A STRATEGIC MANAGEMENT

OF

Nepal Doorsanchar Company Limited

A Report Submitted To:

Mr. Saroj Mishra
Course Instructor of Strategic Management
Apex College, Kathmandu

Submitted By:
Pratik Paudel
Rupesh Thapa
Saphal Poudel
Sanjaya Ranjitkar
Saroj Khanal
Suraj Ghimire

In partial fulfillment of the requirements for the degree of

Master of Business Administration (MBA)

Apex College
Baneshwor, Kathmandu
April, 2019

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 ACKNOWLEDGEMET

The report on “Nepal Doorsanchar Company Limited” was completed in the partial
fulfillment of the course requirement for the degree of Masters of Business
Administration (MBA). The report is the practical implication of theoretical
knowledge acquired from the course strategic management.

Firstly, we would like to express our gratitude to Mr. Saroj Mishra, Strategic
Management course instructor for giving us an opportunity to do this report. This has
helped us to understand the practical implication of what we had learnt in class lectures.

Our appreciation extends to Apex College for continuous support to its students in
completing the report directly and indirectly. The facilities, faculty, and good
environment have helped us complete the assigned report.

Furthermore, we would like to acknowledge the support of the each and every group
members for their cooperation and coordination. We are captivated to every
individual who has helped us directly or indirectly in this endeavor.

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 EXECUTIVE SUMMARY

Nepal Doorsanchar Company Limited is a company registered under the Company

Act 2053. However, the company is known to the general public by the brand name
"Nepal Telecom" as its registered trademark. From establishment to current scenario,
Nepal Telecom (NTC) has made great contribution to uplift the situation of Nepalese
telecommunication industry. The company was a monopoly until 2003, when the first
private sector operator UTL started providing basic telephony services. It is the sole
provider of fixed line, ISDN and leased-line services in Nepal. Following the entry
of Ncell (previously called Mero Mobile) into Nepal's telecommunications industry in
2005, it is no longer the only provider of GSM mobile service. With more than 5,400
employees, it is one of the largest corporations of Nepal.

Looking at recent actions adopted by NTC, we could say that its programs and
policies are consistent with its Mission and Vision. When analyzing the value chain
activities of NTC, each activity are consistent with corporate strategy. NTC has
always put its endeavors in providing its valued customers a quality service since its
inception. Its long term objective is to decrease the digital divide in the country by
providing telecommunications services all over Nepal. It has also designed its short
term objectives accordingly.

The EFE matrix shows that the opportunities outweigh threats. So, the organization
has potential and promising opportunities for it to grow. It can grab those
opportunities to excel further. Similarly, the IFE matrix shows promising strengths of
NTC and its critical weaknesses. As per the implication of IFE (Internal Factor
Evaluation) matrix, the strengths are higher than that of the weaknesses. Thus, the NTC
has substantial strength and promising opportunities. So, NTC lies in aggressive
quadrant of SWOT matrix. Also, the IE matrix shows that the company should
maintain and hold its business position. In this case, the tactical strategies should
focus on market penetration and product development.

According to the porters generic strategies, NTC is focusing on overall cost

leadership. The grand strategy clusters shows the company has strong competitive
position and rapid market growth. Looking at the company’s position and

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performance, it may go for concentrated growth. In the same way it can also use the
forward integration strategy by opening its own retail centers and distribute the sim
cards.

QSPM indicates NTC should opt for hold and maintain strategy. The best alternative
among the available strategies in hold and maintain is Product Development.
Considering the analysis, NTC may go for premise control as periodic review is
necessary to understand the validity of the strategy even after few years. It is
recommended to NTC, that it focuses on promotion campaigns for new innovative
schemes. Similarly proper HR management and training should be emphasized to
provide better customer services. NTC can provide complaint and query handling
services via email, SMS and various social media platforms. All of these would help
NTC in maintaining its prominent market share and assisting securing an edge above
its competitors.

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Table of Contents
ACKNOWLEDGEMET ........................................................................................................................... i
EXECUTIVE SUMMARY ...................................................................................................................... ii
CHAPTER I ............................................................................................................................................. 1
INTRODUCTION.................................................................................................................................... 1
1.1 Background .................................................................................................................................... 1
1.2 Mission, Vision and Goal ............................................................................................................... 2
1.2.1 Mission .................................................................................................................................... 2
1.2.2 Vision ...................................................................................................................................... 3
1.2.3 Goal ......................................................................................................................................... 3
CHAPTER II ............................................................................................................................................ 4
INTERNAL ANALYSIS ......................................................................................................................... 4
2.1 Value Chain .................................................................................................................................... 4
2.2 SWOT Analysis.............................................................................................................................. 6
2.3 Resource based view ...................................................................................................................... 9
CHAPTER III......................................................................................................................................... 11
EXTERNAL ANALYSIS ...................................................................................................................... 11
3.1 External Analysis ......................................................................................................................... 11
CHAPTER IV ........................................................................................................................................ 18
STRATEGIC ANALYSIS AND CHOICE ............................................................................................ 18
4.1 EFE Matrix ................................................................................................................................... 18
4.2 IFE Matrix .................................................................................................................................... 19
4.3 IE Matrix ...................................................................................................................................... 19
4.4 Generic Strategies That Strategic Business Units Use ................................................................. 21
4.4.1 Cost Leadership Strategy....................................................................................................... 21
4.4.2 Differentiation Strategy ......................................................................................................... 21
4.4.3 Focus Strategy ....................................................................................................................... 22
4.5 SWOT Matrix............................................................................................................................... 23
4.6 Grand Strategy Clusters Matrix .................................................................................................... 24
4.7 Quantitative Strategic Planning Matrix (QSPM) .......................................................................... 26
LONG AND SHORT TERM OBJECTIVES......................................................................................... 28
5.1 Long- term Objectives .................................................................................................................. 28
5.1.1 Strategic Objectives............................................................................................................... 29
5.1.2. Financial objectives .............................................................................................................. 29
5.2 Short term objectives .................................................................................................................... 29
5.3 Functional Tactics ........................................................................................................................ 29
CHAPTER VI ........................................................................................................................................ 31
STRATEGIC CONTROL ...................................................................................................................... 31
CHAPTER VII ....................................................................................................................................... 34
SUMMARY, CONCLUSION AND RECOMMENDATION ............................................................... 34

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 7.1 Summary and conclusion ............................................................................................................. 34
7.2 Recommendations:- ...................................................................................................................... 35
Bibliography........................................................................................................................................... 36

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 CHAPTER I

INTRODUCTION

1.1 Background

Nepal Telecom is state owned telecommunication service provider in Nepal with

91.49% of the government share. The central office of Nepal Telecom is located at
Bhadrakali Plaza, Kathmandu. It has branches, exchanges and other offices in 184
locations within the country. It was registered on 2060-10-22 under Company Act,
2053. Then Nepal Telecommunications Corporation (NTC) was dissolved and all assets
and liabilities were transferred to Nepal Telecom effective from 2061-01-01 (i.e.
13th April 2004). The company with its long history is on the way of customer service
and nation building.

In Nepal, operating any form of telecommunication service dates back to 94 years in

B.S. 1970. But formally telecom service was provided mainly after the establishment
of MOHAN AKASHWANI in B.S. 2005. Later as per the plan formulated in First
National Five year plan (2012-2017); Telecommunication Department was
established in B.S.2016. To modernize the telecommunications services and to
expand the services, during third five-year plan (2023-2028), Telecommunication
Department was converted into Telecommunications Development Board in
B.S.2026. After the enactment of Communications Corporation Act 2028, it was
formally established as fully owned Government Corporation called Nepal
Telecommunications Corporation in B.S. 2032 for the purpose of providing
telecommunications services to Nepalese People. Nepal Telecommunication
Corporation was transformed into Nepal Doorsanchar Company Limited from
Baisakh 1, 2061. Nepal Doorsanchar Company Limited is a company registered under
the companies Act 2053. However the company is known to the general public by the
brand name Nepal Telecom as registered trademark.

With more than 5,400 employees, it is one of the largest corporations of Nepal. The
major services provided by NTC are

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  Lease Line service

 Basic telephony

 ISDN
 GSM Cellular Telephony
 Email
 Internet Leased Line
 Payphone
 CDMA Network as SkyPhone
 Wireless Loop Link
 CDMA EV-DO
 3G, HSDPA
 4G LTE
 Intelligent Network
 Voice Mail
 GPRS Service
 MMS
 Digital Data Network (DDN)
 ADSL
 WiMAX

1.2 Mission, Vision and Goal

1.2.1 Mission

“Nepal Telecom, as a progressive, customer spirited and consumer responsive entity,

is committed to provide nation-wide reliable telecommunication services to serve as
an impetus to the social, political and economic development of the country.”

1.2.1.1 Focus area of NTC

Build word class company service

Secure high quality in their networks

To have an efficient cost structure

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 Customer Oriented

Sustainable development

1.2.1.2 Evaluation of mission statement

A good mission statement consists of the following nine components: 1) Customer, 2)

Product or Service, 3) Market, 4) Technology, 5) Concern for survival growth and
profitability, 6) Philosophy, 7) Self Concept, 8) Concern for public image, 9)Concern
for employees.

On the basis of these nine components NTC mission statement can be evaluated as
follows:

1. Market : Nationwide reliable telecommunication

3. Product or Service: Telecommunication service Customers: Every individual
4. Philosophy: To satisfy the customers and deliver wide range of
telecommunication services for the contribution to nation.

1.2.2 Vision

“NT vision is to remain a market leader in information and technology sector in the
country while also extending reliable and cost effective services to all.”

They are proud of being pioneers of the telecom industry, a position they have gained
by being a marker leader in information and technology sector in the country. They aim
to provide the most reliable and cost effective service.

1.2.3 Goal

“NT goal is to provide cost effective telecommunication services to every nook and
corner of the country.”

Their main objective is to cover the every part and hence provide the network services
throughout the entire country.

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 CHAPTER II

INTERNAL ANALYSIS

2.1 Value Chain

Value chain analysis focuses on analyzing the internal activities of a business in an
effort to understand costs, locate the activities that add the most value, and
differentiate from the competition. To develop an analysis, Porter's model outlines
primary business functions as the basic areas and activities of inbound logistics,
operations, outbound logistics, marketing and sales, and service. The model also
identifies the discrete tasks found in the important support activities of firm
infrastructure, human resources management, technology, and procurement. The overall
goal of value chain analysis it to identify areas and activities that will benefit from
change in order to improve profitability and efficiency.
It provides a useful tool to analyze the relationship of cost to build versus the price a
consumer is willing to pay. Because the value chain examines what activities are most
beneficial, it is also used to find opportunities, innovations, or practices that set the
firm's offering apart from its competition.
Firstly, the primary and supporting activities and the tasks within each activity is
identified. Next, valuable and wasteful activities are classified. These information
helps to guide change to maximize value and eliminate waste.
1. Inbound Logistics: These are the activities that receive, store, and handle
materials. They include warehousing, inventory, scheduling, and vendor returns.
The various activities that are carried out by NTC include Network
infrastructure, Software and content provider, Finance and Licenses.
2. Operations: This area represents all the activities to build or develop the end
product including assembly, testing, labeling, packaging, and overall facility
operations. The various activities that are performed to carry out smooth
operations of NTC include infrastructure development, Network integration,
Capable Supplier, etc.
3. Outbound Logistics: GSM Services, VAS, Fixed Lines, Broadband are
various activities that are being delivered to the Telecom service users.
4. Marketing and Sales: Activities include branding, advertising, promotion,
sales force management, pricing, and quoting. The various activities include

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 strong channel distribution, market innovators, Unique and innovative
advertising strategy, etc.
5. Post Sales: Post sales services are offered to the various users such as public,
corporations, SMEs, Institutes, etc.
There are also four “support activity” centers that support these five primary
functions. They are found on the model in a vertical "umbrella" over the primary
functions because these operations get distributed throughout the entire
enterprise.
6. Firm Infrastructure: These are the activities that are interwoven throughout
the entire business structure including finance, legal, quality, government
affairs, general management, and accounting. The various infrastructure at
NTC includes CRM tools, MIS, CRP, Networking Equipment, Telecom
Equipment for overage and signal strength.
7. Human Resources Management: HR is responsible for providing methods
of hiring, training, compensation, and motivation for personnel in all areas of
the business. The HR is responsible for hiring IT skilled workforce, Telecom
engineers and also provides Value added customer services by providing
teleservice trainings to its workforce.
8. Technology Development: This area is more than research and development.
It includes uses of technology for overall business support such as phones and
plans, office automation, order processing methods, and procedures. The
activities include creating a 3G/4G enabled network, launching M-commerce by
tie ups with banks
9. Procurement: This activity includes purchasing raw materials and supplies, as
well as vendor qualification, building or leasing, info system development,
and fleet management. It is of utmost importance to maintain long term
relationship with the suppliers.

These are the discrete functions and activities that make up Porter's generic value
chain model. We can use this model to design or re-design an organizational
structure, as well as to develop a management and analysis strategy to identify both
cost advantages and differentiation opportunities.

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2.2 SWOT Analysis

 Strengths

.1. Strong brand - People has trust and is loyal towards the company. It has
positioned itself in the market as government backed company and with an image of
national pride and patriotism. This makes it easier in introducing its products and
technologies in the new market.
2. Experienced business: It is the first telecommunication provider in Nepal,
established in April 13, 2004 and the sole mobile service provider until the emergence
of other telecom providers. So it has well experienced staff, business units.
3. Major telecom service provider: It is the pioneer in providing
telecommunication services to the public in Nepal. It is one of the major service
providers with a market share of 47%.This makes it easier in customer and market
knowledge .Thus it has a large customer base and successful product ranges.
4. Presence in rural area CDMA phone: It is the service provided by NTC
where the priority is given to the remote costumers. The foremost application of CDMA
is the digital cellular phone technology from QUALCOMM that operates in

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the 800MHz band and 1.9GHz PCS band. CDMA phones are noted for their call quality
5. Government backed company: Being a state owned company, it has higher
chances of ease in approvals and other facilities by the NTA.eg Nepal Telecom had
been given permission to launch the 4G service under the same 1,800 MHz frequency
band that it has been using to operate 2G service making it the first telecom company
to start 4G in Nepal. The telecommunication regulator, however, had not made any
decision on the application submitted by other private telecom companies. NTC being
a government backed company, in event of heavy losses or similar financial catastrophe,
the government will be guiding it and provide necessary monetary assistance.

 Weaknesses
1. Low signal strength: Large number of call drops and low quality of
connection, this may cause its customers to shift to other telecoms and internet phone
service provider with better connection quality.
2. Late adoption of schemes: NTC is found to be relatively behind in providing
schemes like loan credit facility on phone balance, which is found rather commonly in
other telecom providers. Similarly schemes such as lower call rates and data usage rates
among family (NTC users).This may give negative message of the company not being
innovative and lagging behind.
3. Ineffective HR management: NTC is compiled with large number of staffs.
NTC is facing hard time to recruit and assign the employees in right place at the in right
time .The organization is encountering the hitch of overstaffing and human resource
management. The employees in the organization are not well updated with the
technology and trends in telecommunication. Training itself is not being implemented
properly. Though new technologies are emerging in NTC, employees and the
management are quite traditional and persist resistant to change. It is complicated to
build the confidence and change the attitude of employees in the organization for new
technologies and trends.
4. Low quality customer care services : NTC often takes a lot of time to cater
customer and their needs. In high competition this can drive users away and is fatal to
the stability of the company. Branch offices are often found not giving priority to

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maintenance related problems and customers complain about the unnecessary hassles
and waiting time for services.

 Opportunities
1. Technological advancement: The technology is getting more sophisticated
and advanced. The telecom firms can use such technology in their operation to
improve the overall performance and customer satisfaction. This provides the firm a
competitive advantage in the market technologies. For e.g. relatively new 4G service
open up new service schemes and opportunity to attract customers.
2. Large domestic market: There is huge market development opportunity in
urban region of Nepal. At present it has only got 43% market share which can be
expanded for being a market leader.
3. Untapped Rural areas: Most of the area of Nepal lies under rural area and
the telecommunication market over there is very poor. Thus, NTC can get opportunity
to expand their business over there.
4. Business Diversification: Though NTC is a telecom service provider, it has
much more scope in other fields as well e.g. investment in hydropower companies. It
can expand itself within the industry or in any other related industry such as cell phones,
sim card etc.

 Threats
1. High Competition: Many Private telecom companies are entering the
industry with new and advance technologies.NTC is facing high competition mainly
from Ncell and other companies such as Smart cell. NTC and Ncell have entered into
a business war, as Ncell is giving tough competition to NTC SIM cards and internet
services.
2. Switching behavior of consumer: Nowadays, customers are well known with
various new technologies around the world due to which they are demanding more
quality and features such as High internet (up to 4G) at low prices. This poses threat
as the customers may switch to another telecom provider.
3. New Political system challenges: Nepal has recently adopted federalism, with
the recent elections and now major political changes are expected. This maybe one of
the major threat to business organizations because as the new province government

8
forms their rules and regulation, budget and all of the running schedule of the
province due to which organizations like NTC also would be affected by it.
4. Unstable economy: Telecommunication Company is affected by fluctuating
economy like any other company. Nepalese economy is undergoing fluctuations and
slowdowns .This might affect the business diversification, overhead costs and pricing
of NTC.

Figure 1: SWOT analysis

2.3 Resource based view

A method of analyzing and identifying firm strategic advantages based on examining

its distinct combination of assets, skills, capabilities, and intangibles as an organization.
This view claims that different performances of companies are due to the uniqueness
of their resources. Generally, these key resources refer to the permanent assets
including tangible and intangible assets that a company owns.

Assessment of NTC resources which prove them as a having their distinct competencies:

1. Tangible assets: They are the physical and financial means a company uses to
provide to its customers.

9
 Physical Resources: Size, location, technical sophistication, land and
building Financial Resources
Financial Resources
Internal fund generation
Firm’s borrowing capacity
Capacity for Investment

2. Intangible assets:

An intangible asset is an asset that is not physical in nature. Corporate intellectual

property, including items such as patents, trademarks, copyrights and business
methodologies, are intangible assets, as are goodwill and brand recognition.
Technological Resources
o Revenue: outgoing calls and SMS
o Revenue: incoming calls and SMS interconnection charges
o Revenue: VAS services
o Technical and scientific employees
Reputation
o Brand recognition
o Brand Equity
o Reputation of company with suppliers, with government , government
agencies and with community

Organizational Capabilities:

Skills that a company uses to transform inputs into outputs.

o NTC’s customer service

o Multimarket offerings
o Understanding the local customer needs and conditions.
o Trained human resources
o Ongoing training or recruiting programs
o Promotional campaign

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 CHAPTER III

EXTERNAL ANALYSIS

3.1 External Analysis

Forces and condition outside the organization that affects the performance and outcome
of the business organization is the External environment of the business organization.
The control of external environmental factors is out of the hand of business
organization. Before analyzing the external environment we have to examine
opportunities and threats that exist in the environment. Both opportunities and threats
exist independently of the firm.

Opportunities refer to favorable conditions in the environment that could produce

rewards for the organization if acted upon properly. For NTC, here are some of the
opportunities

1. Technological advancement
2. Large domestic market
3. Untapped Rural Market
4. Potential market for diversification of business.

Threats refer to conditions or barriers that may prevent the firms from reaching its
objectives.
Here are some of the threats for NTC are:

1. High Competition from private telecom provider.

2. Shrinking economy hindering stability and growth.
3. Customer switching led by Customers Demand for high quality service at less
price.
4. New Political system and its challenges.

Along with these factors of creating opportunities and threats in the competitive
telecommunication industry, we have analyze the external environment with

1. Remote Environment
2. Industry Environment
3. Strategic Group Mapping
The brief description about the external analysis are mentioned below

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.1.1 Remote Environment

They are the political, economic, social-cultural, technological and ecological factors
that originate beyond, and usually irrespective of, any single firm’s operating
situation. They are explained below:

Political/Legal Analysis

Frequent changes in political parties as they remain busy in the game of

government making and toppling.
Government regulation and policy regarding tax.
Apart from that, unclear rules and regulations and the less reactive bureaucrats
is also the political problem

Economic Analysis

Increasing disposable income of people in Nepal.

The inflow of remittance in the country is directly helping in this prospect.
The number of people using the cellular mobile phone is increasing day by
day.
The inflow of Chinese mobile phones at the low cost is also helping people to
enjoy the services of mobile technology.
By analyzing this broad range of peoples, NTC has developed customized
products that best suits them according to their economic status.
Introduced the attractive plans that address the economic class of Nepalese
people.

Socio-cultural Analysis

Growing exposure to TV shows, movies, songs, etc has been gradually

changing life style of people through adaptation of western culture.
Increasing demand for Internet service due to growing popularity of social
networking sites like Facebook, twitter, google plus, Skype among Nepalese
peoples.
NTC has been focusing of Nepal’s diverse culture while designing it’s
products.

Technological Analysis

Focus on research and development

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 NTC is also adopting the new technologies to get updated with the trend (like
4G, 3G.)

Environmental Analysis

Diversified geography certainly causes a big problem to build the towers for
network and in the installation of machines to run the service.
Mountains act as a barrier for smooth flow of radio frequency.
Need to build more number of towers to capture further coverage, which
directly induces to rise of operating cost.

According to the porter’s five forces model, the intensity of industry competition and
an industry’s profit potential are a function of five competitive forces: the threats
posed by new entrants, suppliers, buyers, substitute products and intensity of rivalry
among existing firms. NTC competitive analysis is also done by analysis the five
force model suggested by Michael E. Porter.

Figure 2: Porter’s Five Force Model

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1. Threat of New Entrants

The seriousness of the threat of entry depends on the barriers present and on the reaction
from existing competitors that the entrant can expect. It represents how easy or difficult
is the situation for new entrants to start up the similar company in the industry. To
compete, which barriers do exist, a huge investment is required. Nepal Telecom (NT)
was the only state owned firm in the sector. NT held monopoly in the
telecommunication market for almost 30 years. But the growth of telecommunication
has been restricted by NTA itself for new and emerging services. By imposing
conditions that are not conducive through taxes, time consuming bureaucratic practice
etc. The reason for the restriction in proliferation is because of unprepared technical
expertise for the usage of new services and lack of awareness about technology
amongst the executives and government bureaucrats.

From the different angle, there is neck to neck competition between the two major
brands of telecommunication (NTC and Ncell), it will cost very high for new players
to gain the attraction of customers. NTA has restricted foreign companies to enter this
sector. And from the customer view point, it will cost a lot to switch a brand to
another. It will be hassle to change the contact number time and again. Hence the
customers are reluctant to switch to other service providers. So, with this regard there
is a strong barrier to entry in this industry.

2. Bargaining Power of Buyers

Buyers always bargain for higher quality, greater level of service and lower prices.
Bargaining power of buyers refers to the strength of the buyer’s position. In context of
the telecommunication Industry, buyers / customers are the individuals or organizations
using the services provided by the telecommunication companies. Buyers are weak
because they do not have significant influence over product and the price. Although
there are 6 companies that provide telecommunication facility in the country, the
situation is almost oligopoly. The nearest and largest competitor Ncell is supplying
abundant sim whereas, on the other hand NTC is not able to fulfill the customer’s
demand. In this sense, the bargaining power of customer is a bit weak.

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3. Bargaining Power of Suppliers

Suppliers can affect industry through their ability to raise prices or reduce the quality
of purchased services. The Suppliers in the telecommunication industry for the mobile
operation are the firms manufacturing and distributing SIM cards, recharge cards,
CDMA handsets and
Technologies for activating and providing the service. Ncell and NTC select the
suppliers from global bidding process. The main players are Zhongxing
Telecommunication Equipment Corporation (ZTE) and Huawei. UTL’s handsets and
chipsets are supplied by LG, Korea. The power of the companies to select the
suppliers shows that the suppliers are weak. On the other hand, the availability of few
suppliers forces the companies to have a limited choice and act as the strength of the
suppliers.

4. Threat of Substitute Products

The threat of substitute products occurs when the demand of a product is affected by
the price or service provided by the substitute product changes. NTC is also reducing
cost for customer and staying competitive in the market. To counter the competitors
strategy and techniques of attracting customer, NTC, without lagging behind is working
on providing services in lower cost, customer friendly and new schemes and features.
But simultaneously, the low signal strength and low quality of customer services are
few blockades for the extensive growth of business of NTC. The internet based
telecommunication can be the strong substitute product that does not need to pay the
charge. So the lower price substitute products could as the strong competitor for NTC.

5. Rivalry among Existing Firms

Rivalry among the existing firm exists when two or more firms compete with similar
product and for the same customer group on the basis of price, quality and innovation.

NTC was only player in the telecommunication industry for almost 30 years. The
monopoly of NTC ended with the entry of Ncell and UTL. Currently there are 6 players
in the telecommunication industry with NTC being the dominant player. Nepal
Telecom is the leader in the market with maximum number of services and capturing
the maximum market share. Ncell, though a leader in ISP, it has its major

15
stake in GSM mobile service. We cannot neglect the fact that Ncell has a competitive
edge in providing value added services as well as by using price strategies to attract
larger customer base, considering this we can say that the Telecommunication
Industry depicts a strong rivalry among the existing players.

3.1.3 Strategic Group Mapping

The strategic group is a concept used in strategic management that groups companies
within an industry that have similar business models or similar combinations of
strategies. The key success factors for telecommunication industry are:
Price
Brand Identification
Service Quality
Net sales
Geographical coverage
Product range
Customer satisfaction
Customer service

Strategic Maps of NTC

The key players in the telecommunication industry are: NTC, Ncell, UTL, Smart
Telecom Pvt. Ltd., Nepal Satellite Telecom Pvt. Ltd., STM Pvt.Ltd. Among the above
identified key success factors for telecom industry, we have taken two KSF for
strategic group mapping: product range and geographical coverage.

Product
Range

Geographical Coverage

Figure 3: Strategic group map

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In the x-axis, we have taken geographical coverage of the key players in telecom
industry. According to the report of economic survey 2073/74, NTC and Ncell have
highest percentage of geographical coverage 47% and 45% respectively. Similarly,
other players: Smart Telecom has 5% geographical coverage. While Nepal Satellite
Telecom (Hello Nepal), and STM have 1% geographical coverage each.

In the y-axis, we have taken product range. The product range has been identified
from the official website of each player in telecom industry. The players or companies
are plotted on the map according to the number or range of products it provides. In
this context, NTC provides around 9 products (Mobile, Landline Phone, Email, Internet,
Wireless Mobile Phone, ADSL Services, 3G, and GSM). Ncell provides 4 products
(3G, GSM, Wireless Phone, and Internet service). Furthermore, Nepal satellite telecom,
STM, and Smart telecom provides 2 products (Wireless Mobile Phone and Internet
Services).

After plotting the companies in the strategic group map with respect to product range
and geographical coverage, we have identified that Ncell and NTC being the two
giants in the telecom industry share same group in strategic group mapping. This shows
that they are direct competitors to each others. For NTC to sustain in the market,
it is important to understand the strategies and step taken by Ncell. Similarly, the
remaining companies in the telecom industry fall in the other group in strategic group
mapping. The product range they provide are same and the percentage of geographical
coverage is also similar. This makes them direct competitors to each others.

Thus, there are two strategic groups present in telecom industry. The market has
dominant player NTC and Ncell with highest product range and geographical
coverage. The two strategic groups are indirect competitor to each other. NTC doesn’t
have much threat from the other group as there is huge gap in between.

The strategic group map shows that there is huge untapped market in telecom
industry. The gap between two groups shows that there are opportunities for new
product and new market. NTC must try to locate those gaps and untapped market to
gain competitive advantage over Ncell.

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 CHAPTER IV

STRATEGIC ANALYSIS AND CHOICE

4.1 EFE Matrix

EFE (External Factor Evaluation) Matrix shows the potential opportunities and threats
faced by the organization. It gives a picture of external environment of the company.
The factors representing opportunities and threats are analyzed by assigning weights
to them respectively; the total of which is always 1 and then rating those factors on
the basis of how well the company can take advantage of it. Rating
is done on a 0-4 scale, where 0 means least responsive and 4 means most responsive.

Wt
FACTORS Weight Rating Score
Opportunities

1. Technological advancement 0.20 3 0.60

2. Large domestic market for market development in urban
areas.
0.20 3 0.60
3.Untapped Rural areas
0.05 2 0.10
4.Potential market for business diversification
0.05 3 0.15
Threats
5.High competition from increasing private telecom
provider.
0.20 4 0.80
Switching behavior of consumer for low price keeping
6. quality intact.
0.1 2 0.20
Instability in policies due to new political system
7. challenges
0.15 1 0.30
8. Unstable economy
0.05 1 0.05

Total 1.00 2.8

The table above shows that the opportunities outweigh threats. So, we can conclude
that the organization has potential and promising opportunities for it to grow. It can
grab those opportunities to excel further.

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4.2 IFE Matrix

IFE (Internal Factor Evaluation) Matrix shows the internal strengths and weaknesses
of the company. This matrix gives a clear picture of how well the factors represent
strong internal condition of the company. It be a process of internal evaluation and
as like the EFE matrix, these factors are given weight age (total of which is 1) and
then rated on the basis of how strong the internal conditions are. Strengths are given
the ratings between 4 and 3; where 4 means major strengths and 3 means minor
strengths. Similarly, the weaknesses are given the ratings of 1 and 2 where 1 means
major weakness and 2 means minor weakness.

Weighted
Weight Rating Score
Strengths
1. Government backed company 0.08 3 0.24
2. Major telecom service provider 0.19 4 0.76
3. Sustainable business modeling 0.17 4 0.68
5. Comparatively low international call tariff 0.03 3 0.09
6.Strong brand image and loyalty 0.14 4 0.56
7 Presence in rural area via CDMA phone 0.01 3 0.03
Weakness
8. Low signal strength 0.15 1 0.15
9.Late adoption of innovative schemes 0.13 2 0.26
10.High overhead cost and Ineffective HR
management
0.05 2 0.1
11.Low quality customer care services 0.05 2 0.1
Total 1 2.97

The above table shows promising strengths of NTC and its critical weaknesses. As per
the implication of IFE (Internal Factor Evaluation) matrix, we can say that the
strengths are higher than that of the weaknesses. Here, the total score is 2.97 i.e.
more than 2.8 which signifies that the internal situation of the company is strong.

4.3 IE Matrix

IE (Internal-External) Matrix is a strategic management tool that is used to analyze

the working condition and strategic position of the business. It is based on the analysis
of the internal and external environment of the organization. On X-axis, the matrix

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shows total score of IFE matrix, as shown above, and on Y-axis, the matrix shows
total score of EFE matrix. The point where both these matrixes lie are plotted on IE
matrix to draw necessary conclusions about the strategy to be used by the
organization.

Figure 4: IE matrix

The table above represents IE matrix where different quadrant mean different
strategies to be used by the organization. Following are the implication of the matrix:

Quadrant I, II and IV: Grow and Build

Quadrant III, V, and VII: Hold and maintain the organization

Quadrant VI, VII and IX: Harvest or Divest the company

From these implications, it can be concluded that NTC lies on quadrant V where the
strategy is to hold and maintain the organization. It can use the strategies of market
penetration and product development.

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4.4 Generic Strategies That Strategic Business Units Use

A company’s attractiveness in its industry is a primary determinant of its profitability.

Location within that industry comes in at a close second. According to the Quick
MBA website, “Even though an industry may have below-average profitability, a firm
that is optimally positioned can generate superior returns.” That is where strategic
business planning comes in.

Generic strategies are the core idea about how a firm can best compete in the
marketplace. Today communication services are an integral part of people’s daily
lives. Since the arrival of Smartphone and tablets, we rely increasingly on digital
communication for social and business Interaction. Communication services have
moved from being expensive and exclusive to being available, affordable and
personal.

4.4.1 Cost Leadership Strategy

To practice cost leadership, organizations compete for the largest number of

customers through price. Cost leadership works well when the goods or services are
standardized. That way, the company can sell generic acceptable goods at the lowest
prices. They can minimize costs to the company in order to minimize costs to the
customer without decreasing profits. A company either sells its goods at average
industry prices to earn higher profits than its competitors or it sells at below-industry
prices, trying to profit by gaining the market share. Wal-Mart is an example of a
company with a cost leadership strategy.

4.4.2 Differentiation Strategy

Differentiation strategy calls for a company to provide a product or service with

distinctive qualities valued by customers. You draw customers because you set yourself
apart from the competition. To succeed at this strategy, your business should have
access to leading scientific research (or perform this research); a highly skilled and
creative product development team; a strong sales and marketing team; and a corporate
reputation for quality and innovation. Apple, for example, uses differentiation strategy.

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4.4.3 Focus Strategy

Focus strategy is just what it sounds like: concentrate on a particular customer, product
line, geographical area, market niche, etc. The idea is to serve a limited group of
customers better than your competitors who serve a broader range of customers. A focus
strategy works well for small but aggressive businesses. Specifically, companies that do
not have the ability or resources to engage in a nationwide marketing effort will benefit
from a focus strategy. Focus can be based on cost or differentiation strategy. It involves
focusing the cost leadership or differentiation on a small scale. The idea is to make your
company stand out within a specific market sector.

In the context of NTC, Cost leadership is recommended. Charging a lower price but
selling a larger volume of a good allows a company to maintain its profits and expand
its market share. To be co maintain and increase its major market share NTC can be
found following cost leadership strategy. NTCs data package are more value for
money as it has more validity days per mb per package.(Re. 1.00 per MB24 hour.

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4.5 SWOT Matrix
SWOT analysis is a technique to create a quick overview of the company’s strategic
situation. Companies try to overcome threats by using its existing strengths and grab
the opportunities provided by the external environment to overcome its internal
weaknesses. This matrix takes managerial planning discussions into a more structured
approach and that aids strategic analysis of the company.

Figure 6: SWOT Matrix

Cell I is the most favorable situation, where firm faces several environmental
opportunities and has numerous strengths that encourage pursuit of those
opportunities; this situation suggests growth-oriented strategies.
As shown in the figure above, cell II implies a turnaround strategy where the
company should reduce its redundant cost or assets or both to increase its
profitability. Similarly, cell IV demands a diversification strategy where the
company can use its substantial strengths to reduce threats it encounters from
the external environment. The third cell represents a defensive strategy where
it has to divest or liquidate the company so as to ensure no further loss.

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 Looking into these implications, it can be concluded that NTC lies on the
first quadrant where the strategy is to grow. It has promising opportunities
available and the internal strength is strong, so, the strategy suggested for the
company is aggressive growth.
Despite the simplicity and broad conceptual approach of SWOT matrix, it
still is exposed to some limitations that may be highlighted as:
A SWOT analysis can overemphasize internal strengths and
downplay external treats

A SWOT analysis can be static and can risk ignoring changing

circumstances.

A SWOT analysis can overemphasize a single strength or element of strategy

Strength is not necessarily a source of competitive advantage.

Thus, considering these limitations, it is essential to study or analyze, in detail, the

grand strategies that a company should follow for attaining its competitive
advantage.

4.6 Grand Strategy Clusters Matrix

Grand strategies that company can follow are:

1) Growth Strategy

1. Concentrated Growth: Committed to its current products and markets

2. Product Development: New product in same market
3. Market Development: New market with same product
4. Innovation: Innovative product
2) Diversification
1. Vertical Integration: Backward or forward integration
2. Horizontal Integration: Acquisition of additional business activities at
the same level of the value chain
3. Conglomerate Diversification: It occurs when a company stretches out
its business into an area which is dissimilar to its core business

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4. Concentric Diversification: Diversification in same portfolio
Fig 7: Grand Strategy Clusters

Since the company has strong competitive position and rapid market growth,
the company can choose to be in the cell 1. In cell 1 following grand strategies can be
chosen

Concentrated Growth
Vertical Integration
Concentric Diversification
Looking at the company’s position and performance, it may go for concentrated
growth .NTC can attempt to increase market share by increasing the usage rate of
present customers, by attracting competitor telecom’s customers, or by selling to non
users. Also, precisely, the company may go for market or product development.
According to Grand strategy cluster matrix, it can be concluded that NTC lies in the
1St quadrant where it is considered to have an excellent strategic position. The
strategies which NTC can apply to be in the quadrant 1st are concentrated growth( via
product development or market development) and forward integration. This is
because customers are seen to be more satisfied with the firm’s current strategy, shifting
notably from it would endanger the firm’s established competitive advantages.
In the same way it can opt for the forward integration strategy –in order to protect its
profit margins and market share by ensuring better access to consumers or material

25
inputs. NTC can opt for the acquisition of a firm nearer to the ultimate customer-
example opening retail centers for sim distribution .NTC has also introduced NTC
approved 3G and 4G routers as a move towards forward integration.

4.7 Quantitative Strategic Planning Matrix (QSPM)

QSPM is a decision making tool in strategic management that takes inputs from IFE
and EFE matrixes. Also, the strategic alternatives identifies through matching stage
are analyzed here to draw conclusions and take decisions.

Matching between NTCs internal resources and skills, and the opportunities and
threats created by its external factors, the following alternatives have identified. They
are:

Alternative Strategy 1 : Market Development

Alternative Strategy2 : Product Development

MD PD
Key Factors Weight AS TAS AS TAS
Opportunities
1. Technological advancement 0.20 3 0.60 4 0.80
2. Large domestic market for market development in urban
areas. 0.20 3 0.60 4 0.80
3. Untapped Rural areas
0.05 3 0.15 3 0.15
4.Potential market for business diversification
0.05 4 0.20 4 0.20
Threats
5. High Competition from increasing private telecom
provider 0.20 1 0.20 3 0.60
6. Switching behavior of consumer for low price keeping
quality intact 0.1 2 0.20 1 0.10
Instability in policies due to new political system
7. challenges 0.15 2 0.30 2 0.30
8. Unstable economy 0.05 2 0.10 2 0.10
Strengths
1. Government backed company 0.08 2 0.16 4 0.32
2. Major telecom service provider 0.19 2 0.38 1 0.19
3. Sustainable business 0.17 3 0.51 3 0.51
4. Comparatively low international call tariff 0.03 0 0 0 0
5. Strong brand image and loyalty 0.14 4 0.56 3 0.42
6. Presence in rural area via CDMA phone 0.01 3 0.03 3 0.03

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 Weaknesses
9. Low signal strength 0.15 1 0.15 2 0.30
10. Late adoption of innovative schemes 0.13 2 0.26 3 0.39
11. Ineffective HR management 0.05 2 0.10 2 0.20
12. Low quality customer care services 0.05 1 0.05 2 0.10
Total score 5.36
5.41

Through the analysis of QSPM matrix, the best alternative among the available
strategies identified is Product Development. Through the analysis of QSPM matrix the
best alternative among the available strategies identified as product development.
Product development involves the substantial modification of its existing products or
the creation of new but related products that can be marketed to current customers
through established channels. This strategy is adopted to take advantage of a favorite
reputation or branding.
NTC can attract its satisfied customers to its new services as a result from its positive
experience to the NTC previous offerings. NTC can modify its current range of
products and services like upgrading the data package in same price to appeal to the
younger customer base NTC can also provide direct call services to more and more
countries.

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 CHAPTER V

LONG AND SHORT TERM OBJECTIVES

Growing a business requires setting short- and long-term goals. Often the short-term
goals are the steps necessary to achieve the longer-term goals. Choose related areas
such as advertising and revenue, and base short- and long-term goals within these
categories. An example of a short-term goal is to increase advertising budget each
month for the next three months. An example of a long-term business goal that the short-
term goal helps achieve is to double business revenue by the end of the fiscal year.

5.1 Long- term Objectives

Long-term objectives define any goal that has a time frame exceeding one year.
Business goals that are normally considered long term include developing a new
product, growing annual revenue and developing a comprehensive marketing and public
relations strategy. Importantly, long-term goals must not go on forever. While they take
more time than short-term objectives, long-term goals must be realistic and time bound.
The long term objectives of NTC are:
 To decrease the Digital Divide in the country by providing telecommunication
service especially in rural and remote areas.
 To ensure the good availability of infrastructure(telecommunication) by
providing affordable and good quality services
 To establish telecommunication infrastructure development company.
 To maintain the existing customers and increase the customer base market
share of the company.

However, the long term objective of NTC can be divided in two parts. They are:

Strategic Objectives
Financial Objectives

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5.1.1 Strategic Objectives

The strategic objective of NTCis to increase market share and dominate the market
leadership. To achieve this objective, NTC is focusing to replace the landline service
with more advanced PSTN technology, which allows ADSL service, Video on
demand in same time. They are focusing to equip technically to stand against the
competitors. They are striving on value added services like Mobile money.

5.1.2. Financial objectives

The financial objective is to grow at higher than industry rate and create value for
shareholders. To become market leader; NTC is maintaining sufficient cash reserves
to invest in R&D and network dividend. This can help in bringing innovative services
and packages and improve call quality. As more services and quality in ensured,
higher the consumption of services that helps to increase revenue.

5.2 Short term objectives

Short-term objectives represent the goals an organization sets that are centered on
tasks that can be achieved within the next six months or, at the outset, within one
year. This is an easily measurable goal and employees can be held directly
accountable for ensuring that it is met. Short term objectives are the basis to achieve
long term goals. The short term objectives of NTC to achieve long term objectives
are:
 Standardize and replace the landline service with advanced PSTN technology.
 Introduce IPTV, Video on demand service simultaneously.
 Introduce Mobile money related services.
 Introduce customer care service via SMS, E-mail and web chat.
 Introduce feedback and queries services via social media platforms.

5.3 Functional Tactics

It is the approach a functional area takes to achieve corporate and business unit
objectives and strategies by maximizing resource productivity. It is concerned with

29
developing and nurturing a distinctive competence to provide a business unit with a
competitive advantage. The functional tactics of NTC are as follows:

NTC should primarily pursue a push strategy with the presence of extensive
promotion and a wide and well-structured distribution channel. NTC should
focus in the presence of different schemes, which should be lucrative, want to
push products into the markets.
The costs associated with the telecom industry are widely fixed in nature and
realizing this NTC from the outset set to grab a large customer base and provide
its products at a range which is highly affordable.
NTC should conduct market research regarding the performance of its
products and other feedback activities at very regular intervals.
At NTC the product which is a service is constantly produced and in a high
number. The operation should focus on repair and maintenance and
installation of new infrastructure to enhance the quality and availability of the
service.

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 CHAPTER VI

STRATEGIC CONTROL
Strategic control is concerned with tracking the strategy as it is being implemented,
detecting any problems areas or potential problem areas, and making any necessary
adjustments. Strategic control means the mechanism put in place to have an oversight
on the strategy implemented. It also helps in identifying problems or challenges that
come up in the implementation of a strategy and make necessary adjustments.
Strategic control can be defined as process of monitoring as to whether to various
strategies adopted by the organization are helping its internal environment to be
matched with the external environment. Strategic control is the process of measuring
performance. It monitors whether or not the strategic choices result in desired action.
Conventionally, control is punishment oriented and assumed that people are bound to
make mistakes. However, the modern approach is improvement oriented and control
is done simultaneously with implementation of the strategy.
There are many types of control in the modern approach.
The various strategic control provides a different perspective and method of analysis
to maximize the effectiveness of the business strategy:

1. Premise Control

A strategy may be based on certain premises related to the industry and other
environmental factors like government policies and regulations, socio-demographic
factors, economic conditions, etc. Premises may be affected by environmental factors
such as inflation, interest rates and social changes or by industry factors such as
competitors, suppliers and barriers to entry. These controls will help recognize
changes in the premise so that strategy can be adopted accordingly. Here, the
anticipation, projection or prediction is premise and controlling on the basis of such
premise is important for NTC as it operates in such a dynamic environment. Periodic
review is necessary to understand the validity of the strategy even after few years,
especially when Nepal is going through a transition phase and is in a vulnerable
condition with lucrative policies.

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 2. Implementation Control
Implementation control is designed to assess whether the overall strategy should be
changed in the light of unfolding events and results associated with incremental steps
and actions that implement the overall strategy. Strategies Implementation of NTC
includes product development Strategy after the analysis of QSPM (Quantitative
Strategic Planning Matrix). There are various short term and long term objectives
that are designed to monitoring strategic thrusts and doing milestone reviews.

3. Strategic Surveillance Controls

It is designed to monitor a broad range of events inside and outside the company that
are likely to threaten the course of the firm’s strategy. Therefore, it is necessary that
the company exercise surveillance for timely detection of such developments and
corrective action.

4. Special Alert Control

A special alert control is the rigorous and rapid reassessment of an organization's
strategy because of the occurrence of an immediate, unforeseen event. Special alert
controls allow reconsidering the relevancy the strategy in light of these new events. It
requires crisis management team, continuous screening of team capabilities,
development of competencies and experts. NTC has been planning to introduce
Enterprise Risk Management and Revenue Assurance technologies.

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Considering above analysis, NTC may go for premise control. Premise control is
designed to check methodically and constantly whether the premises on which a strategy
is grounded on are still valid. Here, the anticipation, projection or prediction is premise
and controlling on the basis of such premise is important for NTC as it operates in such
a dynamic environment. Periodic review is necessary to understand the validity of the
strategy even after few years, especially when Nepal is going through a transition phase
and is in a vulnerable condition with lucrative policies. Thus, NTC should go for
premise control.

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 CHAPTER VII

SUMMARY, CONCLUSION AND RECOMMENDATION

7.1 Summary and conclusion

From establishment to current scenario, NTC has made great contribution to uplift the
situation of Nepalese telecommunication industry. It is the pioneer telecommunication
provider in Nepal. It is state owned company and aims at decreasing the digital divide
prevalent in the company .It plans to do so by providing quality services all over the
country .
Looking at recent actions adopted by NTC, we could say that its programs and
policies are consistent with its Mission and Vision. If we analyze value chain
activities of NTC, then each activity are consistent with country strategy and
corporate strategy.
NTC has always been the leading network provider at a lowest cost which is
affordable .NTC has a major customer base which could be enhanced further by
investing in innovative promotional campaigns.

Even though the growth of the company is stagnating in recent times, and the pressure
from competitors is always on the increase, new strategies and innovations, acquisitions,
penetration into international markets better schemes for customers should ensure that
NTC keeps its nose above its strong competition. The prospects of NTC continue to
remain strong because it is built around very strong fundamentals, government backing,
support from NTA and this growth should be visible in the near future.

Among its priorities it now counts new economic and social concerns as the information
society develops: national coverage is a major issue and NTC intends to play its part to
protect the interests of all consumers.

To this backdrop, new regulatory policies are expected arising out of the new federal
governance. It must align itself with the regulatory activity with new tools .It must
also contribute to the development of a more consistent market that is better able to
face up to the challenges of the information society within the context of globalization

34
We would like to conclude NTC being one of the major telecommunication provider
and pioneer of mobile telecommunication in Nepal, focusing to connect people from
the remote and rural areas to the major cities in affordable manner.

7.2 Recommendations:-
1. Focus in promotional campaigns: There is high competition in the market from
private telecom companies. In this case, NTC should focus in their promotional
campaigns and view it as an investment for maintaining its customer base, attracting
new customers towards its various products and schemes.

2. Focus in innovative schemes in timely manner: In a competitive market, every

customer counts, and the customers want innovative products. The private telecom
companies are coming up with new schemes every time. NTC should keep up with
the trends via innovative schemes like cheaper call rates and data package for Family
(NTC users) regularly.

3. Improvement in Technology: NTC should update its landline services with more
advanced technology of PSTN which will allow better ADSL services, which in turn
will allow introduction of IPTV and Video on demand services possible for the first
time in Nepal. This will give NTC an edge over its biggest competitor.

4. Focus on customer service and complaint handling: NTC should focus on

improving its customer services with faster customer service .It should also update its
complaint handling with social media platforms, Email, SMS rather than just limited
to telephone.

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 Bibliography

Amita Mital,John Pearce,Richard Robinson. (2015). Strategic Management:

Formulation,Implementation and Control. Tata McGraw-Hill Education Pvt. Ltd.

http://www.thehimalayantimes.com/fullNews.php?headline=NT+loses+6pc+mark...

http://mobilenepal.net/news/nt-loses-6pc-market-share

https://www.ntc.net.np/pages/view/nepal-telecom

http://www.newbusinessage.com/MagazineArticles/view/1527

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