THE OPEN UNIVERSITY OF SRI LANKA

Master of Business Administration (MBA)

Human Resource Management

(OSP9336) - STRATEGIC MANAGEMENT

By

E.S. Jayaweera

Reg.No - 621428735
Introduction

Strategy is the direction and scope of the organization for a long term which achieved
competitive advantage in a changing environment through the resource allocation with the
aim of fulfilling stakeholder expectation (Johnson at al,2008). The strategic planning process
of achieving long term organizational objectives through the setting of strategies.

Sri Lanka telecom (SLT)

Sri Lanka Telecom PLC is the premier telecommunication services provider in Sri Lanka and
Information and Communication Technology solutions provider, connecting over 10.2
million subscribers, and has always being in the forefront in catering to the nation's
requirements. Sri Lanka Telecom started its operations in 1858 and in 1991 its become a
corporation. In 1997 it was privatized. The company provides a huge range of domestic and
international services which includes fixed & wireless voice, internet and data services that
cater to a wide audience comparison of both corporate and domestic customers.

SLT-Mobitel was the pioneer in South Asia to launch the first Super-3.5G HSPA network in
South Asia in 2007, and subsequently trialed HSPA+, MIMO (Multiple Input Multiple
Output) in 2009, another first in the region, Mobitel went on to demonstrate 4G-LTE
technology also for the first time in South Asia in 2011.

Vision

All Sri Lankans seamlessly connected with world-class information, communication and
entertainment services

Mission

You’re trusted and proven partners for innovative and exciting communication experiences
delivered with passion, quality and commitment

SWOT Analysis

Strengths

SLT strengths are its resources and capabilities that can be used as a basis for developing a
competitive advantage.
• Strong brand names
Currently SLT has become a well established telecommunication organization in Sri
Lanka
Market share – Largest telecom service provider and having good market share in Sri
Lanka
• Good reputation among customers
• Cost advantages
• Favourable access to distribution networks
 4G coverage at around country and fiber coverage at major cities
• Happy and motivated work force (Less employee turnover)

Weaknesses
Weaknesses stop an organization from performing at its optimum level. The absence of
certain strengths may be viewed as a weakness
• High advertising cost
• Heavy reliance on outside expertise
• In some cases, a weakness may be the flip side of a strength
High production capacity vs to big to reacting quickly to changes in the strategic
environment Few customer = better data service but higher cost per customer
• Lack of Operational Planning
• Late delivery of suppliers
• Low signal Strengths

Opportunities
Opportunities refer to favorable external factors that could give an organization a competitive
advantage

• Technological advancement – The telecom can use such technology in their

operations to improve the overall performance and customer satisfaction (eg-working
from home situation)
• New opportunities for profit and growth
• unfulfilled customer need- data
• arrival of new technologies- LTE, fiber to home
• loosening of regulations- new licenses, converged licenses
• removal of international trade barriers

Threats
• Threats include anything that can negatively affect your business from the outside,
such as , Competition of other Telecommunication providers – Ex. Dialog
• Other telecommunication services entering the market with new technologies
• Other network failures – Ex due to the power cut
• Government Issues. Increasing rules and regulations
• Economic crisis – Difficult to enter the new market and existing ones are unable to
expand and also cannot imports instrument without having dollars.

PORTER’S FIVE FORCES ANALYSIS OF SRI LANKA TELECOM

Pearce and Robinson (2005) in [3] and Johnson and Scholes (2002) in [4] mentioned
that Porter’s model provides an easy and simple approach for industry analyses. This model
also provides an opportunity to take important decisions like whether to enter in a particular
industry or to leave it. This is also a very simple tool in the hands of strategists to determine
the profitability position of a company.

Figure 01- Porter’s Five forces

Using porter’s five forces mode to consider the highly dynamic telecommunications industry
enables us to outline the competitive structure of this industry in Sri Lanka. The SLT
providing telecommunication services including 4G, Fiber, FTTC, FTTB and FTTH
technologies, fixed wired and wireless telephone, mobile broadband, dial-up internet and
satellite internet services.

01. Threat of new competition: Barriers to entry

The threat of new entrance is usually based on the market entry barriers.
Telecommunication industry due to higher amount profitability the attracting new
business company is competitive high. To cover high fixed costs, serious contenders
typically require a lot of cash. Ownership of a telecom license can represent a huge
barrier to entry and most important solid operating skills and management experience is
making entry even more difficult.

Many new entrants, which eventually will decrease profitability for all firms in the
industry unless there are barriers to entry:
• Patents and rights (site rights)
• Licenses -market restriction
• ownership requirement Existing mobile network coverage and technologies
• Existing fiber network of TN
• Brand Loyalty
• Absence of number portability Switching costs of postpaid customers (contract
durations, keeping number etc.
• Capital requirements
• Access to distribution
 • Industry profitability; the more profitable the industry the more attractive it will be
to new competitors.
• Labour cost
• range availability

Bargaining Power of supplier

Supplier power is a image of the buyer power. As result, the analysis of supplier power
typically focuses first on the relative size and attentiveness of suppliers relative to industry
participants and second on the degree of separation in the inputs supplied.
The suppliers in SLT are the many factures of telephone switching, switch board equipment,
fiber optic cables, network equipment. The Bargaining power of suppliers in the telecom
industry is moderate.

• Presence of substitute inputs telecommunications

• Bargaining power of employees - trade unions
• Suppliers may refuse to work with the firm, or, e.g., charge excessively high prices
for unique resources Supplier switching costs relative to firm switching costs Services
(consulting, technical, billing)
• Strength of distribution channel of suppliers
• Supplier concentration to firm concentration ratio Electricity- solar

The Threat of Substitutes

The extent to which a consumer is willing to pay for a product is dependent upon the
availability of substitute products (Porter, 2008). The threat that substitute products create to
an industry's profitability depends on the relative price-to-performance ratios of the different
types of products or services to which customers can turn to satisfy the same basic need.
Substitutes include IP Telephony, Satellite, Email, Skype facilities and broadband internet
service etc. Among the several substitutes that have emerged, IP telephony has emerged as
the biggest threat. Broadband internet services and satellite can substitute for high-speed
business network needs.

Bargaining Power of buyers

Bargaining power of buyers refers to the strength of the buyer’s position. Buyer power is one
of forces that influence the appropriation of the value created by an industry. The most
important determinants of buyer power are the size and the concentration of customers.

▪ SLT revenue for the time period in 2020 grew from 91,119(000) to 102,348 (000) to
comparison with 2020 and 2021 due to enhance the customer usage during this period
▪ High degree of brand individuality - Company image uplifted after their performances
and then automatically revenue has been up
▪ Price elasticity factors
Competitive rivalry within an industry

Porter’s five forces model was flawed due to the lack of a statistical outline to support it
(Grant, 2002). The model is also focused on the competition at the industry level and does not
get into differences between companies competing within the industry and the dynamic
nature for the competition among them. It is high in those industries where there is a threat of
substitute products and existing power of suppliers and buyers in the market

Installing latest technology – SLT using latest technology as a NGN and National Backbone
Network (NBN), Optical Fibre, ADSL2+,VDSL2,Fixed 4G LTE and 4.5G

TOWS Matrix

A TOWS Analysis is an extension of the SWOT Analysis framework that identifies your
Strengths, Weaknesses, Opportunities and Threats but then goes further in looking to match
up the Strengths with Opportunities and the Threats with Weaknesses.

Figure 02- TOWS matrix

Strengths and Opportunities (SO)

Company’s use an internal strengths to take advantage of external opportunities. All

managers would like their organizations to be in a position where internal strengths can be
used to take advantage of external trends and events.

▪ If the SLT has Good reputation among customers it will be a good opportunity to
enhance their profit, because most of the people attractive that brand and motivate to
try it with good reputation.
 ▪ The SLT work with Happy and motivated working people it will be an opportunity to
get a new technical ideas and the reduce employee turnover.

Strengths and Threats (ST)

Use strengths to avoid or reduce the impact of external threats.
▪ It the Other new telecommunication services entering the market with new
technologies SLT can introduce most familiar new services using new technologies.
▪ If the SLT has a network failure issues can introduce and expand their bandwidth and
coverage.
▪ The entry of new competitors from the industry, low purchasing power of customers,
and global recession could be strong by strategies like increased capital injections and
the condition of diverse products (Cole, 2013). Therefore the SLT stocks have seen
increased trading activities as investors consider for a profitable future.

Weaknesses and Opportunities (WO)

Focus on improving internal weaknesses by taking advantage of external opportunities. A

sometimes key external opportunity exists and firm has internal weaknesses that prevent it
from exploiting those opportunities.
▪ The SLT move towards developing its network of operations in the emerging markets
has elevated its chances for growth that simultaneously mitigates the risks associated
with its threats.
▪ If there may have a low network connection in some areas SLT can enhance their
Fiber network facilities and maximize their signal coverage using that signal towers.

Weaknesses and Threats (WT)

These are defensive tactics directed at reducing internal weaknesses and avoiding
environmental threats. An organization faced with numerous external threats and internal
weaknesses may indeed be in a precarious position. In fact, such a firm may have to fight for
its survival, merge, retrench, declare bankruptcy, or choose liquidation.

Grand Strategy Matrix

Grand strategy matrix is the instrument for creating alternative and different strategies for the
organization. All companies and divisions can be positioned in one of the Grand Strategy
Matrix’s four strategy quadrants. This is based on two dimensions, competitive position and
market growth.

This matrix offers feasible strategies for a company to consider which are listed in sequential
order of attractiveness in each quadrant of the matrix.
 Figure 03- Grand Strategy matrix
Quadrant I (Strong Competitive Position and Rapid Market Growth) – The first
quadrant refers to the firms or divisions with strong competitive base and operating in fast
moving growth markets. . The idea behind is to focus and make the current competitive base
stronger. Such firms or divisions are better to agree to and pursue strategies such as market
development, market penetration, product development etc

Quadrant II (Weak Competitive Position and Rapid Market Growth)

If these SLT foresee a tough competitive environment and faster market growth than the
growth of the SLT, the better option is to go into divestiture of some divisions or liquidation
altogether and change the production.

Quadrant III (Weak Competitive Position and Slow Market Growth)

If the company in slow-growth and weak competitive positions, company must be doing
some strong changes quickly to avoid further failure and feasible liquidation. Ex: general cost
and asset decrease should be pursued first.

Quadrant IV (Strong Competitive Position and Slow Market Growth)

Company is better to go into related or unrelated combination in order to create a huge market for
products and services and also it have the strength to launch diversified programs into more capable
growth areas.
Ansoff Matrix

Existing Market Penetration Product Development

Markets

Market Development Diversification

New
Markets

Existing Products New Products

Figure 05 – Ansoff Matrix

This is a most popular method used by the organizations to grow their business. This product
market development grid support to identify the product and market strategy option available
to the organization.

Market Penetration

In this strategy, SLT can lower their prices so that they can enter into the market more
quickly. To achieve this point it need more sales promotion, advertisement and price
reduction to maximize their sales and market share.

Market Development

SLT Need to do market research for identifies a new market for development. New market
should be a segmentation or new geographical area in country.

SLT has good market but company growth rate should be increase the enhanced market
coverage. SLT has not completely covered the village area geographical area. Through the
market development can increase the company growth and profit.

SLT is a already provide best service their customer and it’s a leading telecommunication
service provider in Sri Lanka. Sri Lankan people has a good reputation about SLT brand and
it will create a employment opportunities to the market.

Product Development

In Market development strategy, the company takes an existing product into a new market. In
business environment peoples taste and needs changing very quickly because of the
environment change. Therefore customers like to try new product and technologies and also
providing speed and new features. SLT also create a good relationship with customers. It’s
use to good strategy for development their product and using fiber for product development.

Diversification

It’s implies a new product to the new market. SLT can mergers, Acquisitions and joinventure
for enhanced their products. Ex -SLT joins with Mobitel and maximized their market shares
and growth.

Conclusion and Recommendations

Strategic management practices implemented by the organization must be monitored in

consistent intervals to make sure that the company is in the correct direction in its way to its
vision and mission (Collis & Montgomery, 1998). Strategic management can be identified as
a serious investment to consider in today’s competitive business environment.

TOWS analysis - The primary advantage of this approach is the influence of prioritized
internal and external factors embedded in alternative strategies. The main disadvantage of the
TOWS matrix is that certain combinations are not considered such as SW or OT.

In SLT can stretching has been helpful in laying the foundation for its competitiveness in the
market. The weaknesses and threats that SLT has been subjected to hinder its growth in the
market. in this respect, various alternatives such as partnerships, mergers, acquisitions, and
enhancing its global presence could be strategic for sustainable growth and TOWS analysis is
can recommend to this company.

And also SLT performs well in the market today, with the technology improvements of
competitors and due to some major factors, including price, it seems that it is not in control of
its current market position any more. SLT can recommendation more expand current
activities, and reposition product lines, expand their bandwidth which will assure that the
company is in its right direction.

References

Collis , D. J., & Montgomery, C. A. (1998). Creating Corporate Advantage. Harvard

Business Review, 76(3), 71-83.

Cole, A. (2013). Analysis of Etisalat. Munich, Germany: GRIN Verlag.

Johnson, G., Scholes, K., & Whittington, R. (2005). Exploring Corporate Startegy (7th ed.).
New Jersey: Prentice Hall

Porter .M.E (1980). ‘Competitive Strategy: Techniques for Analyzing Industries and
Competitors”, New York: Free press.p.3. [2].

Wheelen.L.Thomas & HungerD.J.(2002), “Strategic Management and Business

Policy:Concepts”,8th Edition,Published by Pearson Education, India
https://www.slt.lk/sites/default/files/sustainability_reports/AR-2021-Final.pdf