CHAPTER- 1 INTRODUCTION

1.1 OriginAs per the course requirement of Business Environment, we need to do a term paper on the topic selected by our honorable faculty, Kohinur Akhter. We have been assignment industry analysis where we have selected the industry of telecommunication. The report is the elaboration of external and internal subject that we include decision among our group members. We believe that industry analysis is a tool that facilitates a company's understanding of its position relative to other companies that produce similar products or services. 1.2 ObjectiveThe objective of the report is to find out and analyze the forces at work in the overall industry and it is an important component of effective strategic planning. Moreover, we will be focusing and elaborating on: Porters Five Forces Model SWOT analysis of Telecommunication Industry PEST analysis

1.3 MethodologyFor this study mainly secondary data and information have been used. In some cases primary information has been used to clarify the decision of innovative side. Secondary data and information have been collected from internet, newspaper, existing literature, magazines etc. Personal observation has been a key source for data validity and reliability. Sometimes personal interview has been conducted with various employees of different mobile phone companies

1.4 LimitationSome of the constraints we have faced during doing the report are: Lack of common free time of all the group members. Some information may be too confidential for the company for us to collect. Paralysis through analysis syndrome. Many information may be unrelated with the topic so we have to do further assessment on what to keep in the term paper etc.

CHAPTER-2 INDUSTRY ANALYSIS

2.1 Threats of entryIn most markets, any company should be able to enter and exit a market and profits should usually be steady. But in reality, some markets have the ability to inhibit new companies from entering a market and protect existing companies. These are called barriers to entry. We can analysis the barrier to entry of the telecommunication industry on the basis of four factors: 2.1.1 Economies of scaleEconomies of scale are an economic term describing a business model where the longrun average cost curve declines as production increases. To service a single phone in a town costs a huge amount of money. Towers must be constructed, and other infrastructure purchased to build up networks and provide facility. When the company is servicing a thousand phones in the country, however, the cost per phone of the entire infrastructure is significantly lowered as the lines are already laid and the infrastructure is set, so it makes sense for the telecoms company to have all of its lines/infrastructure to be used fully, rather than lay there redundant. As a result, we can see that, these high levels of economies of scale in the mobile phone industry have dampened competition in the market.

2.1.2 Product differentiationBangladesh has currently six mobile phone operators in Mobile Telecommunication Industry. Though the industry is relatively new yet the growth is much faster in comparison to other industries due to aggressive market oriented business strategy, Bangladeshs phone sectors witnessed a 120 percent growth from January 2006 till now,
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with the numbers of users rising to 22 million from 10.8 million in 13 months. These indicates the brand loyalty of each companies. These brand loyalty comes from the different comparative advantage of different companies. For example- Grameenphone have its loyalty in terms of network coverage and serving people of different age by djuice, family, smile etc. Airtel and Banglalink have its advantage in terms of price etc. 2.1.3 Capital requirementTelecommunication industry is one of the sectors which require huge capital investments. However, this sector is also posed for one of the rapid growing sector in Bangladesh. Moreover, the growth potential will continue to remain robust for the foreseeable future. That is why, Docomo has invested $350 million on former Aktel for 30 percent stock share of Robi in 2008 and later in that year the Japanese company along with the Malaysian company invested an additional of $100 million. Huge capital requirement may pose as a barrier but high growth rate may encourage other firms to enter for more profit. 2.1.4 Government rules and regulationDESPITE the presence of multiple operators, the mobile phone users were deprived of lower tariffs, a natural outcome of competitive market until 2003-04. But, later the government rules were made easy as they are giving easy free facilities and option, easy licensing facility, tax free time frame, 100% ownership possibility and also 100 % profit enjoying option making the entry very easy and tempting in the court. Although, bureaucracy in the government takes long time for a company to get license but otherwise government is very much flexible.

2.2 Rivalry among existing firmsThe telecom industry is one of the few technical industries that have intense internal competition. With majority of the telecom companies of the country being multinational subsidiaries, who have vast finances at their disposal, and the Bangladesh market providing a population of
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roughly (and unofficially) around 200 million many of whom are intent of carrying more than one subscription, competitive price wars are ever present. During the early years, Pacific Bangladesh Telecom Limited (Citycell) dominated the industry due to the absence of competition (Sheba Telecom struggled horribly to gain market share because of poor infrastructure). However, during that period, customers were deprived of benefits as Citycell ran a monopoly market focusing more on profit than on expansion. But with the introduction of GrameenPhone and Aktel (which is now Robi), The scenario changed significantly as call rates started to falter, with GrameenPhone racking up market share through its improved area coverage and customer driven products. The later injection of Egyptian company Orascom into Sheba Telecom, which renamed its brand to Banglalink, triggered a price war that created a massive drop on both registration and call rates. In December 2004 Government owned Teletalk BD Ltd. started its journey with the slogan "Desher Taka Deshey Rakhun" ("Keep your Money in your Country"). Teletalk is the first operator in the country that gave BTTB (now BTCL) incoming facility to its subscribers. Warid Telecom International LLC, an Abu Dhabi based consortium, was the sixth mobile phone carrier to enter the Bangladesh market, and launched commercial operations in May 2007. It has since sold a majority 70% stake in the company to India's Bharti Airtel Limited. 2.2.1 Industry growth rate and strategiesUsing the BCG Matrix we can define telecommunication business, Strategic business unit (SBU) in following way:
A. Grameen Phone : In GP their market share & also market growth is in high rate.

So, this is called star situation. GP often need heavy investment to finance their rapid growth. Eventually, their growth will slow down & they will turn into cash cows. So, it is necessary to hold their position in high, both of market share & growth rate.

B. Citycell & Robi : In Citycell Phone Company & Robi their market growth rate is

low but their market share is in high position. So, this situation is called cash cows. They are in the harvest position that means, they are stable in their growth rate. So it is necessary to increase their market growth rate & also produce a lot of cash to hold their market share.
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C. Banglalink &Airtel: Banglalink & Airtel both of these company creates low share

business units in growth markets. So, Banglalink & Airtel are in questions marks situation. Here, both of this company management has to think hard about which questions marks it should try to build into stars & which should be fazed.
D. Teletalk- Teletalk have a low market share and does generate enough revenue that

enable them to fall under dogs.

QUESTION MARK (BUILD) STAR (BUILD)

CASH COW(HARVEST) Star: Stars are high growth, high share business or products.

DOGS (DIVEST)

Cash Cow: Cash cows are low growth, high share business or products. Dog: Dogs are low growth, low share business and products. Question Mark: Question marks are low share business units in high growth markets.

2.2.2. Product differentiationList of products offered by the six telecom companiesGrameen phone * Smile * Djuice * Internet * Bill pay * Cell bazaar * Village Phones * Community Information Centres * Stock Information * Instant Messaging Banglalink * Desh * Desh rang * regular prepaid * ladies first * be linked * personal package 1 Airtel *Airtel postpaid *Airtel Prepaid * Adda * Golpo * Kotha * MMS Citycell *Aalap Call me *Aalap super * 0123 Robi
* SMS *GPRS

Teletalk *GPRS * Push-pull services * ISD and EISD

*EDGE, *Internatio hello nal roaming *SMS banking

*Instant load * Postpaid * Citycell zoom

* DESA load shedding *Caller push pull Ring Back service

Tone *MMS

* personal * supplementary International Roaming *personal call & control * GPRS * Formal Packages

* SMS *Voice SMS *Mobile Applications through GPRS Center and helpline Etc.

* attractive *Voice Greetings sets

*Call Blocking

* Banglalink * SMS based enterprise Alert/ * Customer Services Center and * Customer helpline Center and Etc. helpline

* Corporate * Rim Card package * Customer * Customer Center and Center and helpline helpline Etc. Etc.

* Bengali * Customer SMS

* International Roaming * Customer Center and helpline Etc.

From the table we can see that almost all the company offer similar type os packages and the switching cost of the customer is only 150-300 taka.

2.3 Bargaining power of SuppliersAt first glance, it might look like telecom equipment suppliers have considerable bargaining power over telecom operators. Indeed, without high-tech broadband switching equipment, fiberoptic cables, mobile handsets and billing software, telecom operators would not be able to do the job of transmitting voice and data from place to place. But there are actually a number of large equipment makers around. There are enough vendors, arguably, to dilute bargaining power. The limited pool of talented managers and engineers, especially those well versed in the latest technologies, places companies in a weak position in terms of hiring and salaries. However, the bargaining power of suppliers in the industry is strong in some cases if not in all. If the telecom operators had to design the products on the whims of the suppliers because their output is unique, then the suppliers would enjoy absolute advantage in terms of bargaining power. But here this is not the case. Again, since the number of the suppliers is very limited say NOKIA & Ericsson and a handful number of network administrators, they (the suppliers) have this power to leverage on this, because this is limiting the choice of the operators and making the switching cost very high for them. 2.4 Bargaining power of BuyerIn our country the customers have absolute bargaining power. Because there are a number of operators in the market, the cost for switching loyalty is very low. Customers may want to switch from one operator to another for a better deal. Nothing can restrict this trend. In fact what we see is that every customer nowadays uses more than one mobile phone or at least owns more than one connection, and use them interchangeably. This trend is especially very dominant among the teenagers who constitute a major portion of the market share, and on the other hand are also very sensitive to price. This phenomenon of subscribing to more than one operator, needless to say, has sparked a boom for another kind of mobile hand set that enables customers to use dual SIMS in one handset. And mobile phone companies, such as Samsung and Spice, by understanding this need of the consumer have come up with phones with this feature. This shows how powerful
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consumers are in this industry as trend-setters and this applies to every aspect of the business ranging from the designing of the products to pricing them.

2.5 Availability of Substitute productFor voice transfer, main substitute product is BTCLs land phone. Besides BTCLs land phone there are also some PSTN phone operators in Bangladesh. Though 5 of the PSTN operators operation have been suspended by Government but in future more companies will get license to operate PSTN phones. For data transfer, in Bangladesh there are more than 50 listed internet service providers. Last year two Wimax service providers have started their operation. Illegal internet & VOIP phones are also serving as substitutes for mobile phones. The major competitors of the mobile telecom industry include wireless Internet providers (Banglalion, Augere), PSTN and VoIP based operators. Although the Government has so far banned majority of VoIP operators, there are still some operating illegally in the country. Wireless Internet providers are also a threat as increased usage of smart phones and PDAs mean that communication can be made over the Internet using hand held devices rather than having to go over mobile phone networks. Taking these contenders as a joint threat, their strengths, weaknesses and strategies are discussed below. Strengths and Weakness The major strength of wireless Internet providers and VoIP operators is high data transfer rates. Whether it is Internet data or voice data, these service providers have relatively higher bandwidth compared to mobile network operators. Additionally, this extra bandwidth may come at cheaper costs. The technology for such providers is also relatively new to the customers and thus can create a sense of intrigue among the customers resulting in a motive to buy.The weakness of such service providers lies in infrastructure. Setting up new facilities and support structure is difficult, time consuming and expensive. Costs can boil down to customers and substantially
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raise prices. This is observed currently in the case of Augere promoted Qubee, where the costs are creating a barrier for customers. Also, advanced hand held devices and laptops (which are often necessary to access these services) is currently beyond the affordability of majority of the population. VoIP on the other hand faces great barriers from the Government (BTTB) regarding licenses as the Government currently has imposed a ban on the service and all providers.

CHAPTER-3 PEST ANALYSIS

PEST analysis stands for "Political, Economic, Social, and Technological analysis" and describes a framework of macro-environmental factors used in the environmental scanning component of strategic management. The PEST analysis of telecom industry are as follows. 3.1 Political FactorsPolitical factors include government regulations and legal issues and define both formal and informal rules under which the firm must operate. These include tax policy, employment laws, environmental regulations, trade restrictions and tariffs, and political stability. Political environment in Bangladesh is always unstable. Frequent changes of government and policymakers' reluctance or incapability to implement or design progress oriented policies is a major drawback for the telecom industry, an industry that is constantly changing in terms of technology. 3.2 Economic FactorsEconomic factors affect the purchasing power of potential customers and the firm's cost of capital. These include economic growth, interest rates, exchange rates, and inflation rate. In context of customers' buying power, in many ways Bangladesh is a poor country. With a low GDP per capita and a majority of the population under poverty level, to much of the population, a mobile phone and a network subscription is a luxury. However, the emergence and rapid spread of pay phone stalls utilizing mobile phones, has eased usage somewhat for these customers.

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3.3 Social FactorsSocial factors include the demographic and cultural aspects of the external macro-environment. These factors affect customer needs and the size of potential markets. Social factors include health consciousness, population growth rate, age distribution, career attitudes, and emphasis on safety. The telecom industry has definitely made an impact on the job market of the country, taking in thousands of employees and creating new career opportunities every day. The overuse of mobile phones has often triggered arguments regarding safety, but the Bangladesh market does not regard it as a threat. 3.4 Technological FactorsTechnological factors can lower barriers to entry, reduce minimum efficient production levels, and influence outsourcing decisions. Technological factors include R&D activity, automation, technology incentives, and rate of technological change. Sadly Bangladesh does not have an infrastructure that allows for research and development of large scale. However, recent drives to automate day to day activities have been taken by a majority of telecom companies, most notable by GrameenPhone with their new corporate headquarters that reportedly runs on its own power supply and is fully automated (including doors, lights etc.). While Bangladesh's policies and government processes hamper fast technological change, the telecom industry has in many ways influenced the both the public and private sector to invest and bring in new technology such as WiMax and submarine cable, although limitations have not allowed these technologies to flourish. From the PEST analysis, we can see that the macro-economic environment in terms of Political, Economical and Technological factors can be complex and hard to break through. But the customers of the market do display an uncanny need for communication through cell phones and are often noted to spend more money on making calls than they do on food. In terms of Social factors, the market is still thriving for more. Customers are still willing to try something new and because of lack of loyalty, customers are always ready for a new operator, hoping that call rates will fall even more.

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CHAPTER- 4 SWOT Analysis

4.1 OverviewSWOT analysis is a careful evaluation of an organizations internal strengths and weakness and external opportunities and threats.

In SWOT analysis, the best strategy is accomplish organizations mission by a) Exploiting an organizations opportunities and strengths b) Neutralizing its threats and c) Avoiding and correcting its weakness.

Strengths: Organizations Strengths are the skills or capabilities that enable an organization to conceive and implement its strategies. In telecommunication business strength is

Capital: Most of the telecommunications companies in Bangladesh are now joining with large

foreign investor and others are directly foreign investor comes into the market. All of these foreign companies are well established in many countries, capital is a big strength for these companies in Bangladesh. For Example:

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Grameenphone joined with Telenor, Sheba bought by Orascom and Dhabi come Bangladesh by named Warid Telecom.

Office Management:

All the Companies have huge amount of capital and they offer attractive salary to the employee. Thats why highly skilled people are comes to work. So, strong office management and highly skilled marketing executive are important strength for them.

Policies:

They have skilled marketing executive. They build policies that can attract customer and build customer relation to retain customers. For Example: GP and AKTEL give some extra benefit who are long time using their service. And also offer for reactive those customer who are inactive.

Goodwill:

Some companies are giving their service for a long time in Bangladesh. Customer know them very well and rely on their service. Other companies who are new and directly invested by foreign investor, they also have goodwill in working many other countries. For example: GP have built strong belief on customer mind that they have strong network system & this is their one kind of goodwill.

Internet Service:

Now a days internet has become an important part of our life. We are depending on internet on various sectors. Most of mobile companies are now giving broadband internet, mobile internet and WAP service. And others are going give the facilities. For Example: GP, Robi, Citycell and Airtel Telecom giving WAP and Internet service.

Equipment:

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All operators have huge amount of capital. They are using upgraded and high powerful expensive equipment. So, they can give a quality service to the customers and satisfy them.

Experience:

Some of operators are working long time in Bangladesh. So, they know what kind of sales promotion and new offer should take. Others have experience in working in many other countries. They can implement their experience in our country.

For Example: GP, Robi and Citycell have working in our country for a long time and Orascom and Dhabi has experience in working many other countries. Weaknesses: Attributes of the organization that is harmful to achieving the objective. There have some weaknesses also telecommunication sector. These are:

Network Coverage:

Though huge amount of investment and high performance equipments are using by all companies, but no one can give full network coverage. There are no competitions on those areas where all competitors are not available. For Example: Citycell do not have network coverage in all the areas of bangladesh

Value added Services:

Now days all operators are competing each other by only call rate, FnF etc. Thats why some value added services like mobile TV; MMS from one operator to another is still not given by them. Weak network:

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Some companies are fully concentrated on sales promotion and billing. They are not giving attention to upgrading the network system. Some of them have huge existing network system so changing the whole system is big pressure for them, because it is very much expensive. So, customers are bored by unclear sound and busy network & for this reason they are changing the operator. For example: Banglalink user are facing problem with unclear sound and they have to try many times to find a connection.

Dependency:

All mobile operators are now depending on foreign investment. No one is self dependent and do their business alone. Opportunities: External conditions that is helpful to achieving the objective. Organizational opportunities are areas that may generate higher performance. In telecommunication business their opportunity is Potential Customer:

The number of potential customer is much more than the existing customer. So, they have the big opportunity to attract those potential customers to serve them.

Entering in Share Bazaar:

Two large companies GP and AKTEL are entering to share bazaar and some will come in future. So, they dont have to depend on foreign invest in future. Grameen phone have already entered it and other companies are yet to enter. Technological up gradation:

Mobile operators have the opportunity to upgrade network and offer new facilities also reducing maintaining cost. Threats:
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Organizational threats are the areas that increase the difficulty of an organization performing at a higher level. In Telecommunication business their threats are given below Natural Disaster:

Weather condition is not stable in our country. Any disaster can arise any time and break network system. Mobile operation is dependent on electricity and companies have no strong backup system. If any disaster happens and power supply stopped for more then a day, they will fail to continue their service. Competition:

Competition between mobile operators can become a threat for them, because some companies not going for profit to attract more customer by giving various competitive offer. Others also can take same strategy. As a result they may not become profitable company if they retain the strategy. 4.2 SWOT analysis of Grameenphone Strength: Network coverage (94%of total area of the country.) &Total number of customer. Weakness: Short term defensive strategy & high call rate, which may hamper the companys good will & future competition. Opportunity: To get link to the up coming technology i.e. Wi-Max. Threat: Up coming technology may not support the present technological infrastructure. And Banglalink. 4.3 SWOT analysis of Banglalink Strength: Active distribution management and sales personnel & brand image. And network coverage (95% of total population). Weakness: Time constant with other companies are not suitable. Opportunity: Rural market & corporate customers.
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Threat: Only time sense. 4.4 SWOT analysis of Robi Strength: Call rate superiority (at present situation.) & network system Weakness: poor customer service & late response to competitors offer. Opportunity: great opportunity to expand market by present network system which adopt the Wi-Max technology. Threat: other potential GSM network like Warid(NGN) 4.5 SWOT analysis of Citycell Strength: Digital technology CDMA1X. And network coverage (92% of total population). Weakness: Failing of making consciousness to the people about CDMA1X technology. Opportunity: Broadband wireless technology of EV-DO (evaluation data optimize). And up coming technologies are supportable to the present technology. Threat: GSM technology where people habited with the change of Handset. 4.6 SWOT analysis of Airtel Strength: Customer service & NGN network. Weakness: Product design & product marketing. Opportunity: Adopting Wi-Max which will definitely supported by the 3G(NGN) network. Threat: Other potential competitors. 4.7 SWOT analysis of Teletalk Strength: Govt. owned public ltd. Co. & they use the frequency of BTCL Which is covered all around the country.

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Weakness: Poor customer service & bad product design. Opportunity: great opportunity to expand market by present network system which adopt the Wi-Max technology. Threat: other potential GSM companies

CHAPTER-5 RECOMMENDATION
Flexibility in Government Regulations: While formulating and/or amending any act, the government should make the final decision in consultation with the industry experts as well as the industry operators so that the decision to be made benefits both the industry in particular and the economy at large. Government should play a role of facilitator to expedite the growth of the industry and also should follow the international standards in any legal procedures so that the potential foreign investors feel encouraged to inject investment into the economy and also the existing players feel motivated to expand their business. Offering post-paid connections to young-adults: For years, operators in our country assumed that many teens and college students could not afford to subscribe to the post paid cellular services, so they pushed pre-paid cellular to this group. Given the current situation of the market, telephone companies should understand that this segment possesses three major characteristics that they starve for: 1) they have disposable income, 2) they have grown up with technology, and 3) they view their cellular as No. 1 possession. Still further, young adults (age 18 to 34) are two or three time more likely to also use services such as email, news and text alerts, all of which produce additional revenues for the companies. So this post-paid offering can give them more freedom to spend more. Just think of all the photographs that teens take with their cell phones and all of the ring tones that they pay to download. Mobile Application: Designing popular application is not an easy task. Here come the complicated issues like platform compatibility, user-friendliness, economics of the users, educating them and the like. Therefore, it's of paramount importance to consistently monitor
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what customer want and what they get through the feedbacks, then identify the gap in between through research and bridge the gap through continuous innovation. Operators must keep in mind that the search and the switching cost have substantially reduced due to the easily accessible and available information and the users have become more skeptic and intractable as a result. That's why designing is so crucial and critical. In this connection, developing a consortium of apps developer, phone maker and the operators seems to be a viable option. It will help know them better and serve them the best. To lead the consortium or in other words, in order to attract the developers, operators can leverage its powerful brands and marketing expertise, quality storefronts and monetization process. In fact, operators' use of these advantages will determine their strategic directions for the future. But that's not enough to attract developers. A generous profit-sharing- agreement can help in this regard. The current market trend suggests that 70% of the revenues coming from the apps straight goes to the developers' pockets. But still the deal helps the operators acquire new customer, reduce the attrition rate and net higher average revenue per user. So it's still worth the deal! Merger and 3G & 4G viability: Huge first mover advantage is also present here. All the existing players in the industry need to do is transfer the technology, expertise, know-how, and people through merger or acquisition and dedicate them to build a new infrastructure to thrive on the market.

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CHAPTER- 6 CONCLUSION
Finally, all these emerging concerns and phenomena in the industry offer both merits and demerits to the operators at the same time. In the face of this new move towards mobile application business, telecom operators throughout the world share a common fate of becoming mere conduits to the successful app stores of others in one hand, and due to the fierce competition among the operators, this phenomenon also provides numerous opportunities to stand out from the crowd, on the other, especially in emerging markets like ours. Regardless to say, the industry is evolving very, very quickly. It may put so many existing powerful players out of their business and may give the business to the new entrants. In light of this reality, the operators have got two simple choices: as to whether to adapt to this revolutionary trend by incorporating mobile applications in every offering and reap the substantial advantage out of it or to bear the brunt of losing business. Similarly, excessive flexibility in regulations may sometimes put a greater interest of the nation at risk. So check and balance on the part of the government are the main keys.

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