A study on hypercompetition the case of vms from 2005 to 2007

VIETNAM NATIONAL UNIVERSITY, HANOI SCHOOL OF BUSINESS Dang Thi Thuyet A STUDY ON HYPERCOMPETITION THE CASE OF VMS FROM 2005 TO 2007 Major: Business Administration Code: 60 34 05 MASTER OF BUSINESS ADMINISTRATION THESIS SUPERVISOR: DR N G U Y E N THI PHI NGA Hanoi - 2007 TABLE OF CONTENT Pages Sub cover page Table o f content List o f abbreviations List o f Figures INTRODUCTION CHAPTER 1: THEORY FOUNDATION 1.1 Introduction 1.1.1 The definition o f Hypercompetition 1.1.2 Competitive advantages in Hypercompetition 1.1.3 Levels of competition within an industry 1.2 Four Arenas in Hypercompetition 1.2.1 Cost & Quality 9 1.2.2 Timing & Know-how 11 1.2.3 Strongholds 13 1.2.4 Deep pocket 16 1.3 New 7S’s Model 18 CHAPTER 2: MOBILE SECTOR AND VMS ANALYSIS 2.1 Competition analysis on Mobile market from 2005-2007 2.1.1 Vietnam’s Mobile market 21 21 2.1.1.1 Overview 21 2.1.1.2 Mobile structure 22 2.1.1.3 Regulations 23 2.1.1.4 Operators 24 2.1.1.5 Technologies 25 2.1.1.6 Market situation 27 2.1.1.7 Forecasted growth 29 2.1.2 Mobile market competition 31 1.2.1 Cost & Quality Arena 35 2.1.2.2 Timing & Know-how Arena 37 2.1.2.3 Strongholds Arena 38 2.1.2.4 Deep-pocket Arena 38 2.1.3 Conclusion on Mobile Market 2.2 Analysis o f the VMS’s Competitive ability in 2005-2007 38 39 2.2.1 VM S’s Overview 40 2.2.2 VM S’s competitive ability 40 2.2.2.1 Organization 40 22.2.2 Business culture 41 2.2.2.3 Infrastructure 42 2.2.2.4 Human resource 43 2.2.2.5 Financial 43 2.22.6 Products 44 22.2.1 Marketing and Sales 45 2.2.2.8 Forecasted Growth 47 48 2.2.3 Conclusions on VMS CHAPTER 3: RECOMMENDATIONS 3.1 For Vietnamese authority 50 3.2 For VMS 51 3.2.1 New 7S’s Model 51 3.2.2 Action plan 55 CONCLUSION 58 REFERENCE 59 APPENDIX ii LIST OF ABBREVIATIONS TECH: technology MBA: Master of Business Management ID: Identify WTO: World Trade Organization BTA: Bilateral Trade Agreement BCC: Bilateral Corporation Contract FDI: Foreign Direct Investment ROA: Research Group on Asia HCM: Hochiminh City VMS: Vietnam Telecom Mobile Service Company SPT: Saigon Post Tel VIETTEL Mobile: V1ETTEL Mobile Corporation HANOI TELECOM: Hanoi Telecom Corporation VP TELECOM: Vietnam Power Telecom Coiporation GPC: Telecommunication Service Company MPT: Ministry' of Posts and Telecommunication VNPT: Vietnam Post and Telecom Corporation SMP: Signified Market Power GSM: Global System for Mobile Communication CDMA: Code Division Multiple Access BTS: Base Transceiver Station WAP: Wireless Application Protocol 3G: generation NGN: Next Generation Network SMS: Short Message Service R&D: research and deploy TV: Television PR: Public relation ix LIST OF FIGURES Figure 1.1: A series of short-lived actions add up to a sustained Page: 06 advantage Figure 1.2: Different level of competition within an industry Page: 07 Figure 1.3: Different strategies in cost-quality arenas Page: 09 Figure 1.4: The cycle of timing/know-how competition Page: 11 Figure 1.5: The cycle of turf battles an entry barrier competition Page: 14 Figure 1.6: The cycle of competition in the deep pockets arena Page: 16 Figure 1.7: Disruption and the New 7S’s Model Page: 18 Figure 2.1: Vietnam’s Telecommunication structure Page: 22 Figure 2.2: The suppliers of Vietnam Mobile Market Page: 24 Figure 2.3: The subscriber growth of Vietnam Mobile Market Page: 27 Figure 2.4: The revenue growth of Vietnam Mobile Market Page: 28 Figure 2.5: The Mobile Penetration Growth Page: 29 Figure 2.6: The Mobile market share in the first quarter of 2007 Page: 29 Figure 2.7: The subscriber growth of Vietnam Mobile Market Page: 31 Figure 2.8: The Vietnam Mobile Market Share 2005-2007 Page: 33 (subscribers) Figure 2.9: The Vietnam Mobile Market Share 2005-2007 Page: 34 (revenue) Figure 2.10: History of Vietnam Mobile sector in each of the Page: 36 four arenas Figure 2.11: History of Vietnam Mobile sector in Pirce-Quality Page: 37 arenas Figure 2.12: Organization structure of VMS Page: 41 Figure 2.13: The network coverage of MobiFone Page: 43 Figure 2.14: Revenue-Cost-Profit of VMS Page: 44 Figure 2.15: MobiFone’s Market share growth Page: 46 * Figure 2.16: The choice of current customers when renewing Page: 47 Figure 2.17: The choice of new customers Page: 47 Figure 2.18: VMS' Development Forecast Page: 48 Figure 2.19: The Forecast of technology development in VMS Page: 48 Figure 2.20: The comparison of VMS’ competitiveness Page: 50 Figure 3.1: The suggestion New 7S's Model for VMS Page: 54 Figure 3.2: The suggestion action plan for VMS Page: 58 xi INTRODUCTION Problems: The Vietnam mobile market’s competition is increasing and now VMS is loosing its market share and its brand name preference in customer perception We can see that VMS’s competitive ability is decreasing Therefore, How VMS can keep its leading position and compete with its rivalries? Objectives & Aim Objectives - Study on the Hypercompetition (4 arenas and New 7S’s Model) - Competition analysis on Mobile market from 2005-2007 - Analyze the VMS’ competitiveness - Application New 7S’s Model to VMS case Aim - Give out the applicable and effective competitive strategy and action plan to improve the VMS competitive capacity Research questions In order to achieve the objectives o f the thesis, the author of thesis will try to answer the following questions: - What is the VMS’ competitive capability in 2005-2007? - How is the competition in Mobile sector in 2005-2007? - How is the new 7S’s Model of VMS? Method/Approaches - Empirical research/Case study method - Approaches: statistics Scope o f w ork - VMS 2005-2007 - The competition in Mobile sector Data resources and processing Data Resources - Secondary Source: Report and Data o f VMS and its competitors - Tertiary Richard Source: D ’Aveni and RobertGunther, Hypercompetition 1994 Free Press, Grahan J Hooley, John A Sauders, Nigle F Pierry, Marketing strategy & Competitive positioning 1998 Prentice Hall Europe Data Processing Data Processed by excel, chart to summary, compare and analyze Significance - Theory: Introduce the significant theory to VN - Reality: Bring more competitive advantages to VMS Limitations - This research only focuses VMS and the data is 2005-2007 It is may be changed in future Expected results - Knowledge in Hypercompetition and Vietnam’ Mobile Market competition 10 Dissem ination 11 What is VM S’ strength and weakness comparing with its rivalries This research can be studied further for service sectors Follow-up potential How VM S’s competitive capability is improved if applied these recommendations? The checking and adjusting will be done if needed 12 Thesis structure This thesis is divided into three parts included theory foundation, Mobile sector and VMS analysis and recommendations Chapter 1: Theory foundation The Hypercompetition theory of D ’Aveni (1994) is reviewed in this chapter by some main parts such as: definition, advantages, four arenas and New 7S’s Model The thesis will discuss on this theory The New 7S’s Model will be applied to suggest suitable solution for VMS to enhance its competitiveness Chapter 2: M obile sector and VMS analysis The statistic data and analysis by hypercompetitive view will give the deep and detail picture o f Mobile sector as well as its competition battles in Network coverage Expand to high land; rural area of Vietnam 20072009 Incorporatio n with other GSM providers All people in every territories can use and choose VMS as their first choice International cooperation Roaming; international transmission 20072012 VNPTVMS Best Service Provider Unified communication Be ready for Digital Centralization 20092012 IP-SP The pioneer and take leader position 3G Launching Mobile Television and video conference 20082009 VNPTVMS High quality of 3G services R&D Develop more added value or new product to attract customer (Ex: services based on the technology integration of Mobile-IntemetCall Center) Mobifone is the pioneer and the best service provider 20072012 VMSPartner Full-line product=> maintain and expand its market share 20072012 VMS Premium Brand Customer orientation/Best quality service/ 20072012 VMS (Alliance) Differentiation Brand loyalty Marketing campaigns 56 Hiring the best Attract talent staff Create best working environment 20072010 VMS To be top 10 well-paid company Training Training new staffs and improve or update for current staffs 20072012 VMS Corporation Finance Prepare financial resource and effective using 20072012 VMS To be the best company in terms of professional staff and service delivery Good /healthy financial status FIGURE 3.2 THE SUGGESTION ATION PLAN FOR V M S The suggested actions in plan can be detail, added and changed depending on the market changes and VMS’s strategies or tactics to compete with its rivalries 57 CONCLUSION In today’s rapidly developing economy and more and more hypercompetitive business environment, the competitive ability is considered much by the leaders in every sector Your ability in new generation is what you can better and more quickly than your competitors So, keep in mind that if you have continuous small temporary advantages period by period, you will get the big sustainable advantages in long-term This is no one best and sustainable model for competition The more flexible and speed the leader use to meet the demand o f market, the better company compete with is rivalries The research result will help partly leader o f VMS in particular and every business organization in general, to recognize and consider the importance o f competitiveness in business management 58 REFERENCES Tiếng Viềt Đinh Hằng (2004), “Mười năm chín lần giảm cước di động” loạt cước di động” MPT (QI o f 2007), “Z?áơ cáo dịch vụ viễn thông http://vietnamnet Hồng Anh (2007), “Chuẩn bị giảm http://www.vnexpress net Thế Dũng (2006), “Cước điện thoại di động xuống sát giá thành” http://www.nld.com.vn VMS (2005-2007), “Báo cảo kết sản xuất kinh doanh” VMS (2007), “Mạng lưới VMS” http://www.mobifone.com Tiếng Anh Grahan J Hooley, John A Sauders, Nigle F Pierry(1998), “Marketing strategy & Competitive positioning” Prentice Hall Europe Nguyen Dang Nguyen Deputy Manager o f technology & Network development department of VMS (2006), “Core network development and the services fo r Mobifone Network presentation Richard D ’Aveni and Robert Gunther (1994), “Hypercompetition ” Free Press ROA (2006), “Report on Mobile market o f Vietnam Thompson, Jr & A J Strickland (2001), “Strategic Management” McGraw-Hill/Irwin World bank (2005), “Report on Vietnam telecommunication sector” 59 A P P E N D IX FIGURE THE REPORT OF VNPT ON THE PRICE CUTTING DOW N CAMPAIGN So sánh số thuê bao VN PT trưởc sau ngày giảm cước 1/5/2004 Đ n vị T rư c ngày giảm c c (21/4/2004) SỐ thuê bao Sau ngày giảm c c (30/6/2004) phát triển T h u ê b a o c ố định 4.7 92 99 111.131 T h u ê b a o V in a p h o n e 1.923.140 26 70 103.566 Thuê bao M obiFon e 1.211.699 1.309.435 97.736 8.0 29.814 8.3 40 35 310.539 T h u ê b a o toàn m n g [ Source: M P T ’s report, 2004] FIGURE THE TELECOM PEN E T R A T IO N OF A S E A N C O U N TR IES M ật độ điện thoại cố định (M áy/lóo dân) M ật độ điện thoại di động (Máy/lơo dân) M ật độ ngưịi sử dụng Internet (Số người sủ dụng /1 0 dân) M ật độ ngưòi sử dụng dich vụ băng rộng (Số ngưòi sủ dụng / 100 dân) 0.26 7.55 0.3 26.63 29.9 8.44 1.65 5.73 21.06 7.18 0.03 49.17 79.39 68.35 24.76 o 1.27 10.77 0.42 ysia 16.79 75.77 42.37 0.1 pore 43.5 103.41 57.87 11.82 56 and 10.95 42.98 11.03 0.02 Kong 55.2 119.2 50.8 21.69 48 Nam 8.27 10.74 12.9 0.06 ớc odia na esia ea Băng thô t (bit/n [Nguồn: G lobal Trends and Polici FIGURE THE R EV EN EU G R O W T H OF V IET N A M MOBILE M ARKET Unit: Million 2006 2005 Sum Pre-Paid Pre-Paid Post-Paid 2,973,319 1,696,271 4,669,590 2,250,787 1,605,636 3,856,422 664,245 867,878 169,172 QI/2007 Post-Paid Sum Pre-Paid Post-Paid 1,703,970 1,703,970 1,136,291 408,631 4,178,912 1,811,211 5,990,123 1,408,417 599,924 1,532,123 2,307,944 1,749,575 4,057,519 1,207,096 540,914 143,886 313,058 193,482 81,922 275,403 86,951 15,293 0 3,983 3,983 300 0 0 0 13,790 85 6,057,522 4,313,671 10,371,193 6,684,321 5,346,678 12,030,999 3,852,845 1,564,847 [Source: M P T ’s report, Apri FIGURE4 THE S U B S C R IB E R GR O W T H OF V IE T N A M MOBILE M ARKET Unit: subs QI/2007 2006 2005 Pre-Paid 789,874 3,615,967 4,520,318 833,427 5,353,745 4,425,084 823,345 2,140,935 673,547 2,814,482 3,656,901 819,333 4,476,234 4,780,687 806,750 685,715 603,331 1,289,046 3,176,557 946,982 4,123,539 4,597,006 1,082,539 311,579 72,399 383,978 1,437,010 69,858 1,506,868 1,760,077 100,827 0 7,126 37,895 45,021 2,753 41,802 0 0 0 125,221 2,561 5,964,322 2,139,151 8,103,473 12,797,912 2,707,495 15,505,407 15,690,828 2,857,824 Post-Paid 2,826,093 Post-Paid Sum Pre-Paid Post-Paid Sum Pre-Paid [ Source: M P T ’s report, A pril FIGURE T H E R E P O R T OF V N P T ON TH E PRICE C U T T IN G D O W N RATE Unit: USD/Minute 2000 2001 2002 2003 2004 2005 Pre paid 0.244 0.244 0.244 0.217 0.150 0.150 Post paid 0.123 0.120 0.120 0.111 0.092 0.092 Pre paid 100% 100% 89% 69% 100% Post paid 98% 100% 93% 83% 100% [ Source: M PT's report 2005] FIG U RE T H E LIST OF V M S ’S PR O D U C TS SIM 32K Service charge: V iew here 32K b SIM C ard has storage o f 32Kb In addition to normal SIM C ard, 2K b SIM Card is integrated w ith inform ation tracking services inside: stock exchange, lotteries, scores, entertainm ents, A T M locations, consultations, secrets, m arket prices More SuperSIM Service charge: V iew here Super SIM offers 64k store, tim es higher than normal SIM C ards available in Vietnam Super SIM C ard also offers store capacity o f m ore contacts, defaulted utilities services and easy-to-use feature M ore F A Q s USSD Serv ice The free-of-charge service prom pts c u sto m e r’s abbreviated buttons on h a n d phone to recharge a n d /o r check a c c o u n t in an easy and convenient way To recharge account: 1.Scratch the latex on the card to get 14-digit serial num bers; 2.Press *100* 14-digit serial n u m b ers# O K on handphone To check account: Press * l d # O K ; You will hear the current a m o u n t o f m oney left in your account and validity *Note: > T he service is dedicated to Prepaid subscribers such as M obiC ard, M obi4U and M obiPlay; > O K button could be m ea n t by other buttons such as YES and/or S E N D W AP, GPRS, MMS From 27th M ay 2004, G P R S subscribers are suggested to reinstall A P N (A ccess Point N um ber) on your h a n d set as described: * APN to access Internet an d W A P is m -w ap (ip@ pool:10.3.x.x); * APN to access M M S is: m -i090 (ip@ pool:10.4.x.x) •M ore Voice mail What is Voicemail? If it’s not c o n v e n ie n t for you or you c a n ’t answ er your calls th e s e ’s an autom atic service w hich an sw e rs your phone and recode voice m essage for you Each M a ilb o x has a personal secret code, thesefor the system ensures a high level o f security w here only you can retrieve m essage from y our M ailbox M o r e Call Holding & Call Waiting Call Waiting • • • A lerts c u s to m e r w h o is on talk a new call is com ing T h e new call will be answ ered and/or ignored w hilst keeping the first call on hold This helps su b scriber handle tw o calls at once T his is a free o f charge service Call Holding • • H elps c u s to m e r place the first call on hold and m ake another call T h is is a free o f cha rg e service Calling Line Identification Presentation (CLIP) • • Displays in c o m in g call on custom er' hand phone that c u sto m e r will k n o w w hether they wish to answ er T h is is a free o f cha rg e service Call Forwarding H elps c u sto m e r rec e iv e all calls even in case o f unavailability as they wail be diverted to another selected tele p h o n e n u m b e r (i.e hom e, office telephones ) Divert calls in cases: • • • W hen not a n sw ered W hen busy N o cov e g e / p h o n e o f f MobiFone Short M essage Service " S om etim es it isn't c o n v e n ie n t to speak on phone but quiet w ords, please send it in text M o biF one Short M e ss a g e Service (S M S ) is the best way to get through" • • • • • • • W hat is M obiF one Short M essage Service? Benefits from M obiF one Short M essage Service H ow to use Short M essage Service H o w to install M essage Center H o w to send/receive a text m essage H o w delete m essages H o w to chat M ore Mobifone Voice Mail Service Introduction N o t all the tim es incom ing calls are ready answ ered especially in several cases such as battery run-out, m eetings and/or personal reasons M obiF one V oicem ail is the best alternative w a y to help custom er M o re Fax - Data Fax - Data service is a value added service offered to M obiF one users To use this service, ju s t connect your m obile phone to a laptop though a fax - d a ta card (PC M C IA card) More Wireless Application Protocol (WAP) Service W ireless Application Protocol (W A P ) service is increasingly be c o m in g popular now adays T his kind o f service is described as a cell phone, pager and/or a w ireless device com patible with W AP, user can s u r f W ebsites for inform ation, new s, check em ails ■-More Cell Broadcast "Cell Broadcast" and/or "A rea Info" and/or "Info Service" is a service to provide brief new s and/or inform ation widely for the w hole and/or a certain netw ork area Information provided could be w e ather info, area code, exchange rates, local telephony tariff, taxi phone num bers, and m any other useful inform ation for users This kind o f service is optional For further inform ation please contact C u sto m er Service C e nter at 0 1090 and/or any M obiF one shops Cell B roadcast - T he latest new s for users -More MobiFone Short Message CHAT M obiC hat offers M obiF one and M obiC ard custom ers to chat by sending S M S via our M obiC hat system This service is sim ilar to any Internet chat com m unities More International SM S International Short M essage Service offers custom er send m essage from your mobile phone to other international roam ing M obiFone subscribers More MobiMail Services M obiM ail offers M o b iF o n e and M obiC ard subscriber to send/receive e-m ail via SMS -More 19001570 [Source: www.mobifone.com.vn] FIG U RE T H E S A M P L E O F V M S ’S P R O M O T IO N Đón Xuân 2007, Trẩy Lộc MobiFone! Thứ Năm, 25/01/2007, 00:45 Theo Mobifone Đ T D Đ Vertu Cơ hội trúng điện thoại Vertu sang trọng bậc nhất, hàng ngàn điện thoại di động thòi trang Quà tặng Năm Mới cho tất khách hàng MobiFone! C h ộ i t u y ệ t v i c h a t n g c ó đê’ b n v u i X u â n m i t h ậ t r ộ n r n g v n ổ i b ậ t v i m ỗ i t h ẻ P h ú c L ộ c T h ọ k h i n p t i ề n v o t i k h o ả n , v é c o đ ợ c g i k è m kh i h o m n g m i h o ặc tro n g th ô n g b o cước, b n đ ề u c ó c h ộ i t r ú n g n g a y n h ấ t m ộ t t r o n g s ố t r o n g h n g t r i ệ u g iả i t h n g đ ộ c đ o v g iá trị c ủ a M o b i F o n e G iả i đ ặ c b i ệ t Đ T D Đ V e r t u 1 0 đ / g iả i ( T ỷ giá U S D = V N Đ ) 800 G iả i n h ấ t Đ T D Đ N o k ia 0 800 G iả i nhì ĐTDĐ C139 88.000 G iả i k h u y ế n khích***** H ã 'y đ ó n nh ận Q u tặ n g N ă m m ới M o biFon e cho kh ch h n g hòa m n g m ới h a y sử dụng Quà tặng Năm Thuê bao C ó n g a y tà i k h o ả n 0 đ v n g y s d ụ n g T ặ n g t i ế p T r ả trư c hòa % g i trị v n h â n đ ôi s ố n g y s d u n g k h i n a p t h ẻ , , m iạ n g m ới trư c / /2 0 T r sau hòa m ạng T ặ n g n g a y 0 Ở T ặ n g t i ế p 0 Ổ CƯỚC p h í t r o n g miới nư ớc/tháng X th n g (đ ã bao g m T rrả t r c đ a n g s T ặ n g 1 % g i trị t h ẻ n h â n đ ô i n g y s d ụ n g dtụng T h u ê b a o k h o c h i ề u t r c / / 0 t ặ n g 0 % g i trị v V AT) n h â n đ ô i s ố n g y s d ụ n g c h o t h ẻ n p đ ầ u t i ê n