) and Virtual
Private Network (VPN) etc.
• As new technologies related to telecommunication introduced in
market, the team of Ufone of technological development get
pressurized from upper management to deal with the need of new
technology.
CONCLUSION:
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situation of a running business. It tells us how one can improve his
business by avoiding some weak business and support other strong units.
Ufone is doing great effort to make his business number one in Pakistan,
for this thing, they do many type of strategy analysis periodically. With
Ufone’s this effort they have been made their name most known and
popular in Pakistan.
RECOMMENDATION:
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