Balanced Scorecard For Telecoms in Pakistan

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Telecom Industry In Pakista"
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Balanced Scorecard For Telecom Industry In
Pakista
Submitted by jalalsj on January 6, 2011
• Category: Business and Economics
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Table of Contents
1.0. Introduction 3
1.1. Background 3
1.2. Balanced Scorecard 4
1.3. Aim of the Research Study 6
1.4. The Telecom Sector in Pakistan 7
2.0. Structure of Thesis 9
3.0. Literature Review 10
4.0. Theoretical Framework 16
4.1. Financial 17
4.2. Customer 18
4.3. Internal Business Process 18
4.4. Learning & Growth 19
5.0. Data Collection 20
6.0. Findings & Analysis 21
6.1. UFONE 21
6.1.1. Company Introduction 21
6.1.2. Company Interview 22
6.1.3. Balanced Scorecard for Ufone 23
Table 1: Balanced Scorecard for UFONE 24
6.2. TELENOR 25
6.2.3. Balanced Scorecard for Telenor 27
Table 2: Balanced Scorecard for Telenor 28
6.3. MOBILINK 29
6.3.3. Balanced Scorecard for Mobilink 30
Table 3: Balanced Scorecard for Mobilink 31
6.4. WARID 32
6.4.3. Balanced Scorecard for Warid 34
Table 4: Balanced Scorecard for Warid 34
6.5. TELECOM INDUSTRY 35
6.5.1. Industry Stage of Life Cycle 35
6.5.2. Financial Perspective 35
6.5.3. Customer Perspective 37
6.5.4. Internal Business Process Perspective 38
6.5.5. Learning & Growth Perspective 39
6.5.6. Balanced Scorecard for the Telecom Industry 40
7.0. Recommendations 42
8.0. Conclusion 43
9.0 Limitations 43
References 45
Appendix 49
Exhibit 1: The BSC as a Strategic Framework for Action 49
Exhibit 2: The BSC provides a Framework to translate a Strategy into Operational Terms 50
Exhibit 3: Teledensity of WLL/ Cellular/ Fixed Sector 51
Exhibit 4: Cellular Subscribers Growth 51
Exhibit 5: Foreign Direct Investment in Telecom Sector 52
Exhibit 6: Financial Themes 52
Exhibit 7: Market Share of Telecom Operators 53
Exhibit 8: Subscriber Mix (Dec 2009) 53
Exhibit 9: Questionnaire for Interview 54
1.0. Introduction
This section pertains to the mild introduction of the Balanced Scorecard concept as explained by
the original authors Kaplan and Norton; its significance in today’s world of business and the
importance of using this tool in the Telecom Sector of Pakistan.
1.1. Background
The late 18th and the early 19th century saw the drastic shift from labor and animal
manufactured products to machine based production systems. This Industrial Revolution brought
changes not only in the way products were created but also the way businesses started planning
for a more profitable growth. Measures such as high net profit, increasing cash flow from
operations, number of products made per machine, economies of scale and economies of scope
were given high significance for the success of a company. Major firms concentrated most of
their effort on amplifying their financial gains with little or no importance given to the service
quality, convenience of the customer, or customer care. In the early 1980’s, when the Japanese
started their operations in the United States of America, more focus was given to the operations
dimension of the business: it became crucial to reduce the number of defects, to reduce the cycle
time and work on the total quality management in a firm. Moreover, in the later years the
Internet Revolution brought further new methods of doing business and creating a profitable
edge for companies in the business environment that had turned extremely competitive. Along
with latest gadgetry, machines and measurements, companies started investing more in its human
capital as the importance of a skillful human resource was uncovered. By this time the Industrial
age converted into the Information Age. In this era, businesses no longer can gain a sustainable
competitive edge just through implementing financial models, but the importance of knowledge
and information became the most sought out elements in a successful business. Management is
now required to invest in their intangible resources as much as, if not more, in their tangible
assets.
However, with time other firms caught on with the leading businesses of the world, and thanks to
globalization and the internet and transfer of technology, countries: both developed and
developing nations got ahead of the race as well. Thus, margins started reducing for huge
corporations, especially those that were operating in the mature stages of the business life cycle.
Therefore, businesses started rethinking their strategies: aligning them with their corporate goals
and making them in lieu with their strengths and weaknesses. In this way, a good strategy
became the most important element in the business plan in the 21st century.
1.2. Balanced Scorecard
The problem to the businesses arose when despite having excellent strategies laid out; the actual
results did not match the expected results, and lagged behind. Various researchers found
different reasons for this abnormal behavior, and the major point most agreed on was that firms
did not give much significance to the implementation of the strategies; where proper
implementation was crucial to the survival of the business. Along with this theory, Kaplan and
Norton (1996) gave the concept of a Balanced Scorecard; a performance management tool
through which all the operations and activities of the business are aligned with the strategies,
thus, making it easier for the management to keep a check on the actual performance of the
company with respect to the expected results that would stem from the strategies implemented
(Kaplan and Norton, 1993). This Scorecard is also explained as a myriad between the traditional
financial model, which focuses on the financial measurements, and the new information age
measurements. These measurements are taken as the customer segmentation, links to these
customers and suppliers, innovation and knowledge workers (Kaplan and Norton, 1996). Now,
the Balanced Scorecard, along with the financial measures, that take into account the past
performance of an organization; it also considers the drivers of the future performance, such as
the loyal customers, skilled labor and innovation. This way, the management tool accounts for,
not only the short-term financial perspective but also the long-term drivers of performance in a
particular company (Kaplan and Norton, 2007). This tool emphasizes the importance of using the
financial and the non financial measures of a company in the information system that should be
used by employees at all levels in the company; this would ensure that employees are aware of
the impact their decisions would make on the measures of the company, in turn providing a
system of continuous feedback and regular check.
The Balanced Scorecard works on the theory of translating the company’s mission and strategy
into measures that are objective and the effect of which can be tangibly seen in the organization.
Moreover, it also helps in linking the strategic objectives and measures; along with assisting in
the planning process of the management and providing a feedback loop that encompasses the
whole organization (See Exhibit 1). The Balanced Scorecard allows the organization to seek
areas of improvement and processes that need more investment so to give the company a
sustainable competitive advantage over rivals. This era witnesses how companies are investing
more in their intangible assets such as human capital, information systems, customer relationship
and culture. The worthiness of the Balanced Scorecard management tool spurts up because as
already explained, it includes these intangible drivers and converts them into measurable goals
that are achievable (Kaplan and Norton, 2004).
The Balanced Scorecard comprises of four perspectives as created by the original authors of the
idea. These perspectives would be explained in detail in the upcoming sections; however Exhibit
2 shows the relationship between these perspectives in a diagram. These are the financial
perspective; the Customer Perspective; Internal Business Process and Learning & Growth. The
last three are non-financial measures and act as a compliment to the financial measure of the
company (Kaplan and Norton, 2007).
This tool is the new phenomena that has taken the business world by a storm; a study surveyed
shows that 70% of the Fortune 500 companies are now using this tool for their performance
measurement and have seen increases in their cash flows, revenues, market shares, customer
satisfaction and the like( Beiman and Johnson, n.d.) . Therefore, it is safe to assume that the
success rate of using this tool effectively is pretty high and would result in a positive growth of
the company’s success measures.
1.3. Aim of the Research Study
Keeping this factor in mind, the aim of this research study is to determine how the telecom sector
in Pakistan can benefit from the use of this Balanced Scorecard management tool by translating
their intangible objectives and strategies into measurable goals and high long-term growth. The
reason in selection of this particular sector is the fact that the telecom sector lies in the maturity
stage of the business cycle; and hence in this stage companies work on investing to reduce the
costs; increase operating efficiencies; maintain their market share and work on increasing their
profitability( Little, n. d.). Since, this industry has reached its saturation level; players in this
sector have now turned towards various methods of how to race ahead of the others. Most of the
strategies that these companies are now using are imitated by all the players in the sector, and
thus, there is very little long term sustainable competitive edge that any of these companies
enjoy. Therefore, the impact that a performance management tool such as the Balanced
Scorecard, if implemented in its proper spectrum, would be profound and would result in a string
of successful outcomes for the company. This is because, the firm would be able to properly
convert its strategies into workable and attainable goals and also keep a constant eye on the
performance measures and provide instant feedback to all the employees throughout the
organization. Moreover, the tool ensures that strategies are inter-linked and they are made
involving all the levels of management in the decision making process. This would assist the
sector in making strategies, and help in the implementation of those strategies by the lower level
management. A better integrated system of using the customer measures, along with the
innovation and the financial measures would result in successful companies; and in turn increase
the effect that this sector has on the economy of Pakistan.
1.4. The Telecom Sector in Pakistan
The telecom sector in Pakistan comprise of the Cellular Mobile sector, the Fixed Line sector, the
Wireless Local Loop sector, the Payphone Services and the Internet Services. However, this
research study would only include the Cellular Mobile Sector in the Telecom Industry. The
reason for this is that the Mobile Sector has been the major source of the increased revenue
flowing through the telecom sector, along with the main reason for high growth in the telecom
sector. Exhibit 3 shows the teledensity of the cellular sector, the fixed line sector and the wireless
loop sector; and as can be seen the celleular sector outperforms the other two by a very high
margin. Currently there are six major players in the Cellular Sector of Pakistan: Mobilink,
Telenor, Ufone, Zong, Warid and Instaphone. The cellular mobile services commenced in the
90’s, and initially licenses were given to Paktel and Instaphone. By 2007 cellular telephone
services were available in 7011 areas of the country. The teledensity in Pakistan reached 52% in
2007, compared to that of other regional economies which stand at 48.4% (Telecom Industry
Report, 2007). The Cellular sector grew by 80% in FY2007, whereas the previous 4 years the
average growth rate witnessed has exceeded 100%. Exhibit 4 shows the growth in the subscriber
base of the mobile service providers; and it is observed that there has been a tremendous growth
from the year 2006 to 2008 from a 34.5% to 78.7% respectively. The market share has been lead
by Mobilink over the past few years, since it had the First Mover Advantage in the country.
However, due to intense competition in the sector, Mobilink has been losing its market share to
Telenor and Zong (previously Paktel), as the later two pick up growth in their subscriber base. In
2007, the market share of Mobilink stood at 39.2%, wheras Ufone followed at 20.9%, and
Telenor 19.5%.
Deregulation of the telecom sector has played a major role in bringing tight competition among
the players and hence it has contributed to a large extent to the economy of Pakistan through
increased revenues and taxes. Along with, the foreign direct investment in this sector is the
highest in the country: capturing more than one fourth of the total FDI in Pakistan, which also
shows investor’s confidence in the sector’s performance. In 2009, telecom sector received 22%
of the total FDI in Pakistan. The Pakistan Telecommunications Authority has also provided
regulations such as 100% equity allowed and 100% repatriation of the profit; and a business
environment which would attract investors and thus contribute to the FDI flowing in the country,
and eventually landing in the GDP of Pakistan. Exhibit 5 shows that the total FDI flowing into
the telecom sector; the highest has been retained by the Cellular Sector, as compared to the other
sectors in the telecom industry.
Revenues from the telecom sector have been increasing over the last five years; however, the
growth in the revenues has been slumping since 2006, when it reached its peak at 34.9%. After
that there has been a decline in the growth rate of revenues going from 34.9% in 2006 to 19.8%
in 2009. The cellular mobile sector contributed 64% of the total revenues of the telecom sector;
indicating a 17% of growth in revenues in 2009. All in all, the telecom sector has been showing a
good performance despite the slump in the economic situation of the country; and the cellular
mobile sector among the telecom sector has outperformed all the other sectors in terms of its
revenues, growth and subscribers (Telecom Sector Annual Report 2009).
2.0. Structure of Thesis
The sections proceed as follows:
* Literature Review: what other authors have written about this concept
* Theoretical Framework : what are the variables on which the thesis is based
* Data Collection
* Findings and analysis: This section has the reaserch done over the four main market players in
the telecom sector at present; Ufone, Telenor, Mobilink and Warid. The section elaborates on
how these companies are using their strategies, and how these strategies can be used to form a
Balanced Scorecard for these companies. Respective Balanced Scorecards are created for each
company and the whole Telecom Sector as a whole.
* Recommendations
* Conclusion
* Limitations
3.0. Literature Review

The concept of Balanced Scorecard have been widely researched and studied by various authors,
from a multitude of angles and combining the basic concept with application in technology
companies, non-profit organizations and for-profit organizations. The amount of work on this
particular topic indicates the level of popularity this concept has gained among the scholars; as
well as among different companies that are open to the application of this concept to their
particular case. A vast number of available case studies support the fact that this concept if
implemented in a proper way can assist the company in measuring its performance regularly and
act like a measuring gauge like that similar to a car in its dashboard which shows the level of
fuel; or temperature status of the engine and the like. Just like a vigilant person would never
drive a car with some gauges or instruments missing from it; similarly, a smart management
would never navigate their business blindly without the proper instrumentation to guide them
towards success (Kaplan and Norton, 1996). Therefore, the balanced scorecard enables
companies to keep track of their performance.
Moreover, other scholars think that strategy implementation is more important and crucial for
businesses to realize compared to strategy creation. A horde of different strategies can be made
for a particular company keeping in view its particular situation and life cycle; however, what is
more difficult is executing those strategies effectively (Kaplan and Norton, 2001). The problem
occurs mainly due to the shift of the economies from an industrial age to an information age.
Managing and measuring performance in the information age is difficult but not impossible. In
the early days of industrial age companies main target was to bulge up its balance sheet and the
focus was more on the finances and building up huge inventories and gaining profits. However,
that is clearly not the case in this age of a dynamic competitive environment where a lot of
companies sell similar products and provide similar services. Then how would companies excel
and become successful? In this information age value creation is the key to success; and
companies do this through managing their knowledge based assets and using these intangible
assets to create strategies that are not easily imitable (Kaplan and Norton, 1996). Thus, the
problem arises in how to measure the performance of this knowledge based intangible assets. For
this purpose, balanced scorecard is a helpful tool to measure not just the results of a strategy, but
also create the best suitable strategies for a company in the first place.
The balanced scorecard is composed of financial indicators that cover past performance of the
company, along with other indicators that would measure drivers of future performance (Kaplan
and Norton, 2001) and in turn actually guide the company towards making such strategies that
would be perfect for that particular company, where the mission and the vision of the company is
also accounted for. Companies need to fully understand and know the four perspectives of the
balanced scorecard; and concentrate equally on them. Unfortunately many companies fail to do
so and just concentrate on one or two perspectives and eventually find themselves in a position
similar to that of a person sitting on a stool with four legs with one leg broken: inevitably they
fall (Hannabarger, Buchman and Economy, 2007).
Furthermore, focusing only on the four perspectives in isolation is not a good step; instead the
company needs to keep in view the market it operates in, the industry environment and the trends
happening there. A company should keep abreast with how the market is functioning in which
it’s operating; what the product introduction cycle times are, what the lead times are and the like.
Seconding this view and assisting companies to use Balanced Scorecards for their operational
purpose is the work of another author who researched upon Balanced Scorecard with a Six
Sigma approach (Gupta, 2004). The work studies how this model facilitates companies in
optimizing their profitability, cost and revenue measures and enhance firm performance overall.
The author believes this model is important for a company to know because it enables the
company to set targets for their performance measures and therefore, employees can meet them
in a better fashion by rechecking with the target levels on a continual basis. The external
environment should be analyzed as well for best results of a strategy implemented. This external
environment would include no just the local environment but the international arena as well
(Hannabarger, Buchman and Economy, 2007).
One important factor in the successful implementation of a balanced scorecard model is that the
company under subject should be confident about its performance measures, since the key
performance indicators would indicate how well the company is doing. However, research shows
that many businesses are dissatisfied with their performance measures and are often shifting to
new measures; on the way losing focus of their true indicators altogether (Meyer, 2002). This
research states that knowing the performance measures are more crucial than implementation of
balanced scorecard. The author believes that if firms would know their performance measures
and if these performance measures are positively correlated then measuring just one performance
indicator would do the job, and a company would not have to assess all the indicators and not
implement the balanced scorecard. Keyes’ (2005) second this point, and state that balanced
scorecard approach helps companies realize how strong there is a relation between the drivers of
an organization and formulate the ‘cause-and-effect relationship’ between them; thus, enabling
companies to eliminate those indicators that do not show a positive relationship with the main
indicators of success of the companies. Therefore, Meyer’s (2002) stand is that companies
should work more towards ‘going beyond balanced scorecards’ and search for the performance
metrics that best describe their business.
Balanced Scorecard has been linked with information technology as well. For some companies
IT serves as the most crucial part of the organization and these companies depend on the success
of their IT systems and IT strategies; however for some other businesses the dependence on
automated systems is not that large, and IT is used only in their operations. Thus, this
dependence on IT systems gives birth to various strategic decisions by the management. Keyes
(2005), in her book emphasizes upon this point that for companies that have their profitability
measures linked with the success of their systems, balanced scorecard approach provides the IT
departments of these firms to link their strategies with the overall business strategies; and
eventually this leads to successful operations.
In another study, the Balanced Scorecard tool has been linked with the Enterprise Systems, so to
measure its performance (Sedera, Gable, and Rosemann, 2001). The study has been done taking
into consideration the public sector only; since the author states that in the private sector the
major focal point is on financial indicators of managing the organization; such as market share,
share price fluctuations and dividends. However, the public sector works more on the legislative
acts and government regulations; and thus, the balanced scorecard used for a public sector would
incorporate cost reduction techniques; while private sector focuses on revenue generation
measures.
Various works have studied the effects of this phenomenon on companies, businesses, non-profit
organizations, as well as education centers. A recent study has researched upon how Balanced
Scorecard management tool can be used to compare the strategic positioning of different
universities, with the Balanced Scorecard strategic perspectives (Nayeri, Mashhadi and
Mohajeri, 2008). The study concludes that the school with the more customer-oriented mind-set
scores the highest among the sample size.
Balanced Scorecards do not just help companies in keeping track of their performance, but also
keeps companies away from subjecting themselves to corporate scandals, due to intense pressure
of increasing shareholder wealth (Niven, 2003). Furthermore, the performance management tool
also assists companies to execute strategies effectively, which is more important since many
firms fail not because they do not formulate good strategies, but because their execution is faulty.
The author, further believes that the reasons for a failed strategy implementation are unclear
vision of the company; incentives of managers not linked to the strategy execution; top
management hardly meeting up to discuss strategy for the company; and businesses failing to
link budgets with strategy which means there is a resource constraint. Thus, these issues are
handled and sorted out with balanced scorecard tool, since it allows management from regularly
keeping up to date with the performance and strategy execution of the company.
Talking about the use of a Balanced Scorecard in the telecom sector, especially in the cellular
sector of this industry; it is important to know what other researchers have worked upon.
Initially, the telecom sector was bombarded with a lot of foreign investment into the
manufacturing of multiple systems and a range of equipment for the telecom industry. However,
the industry felt that these range of systems would lead to inefficiencies; and Pakistan would
have to wok upon several different types of systems whereas most developed nations worked on
just two or less (Ali, 1994). Moreover, there has been a lot of research done upon the amount of
foreign direct investment in this particular sector. According to one research, market size,
literacy rate, competition, foreign trade and per capita income have a significant and positive
relationship with FDI in this sector; that is with the increase in these independent factors, the FDI
has also risen up (Hashim, Munir and Khan, n.d.). Moreover, on the other hand the impact of the
investment carried out by the telecom sector on the amount of foreign and domestic trade, have
also been studied. In this case, a positive and significant impact has been seen between the
independent variable of telecom investment and the dependent variables, domestic and foreign
trade. This reconfirms the idea that an increase in the telecom facilities, there has been a positive
shift in the trade activities (Hashim and Zaman, 2010).
Other than the effect the telecom industry has had on the economy of Pakistan, it has also
contributed a lot to the drastic change in the culture of the country. Most of the public is now
using the services of the cellular operators in Pakistan, and many are privy to the multiple ranges
of call and SMS packages available to the customers. Some authors also believe otherwise, that
is, in order for a telecom operator to do well in a country it is crucial that they know the culture
and societal values of that country before setting up their businesses in that area (Umar and
Tahir, 2007).
Most of the works on the concept of Balanced Scorecard agree on the fact that this tool assists
companies to get ahead of all the other players in the market, and also many international
companies that have implemented this tool throughout their organizations are reaping the
benefits of a successful company. Thus, the telecom companies, especially the cellular mobile
companies that are often seen in a headlock of intense competition, would benefit financially and
strategically if they implement the Balanced Scorecard in its true form.
4.0. Theoretical Framework
Independent Variables: the four variables are separate

Dependent Variable
Balanced Scorecard for the Telecom Sector

Customer Perspective
Financial Perspective
Learning and Growth Perspective

Internal Business Process Perspective
The variables that are taken for this research study are shown in the diagram above. The
independent variables are the four perspectives shown on the left side: Financial, Customer,
Internal Business Process and Learning and Growth. These perspectives basically relate to the
strategies used by a company; and are primarily concerned with the strategies used in these four
areas by the management. The dependent variable is the Balanced Scorecard for the telecom
sector that would be the outcome as a result of the analysis of the four perspectives. Since, the
Balanced Scorecard has been explained in detail in the previous sections, only the four
perspectives would be explained in detail in this section.
These perspectives basically are determined through a set of objectives and the drivers that
measure them. The objectives and the measures of the BSC should be interlinked and should be
“consistent” and “mutually reinforcing” (Kaplan and Norton, 1996). It is highly important that a
good BSC have a cause-and-effect relationship between the four perspectives: i.e. one objective
on one perspective would result in another objective on another perspective. Both the measures
and the performance drivers are equally significant to know; and moreover all the measures in a
BSC should eventually be linked to its effect on the financial outcome, since at the end of the
day it’s the numbers that count.
4.1. Financial
The financial perspective is one of the most important variables of a BSC, since this determines
the effect of the strategies on the bottom line. In case of successful implementation of a BSC, the
financial objectives of the company would indicate how effective the BSC has been for the
company. The financial objectives of different companies would differ, according to the type of
industry it is in, or at what stage of the industry life cycle the sector is at, or a million other
reasons. However, generically speaking, financial objectives of for-profit organizations are
mostly related to growth in profitability, which are in turn measured by drivers such as operating
income, return on capital, economic value added, rapid sales growth or generation of cash flows
(Kaplan and Norton, 1996). The financial objectives and measures should play a dual role
ideally: i.e. they serve the purpose of setting up performance standards for the company, and
define targets for the objectives and measure drivers for the other three perspectives of the BSC.
There are three stages of the industry life cycle that affect the financial perspective; since for
each stage there are a different set of objectives and measures to establish a financial Scorecard.
For each of these three strategies, there are three financial themes (See Exhibit 6). These stages
for the industry life cycle are:
* Growth- business at the early stage of their life cycle; higher investments in new projects and
products are expected here
* Sustain- reap profits from the already invested capital and earn high return on it
* Harvest- where company reaches maturity and harvests the investments and maximizes cash
flow to the corporation
The financial themes are:
* Revenue Growth & Mix- This refers to how the company can manage to increase its revenue
through strategies like new products or new customer segments
* Cost reduction/ productivity Improvement- refers to the company employing various cost
reducing techniques and trying to improve of their productivity
* Asset Utilization- refers to better utilizing the resources for other business units
4.2. Customer
In this, the business determines the customer and market segments which they will compete in,
and set targets for determining the objectives and measures related to customers: such as
customer loyalty, customer retention, customer profitability and market share. Moreover, the
customer perspective takes into account the value proposition that the company gives to its
customers, such as fast delivery or innovative products. The value proposition is critical for the
business success since it translates into customer loyalty, and hence higher revenue from repeat
customers.
4.3. Internal Business Process
This perspective deals with the business processes that the company must excel at in order to
give the value proposition to its customers at a financially feasible rate. It also assists in
implementing the strategies of the other perspectives of the company: like if customers prefer
fast delivery, then an improvement to the operating machines would enhance the ability to serve
the customers on-time, resulting in satisfied customers, better customer loyalty, and hence higher
operating income. Thus, the investment in the internal business processes brings positive results
in the customer and the financial perspectives respectively. This variable also contributes to
gaining good financial returns for the shareholders of the company, since bottom line increases.
Moreover, innovation is an integral part of this perspective; the reason being that for a long-term
financial success its mandatory that the business invest in new products, new technologies and
systems so to have a continuity in the vision of the company.
4.4. Learning & Growth
Investments in better technologies and systems bring us to investment over the human resource.
It is imperative that businesses give significance to the learning and growth of its employees,
since they are the ones running the business. It would do no good if a company has the latest
gadgetry and technologies but no one in the company knows how to benefit from them. Thus,
employee satisfaction, training and development, improving skill sets, enhancing information
systems capacities for quick decision making and developing better organizational procedures
like aligning employee’s incentives with performance, are some of the objectives for this
perspective.
5.0. Data Collection

The data collected for this research study is both primary and secondary. The secondary data is
collected from various reports by Pakistan Telecommunications Authority, newspaper articles,
and research studies by different authors. The primary data is collected through interviews with
employees of the four major players of the telecom sector in Pakistan: UFone, Telenor, Mobilink
and ZONG. The interview sessions were an hour long and the questions asked were based on the
Questionnaire attached in the Appendix. The information was primarily related to the strategies
that the companies have been implementing till date and the measures that are taken to observe
the affect of those strategies. The Questionnaire involved all the four perspectives of the
Balanced Scorecard and the relevant sub topics of these four variables. This information was
then utilized in building the Balanced Scorecard for each individual company. However, some
information has not been disclosed in the report on the request of the interviewees, and their
confidentiality has been respected.
6.0. Findings & Analysis

6.1. UFONE
Pak Telecom Mobile Limited (PTML), which is a subsidiary of Pakistan Telecommunication
Corporation Limited (PTCL), is operating under the brand name ‘Ufone’. It started its operation
in January 2001 and after the privatization of PTCL, it has become a part of Etisalat. In less than
a time period of a decade, Ufone has developed a customer base of over 2.57 million, having a
second largest market share. In 2007, Mr. Abdul Aziz joined Ufone as the president and CEO of
the company.
6.1.1. Company Introduction
Ufone provides network coverage in 10,000 locations and provides international roaming to
more than 260 live operators in around 150 countries. Apart from this, it provides coverage over
all the major highways like GT road, Motorway etc. Ufone’s mission statement is ‘To be the best
cellular option for U’; focusing on ‘U’, the customers. Therefore, for Ufone, the customer aspect
is important. In order to keep up with the pace of the changing environment, Ufone has been
accordingly changing its strategies to sustain its position in the market. In its strategy to revamp
the image among the customers, it changed the colors of its logo to green and orange that is more
appealing than before. It is their valued customers that bring success to the company which is
why it has focused on the tagline ‘Ufone, it’s all about you!’ Ufone’s marketing strategy involves
a humorous advertisement that has become its signature, but some may say it is unethical as it
directly hits its competitors. In its efforts to increase its out reach for a larger customer base and
provide an efficient customer service to its existing customers, Ufone has 200+ sales and
customer service centers across Pakistan. Ufone is also planning to expand its existing coverage
to new cities, enabling it to reach untapped markets.
Ufone offers both, prepaid and postpaid services, though its postpaid service is not as popular as
Mobilink “Indigo”. It has activated international roaming on all its prepaid services for free for
over 30 countries and is strategizing to cater for international roaming to some more countries.
Ufone is a leader in Value Added Service, and has been constantly introducing innovative
services to maintain its leadership position. Ufone offers its customers virtual private network,
which enable the customers to make their own private network within their Ufone network. And
like all cellular operators, Ufone also provides GPRS.
6.1.2. Company Interview
The major points that the company official relayed to the group were as follows:
* The telecom industry is almost at the mature stage; since there has been around 60%
penetration rate of the total population.
* Average Revenue per User (ARPU) would increase with the introduction of 3G technology
from a current of Rs.220 (Average Revenue per subscriber per month) to Rs. 1800 for 3G
technology.
* Customer retention is more important than customer acquisition, since the former is less costly
to the company; and with an industry churn of 24% it is important to retain the customers.
* Ufone focuses highly on the Value Added Services (VAS); and considers ‘Caller Back Ring
Tone (CRBT)’, Internet and Call Block VAS as the highest revenue providers.
* Costs to a telecom company consists of network costs (the basic towers), and further
enhancement technologies over the basic tower structure, such as for Utunes and CRBT.
* The telecom companies are offering to make a joint venture for Infrastructure Sharing, so to
minimize operating costs.
* The value proposition to a customer is that Ufone is the cheaper operator in the minds of the
consumers; this is further stressed by their commercials that are launched every two months on
average.
* Mobile Number Portability (MNP) provides one of the highest revenues.
* Surveys are collected regularly and a database is there to give real time data.
* 360 degree appraisal format is followed; and interdepartmental knowledge sharing is
encouraged
* Training is given importance and more training for the executive level than the operational
levels.
* Culture has changed from an earlier bureaucratic environment, to a very open culture, where
any employee can walk in the CEO’s office anytime.
6.1.3. Balanced Scorecard for Ufone
Based on the above information that the group gathered, a Balanced Scorecard is suggested for
the company. It involves the four perspectives, and the Strategy Map shows which parts of the
business are crucial to the company at present and how one set of Objective is linked to another.
It is important to remember that all the other perspectives should end up and link to the Financial
Perspective, since bottom line is the key ingredient to success. The Measures show how the
company would measure a certain objective, and what the targets are for the company. The
initiatives show what the company must do at the operational level in order to pursue the
strategic objectives.
Table 1: Balanced Scorecard for UFONE

| Strategy Map | Measures | Targets | Initiatives |
Financial | Increase Operating Profits
Increase Operating Revenue
Reduce Operating Costs
| -increase EBITDA-Reduce Operating Costs-Increase Average Revenue per User (ARPU) | -
Increase EBITDA by 2-3% per year-Reduce Operating costs by 3-4% per year | - Acquire Warid
as a competitor-Infrastructure/ Tower Sharing by company |
Customer | Reduce Customer churn
Increase Subscriber base
Highest VAS
Lower prices
| -% of customer retained-no. of subscribers-price index of industry-customer satisfaction with
current VAS | -customer retained more than industry churn of 24%-increase subscribers by 5-8%
every year-prices lower than competitors’-meet 99.99% (Etisalat’s target) | -Extra services like
“Broadback from dormancy”-more focus on prepaid and VAS-lower prices of SMS and Voice
Call-Customer surveys: preferably live reporting feedback |
Internal Business Process | Enhancements on current towers
Reduce network/site costs
Improve Marketing
| -% of operating costs incurred by sites/network-Revenue from enhancements-% of subscribers
added to new marketing campaign | - reduce from current 30% network costs incurred in
operating costs-reduce CAPEX, but maintain revenue levels-change subscribers by 100%
compared to last year | -Infrastructure sharing/ tower and site sharing-revenue sharing with
suppliers for enhancements-new marketing campaigns every two weeks on average |
Learning & Growth | Training for Skills Development
Improve Use of Current Technology/Systems
| -No. of new uses of current technology/ systems-No. of trainings per year | -Meetings twice a
year for discussions-4 trainings : 3 minor trainings and 1 major training in a year | -Innovation
meetings every year: Quality circles, and Ideas Building-Employee Surveys/ Appraisals showing
training effectiveness |
6.2. TELENOR
Telenor is one of the leading companies of Norway and Telenor Pakistan is a wholly owned
subsidiary of Telenor Norway. It started its business in Pakistan in March 2005 when the telecom
industry was at the peak of high competition & took very little time to grow in the market .
Today it has a market share of 19.5%, standing at almost the same rank as Ufone next to
Mobilink. By providing different services to its customers at high quality; it has progressed
rapidly and has become the fastest growing mobile network in the country. Today it has a
network of 23 company owned sales and service centers, more than 200 franchisees and 100,000
retail outlets.
Telenor’s total number of subscribers according to the 1st quarter of 2008 is 15.3 million, which
stood at 3rd in ranking, and it has penetrated in market with well organized strategies. Its
coverage extends to 1252 cities and villages of Pakistan.
Telenor’s pricing policy is influenced by five main factors indicated below:
* Market survival
* Sales growth
* Market position
* Maximization of profits
* Maintenance of product quality
Telenor follows a high price strategy for some of its products but at certain level a penetration
price strategy is also adopted to stimulate sales growth, It also follows adaption policy where it
allows local subsidiary or partner to set a price which is considered to be most suitable for local
conditions.
Channels of distribution adopted by Telenor follow the cultural traditions of the target market.
It’s is using different distribution channels which vary from market to market. As Telenor is
involved in the telecommunication business so usually it does not involve in physical distribution
but it has the partnership strategy and on the local level shops and customer care centers are used
as a place strategy. At the beginning of its operations in Pakistan, Telenor aimed to reach out to
people living in small towns and the rural areas of Pakistan. Soon it gained the support of people
living in those neglected areas and it became the first Mobile Operator to cover such areas. This
strategy has led it to quickly gain customer support over the country. It also has a strategic
alliance with Nokia Siemens Networks for expansion in Pakistan.
Telenor’s product line at the moment comprise of eight prepaid packages and four postpaid
packages.
Prepaid Packages:
* Talkshalk A1
* Talkshalk Har Second
* Talkshalk Har Minute
* Talkshalk 30 Second
* Talkshawk 63
* djuice
* Djuice Jaagtay Raho
* Djuice Din Raat
Postpaid Packages:
* Persona EASY
* Persona SIMPLE
* Persona FREE
* Persona Karoobar (Aimed at Business owners)
* The main financial objective is to increase the Shareholder Value since this is a Foreign Direct
Investment; and with decreasing operating margins everyday, it has become more important to
increase shareholder wealth
* Some companies might be opposed to the introduction of 3G technology, since most of them
have their own WiMax Technology; however, the payback is very less on a 3G phone, since it si
very expensive and there is a very minute segment of customers
* The Pricing Strategy is to provide the best value to the customer but not decrease their prices to
a very minimum unless absolutely required to
* The telecom sector faces high fixed costs on towers, electricity and fuel, and these can become
sunk costs if the payback is not high
* Customer Retention is more important than Customer acquisition; thus focus on Customer
Churn is an important Customer Objective
* Value Proposition is High coverage and good quality
* There is a high degree of focus on the Learning and Growth perspective in Telenor, with
empowerment given to operational level employees. Moreover there is high focus on the
Training and Development aspect, since every individual has a detailed Individual Development
Plan.
* Benchmarking is done for every practice, and the benchmark companies can be local or
Global.
6.2.3. Balanced Scorecard for Telenor
strategic objectives.
Table 2: Balanced Scorecard for Telenor
Financial | Increase Shareholder Value
Increase Revenue
| -increase EBITDA and EPS-Reduce Operating Costs-Increase Average Revenue per User
(ARPU) | - Increase EBITDA by 4% per year -Reduce Operating costs by 2% per year | -
Increase dividends-reduce CAPEX-Introduce their WiMax broadband and increase extra
revenues |
Customer | Improve Brand Image
Reduce Customer churn
Increase diversification
| -% of customer retained-Market Share or Brand awareness score -No. of products launched |
-customer retained more than industry churn of 24%-Market share increased from current of
23% -a new product launched every 2weeks | -More focus on the coverage aspect; esp. rural
areas-Bundle offers increased; Customer recall and satisfaction surveys -provide bonus for
employees for implemented ideas |
Internal Business Process | Enhance distribution channel(retailers)
Improve Marketing
Reduce network/site costs
| -% of operating costs incurred by sites/network-% Revenue from Retailers-% of subscribers
added to new marketing campaign | - reduce from current 30% network costs incurred in
operating costs-3%; since relatively new-change subscribers by 100% compared to last year |
-Infrastructure sharing/ tower and site sharing-revenue sharing with retailers for VAS;
commissions and bonus given-new marketing campaigns |
Learning & Growth | Improve Use of Current Technology/Systems/Innovation
Training for Skills Development
| -No. of new ideas generated-No. of trainings per year | -Meetings every six months-on-a-need-
basis | -Innovation meetings every year: Quality circles, and Ideas Building;Global services team
and SEED competition-Employee Surveys/ Appraisals showing training effectiveness-Individual
Development Plan |
6.3. MOBILINK
Mobilink being the pioneer of introducing cellular networks in Pakistan started its operations in
1994. It is a subsidiary of the Orascom Telecom Holding, which is the leading cellular and
Blackberry service provider. Orascom telecom also operates in other emerging countries like
Egypt, Tunisia, Bangladesh and Zimbabwe as one of the leading mobile telecommunications
company.
In April 2001, OTH took over management control of the company & today it covers almost
every city of Pakistan. As the market leader, Mobilink serves more than 30.9 million subscribers;
representing a market share of 39.2%.It also has the highest penetration level in terms of the
cities and villages covered and the cells sites erected by the cellular companies in Pakistan.
Mobilink offers both Pre-paid (Jazz) and Post-paid (Indigo) services .These are products which
are catering to different market segments. Indigo is targeted at the upper segment & Jazz at the
middle segment. Mobilink aims to have the largest customer base and therefore, provides
services in maximum locations. Different promotion strategies are being used like traditional
ways of promotion as well as others to reach out to as many customers as possible. Mobilink has
been following a differentiation strategy ever since it started. Their differentiation strategy is
usually targeted at people who are not particularly concerned with price, so it can be quite
profitable e.g. indigo and blackberry are relatively expensive packages; blackberry is mainly
targeted at the business class who can afford it. In this way, the revenue generation remains high.
Mobilink does not follow a low cost strategy. Since it first started its operations, it has been
focusing its products on the upper strata of the society. That is why its rates are higher than its
competitors, Ufone, Warid, Telenor, etc.
Mobilink has always made successful attempts to distinguish their products or services from
others in the industry. They make their product unique through unique advertising, distinctive
product features and exceptional services.
* Voice is mature technology, but other products are still changing and have not reached mature
* It is about to become a commodity
* The company pays dividends to shareholders, unless there is s huge CAPEX
* The pricing strategy followed is to stabilize the price, and with mutual understanding between
the different operators for stabilization of price, in order to avoid destructive competition
* Value Proposition is High coverage; and there still is a lot of population that have not been
reached
* Customer Surveys are not very regular and they rely on Focus Groups.
* Trainings are done on a need basis, and the supervisor take the initiative that the sub ordinate
requires training for a particular aspect
6.3.3. Balanced Scorecard for Mobilink
strategic objectives
Table 3: Balanced Scorecard for Mobilink

Inc. Asset Utilization
Increase Revenue
| -ROCE-Reduce Operating Costs-Increase Average Revenue per User (ARPU)-Utilization Rate |
- | - Increase Dividends more than the current1 share for every 36 shares-Infrastructure Sharing-
better resource allocation |
Improve Quality Service
Find New Segments
| -% of customer satisfied from quality-Market Share or Brand awareness score -%of revenue
from new market segments | - | - Customer surveys: preferably live reporting feedback -Bundle
offers increased; Customer recall and satisfaction surveys -marketing program for segments in
rural areas |
Improve Marketing
Reduce Variable Costs
| -% of revenue from enhancements-% of costs per call (interconnect costs,govt.charges,sim
activation costs)-% of subscribers added to new marketing campaign | - -3%; since relatively
new-change subscribers by 100% compared to last year | - revenue sharing with suppliers for
enhancements-improve quality control and focus on customer retention-new marketing
campaigns |
| -No. of new ideas generated-No. of trainings per employee per year-hours in strategic skills
training | -Meetings every six months-on-a-need-basis; see turnover rate | -Innovation meetings
every year: Quality circles, and Ideas brainstorming sessions-Employee Surveys/ Appraisals
showing training effectiveness-Competency Profiling |
6.4. WARID
Warid Telecom started its operations in Pakistan in May 2005. Warid is a result of joint venture
between SingTel Group and Abu Dhabi Group. SingTel is a Singaporean company, having
operating experience of more than 128 year and has played a major role in development of
communication system in the region. SingTel has been the largest satellite operator in Asia
Pacific. It has major investments in this region, India, Bangladesh, Thailand, Philippines,
Australia, Indonesia and Pakistan and has over 172 million mobile customers.
Warid is backed by another very strong business tycoon, Abu Dhabi Group, offering financial
resources and management expertise. It has a diversified business portfolio and hence of the
largest business groups in the Middle East and the largest foreign investor in Pakistan. Abu
Dhabi formed a strategic alliance with Singapore Telecom. Being part of the Warid’s strategy to
grow and increase its market share, SingTel acquired 30% of the equity. The chairman of Warid
Telecom is Sheikh Nahayan Mubarak Al Nahayan and Chief Executive Officer is Mr. Muneer
Farooqui. Warid gives coverage to around 500 cities, rural areas and road length area of 12500
KM across Pakistan.
Holding a fourth largest market share in the industry, Warid is constantly striving to improve and
adopt strategies that will enable it to attract a larger customer base. In its effort to target youth,
Warid has sponsored LUMS sports society for the year 2010-11. In 2009, Warid launched
GLOW, a prepaid brand, for the youth of Pakistan. With its remarkable success, it has now
brought an advanced version, GLOW 2.0. Warid is the second mobile operator, after Telenor, to
offer EDGE apart from GPRS. Warid has also signed MoU (Memorandum of Understanding)
with PIA, which will enable PIA to use the voice and data communication service of Warid.
Warid offer prepaid and postpaid services; prepaid is marketed under the brand name Zem and
postpaid under the brand Zahi. International roaming is available on both the services, though for
prepaid it if offered for selected countries. To keep abreast with its competitors, Warid offers
different packages to customers that are related to entertainment, live sports update and news etc.
* Telecom sector is currently at the maturity stage and has become a commodity.
* Warid thinks that its customers are not ready for 3G technology and it is an expensive
technology to purchase
* Warid is focusing on retaining its existing customer base; but since it has a 19% market share,
it still has a room to further capture new customers. Warid has a strongest hold in Lahore, due to
its headquarters being there and they sponsor a large number of public events.
* Fixed cost of infrastructure comprises major part of their cost and can result into sunk cost as
well if the customer base in a certain area is not strong. Warid currently does not share its towers
with others for cost reduction
* Their value proposition is superior GPRS; unlimited internet download for postpaid users;
friends & family package can have upto10 members which is higher than offered by the
competitors; offer free call on weekends and free MMS package for the customer.
* They do not follow double taxation strategy
* Customer surveys are conducted throughout the year and feedback from customers are also
taken at point of sale and customer support centers.
* The organization structure of Warid is function based, compared to brand based and the
employee of the same designation as that of its competitors gets a higher pay.
* Trainings are conducted on monthly basis according to the needs of employees.
* Rewards are performance based.
Inc. Asset Utilization
Increase Revenue
| -ROCE-Reduce Operating Costs-Increase Average Revenue per User (ARPU)-Utilization Rate |
- Not given by the company | - Increase Dividends -Infrastructure Sharing-better resource
allocation |
Lowest Prices
Find New Segments/cities
| -% of customer satisfied from low prices-Market Share or Brand awareness score -%of revenue
from new market segments | -Not Given by the company | - Customer surveys: preferably live
reporting feedback -Customer recall and satisfaction surveys -marketing program for segments in
other cities than Lahore |
Infrastructure Sharing
Improve Marketing
| -% of revenue from enhancements-% of costs from towers-% of subscribers added to new
marketing campaign | -change subscribers by 100% compared to last year | - Share towers with
other operators-improve quality control and focus on customer retention-new marketing
campaigns; and more sponsor events in other cities than Lahore |
| -No. of new ideas generated-No. of trainings per employee per year-hours in strategic skills
training | -Meetings every six months-on-a-need-basis; see turnover rate | -Innovation meetings
every year: Quality circles, and Ideas brainstorming sessions-Employee Surveys/ Appraisals
showing training effectiveness-Competency Profiling |
6.4.3. Balanced Scorecard for Warid
Table 4: Balanced Scorecard for Warid
6.5. TELECOM INDUSTRY
As already mentioned in the first section that the telecom industry of Pakistan has outperformed
many sectors in terms of revenue generation and attraction to Foreign Direct Investment; this
section would elaborate on the latest happenings in this industry and would analyze the affect
such events would have on the overall economy.
6.5.1. Industry Stage of Life Cycle
Telecom sector is experiencing a stabilized growth, and has almost reached the maturity stage.
This stage allows the operators to ‘harvest’ their invested capital, and just maintain their present
level of capacity and capabilities, with minor additions to the almost mature technology. The
GSM technology is in the mature stage, and VOICE has reached saturation and no new change in
this technology is expected soon. However, many operators believe that there still is room for
further changes in the other products such as Value Added Services, Caller back Ring Tone,
internet facilities and such. However, these services do not require a huge capital investment, but
are enhancements over the already erect tower structures of the companies. The main measures
of strategic objectives for the telecom operators are Customer Retention which would lead to
high operating cash flows and revenue, with as little working capital requirements as possible.
This means that companies in this sector are now striving towards lowering their operating costs
as much as possible and trying to maintain their Average Revenue Per User(ARPU), if not
increase it.
6.5.2. Financial Perspective
Again if Exhibit 6 is seen, and the types of strategies concerning the Mature/Harvest Business
Unit Strategy, then it is clear that theory suggests that the strategies for Revenue and Growth
Mix should be “to see the customer and product line profitability”. This is confirmed by the
research conducted through interviews, in which the company officials agreed that in spite of
multiple products being launched often, only a few are profitable and they remain. Moreover,
stabilizing the ARPU is now a great concern.
Furthermore, the Cost Reduction strategy involves lowering the “unit cost”, which again the
companies are trying to accomplish, i.e. lower the variable cost. An example of this is the
Infrastructure Sharing or the Site sharing by the companies. Moreover, Telenor has invested in
its solar power network to increase its cost efficiency through the Government’s Universal
Service Fund, and to increase its customer base. In addition to this, the company would cut down
on its fuel power which is a big fixed cost for telecom operators (brecorder, 2010). Moreover, it
is expected that the introduction of Value Added Tax(VAT) would further lower down the cost
of doing business since the current rate of 19% would come down to 15%, and hence boost
economy(Amin, 2010).
The overall financial goal is simple: increase Shareholder’s Wealth. This is because investments
are from international companies that have selected Pakistan for reaping profits from this region.
The total investment in this sector reached $ 970 Million at the end of 2009; with Telenor
leading in investing to reduce its operational costs. However, due to the intense competition and
price wars raging between the operators, there is high amount of concern especially the affect
that this would have on the company’s ARPU levels and the economy of the country. Destructive
pricing strategy is detrimental to the overall sector, and many companies are against this
(Quarterly Report PTA, 2009). The average revenue generated in the 2009 was Rs. 55,315
million; and Mobilink gave the highest revenue with Rs. 103 Billion in the FY 2009.
As of December 2009, the Market Share of each company is shown in Exhibit 7. Mobilink leads
the market with a market share of 32%, followed by Telenor with 23% and Ufone, 19%. Even
though Mobilink is clearly the market leader due to its First Mover Advantage, however, Telenor
has shown a higher increase in its subscriber base, and is leading in its expansion to Azad Jammu
Kashmir.
6.5.3. Customer Perspective
The focus on the customer is high in this industry, since with intense rivalry between
competitors, the customer is the key element to success. The companies in the industry focus
more on customer retention because it is less expensive to the company, compared to customer
acquisition. Therefore, the operators launch various different strategies for attracting dormant
and active customers, e.g. Ufone’s Broadback from Dormancy Programme. Other than this,
various strategies are implemented for certain occasions such as Eid Days and Independence
Day. Customers in this sector are not brand loyal, especially for pre-paid packages and are
frequent switchers. This is one of the major problems faced by telecom companies since
switching costs are pretty high for this industry. There are numerous bundle offers and packages
from every operator, and there is very little differentiation apparent in the sector. The operators
are now concentrating more on providing various VAS to the customers, and offers such as free
calls on Friends and Family (FnF) numbers. Moreover, CBRT and MNP are one of the highest
revenue generators for these telecom companies. Most of the operators are now working on the
low-cost strategy; and some of them in certain segments of the target market have cut throat
competition with the price decreasing every day.
Other than this, some operators like Telenor and Mobilink have introduced services like Easy
paisa and Genie, which allows customers to pay their utility bills easily; and this new Mobile
banking technology has earned them a lot of revenues. For the success of these kind of strategies,
the companies need supply chain support as well, and hence Telenor has bought Tameer Bank to
assist in the Easy Paisa. The highest subscribers are of Mobilink with 30 Million, followed by
Telenor, 22 Million (See Exhibit 8). Therefore, at the moment these two are leading, and the net
additions in Telenor for the year 2009 have been the highest, and its market share have been
increasing over the years.
6.5.4. Internal Business Process Perspective
The generic structure for any telecom company includes Tower Infrastructure, which are leased
by the companies. This infrastructure is normally a $2-3 Billion investment, and the largest
number of towers of any operator provides that company the highest coverage, and more
revenues. A lot of regions in Pakistan have still not been covered by the telecom operators due to
difficult geographical terrains and bad transport facility, therefore there still is potential left in
certain rural areas. The Internal Business Processes that are crucial for a telecom company are
real time data availability and information systems. These companies are employing Business
Intelligence Softwares such as MicroStrategy that have analysis tools and which enable the
managers to get real time or current data in the form of graphs, figures, charts etc. Moreover, as
already mentioned companies are now using strategies such as Infrastructure Sharing to reduce
their costs, and increase efficiency. Along with this, telecom companies also use enhancements
over the existing towers for new products and services such as CBRT and EDGE technology.
Ufone, for instance, shares revenue with the suppliers of the equipment for the enhancements.
Most of the suppliers are common for these companies such as ZTE, Huawie, Alcatel Lucent,
Nokia Siemens etc. However,
fone has a primary supplier of all parts, and has a back up vendor in case of any problem with the
main supplier. As contrary to this, other operators like Telenor and Mobilink have multiple
suppliers and they strive on having the best products from their supplier based on the amount of
competition between the sup
pliers.
6.5.5. Learning & Growth Perspective
This dimension includes strategies related to improving the skill set and performance of the
workforce. For this purpose, objectives such as Trainings, Quality Circles, Employee Motivation
and Satisfaction elements, Team work, Leadership qualities, Culture change, Empowerment and
Innovation etc make part of this perspective. However, this dimension differs from company to
company and hence, cannot be generalized for the whole sector. However, at present the
Telecom sector is considered to be one of the most preferred employers, due to multiple reasons
such as high compensation packages and good fringe benefits, along with enhanced trainings for
employees of all levels which further improve the skills of an employee. Currently, Telenor is
leading in its strategy of focusing a lot on the Training and Development of its workforce, and
has also been given the Award for ‘Most Preferred Employer’. Their Individual Development
Plan for each employee is pretty thorough, using a software, and keeps an employee on track of
his performance. Moreover, Telenor also has comprehensive method for encouraging Innovation;
like they send their employees with best ideas to a completion to headquarters in Norway; they
have formal meetings every 6 months for brainstorming, and also have informal online forum for
discussion of new ideas. Relatively, other organizations are not focusing that much on the
trainings or innovation; and perhaps that is the reason Telenor has had an edge in bringing Easy
Paisa to the platform.
The Reward system also varies from employer to employer, and different variables play such as
lobbying and prejudice among employees that lead to different compensation packages.
Moreover, hierarchies and Cultures vary as well; like Mobilink has a more bureaucratic
hierarchy than Telenor and Ufone. Warid, again does not have brand managers, but mangers for
similar work activities, such as Executive Marketing Consultant.
6.5.6. Balanced Scorecard for the Telecom Industry
Despite forming Balanced Scorecards for every company in the telecom sector, we now proceed
to creating a basic generic framework for the telecom sector. This would serve as guidance for
any new entrant to the telecom sector in Pakistan, or abroad; keeping in view that the industry
outlook is more or less the same. However, only the Strategic Map having the Strategic
Objectives and Measures are shown in the diagram, since Targets and Initiatives vary with every
company.
The table shows how each objective is linked to the preceding objective, and finally it is linked
to the financial objectives. For the financial, as mentioned increasing Shareholder Wealth is the
bottom line; and to lead that, it is important to increase the revenue and decrease cost or increase
asset utilization. To increase revenue, it is important to retain current customers, and for cost
reduction to reduce customer acquisition costs. Measures are given along with each objective,
and is highlighted with the same color.
The customer value proposition is the key element of the Customer Perspective for any company
to succeed here. This is then broken down into other elements which make up the value
proposition of a telecom company; such as Price is significant for the telecom company in
Pakistani market. The Internal Business Process again consists of Customer Intimacy,
Infrastructure Sharing, which is important for the telecom sector to reduce the operating costs,
and hence better utilize its assets.
Moreover, the Learning & Growth perspective includes innovation, since there are various other
uses of the technology used by telecom sector; and training & development is again important to
increase employee satisfaction and performance; and which will further lead to a better Internal
Business Process.
| Strategy Map and Objectives | Measures |
Financial | Increase Shareholder Wealth
Increase Revenue
Increase Asset Utilization
Decrease Operating Cost
Customer retention
Customer acquisition
| -Dividend growth rate-EPS growth rate-Market Share-EBITDA-revenue from main products-
revenue from VAS, Broadband or new products-Variable costs/Salaries/Customer Acquisition
costs-Asset Utilization rate |
Customer | Customer Value Proposition
Price
Quality
Coverage
VAS
Brand Image
| -% of customer Satisfied-Customer retention rate-customer churn rate-% of customers adding
VAS-Brand image Score |
Internal Business Process | Marketing Campaign
Infrastructure/Site Sharing
Customer Intimacy
| -%of new customers
-% of operating costs incurred by network/site
-CRM and Customer Support centre
|
Learning & Growth | Innovation
Employee Satisfaction
Training & Development
| -Employee suggestions/ month
-% Customer Suggestions Implemented
% New Products Vs. Overall Products
-% of management achieving MBO’s

-No. of trainings per year per employee
-% of employees satisfied
-Turnover/ Absenteeism rate
|
7.0. Recommendations
* The foremost recommendation of course is highlighted throughout the research study, and
concludes that telecom sector, in order to increase its efficiency and performance should
implement the Balanced Scorecard tool throughout their organization.
* It is imperative that the management properly translates the strategies into the objectives: this
means that the Balanced Scorecard can work well only if the strategies are correct. In case of
improper strategies, the objectives would lead to wrong results.
* Along with a Balanced Scorecard, a corporate dashboard should be implemented, which is
complete database of analysis tools that show the performance levels in the form of tables and
figures that are easy to comprehend.
* The company should give different weights to different perspectives, depending on their
priority levels: i.e. if a company wants to give high weight to Customer Perspective, then some
of the Learning & Growth Perspective has to be foregone, due to limited resources.
* This tool might confront resistance from employees; however, the management should train the
employees and impart that the tool would increase performance levels.
* Appraisals and bonuses should be aligned with the performance of employees as shown in the
dashboard; this would reduce factors such as supervisor’s prejudice, and increase transparency,
leading to employee motivation and satisfaction
* Feedback is an important integral part of the Balanced Scorecard, and thus, there should be a
top down and bottom up approach of ideas and strategy implementation in the organization.
8.0. Conclusion
The research and analysis concludes that one of the best and way forward for the telecom
companies of Pakistan to succeed and raise their performance levels is through the
implementation of the Balanced Scorecard. This tool will not only help managers keep track of
their goals and objectives but also increase profitability by translating their strategies into
measurable and achievable goals that are also known by the operational level managers. The
Balanced Scorecard may not be well known at present in Pakistan, but some corporations have
already started looking into this tool that has gripped the West with interest. The tool would
allow companies, to take the whole organization together, and not one department at a time.
The strategies at the top cascade down to the operational level and are translated into actionable
objectives. Various measures ensure that the workforce knows how far their actual results are
from the expected results, and hence proper feedback keeps them on track. The telecom sector
reaching the mature stage, would require this tool since they need to decrease their operational
costs and improve efficiency and performance, which can be achieved through a Balanced
Scorecard.
9.0 Limitations
There were a number of limitations that hindered the progress of the research. Foremost was the
limited amount of information available on this topic, especially for the telecom sector. In
Pakistan, there has not been any research done on this topic whatsoever, thus, finding primary
help was another impediment. Moreover, the primary data consisted of interviews with limited
number of employees of a company, maximum two employees, which again made it difficult to
get complete access to all the strategies used by these companies. Along with this, the companies
also were hesitant in sharing information related to some of their strategies and targets for the
year. Most of the employees we interviewed worked at the operational level therefore most of
them were not aware of the concept of the balanced score card. Timely access to information was
another major issue as the officials of different companies would take time in replying to our
queries.
References
(2010). Telenor completes largest solar power. Business Recorder, July 06,Islamabad.
Ali I. (1994). Structure of the Telecommunications Sector in Pakistan. CMER Working Paper
No. 94-02, Lahore University of Management Sciences, Lahore.
Amin, T. (2010). VAT implementation to boost telecom sector: Khosa. Business
Recorder, June 11, Islamabad
Annual Report, 2009. [On-line] Available www.pta.gov.pk
Balanced Scorecard and Strategy Map at Mobil North America Marketing and Refining
(NAM&R). [On-line] Available http://www.executivemanagementskills.com/pdf/mobil.pdf
Beiman, G. L., and Johnson, C. C., (n.d.) Balanced Scorecard in Developed and Transitional
Economies
Brown, M. G. (2000). Winning Score: How to Design and Implement Organizational Scorecards.
New York: Productivity Press.
Cobbold, I. (2002). Classification of Balanced Scorecards Based on Their Intended Use. Paper
presented at PMA Conference, Boston, USA.
Gavin Lawrie G. and Cobbold I. Development of the 3rd Generation Balanced Scorecard, Part I.
2GC Active Management.
Gupta, P. (2004). Six Sigma Business Scorecard: Creating a Comprehensive Corporate
Performance Measurement System. U.S.A: The McGraw-Hill Companies.
Hannabarger, C., Buchman, R., and Economy, P. (2007). Balanced Scorecard Strategy for
Dummies. Indianapolis: Wiley Publishing Inc.
Hashim S. and Khair-Uz-Zaman. (2010). A Comparative Study on the Effect of
Telecommunication Sector Investment on Foreign and Domestic Trade in Pakistan. African
Journal of Business Management, Vol. 4 (4): 357-361.
Hashim S., Munir A. and Khan A. (n.d.). Foreign Direct Investment in Telecommunication
Sector of Pakistan: An Empirical Analysis. Journal of Managerial Sciences, 3 (1).
http://hbr.org/1993/09/putting-the-balanced-scorecard-to-work/ar/1
Johnson S. (2003). EFQM and Balanced Scorecard for Improving Organizational Performance.
Inland Revenue.
Kaplan R. S. and Norton D. P. (1993). Putting the Balanced Scorecard to Work. Harvard
Business Review. [On-line] Available
Kaplan R. S. and Norton D. P. (2007). Using the Balanced Scorecard as a Strategic Management
System. Harvard Business Review. [On-line] Available http://hbr.org/2007/07/using-the-
balanced-scorecard-as-a-strategic-management-system/ar/1
Kaplan, R. S. and Norton, D. P. (1996b). Using the Balanced Scorecard as a Strategic
Management System. Harvard Business Review.
Kaplan, R. S., and Norton, D. P. (1996a). The Balanced Scorecard: Translating Strategy into
Action. U.S.A: Harvard College Press.
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Scorecard Companies Thrive in the New Business Environment. U.S.A: Harvard Business
School Press.
Kaplan, R. S., and Norton, D. P. (2004). Strategy Maps: Converting Intangible Assets to
Tangible Outcomes. Massachusetts: Harvard Business School Publishing.
Keyes, J. (2005). Implementing the IT Balanced Scorecard: Aligning IT with Corporate Strategy.
U.S.A: Taylor and Francis Group.
Little, A., D. (n. d.). Strategic Planning System: Guidelines for Preparing Strategic Plans for
Individual Business Units. Arthur D. Little International Inc.
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United Kingdom: Cambridge University Press.
Miyake, D. (2002). Implementing Strategy with the Balanced Scorecard: An Introduction to
the Strategy-Focused Organization. Information Management Magazine.
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Using Balanced Scorecard. World Academy of Science, Engineering and Technology.
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Maintaining Results. New Jersey: John Wiley & Sons Inc.
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www.mobilinkgsm.com
www.pta.gov.pk
www.telenor.com.pk
www.ufone.com
www.waridtel.com
Appendix
Exhibit 1: The BSC as a Strategic Framework for Action
Source: Kaplan, R., S. and Norton, D., P. (1996).The Balanced Scorecard: translating strategy
into action; pp.11.
Exhibit 2: The BSC provides a Framework to translate a Strategy into Operational Terms
into action; pp.9.
Exhibit 3: Teledensity of WLL/ Cellular/ Fixed Sector
Source: Pakistan Telecommunications Authority
Exhibit 4: Cellular Subscribers Growth
Exhibit 5: Foreign Direct Investment in Telecom Sector
Exhibit 6: Financial Themes

into action; pp.52.
Exhibit 7: Market Share of Telecom Operators
Source: Pakistan Telecommunications Authority.
Exhibit 8: Subscriber Mix (Dec 2009)

Source: Pakistan Telecommunications Authority.
Exhibit 9: Questionnaire for Interview
FINANCIAL
* Stages of business cycle probable for telecom: sustain or mature stage? In sustain, attract
investment but are required to earn excellent ROCE; maintain their existing market share,
remove bottlenecks, expand capacity, and continuous improvement. Financial perspective is
Profitability: measures include operating income, increase income generated from invested
capital. ROCE, ROI and EVA are some financial measures. Investment projects would be
analyzed through discounted cash flow analysis and capital budgeting etc.
* The mature stage asks for “harvest” minimal investment and just maintain the present capacity
and capabilities: measures are high operating cash flows and low working capital requirements
* Would impact of 3G technology shift the telecom sector into the growth stage?
* REVENUE MIX: New products? New applications for the existing products? New customers
and markets? New product and service mix? How do you measure these? In case of new product
and service mix, if the strategy is low-cost, then the measure the growth of sales in the targeted
segments, and see how much customers have to attracted away from competitors? Pricing
strategy would be price per call/ sms etc to see the trends in the pricing strategy.
* Cost reduction: For the sustain stage, reduce per unit cost of producing the output? Activity-
based-process oriented costing system required, since activities make up one unit of output??
Improving the Channel mix: reducing the transaction costs of interacting with the customers, e.g.
low cost electronic channels, why not shift from service outlets to internet? Reduction of
operating expenses: Is it aligned with the response from customers or the benefit that the
employees are giving to the company?
* Targets below which statistics appear horrifying???
CUSTOMER
* Value proposition? ( Customer intimacy; long term relationship)
* Customer satisfaction: percentage of customers satisfied with timeliness/ quality/ network
coverage/ service of call operators/ amount of complaints??
* Customer loyalty/ Customer acquisition??
* Customer surveys conducted when? Are they reliable?
INTERNAL BUSINESS PROCESS

* Effective Quality Control Systems: number of complaints/ how many of them solved/ is the
rate of complaints reducing? Information systems: databases, are they employee reader friendly?
Measures: Number of unit products produced? Minimize variable cost per unit?
* Supplier management? Do you have any alternative procurement suppliers available? How is
procurement done?
LEARNING & GROWTH

* Quality workforce? Training and development? Employee Satisfaction? Work Environment?
Teams? Leadership? Culture? Values? Empowerment? Which is more effective?
* Innovation? How many times a year do you have innovative ideas meetings? Quality circles:
how many times a year do the management come together for improvements in the system?
What is your current measure for innovation? Revenue from new products? Number of new
products?
* Do you benchmark any company?
* FEEDBACK systems? From employees? Is it anonymous? How do the top management give
feedback to the employees?
* Reward Systems? Are they performance based? Seniority Based?
• back
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Balanced Scorecard For Telecoms in Pakistan

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3.0. Literature Review

4.0. Theoretical Framework

Independent Variables: the four variables are separate

Balanced Scorecard for the Telecom Sector

Learning and Growth Perspective

5.0. Data Collection

6.0. Findings & Analysis

Table 1: Balanced Scorecard for UFONE

Table 3: Balanced Scorecard for Mobilink

-% of management achieving MBO’s

Exhibit 3: Teledensity of WLL/ Cellular/ Fixed Sector

Source: Pakistan Telecommunications Authority

Exhibit 4: Cellular Subscribers Growth

Source: Pakistan Telecommunications Authority

Exhibit 5: Foreign Direct Investment in Telecom Sector

Source: Pakistan Telecommunications Authority

Exhibit 6: Financial Themes

Exhibit 7: Market Share of Telecom Operators

Source: Pakistan Telecommunications Authority.

Exhibit 8: Subscriber Mix (Dec 2009)

Exhibit 9: Questionnaire for Interview

INTERNAL BUSINESS PROCESS

LEARNING & GROWTH

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