Reviewing of 10 research paper about corporate strategies and apply them into Viettel Telecom

MIDTERM EXAMINATION Subject: Strategy Formulation and Implementation Lecturer: Dr Nguyen Ngoc Duy Phuong Reviewing of 10 research paper about corporate strategies and apply them into Viettel Telecom Group 12: Lê Thị Thuý Quỳnh – BABAIU19305 Trần Nguyễn Nhật Quyên – BABAIU19300 Lê Thị Thiên Thảo – BABAIU19323 Phạm Thị Thu Thảo – BABAIU19319 Nguyễn Thu Thảo – BABAIU19324 Table of Content: Abstract Introduction Literature Review Offensive strategies 1.1 Market penetration 1.2 Product Development 1.3 Market development International market strategies 2.1 Subsidiary 2.2 Foreign market entry 2.3 Joint venture Outsourcing 10 Apply selected strategies into Viettel Telecom 11 Viettel Telecom - International market entry strategy 11 1.1 General overview of Viettel's international market penetration process 11 1.2 Evaluation of Viettel's international market penetration strategy in recent years 12 1.3 Solutions to complete Viettel’s international market penetration strategy 13 Viettel Telecom – Offensive strategy 14 Conclusion 15 Reference 16 Abstract Viettel is a telecommunication company that is very large and popular in Vietnam, so they have to change and apply many new strategies to gain inferiority towards its competitors This review paper intends to bring a better knowledge of two strategies in the telecom industry that can apply to Viettel This review article provides a review of 10 papers dating from 2002 to 2019 that relate to the telecom industry The purpose of this paper is to investigate the telecommunication market situations over the world to help Viettel telecom come up with appropriate strategies that can improve the situation The paper summarizes the definitions and evidences of the offensive strategy, and the international market strategies Concepts of two strategies had been used widely in companies and studied in many papers • Keywords : Telecom industry, Viettel, the offensive strategy, the international market strategies, literature review Introduction Vietnam is currently integrating into the regional economy as well as the global economy This has resulted in a plethora of development opportunities for Vietnamese businesses However, because of the turbulent economic environment, which provides possibilities as well as pressure for Vietnamese businesses to survive and grow, companies must adopt business strategies that are appropriate for the current scenario In terms of telecommunications, it can be noted that existing significant firms in the field, such as Vinaphone, Mobiphone, and others, all have a slow growth rate and a falling market share, while Viettel Telecom is always expanding and reaching out As a result, Viettel swiftly grew to become the country's largest telecommunications company after 25 years of existence and development The business tactics that Viettel has established have undoubtedly played a vital role in the company's success However, maintaining its market position in today's fiercely competitive environment is no easy task, necessitating the company's strategy building to be regularly upgraded to match clients' wants However, within the scope of this research, we only focuses on the entry strategies, offensive strategies and outsourcing strategy of large telecommunications companies in many countries, thereby drawing lessons from those strategies and applying them to Viettel Literature Review Offensive strategies 1.1 Market penetration - Personal selling and trade promotions are clearly the most effective promotional techniques with which Essar Telecom Kenya Limited engages its sales team to make direct contact with clients in order to market the company's products The researcher finds that the company has used both a pull and a push technique as a promotional strategy based on the findings of the study Essar Telecom Kenya Limited has been able to stay up with the competition in the telecommunications industry by employing a variety of market penetration techniques for its products in today's environment of fierce competition The study says that pricing penetration methods like setting lower prices rather than higher prices to obtain a large and dominant market share have been a successful penetration pricing strategy that has resulted in huge sales volumes and market shares It goes on to say that one of the company's methods for growing its market share is to use market segmentation Essar Telecom Kenya Limited's differentiation approach is significantly relevant to its marketing goal - Income Level and Monthly Expenses of Telecommunication Service for Different Age Groups Firstly, with people under 19, they have low income levels So, China Mobile and China Unicom should develop tailor-customized service packages for young people, especially students, who use SMS frequently but seldom make phone calls Senior high school students had a mobile phone but didn‟t have much money to spend on mobile services “SMS” and “Phone Call” became the most important functions They also like cheap mobile services, especially free “SMS” allowance If China Unicom could provide them cheaper service packages with more free “SMS”, more young customers could be drawn to it Secondly, to the age group of 19-30 : SMS, Phone Call and Internet were used frequently So, providing better service with competitive prices will help China Unicom gain more customers and expand market share The group of 19-30 also have unclear preference in mobile services “SMS” was still the favorite communication method among young people while the use of “MMS” had increased when compared to people under 19 “Internet” usage had been popular among this group of people “Phone call” was also being used often So “3G” network can be an opportunity for China Unicom to chat up China Mobile and expand customer groups through the attractiveness of Internet services.Thirdly, to the age group of 31-60 : China Unicom's market share was beginning to catch up to China Mobile's But the market share of China Mobile was nearly one time greater than the market share of China Unicom The problem for China Unicom was how to raise their attention and interest and motivate customers to buy their product They also are the major labor force and they are responsible for the society’s major productivity They have the most purchasing power but only use the simplest phone calls “SMS” was the second most popular function So, China Unicom should create new service packages that can provide them with useful and economical information services Lastly, to people over 60 who are retired, making phone calls with relatives is the most popular utility They also were phoned by their relatives rather than dialing themselves that generate no direct expense So China Unicom should find a new consuming pattern and purchasing habit for them Income Level and Monthly Expenses of Telecommunication Service for different occupations Firstly, “Education” sector is the major group that use “SMS” frequently The second and third largest “SMS” groups were “Economy” and “Industry” China Unicom can provide them with service packages that give free “SMS” than ordinary packages “Phone Call” can be less discounted to balance the package costs and remain competitive pricing And “MMS” was not popular for customers in Anqing City “Education” were still the major users of this function Secondly, “Industry” sector and “Economy” sector are the major groups that use “Phone Call” most frequently Due to their occupations, direct and instant phone calls communicate better with their business partners than indirect “SMS” or “MMS” People who were working in “Industry” sector and “Economy” sector preferred using “Phone Call” So, China Unicom can use some tailor-made service packages which offer phone call discounts with a few free “SMS” to attract business-related people and mid-aged working people Additionally, Students and young working people are the major customers of Internet functions And “Industry” sector and “Economy” sector had stronger purchasing power than students and had similar “Mobile Internet” service requirements, but their expenses on “Mobile Internet Service” were not as high as that of students So, China Unicom utilizes their advantages in 3G network and standard to get internet users Economical Internet flow volume packages can be added as additional packages to the main service package 1.2 Product Development - Product development is an important factor determining the success or failure of businesses in the telecommunications industry Take for example three telecommunication companies in Kenya, namely Safaricom, Airtel and Telkom They all implement product development strategies very well Safaricom, Airtel and Telkom are all focused on new goods with one goal: optimizing customer fit and reducing time-to-market While these goals may pose conflicting requirements for the organization, there is growing evidence that companies can succeed because of the products they have Through many surveys, companies have received positive feedback from customers when continuously upgrading products, integrating modern technology when it is launched This allows them to better serve consumer needs, stay ahead of slower competitors, and build brand loyalty Many studies have found a strong positive relationship between the speed and commercial success of new products However, the failure rate of new products is still very high Many R&D projects never produce a commercial product, and between 33% and 60% of all new product launches not generate economic returns Therefore, the goal that telecommunication companies in Kenya are aiming for is to reduce time to market by making the product development process more efficient without compromising product or service quality 1.3 Market development - Through its aspirations to develop a countrywide fiber optic network, KC's offensive strategy focused on spreading its business communications services (through its Torch subsidiary) to leading UK regional business clusters This linked (at least originally) the four major corporate centers of Leeds, London (through COLT), Birmingham, and Manchester The move of KC into the East Riding of Yorkshire, which is next to its Kingston-upon-Hull base, is the second part of its offensive plan Because of the enormous number of previous inhabitants and commuters to Kingston-upon-Hull, KC has a degree of brand loyalty and familiarity International market strategies 2.1 Subsidiary - They should improve the partnership with Vodafone by comparing Vodacom's operations against worldwide standards of excellence, in addition to having exclusive access to new product launches and global research and development skills Vodacom's value proposition and growth strategy are built around the advantages of being a Vodafone subsidiary Expertise and experience in communications are shared Firstly, as the business matures, Vodacom will need worldwide competence Secondly, Vodafone has a very inventive and new style of thinking, with access to world-class research and product innovation Third, cost-cutting procurement through global economies of scale Vodacom has reaped the benefits of Vodafone's purchasing power, and is now able to sell certain handsets at significantly lower pricing The next step is to compare your operations to worldwide criteria of excellence The Vodafone deal has given me a lot of confidence in being a part of a global company, and it will be good for business Finally, there is a strong brand association Vodafone has a great brand that will help Vodacom reinvent itself 2.2 Foreign market entry - After noting that the Rwandan telecom market was a good market with a high degree of demand for telecommunication services, Tigo chose the best entry strategy for effective operations of the firms As a result of what the corporation discovered, bigger returns were expected According to the findings, Tigo employed a foreign direct investment approach to join the Rwandan telecom industry by opening its branches in all of Rwanda's districts, focusing on new markets, penetrating current markets, and developing new distribution channels Firm specific advantages such as ownership of proprietary products or technology, as well as a desire to decrease administrative overlap and better integrate new product development and launch initiatives, encouraged the company to pursue this method - Huawei began to standardize advertising when its products entered the European market initially; advertising was often the sole leader and representative This effectively reduces costs, and to a large extent, it can well implement and control overall promotion goals Then they assess the situation in important locations, devise action plans, dispatch individuals to various parts of the country, and prepare for permanent residence To keep information flowing and undertake ongoing product training, product marketers of Huawei and customers actively communicate with one another In addition, the company finds out the difference between the European market and the domestic market and takes advantage of the relationship between the embassies of the market countries in China Huawei's image is cultivated through the presentation Exhibiting photographs and commercial products is a key way to disseminate them successfully Huawei holds a large exhibition every time it enters a new school The expo can be described as showcasing Huawei's commercial image and a platform for face-to-face meetings The purpose of the operators participating in the exhibition should be to highlight operators' progress and demonstrate high-level strength to the general public and experts at the exhibition Aviation displays products, services, and applications and is the driving factor behind business growth The competitors are close in proximity, and if they just a little better, they will create a dramatic contrast against the fake Aviation displays products, services, and applications and is the driving factor behind business growth The competitors are close in proximity, and if they just a little better, they will create a dramatic contrast against the fake - International market strategies are often favored by Chinese, Korean and Italian companies Chinese telecommunications companies like ZTE and Huawei have done a great job of entering the African market While investing in Africa, Huawei and ZTE are more focused on customer needs and requirements They have established research and development centers in Africa, understand their customers well, then develop specific strategies for R&D, joint ventures, project contracting, mergers and acquisitions, as well as management and operation of telecommunications ZTE and Huawei always work with local telecommunications partners and provide services that make customers happy ZTE, on the other hand, costs 30 to 40 percent less than its European competitors Improved technical capacity, low production costs, access to state funding and state political support give Chinese telecommunications companies a competitive edge Huawei and ZTE not only have political relations with the Chinese government but also with the host country's government In recent years, China's outward FDI model has really developed Part of that is thanks to their very good implementation of international market strategies, especially export strategies 2.3 Joint venture - Bangladesh mobile telecommunications market remains attractive for foreign companies, and the optimal entry strategy is a joint venture to enter the attractive industry For the same reason, Grameenphone has used this method to expand enter the market The international shareholder of the company brings technological and business management expertise, while the local shareholder provides a presence throughout Bangladesh and a deep understanding of its economy Besides, they also use a promotion strategy The company advertises in every available medium, including television, radio, print, the Internet, bus bodies, and billboards Operators spend a lot of money on marketing, and they frequently hire top media producers and performers to direct and act in TV commercials Among our country's telecom companies, Grameenphone has the most aggressive promotional campaign Essentially, Grameenphone employs advertising as a promotional technique to accomplish a communication task with a specified target demographic at a specific time frame GP offers a variety of promos to its subscribers, including bonus talk time for night calls, free SMS, free t-shirt, and cap, among others GP advertised their product using both electronic and non-electronic media In addition, they have launched a new campaign called "Pothe Pothe" to boost sales Outsourcing - Airtel first delegated management of all business operations to IBM8 It cut capital costs and improved customer experience by leveraging IBM's information technology (IT) infrastructure and standardized business frameworks It also outsourced telecom networks to Ericsson and Nokia, with the intention of receiving paid for the use of its network infrastructure rather than an upfront payment Airtel's capital expenses were once again cut as a result of this Airtel decreased the service rate for its customers by adding new users without incurring extra fixed costs Arrangements have been struck with software service providers in addition to network infrastructure outsourcing The payment structure for outsourcing is an important component of the Airtel outsourcing contract Rather than paying for services based on the number of hours done or some other traditional approach, Airtel's outsourcing partners are compensated based on the company's revenue growth, which means that as the company expands and its demands on its service providers grow, so does their income Furthermore, the customer base grows without requiring Airtel, which employs only a few hundred people, to hire more people 10 Apply selected strategies into Viettel Telecom From the literature review, it could found that there were many companies have used different strategies for their business With our chosen company - Viettel Telecom, we will apply the two most suitable ones, international market entry strategy and offensive strategy Viettel Telecom - International market entry strategy In fact, Viettel has applied the international market penetration strategy for 15 years (since 2006) 1.1 General overview of Viettel's international market penetration process At that time, Viettel has chosen to conduct parallel investment, exploit the domestic market and combine investment abroad According to Viettel, the research and development investment to create new products or services account for the highest cost of all types of costs, especially for high technology and services Therefore, when the market can be expanded, and services can be sold to many people, the price per unit of product will be lower Those are the reasons why Viettel decided to reach out to the world market Besides, in order to gain experience in competing with major players in highly competitive markets, Viettel has actively invested abroad, building network infrastructure in many different countries such as Cambodia, Laos, Myanmar, and North Korea, Cuba, Venezuela, Mozambique, Tanzania, Peru, It can be said that Viettel has pioneered the integration of Vietnam's telecommunications industry with the world by investing in infrastructure and providing telecommunications services in foreign markets With its efforts, Viettel has entered the top 100 largest telecommunications brands in the world for the first time This is not only the success of Viettel but also the success of Vietnam's telecommunications industry because with the Viettel 11 brand, for the first time, Vietnam has become a ranked and famous country on the world telecommunications map 1.2 Evaluation of Viettel's international market penetration strategy in recent years It can be said that expanding investment and exploitation in foreign markets is the right direction for Viettel in terms of cooperation and integration As a result, Viettel has established itself and holds a high market share in countries such as Cambodia and Laos; reap certain successes and achievements in the field of technology and telecommunications Besides the achievements achieved in the first steps to foreign markets, Viettel also encountered many difficulties and limitations that need to be faced and overcome Vietnamese telecommunications enterprises not have many competitive advantages compared with other telecommunications enterprises, so they face many difficulties and challenges when investing and doing business abroad Taking Cambodia as an example, Viettel started to penetrate this country's telecommunications market with VoIP services, although Viettel decided to invest at a time when this market only had one service provider, but this was the joint venture of the Cambodian Ministry of Posts and Telecommunications, so they are strongly protected Therefore, Viettel faced many difficulties in connection when it officially raised the problem from February 2006 to May 2006 to agree on the principle and in July 2006 signed the necessary appendices to business Another difficulty is that right after Viettel received the official license to provide the service, immediately nine other operators were also allowed to provide this service Thus, the market went from monopoly to competition in just a few months Telecommunications businesses operating in Cambodia are mainly joint ventures with foreign countries such as Sweden, Thailand, and Norway, so they have a lot of experience and financial potential to compete This is a huge challenge for Viettel 12 Moreover, the human resource problem of Viettel also encountered many obstacles Viettel's strategy is to train people to master technology and business knowledge so that Viettel's key employees take on 10% of intellectual labor; the remaining 90% will be processed for simple labor and outsourced Therefore, it will take time for Viettel to train experts to send there to work with an educated workforce With 90% of the workforce outsourced, Viettel has to train the whole thing from the beginning so that it will take a lot of time, costs, and difficulties due to language and cultural factors 1.3 Solutions to complete Viettel’s international market penetration strategy - Training human resources towards ‘knowledge’ economy: Post and telecommunications is a very sensitive field The explosion of information technology has had a strong impact on the production line, management style, lifestyle and way of thinking of employees Therefore, the process of training and developing human resources not only needs to be dynamically adapted to changes, but also needs to be done on the basis of foresight to cope with the trends of technology and service in the future To be able to penetrate and stand firm in the new market, businesses need to improve their competitiveness compared to competitors In fact, first of all, it is necessary to have a capable and responsive workforce, in which training and development in the right direction and selection will bring much higher efficiency In the new stage of investing in foreign markets, with limited highly qualified human resources, the Corporation needs to focus on training many experts in the fields of science and technology, management, expertise, professional economic service - Strengthen market research: 13 On the basis of carefully studying market needs, enterprises can determine product strategies to increase product consumption, expand market share, and improve economic efficiency Especially for businesses expanding overseas, market research becomes even more important Because the company's strategy will be affected by many factors, it requires acumen, calculation and careful research to avoid risks when investing in new markets Due to its business in telecommunications - a diverse and specific field, market research for Viettel is an indispensable requirement The demand for telecommunications products and services is always changing from day to day, so Viettel must periodically evaluate and review each type of market to make necessary adjustments Viettel Telecom – Offensive strategy As mentioned above, in parallel with the strategy of entering the international market, Viettel also applies a parallel strategy to develope the domestic market When entering the market, Viettel has contributed to the popularization of mobile phones in Vietnam Next, Viettel created a big boom in Internet broadband thanks to 4G coverage to 97% of the population Up to July, 2020, Viettel has become the largest network operator in Vietnam with 65 million mobile subscribers, accounting for 54% of the market share (in which 45 million data subscribers) and 5.8 million fiber-optic Internet subscribers, accounting for 41.5% of the market share Viettel's telecommunications network is a super-broadband network with 360,000 km of fiber optic cable to most districts and communes with 120,000 broadcasting stations and five storage centers meeting international standards In addition, since 2019, Viettel Telecom has focused resources on research and development of 5G base stations and chips for 5G From June 2020, they deployed a trial of 5G stations at 14 the Ministry of Information and Communications Currently, this operator is also continuing to optimize the 5G network for large-scale deployment Viettel has now mastered monitoring, management, and combat tools in cyberspace This operator is also currently ensuring communications in border areas, islands, and military transmission infrastructure Viettel is promoting the application of IT in the activities of the Government and businesses with the implementation of national-scale projects, building payment infrastructure, and mobile digital commerce, contributing to the creation of a 'digital' society Persisting in its mission of bringing technology to everyone, Viettel is always interested in a group of customers who are vulnerable to the change of digital life This humanistic philosophy is fully expressed in the message when this business provides 4G services: "As technology moves forward, no one will be left behind." A strong marketing campaign has also contributed to promoting the development of Viettel's brand Most recently, is a change in the logo as well as the slogan From "Say it your way" to "Your way." This represents an open message for many new digital services of Viettel, not just telecommunications as before In summary, based on Viettel Telecom's achievements, it can be said that the market development strategy that the company has been applying is very successful Conclusion This review paper provides an overview of offensive strategy and international market strategy through 10 case studies of how businesses globally apply them in their business models, and the implications of these two strategies At the same time, these two strategies are also applied 15 to Viettel Telecom Company to increase multidimensionality, specificity and accessibility From the successes that the offensive strategy and the international market strategy have brought, it is clear that the importance and necessity of these two strategies cannot be denied However, both of these strategies still have many inadequacies, risks about economic and political Choose a difficult strategy that requires more challenge and investment Thanks to that, Viettel can show the bravery of a big brand when developing Vietnamese telecommunications to the world Reference Arnold, N., Elegwa, M., & Samuel, M (2017) Relationship Between Strategic Product Development Practices and Financial Performance of Telecommunication Firms in Kenya International Journal of Academic Research in Business and Social Sciences,(3), 309 - 322 Daouda, C.(2012) Chinese Telecom Companies Foray Into Africa Africa East - Asian Affairs,(3), 16 - 21 Amzad, H., Rakib, R., Parves, R., Kamrun, N., & Mohiuddin, M (2017) Business Strategies of Grameen Phone Limited,(3), 4-18 Romans, D., (2020) Research on Marketing Strategy of Huawei Mobile Phone in European Market Open Journal of Business and Management.(3) Debashish, B., (2014) A study of Bangladesh Mobile Telecommunication Market for Foreign Companies Market Entry Mode Strategies,(3), 21 - 66 Han, X., (2010) Marketing Performance and Marketing Communication Analysis of China Unicom Anhui Anqing Branch China Unicom Anhui Anqing Branch,(3), 53 - 53 Sherelle, S., (2009) Multinational subsidiary evolution: Vodafone and its South African subsidiary, Vodacom,(3), 116 Thanh Phong (2020) Viettel cần giữ vững vị trí số Việt Nam viễn thông Vietnamnet (4) LEWIS, K., (2011) Market Penetration Strategies used by Essar Telecom Kenya (YU),(3), 19 - 33 16 Sumangala, D., (2013) New Strategies of Industrial Organization: Outsourcing and Consolidation in the Mobile Telecom Sector in India Economic and social upgrading in global production networks,(3), 5- 22 Corlin, D., (2002) Strategic breakout in UK telecommunications: the case of Kingston Communications,(3), 18 - 23 Ishimwe, J., (2013) Foreign Market entry Strategies adopted by Tigo to enter into Rwandan Telecom Market, (3),20 - 32 Viettel (2021) Thương hiệu Viettel sắc đỏ đầy lượng Viettel Construction.(4) Tiền Phong (2021) Tương lai Viettel Telecom năm 2025 tienphong.vn, (4) Toan Van Dinh (2018 ) International Telecommunication Market Penetration: The case of Viettel - VNU University of Economics and Business, Vietnam National University, Hanoi, (4) 17 ... evidences of the offensive strategy, and the international market strategies Concepts of two strategies had been used widely in companies and studied in many papers • Keywords : Telecom industry, Viettel, ... strategies in the telecom industry that can apply to Viettel This review article provides a review of 10 papers dating from 2002 to 2019 that relate to the telecom industry The purpose of this paper is... part of its offensive plan Because of the enormous number of previous inhabitants and commuters to Kingston-upon-Hull, KC has a degree of brand loyalty and familiarity International market strategies