Report on Zong
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VISION
“Making
communication exciting”
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MISSION
“To be the leading mobile operator of Pakistan by continuously innovating and offering exceptional quality services to be good corporate citizen and envoy of friendship between china and Pakistan core value. Responsibility makes perfection”
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Introduction
• ABOUT ZONG
Zong is the first International brand of China Mobile being launched in Pakistan. The company is often cited as China Mobile (Pakistan). It is meant to empower and liberate the people of Pakistan in every nook and corner of the country. It will become a part of their hearts, their minds and bring about a change in their lives that every one desired but few thought would be possible. The core essence of ZONG is to allow people to communicate at will. Without worrying about tariffs, network coverage, capacity issues or congestion. ZONG will be supported by ground breaking communications, trend setting customer service and an unmatched product offering which will redefine rules of the game and establish ZONG as a serious contender for the number one spot. ZONG would offer its customers with entertaining & innovative value added services and will empower them by giving a wide variety of products, services & content to choose from. We are privileged to be the pioneering country introducing this brand with others to follow. And God willing, together we will also make ZONG a success story for others to try and replicate.
• ABOUT China Mobile Pakistan (CMPak)
China Mobile Pakistan (CMPak) is a 100% subsidiary of China Mobile. The pioneering overseas set up of China Mobile came through acquisition of a license from Millicom to operate a GSM network in Pakistan. So far CMPak has invested more than US$ 700 million in the telecom sector in Pakistan and an additional US$ 800 million will be invested till the end of year 2008. With ambitious plans to cater to the fastest growing Pakistani market and to win over the ever demanding Pakistani customer, it will be offering unprecedented coverage, voice and data services as well as a wide range of tariff options to choose from.
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CMPak 's edge comes from the experience and expertise of running the world 's largest telecom service and the commitment they make to setting quality and customer relations standards. CMPak is geared to offer neatly packaged VAS products that will benefit the individuals, corporate as well as small businesses. Led by a team of professionals from the field of cellular Communication, CMPak is determined to make its mark in the Pakistani market and to change the way people communicate.
• HISTORY
Recently china mobile company in Pakistan after replacing the code 0304 with 0314 now introduced its new brand in called “ZONG”. With an introductory slogan “Say everything” or “Sub Keh Do” & started its advertising campaign at popular print & electronic media outlets. Paktel started its commercial operations in Pakistan in November 1990 as the pioneer of cellular telephony with an AMPS network which was converted to TDMA (Digital) in 2003. Soon after GSM quickly gained popularity all over the world and became the technology of choice leaving AMPS/TDMA far behind. Paktel’s principal shareholder was Millicom Pakistan, which held 98.86% equity of Paktel. But however on Feb 13th 2007 Millicom announced that it had completed the sale of its 88.86 per cent shareholding in Paktel Limited to China Mobile Communications Corporation which finalized Millicom’s exit from Pakistan. Soon after, china mobile company bought all the assets of Paktel, the new management seems busy, to tie up promotional strategies, with the intention to win the telecom market slowly & silently. Well that is just a prediction I have made because in Pakistan Chinese products mostly are famous due to their cheap prices. & more the 90% population in Pakistan is price conscious due to their lower or medium income level, so lets see weather ZONG is facilitating mobile users specially youngsters by providing lowest calling, SMS, MMS as well as GPRS rates or not. •
MISSION STATEMENT ANALYSIS
MISSION STATEMENT ANALYSIS
Customer Product and services Market No Yes No
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Technology Survival, growth, profit Self concept Public image Employees Psychology
Yes Yes Yes Yes No Yes
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PRODUCTS AND SERVICES
Packages
PREPAID ZONG 65
Ladies and Gentlemen, we bring you ZONG 65, the new pre-paid package of ZONG that delivers 100% on economy and guarantees lowest call rates to any network in Pakistan
12 Aanay Package
Talk for an entire hour - any hour, for only Rs.4.99 and for the first time in Pakistan you can change the hour everyday!
50 Paisa/Call (8 Aanay)
People claim of simplicity and yet give you half the truth. Only ZONG gives you the full truth at half the price. Now make calls to any other mobile network for 8 Aanay.
Free Package
For the first time in Pakistan you can make free calls for life!
ZONG Super Free Number
That 's right you can literally talk your heart out 24 hours a day everyday to that special someone - all for FREE!
Break Time Offer
For the first time in Pakistan, ZONG offers you the benefit of calling your friends and family freely during daytime.
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Aik Second Package
Make call for just 4 paisa’s per second!
Unlimited SMS Package
ZONG offers unlimited message package only for 3RS per day.
Postpaid Packages
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Line Rent (Rs) 100 300 600 1200 2000
On-Net Calls Airtime 0.5 0.45 0.375 0.3 0.1 Off-Net Calls Airtime 0.5 0.45 0.375 0.3 0.2 FNF 0.4 0.3 0.2 NA N/A Spouse Number N/A N/A N/A Free N/A Free SMS (On & Off-Net) 20
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Interconnect Charges Other Mobile Operators PTCL Per/ min 1 0.52 Per /30 Sec 0.5 0.26
Details
• • • • • • • • • • •
30 Sec billing Air-time rate for both On-Net & off-Net calls are same Off-Net Calls i.e. Calls to other mobile operators & PTCL will be subjected to Interconnect charges given above Free minutes will be calculated on per minutes basis We will offer 5 FnF (on-net only) numbers on 100, 300 & 600 package FnF addition charges will be Rs 15 for each addition For FnF Addition / Modification dial 1313 from your Mobile Spouse number will only be applicable on Rs 1200 price plan with zero charges Spouse number can be added / changed once in a month Free minutes calculation for Rs 1200 price plan will be exclusive of Spouse number as the charging on Spouse number will be zero Free Minutes on 1200 package are exclusive of Spouse number
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• •
Spouse number can be added by calling our help line or visit our Customer services centre Rs 2000 LR package will have 6800 free minutes in total, 6000 minutes will be On-Net with a daily cap of 200 Minutes (Fair usage policy) The first 200 minutes of the day will be charged at Rs 0 after which charging will be done at On-Net Airtime rates i.e. 0.1 per 30 sec
•
• Mobile Number Portability – MNP
Mobile Number Portability (MNP) enables customers to retain their mobile telephone numbers (including the three digit prefix) when changing from one mobile operator to another mobile operator.
Benefits
• •
You will be able to take advantage of ZONG’s attractive tariffs and service offerings without even changing your mobile number. You will save the inconvenience of informing all your contacts as is faced in the changing your number.
You will experience cost saving by avoiding stationary cost (letterheads and business cards) printing since your number will remain the same.
• Customer service centers
“The beacon of ZONG’s impression and torch bearers of a new era in customer interaction, taking customer service into a portal of customer excitement. These are the doors to ZONG’s first and foremost realization of its promise to excite customers with a new trend in service. Setting the tone and ambiance which is second only to your home, these are ZONG’s arms across the country to welcome everyone to experience the comfort when a true promise is fulfilled.”
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Zone
Address
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1. S.A 16, 17 & 18, Plot # FL 17, Block 5, KDA Scheme 5, Clifton KARACHI Karachi 2. Gulshan-e-Iqbal Opposite Batul Mukaram Masjid Karachi Big City, Shop No G 59 & 60. 3-E-2, Liberty Roundabout. Main LAHORE Boulevard. Gulberg III ISLAMABAD 68-E Jinnah Avenue, Blue Area Islamabad RAWALPINDI Plot # 7, 8 ,9 Bank Road Rawalpindi FAISALABAD Lucky Plaza, 213 Main Susan Road. Faisalabad MULTAN Multan Arcade Main Katchery Road Multan QUETTA Fayyaz Lab, Jinnah Road- Quetta PESHAWAR Burjaman Centre, University Road, Peshawar Shop # 5, Ali heights, Auto Bhan Road, near CitiBank, HYDERABAD Hyderabad JHELUM Old Al-Bilal Hotel, Cantt chowk ,GT Road, Jhelum SAHIWAL 511/BVII, Jail Road, Civil Lines. Sahiwal DG KHAN Azmat Road DG Khan GUJRAT Euro Heights GT Road Gujrat GUJRANWALA Near Traffic Police Office, GT Road, Gujranwala SIALKOT Shop No. 17, Aziz Shaheed Rd. Sialkot Abbotabad Business Complex, Supply Bazar, Manshera RoadABBOTABAD Abbotabad MARDAN Zong Plaza, Mall Road, Mardan Cantt SARGODHA Parhar Plaza, Railway Road Sargodha Baghdad UL Jadeed Road DIG Chowk Near Al Haq House BAHAWALPUR Bahawalpur RAWALPINDI SATELLITE TOWN SUKKUR Plot # B130, B block- Satellite town- Rawalpindi Shop # 421-422.C Minara Road Sukkur
Careers
ZONG is committed on attracting and retaining the best human resource from all over Pakistan. Its also provides a working environment which satisfies the professional and personal needs of its employees.
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• ZONG Mobile Internet GPRS Coverage
Fastest growing coverage in Pakistan.
ZONG Unlimited ZONG Free MMS
@ Rs. 400+Tax/month
@ Rs. 10+Tax/M
The epoch of multimedia content is upon us and the last thing we’d want is to stick to the age old conventional messaging techniques.
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ZONG Mobile Internet Hourly Package
Another spectacular service from ZONG that will keep you entertained 24/7. After rocking the market with our services and all the amazing call rates, we are back with an outstanding feature for all packages; ZONG hourly based Internet package.
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ZONG Internet USB Card
The ZONG Internet USB Card is a device (with a SIM inside it) which can be inserted in your laptop/desktop PC (in the USB Slot) to provide you with access to the internet. It works on the EDGE/GPRS network and gives you wireless Internet connectivity, anytime anywhere!
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• ZONG Mobile
Zong has come up with another interesting Promotion…. you get a phone, almost free but With a year’s payment in advance. This is equivalent to the US model where customers have to sign a contract to get a discounted phone. In Zong’s case they just get the money in advance (great for them) and hope that users will stay with Them after 12 months.
• •
External Assessment:
PEST Analysis of Pakistan in Telecom Industry
In order to survive and remain profitable in today’s competitive marketplace, Zong need to be able to react and adapt to changes in the external environment and ideally be proactive in impacting these forces. External environment factors can be classified into five general categories: competitive, social/cultural, legal, economic, political, and technological.
Political Factors • Political Instability:
Pakistan is facing political instability causing danger for the telecom industry. But the political factor does not effect on Zong so high because Zong related from china and relationship of china and Pakistan is very strong.
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• Deregulation:
The telecom sector of Pakistan has successfully liberalized in an
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efficient, transparent and fastest deregulation of telecom in the region. The Government of Pakistan gave the status of Industry to Pakistan Telecommunication Sector.
• Changes in Tax Laws:
Tax rates have been increased day by day government tax rate of call is 15% and recently government increased it by 6 % more.
Economic Factors:
• Gross Domestic Product:
Telecom sector of Pakistan has a share of almost 2 percent in National GDP.
•
Average Revenue per User (ARPU):
The average revenue per user is falling. It does not affect value able on Zong. Because Zong started in same condition.
• Decline in Money Value:
The decline in Rupee value against the US Dollar, the decrease in the interconnect charges and lower priced tariffs have resulted in an overall decrease of ARPU in US Dollar terms.
• Outflow of Capital:
The ongoing economic turmoil along with the worsening of security conditions in Pakistan has caused an increased outflow of capital from the country.
Technological Factors:
• Technological Development:
Companies are investing in their infrastructure to not only expand but
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also to upgrade their existing structure. As the competition is strong Zong is focusing on its value added services
• Technological Advancement:
Currently all companies are providing Multi-media Messaging Services (MMS), General Packet Radio Service (GPRS), Virtual Private Network (VPN), Pocket Stocks, Conference Calling, Wallpapers Animated pictures Polyphonic ring tones (WAP), and Voice Mail at low price.
Technological Trends:
The well-recognized technology trends that are influencing the evolution of the network indicate that: o The cost of a call is becoming even more insensitive to the distance; o The modularity of the network is increasing; o The networking is shifting from circuit-switched to packet-routing; o The voice communication is now independent of the network; o The geographic boundaries are irrelevant for emerging technology; o The intelligence and function are moving away from the central office. In these conditions competition is very strong among competitors. Zong is improving itself in technology.
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Five Forces Porter Model
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Five forces looks at five key areas namely threat of new entry, power of
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buyers, power of suppliers, threat of substitutes, and competitive rivalry.
Threat of New Entry
• As government of Pakistan is showing liberalism in case of telecommunication sector and opened its policies to award new licensees to new mobile service providers so threat of new entry is high. • As set-up cost is in billions of dollars so in this case threat of new entry is low, but there are companies who are working to achieve licenses and approaching PTA to know terms and conditions for this. • As for this business companies need a well established distributions and franchises network so threat of new entrant is high in this case.
Bargaining Power of Buyers
• Power of buyer is high in telecommunication sector. There are six market players and players are offering different packages at different prices and a situation of price war is running. Buyers have a power to buy any package which is suited to them. • Cost of switching from one company package to other company package is low. Hence, power of buyers is high.
Bargaining Power of Suppliers
• The power of suppliers is low in case of telecommunication sector. • But the fact is that numbers of suppliers are few in the market but they are competing in the market to make agreements with mobile service providers.
Threat of Substitute Products
• Government also gave so many land lines and wireless local loop licenses to different companies like PTCL wireless local loop, GO CDMA, WORLD CALL etc. these services in future will be like mobile phone services like they are
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planning to offer services a lot but currently they are offering SMS and CLI services to their customers.
Rivalry among Competing Firms in Industry
• Currently there are six market players but in future they will be eight and nine or even more. • Thuraya satellite service is offering subscribers freedom of mobility and uninterrupted service. Thuraya 's satellite technology supplements of existing mobile service providers, overcoming the challenges of large geographical areas and insurmountable terrain.
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Competitive Analysis
Major competitors of ZONG include
Mobilink Ufone Telenor Warid
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Mobilink GSM
Pakistan Mobile Communications Ltd (PMCL)
Type Private Limited Company
Genre Subsidiary
Founded 1994
Founder Motorola USA
Headquarters Islamabad, Pakistan 42 Kulsum Plaza, Blue Area
Area served 5000 cities, towns, and villages across Pakistan
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A Comprehensive Strategy-Formulation Framework
Important strategy-formulation techniques can be integrated into a threestage decision-making framework, as shown below. The tools presented in this framework are applicable to all sizes and types of organizations and can help strategists identify, evaluate, and select strategies.
Stage-1 (Formulation Framework)
1. External factor evaluation 2. Competitive matrix profile 3. Internal factor evaluation
Stage-2 (Matching Stage)
1. 2. 3. 4. 5. TWOS Matrix SPACE Matrix BCG Matrix IE Matrix GS Matrix (Threats-Opportunities-Weaknesses-Strengths) (Strategic Position and Action Evaluation) (Boston Consulting Group) (Internal and external) (Grand Strategy)
Stage-3 (Decision Stage)
1. QSPM (Quantitative Strategic Planning Matrix)
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• Stage-1 (Formulation Framework)
Industry Analysis: The External Factor Evaluation (EFE) Matrix
An External Factor Evaluation (EFE) Matrix allows strategists to summarize and evaluate economic, social, cultural, demographic, environmental, political, governmental, legal, technological, and competitive information. The EFE matrix consists of five steps process.
Five-Step process:
• List key external factors (10-20) Opportunities & threats. You have to prepare a list of all external factors which will affect the EFE matrix. These factors should be two points to be kept in mind these are opportunities and threats • Assign weight to each (0 to 1.0) Sum of all weights = 1.0 Now you have to arrange them according to their weight age that which factor is most important. It should be weight age in % ages. The sum of the total of all the factors should always be one. • Assign 1-4 rating to each factor Firm’s current strategies response to the factor: how well firms response to these factors. • Multiply each factor’s weight by its rating Produces a weighted score How the firm will respond to these factors external factors. Such criteria are known as rating.
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• Sum the weighted scores for each Determines the total weighted score for the organization. Highest possible weighted score for the organization is 4.0; the lowest, 1.0. Average = 2.5
• EXTERNAL FACTOR EVALUATION (EFE) MATRIX
EXTERNAL FACTOR EVALUATION (EFE) MATRIX
Key External Factors Opportunities 1 2 3 4 5 6 Globalization Marketing Acquisition New Product Development Northern Areas Pak China Borders 0.10 0.15 0.08 0.07 0.10 0.13 3 4 2 3 3 3 0.30 0.60 0.16 0.21 0.30 0.39 Weight Rating Weighted Score
Threats 1 2 3 4 Old Stable Companies Attractive Packages By Others Price War Government 0.12 0.10 0.06 0.09 4 3 3 3 0.48 0.30 0.18 0.27
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Interference TOTAL 1.00 3.19
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Total weighted score for the ZONG external factor is 3.19 which is above average
The Competitive Profile Matrix (CPM)
The Competitive Profile Matrix (CPM) identifies a firm 's major competitors and their particular strengths and weaknesses in relation to a sample firm 's strategic position. The weights and total weighted scores in both a CPM and EFE have the same meaning. However, the factors in a CPM include both internal and external issues; therefore, the ratings refer to strengths and weaknesses, where 4 5 major strength, 3 5 minor strength, 2 5 minor weakness, and 1 5 major weakness. There are some important differences between the EFE and CPM. First of all, the critical success factors in a CPM are broader; they do not include specific or factual data and even may focus on internal issues. The critical success factors in a CPM also are not grouped into opportunities and threats as they are in an EFE. In a CPM the ratings and total weighted scores for rival firms can be compared to the sample firm. This comparative analysis provides important internal strategic information. Zong’s Competitive Profile Matrix is provided in Table. In this matrix market share, growth rate and financial strength are the most important critical success factors, as indicated by a weight of 0.60. in market share Mobilink is leading but in the growth factor zong is leading with the weighted point of 0.40
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• Competitive Profile Matrix (CPM)
Competitive Profile Matrix (CPM)
Critical Success Factors (CSF) Market Share Growth Rate Financial Strength Management Coverage CCS Advertising Brand Name Packages
Weig ht 0.15 0.10 0.08 0.12 0.10 0.13 0.06 0.10 0.09
Ratin g 4 1 3 4 4 4 2 4 2
Weight ed Score 0.60 0.10 0.24 0.48 0.40 0.52 0.12 0.40 0.18
Ratin g 3 3 3 3 3 3 3 2 3
Weight ed Score 0.45 0.30 0.24 0.36 0.30 0.39 0.18 0.20 0.27
Ratin g 1 4 4 3 2 3 3 3 3
Weight ed Score 0.15 0.40 0.32 0.36 0.20 0.39 0.18 0.30 0.27
Ratin g 3 3 3 3 2 2 4 3 4
Weight ed Score 0.45 0.30 0.24 0.36 0.20 0.26 0.24 0.30 0.36
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Price Competitivenes s TOTAL
0.07
2
0.14
3
0.21
3
0.21
3
0.21
1.00
3.18
2.90
2.78
2.92
The ratings values are as follows: 1 = major weakness, 2 = minor weakness, 3 = minor strength, 4 =major strength. As indicated by the total weighted score of 2.78, Zong is weakest. because it is at its initial position as compare to competitors. With the point of 3.18 Mobilink is leading. Only eight critical success factors are included for simplicity; this is too few in actuality.
The Internal Factor Evaluation (IFE) Matrix
A summary step in conducting an internal strategic-management audit is to construct an Internal Factor Evaluation (IFE) Matrix. This strategy-formulation tool summarizes and evaluates the major strengths and weaknesses in the functional areas of a business, and it also provides a basis for identifying and evaluating relationships among those areas. Intuitive judgments are required in developing an IFE Matrix, so the appearance of a scientific approach should not be interpreted to mean this is an all powerful technique. A thorough understanding of the factors included is more important than the actual numbers. Similar to the EFE Matrix and Competitive Profile Matrix, an IFE Matrix can be developed in five steps: List key internal factors (10-20) o Strengths & weaknesses Assign weight to each (0 to 1.0) o Sum of all weights = 1.0 Assign 1-4 rating to each factor o Firm’s current strategies response to the factor Multiply each factor’s weight by its rating o Produces a weighted score Sum the weighted scores for each
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o Determines the total weighted score for the organization Highest possible weighted score for the organization is 4.0; the lowest, 1.0. Average = 2.5
• INTERNAL FACTOR EVALUATION (IFE) MATRIX
INTERNAL FACTOR EVALUATION (IFE) MATRIX
Key Internal Factors Strengths 1 2 3 4 5 6 7 Investment High Growth Rate Advertising Net Work Portability Zong Mobile Resources Assets And People Location And Geographical Coverage Government Dealing 0.09 0.11 0.12 0.12 0.07 0.08 0.10 4 4 3 3 3 3 3 0.36 0.44 0.36 0.36 0.21 0.24 0.30
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Weight
Rating
Weighted Score
8
0.09
3
0.27
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Weaknesses 1 2 3 4 Bad Image Of Paktel Coverage Low Market Share Weak MIS 0.06 0.07 0.05 0.04 1.00 2 1 2 2 0.12 0.07 0.10 0.08 2.91
TOTAL
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Total weighted score for the Zong’s internal factors is 2.91 which is above average
• Stage-2 (Matching Stage) • Threats-Opportunities-Weaknesses-Strengths (TOWS) Matrix
The Threats-Opportunities-Weaknesses-Strengths (TOWS) is also named as SWOT analysis. A TWOS Analysis is a strategic planning tool used to evaluate the Threats, Opportunities and Strengths, Weaknesses, involved in a project or in a business venture or in any other situation requiring a decision. This is an important tool in order to formulate strategy. This Matrix is an important matching tool that helps managers develops four types of strategies: SO Strategies (strength opportunities), WO Strategies (weakness- opportunities), ST Strategies (strength-threats), and WT Strategies (weakness-threats).The most difficult part of TOWS matrix is to match internal and external factor. Once the objective has been identified, TOWS are discovered and listed. TOWS are defined precisely as follows: Strengths are attributes of the organization that are helpful to the achievement of the objective. Weaknesses are attributes of the organization that are harmful to the achievement of the objective. Opportunities are external conditions that are helpful to the achievement of the objective. Threats are external conditions that are harmful to the achievement of the objective.
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Steps for developing strategies:
There are eight steps involved in constructing a TOWS Matrix: 1. Rank external opportunities 2. Rank external threats 3. Rank internal strength 4. Rank internal weaknesses. 5. Match internal strengths with external opportunities and mention the result in the SO Strategies cell. 6. Match internal weaknesses with external opportunities and mention the result in the WO Strategies cell.. 7. Match internal strengths with external threats and mention the result in the ST Strategies cell. 8. Match internal weaknesses with external threats and mention the result in the WT strategies cell.
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TOWS MATRIX OF ZONG
Strengths–S S1. Capital S2. Network Portability S3. Resources S4. Location S5. Government Dealings S6. High Growth Rate S7. Advertising Weaknesses – W W1. Coverage W2. Bad Image Of Paktel W3. Low Market Share W4. Weak MIS W5. Old Staff
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Opportunities – O O1. Globalization O2. Marketing O3. Acquiring O4. Covering Pak China Border O5. Covering Northern Areas O6. New Product O7. Penetration Threats – T T1. Old Stable Companies T2. Attractive Packages By Competitors T3. Price War T4. Government Interference
SO-Strategies S1,O1 Expand S3,O7 Penetration S1,O3 Acquisition
WO-Strategies
W3,O3 Acquisition
ST-Strategies S1,T3 Cost Leadership S3,T2 Penetration
WT-Strategies
W3,T2 Downsizing
STRATEGIES FROM TOWS MATRIX
SO-Strategies Matching the strength 1 and opportunity 4 Zong can expand their business. From S1 and O7 they can use the strategy of penetration. From S1 and O3 they can use the strategy of acquisition. ST-Strategies Matching the strength 1 and threat3 Zong can use the strategy of cost leadership. Matching the strength 3 and threat 2 Zong can use the strategy of penetration.
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WO-Strategies Matching the weakness 3 and opportunity 3 Zong can use the strategy of acquisition. WT-Strategies Matching the weakness 3 and threat 2 Zong can use the strategy of downsizing.
• The Strategic Position and Action Evaluation (SPACE) Matrix
The Strategic Position and Action Evaluation (SPACE) Matrix is another important Stage 2 matching tool of formulation framework. It explains that what is our strategic position and what possible action can be taken. It is not closed matrix. It is prepared on graph. It is closed matrix. This follow counter clock wise direction. It contains four-quadrant named aggressive, conservative, defensive, or competitive strategies. The axes of the SPACE Matrix represent two internal dimensions financial strength [FS] and competitive advantage [CA]) and two external dimensions (environmental stability [ES] and industry strength [IS]). These four factors are the most important determinants of an organization 's overall strategic position.
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A SPACE Matrix for a Zong
Financial Strength (FS) RAITNGS 1. Revenues 2. Return on investment
3.
5.0 4.0 5.0
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14 Competitive Advantage (CA) 1. Resources Assets 2. High growth rate 3. Advertising
4. Competition capacity utilization
-2.0 -1.0 -2.0 -3.0 -8.0
Environmental stability (ES) 1. Technological changes 2. Rate of inflation 3. Demand variability
4. Barriers to entry into market
-3.0 -4.0 -2.0 -1.0 -10
Industry Strength (IS) 1. Deregulation increase completion in telecom industry 3.0 2. Financial stability 3. Resources utilization 4.0
4. Profit potential
5.0
4.0 16
Conclusion FS average is 14/3 = 4.67
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CA average is ES average is IS average is
-8/4 = -2.0 -10/4 = -2.5 16/4 = 4.0 4.67+ (-2.5) = 2.17 4.0+ (-2) = 2
Directional Vector Coordinates: x-axis: Directional Vector Coordinates: y-axis:
The Zong should peruse Aggressive strategies
• SPACE MATRIX FOR ZONG
Conservati ve (2, 2.17) Aggressiv e
Defensive
Competiti ve
• BCG GROWTH-SHARE MATRIX
Companies that are large enough to be organized into strategic business units face the challenge of allocating resources among those units. In the early 1970 's the Boston Consulting Group developed a model for managing a portfolio of different business units. The BCG growth-share matrix displays the various business units on a graph of the market growth rate vs. market share relative to competitors.
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BCG Growth-Share Matrix
On the vertical axis, market growth rate provides a measure of market attractiveness. On the horizontal axis, relative market share serves as a measure of company strength in the market. The growth-share matrix defines four types of SBUs:
CASH COW - (LOW GROWTH, HIGH MARKET SHARE)
A business unit that has a large market shares in a mature, slow growing industry. Cash cows Require little investment and generate cash that can be used to invest in other business units.
STAR - (HIGH GROWTH, HIGH MARKET SHARE)
A business unit that has a large market shares in a fast growing industry. Stars may generate Cash, but because the market is growing rapidly they require investment to maintain their lead. If successful, a star will become a cash cow when its industry matures.
QUESTION MARK - (HIGH GROWTH, LOW MARKET SHARE)
A business unit that has a small market shares in a high growth market. These business units
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Require resources to grow market share, but whether they will succeed and become stars is unknown.
DOG - (LOW GROWTH, LOW MARKET SHARE)
A business unit that has a small market shares in a mature industry. A dog may not require Substantial cash, but it ties up capital that could better be deployed elsewhere. Unless a dog has some other strategic purpose, it should be liquidated if there is little prospect for it to gain market share.
Zong SBU
Post paid Prepaid Zong mobile Zong USB
Zong postpaid has low market share of 0.25% and high growth rate of16% so in BCG matrix it lies in 1ST quadrant of question marks. Zong prepaid has high market share of 0.7% and high growth rate of15% so in BCG matrix it lies in 4TH quadrant of stars. Zong mobile has low market share of 0.4% and high growth rate of11% so in BCG matrix it lies in 1ST quadrant of question marks. Zong USB has low market share of 0.25% and no growth rate. So in BCG matrix it lies in 2ND quadrant of dog.
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Zong Mobile Strategic Business Unit Of ZONG Telecom
Zong has come up with another interesting promotion …. You get a phone, almost free but with a year’s payment in advance. This is equivalent to the US model where customers have to sign a contract to get a discounted phone. In Zong case they just get the money in advance (great for them) and hope that users will stay with them after 12 months.
Strengths of ZONG mobile
Zong is the first company who introduced mobile With the brand name of ZONG. Zong is benchmark leader in this SBU. It is available at very cheap price. Anyone can get it paying Rs 1900 with Rs 1900 balance. Large number of people appreciates and gets the mobile immediately.
Weakness
Mobile is totally made by china and people’s perception about china mobile is not good. So its resale value is low. Zong mobile is only made for zong network. Other networks cannot operate in this mobile.
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Zong is depending on ZTE.(Zheng Telecommunication Electronics) ZTE
is the vender of zong. Zong purchase mobile from ZTE.
Internal Factor Evaluation
Internal Factor Evaluation Of Zong Mobile
Strengths Benchmark Leader Cheep Rates People 's Appreciation Weakness Resale Value Restriction Of Other Networks Dependent On ZTE Total 0.18 0.05 0.07 1 2 2 1 0.36 0.1 0.07 3.24 Weights 0.26 0.35 0.09 Rates 4 4 3 Score 1.04 1.4 0.27
Highest possible weighted score for the organization is 4.0; the lowest, 1.0. Average = 2.5 Total weighted score for the Zong mobile is 3.24 which is above average in its overall internal strength. Total weighted score by Zong in internal factor evaluation is 3.24 which is above average.
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Threats of ZONG mobile
Other competitors can introduce like this mobile in market. It is very simple mobile which has no extra features but the other
companies have stylish and attracting mobiles in market.
Opportunities for ZONG mobile
It can improve its features like other cell companies. And can attract the people. Zong can manufacture the mobile its own. Because it depends on others
External Factor Evaluation Of Zong Mobile
External Factor Evaluation Of Zong Mobile Opportunity Improving Features Manufacture Mobile Threats Threats Of Competitors Threats Of Cell Companies Total 0.35 0.15 1 2 1 0.7 0.15 1.7 Weights 0.35 0.15 Rates 2 1 Score 0.7 0.15
Total weighted score by Zong in external factor evaluation is 1.7 which is below average.
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• The Internal-External (IE) Matrix
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This is also an important matrix of matching stage of strategy formulation. This matrix already explains earlier. It relate to internal (IFE) and external factor evaluation (EFE). The findings form internal and external position and weighted score plot on it. It contains nine cells. Its characteristics is a s follow • Positions an organization’s various divisions in a nine-cell display. • Similar to BCG Matrix except the IE Matrix: o Requires more information about the divisions o Strategic implications of each matrix are different • Based on two key dimensions o The IFE total weighted scores on the x-axis o The EFE total weighted scores on the y-axis • Divided into three major regions o Grow and build – Cells I, II, or IV o Hold and maintain – Cells III, V, or VII o Harvest or divest – Cells VI, VIII, or IX
Internal External Evaluation Matrix
Total weight of IFE
4 1 i. 1
3.4
3
2 3
i.
2
ii.
3
Total weight Of EFE
iii.
4
iv.
5
v.
6
2 vi. 7 vii. 8 viii. 9
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Steps for the development of IE matrix
Based on two key dimensions IFE and EFE. • Plot IFE total weighted scores on the x-axis and the EFE total weighted scores on the y axis • On the x-axis of the IE Matrix, an IFE total weighted score of 1.0 to 1.99 represents a weak • Internal position; a score of 2.0 to 2.99 is considered average; and a score of 3.0 to 4.0 is strong. • On the y-axis, an EFE total weighted score of 1.0 to 1.99 is considered low; a score of 2.0 to 2.99 is • Medium; and a score of 3.0 to 4.0 are high. • IE Matrix divided into three major regions. • Grow and build – Cells I, II, or IV • Hold and maintain – Cells III, V, or VII • Harvest or divest – Cells VI, VIII, or IX The SBU of Zong (mobile) lies in 3, 5, 7 quadrant. So the strategy of these quadrants (hold and maintained) will be apply here. •
Grand Strategy Matrix
This is also an important matrix of strategy formulation frame work. Grand strategy matrix it is popular tool for formulating alternative strategies. In this matrix all organization divides into four quadrants. Any organization should be placed in any one of four quadrants. Appropriate strategies for an Organization to consider is listed in sequential order of attractiveness in each quadrant of the matrix. It is based two major dimensions 1. Market growth 2. Competitive position All quadrants contain all possible strategies there are four quadrants in grand matrix that further contain various set strategies. Quardrant-1 Market development Market penetration Product development Forward integration Backward integration Horizontal integration
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Concentric diversification Quardrant-2 Market development Market penetration Product development Horizontal integration Divestiture Liquidation Quardrant-3 Retrenchment Concentric diversification Horizontal diversification Conglomerate diversification Liquidation Quardrant-4 Concentric diversification Horizontal diversification
GRAND STRATEGY MATRIX FOR ZONG
Rapid Market Growth Quadrant II Quadrant I
Weak Competit ive Position Quadrant III Quadrant IV
Strong Competit ive Position
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Slow Market Growth
ZONG lies in first quadrant so the all strategies of 1st quadrant can be apply on zong
Stage-3 (Decision Stage) The Quantitative Strategic Planning Matrix (QSPM)
The last stage of strategy formulation is decision stage. In this stage it is decided that which way is most appropriate or which alternative strategy should be select.
Steps in preparation of QSPM
1. List of the firm 's key external opportunities/threats and internal strengths/weaknesses in the left column of the QSPM. 2. Assign weights to each key external and internal factor 3. Examine the Stage 2 (matching) matrices and identify alternative strategies that the organization should consider implementing 4. Determine the Attractiveness Scores (AS) 5. Compute the Total Attractiveness Scores 6. Compute the Sum Total Attractiveness Score
Quantitative Strategic Planning Matrix (QSPM) SELECTIVE STRATEGIES Key External Factors Weight MARKET PENETRATION Attractivene ss Scores (AS) Total Attractivene ss Scores MARKET DEVELOPMENT Attractiven ess Scores Total Attractiven ess Scores
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(TAS) Opportunities 1 2 3 4 Globalization Marketing Acquisition New Product Development 5 Northern Areas 0.10 3 0.30 0.10 0.15 0.08 0.07 3 4 2 3 0.30 0.60 0.16 0.21
(AS)
(TAS)
2 3 2 3
0.20 0.45 0.16 0.21
2
0.20
6
Pak China Borders
0.13
3
0.39
2
0.26
Threats 1 Old Stable Companies Attractive Packages By Others Price War Government Interference 0.12 4 0.48 3 0.36
2
0.10
3
0.30
3
0.30
3 4
0.06 0.09 1.00
3 3
0.18 0.27
2 2
0.12 0.18
TOTAL Strengths 1 2 3 4 5 6 Investment High Growth Rate Advertising Net Work Portability Zong Mobile Resources Assets And
0.09 0.11 0.12 0.12 0.07 0.08
4 4 3 3 3 3
0.36 0.44 0.36 0.36 0.21 0.24
4 3 3 3 3 3
0.36 0.33 0.36 0.36 0.21 0.24
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People 7 Location And Geographical Coverage Government Dealing 0.10 3 0.30 3 0.30
8
0.09
3
0.27
3
0.27
Weaknesses 1 2 3 4 Bad Image Of Paktel Coverage Low Market Share Weak MIS 0.06 0.07 0.05 0.04 1.00 2 1 2 2 0.12 0.07 0.10 0.08 6.10 1 1 2 1 0.06 0.07 0.10 0.04 5.14
SUM TOTAL ATTRACTIVENESS SCORE
We select the two strategies market penetration and market development. There total attractive score is 6.10 and 5.01 respectively. The strategy market penetration has big score.
• CONCLUSION
Zong has strong financial position and growing fast. That is the reason we didn’t found much discrepancies. As seeing the growth rate of Zong it may be possible that Zong can be the leading mobile operator in Pakistan. There are some minor discrepancies but they are adjustable with little effort.
• Recommendation
•
Zong Telecom should be increasing their network coverage and foot prints in every corner of the country to capture the market.
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•
Zong should adopt the strategies of market penetration market development and related diversification, but the most effective strategy would be market penetration. In the SBU of Zong mobile Zong should use the strategy of hold and maintain. Zong should hire the skilled management. Zong should not waste their opportunities and get more help as possible.
•
• •
•
• • •
References www.zong.com. www.google.com www.pta.com.pk Rana Armughan Zong Garden Town Ali Block Lahore Rao Farhan Ali Khan Zong Kchehri Chowk Multan
• •
The end
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References: www.zong.com. www.google.com www.pta.com.pk Rana Armughan Zong Garden Town Ali Block Lahore Rao Farhan Ali Khan Zong Kchehri Chowk Multan • • The end 45 THE UNIVERSITY OF LAHORE
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VISION
“Making
communication exciting”
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MISSION
“To be the leading mobile operator of Pakistan by continuously innovating and offering exceptional quality services to be good corporate citizen and envoy of friendship between china and Pakistan core value. Responsibility makes perfection”
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Introduction
• ABOUT ZONG
Zong is the first International brand of China Mobile being launched in Pakistan. The company is often cited as China Mobile (Pakistan). It is meant to empower and liberate the people of Pakistan in every nook and corner of the country. It will become a part of their hearts, their minds and bring about a change in their lives that every one desired but few thought would be possible. The core essence of ZONG is to allow people to communicate at will. Without worrying about tariffs, network coverage, capacity issues or congestion. ZONG will be supported by ground breaking communications, trend setting customer service and an unmatched product offering which will redefine rules of the game and establish ZONG as a serious contender for the number one spot. ZONG would offer its customers with entertaining & innovative value added services and will empower them by giving a wide variety of products, services & content to choose from. We are privileged to be the pioneering country introducing this brand with others to follow. And God willing, together we will also make ZONG a success story for others to try and replicate.
• ABOUT China Mobile Pakistan (CMPak)
China Mobile Pakistan (CMPak) is a 100% subsidiary of China Mobile. The pioneering overseas set up of China Mobile came through acquisition of a license from Millicom to operate a GSM network in Pakistan. So far CMPak has invested more than US$ 700 million in the telecom sector in Pakistan and an additional US$ 800 million will be invested till the end of year 2008. With ambitious plans to cater to the fastest growing Pakistani market and to win over the ever demanding Pakistani customer, it will be offering unprecedented coverage, voice and data services as well as a wide range of tariff options to choose from.
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CMPak 's edge comes from the experience and expertise of running the world 's largest telecom service and the commitment they make to setting quality and customer relations standards. CMPak is geared to offer neatly packaged VAS products that will benefit the individuals, corporate as well as small businesses. Led by a team of professionals from the field of cellular Communication, CMPak is determined to make its mark in the Pakistani market and to change the way people communicate.
• HISTORY
Recently china mobile company in Pakistan after replacing the code 0304 with 0314 now introduced its new brand in called “ZONG”. With an introductory slogan “Say everything” or “Sub Keh Do” & started its advertising campaign at popular print & electronic media outlets. Paktel started its commercial operations in Pakistan in November 1990 as the pioneer of cellular telephony with an AMPS network which was converted to TDMA (Digital) in 2003. Soon after GSM quickly gained popularity all over the world and became the technology of choice leaving AMPS/TDMA far behind. Paktel’s principal shareholder was Millicom Pakistan, which held 98.86% equity of Paktel. But however on Feb 13th 2007 Millicom announced that it had completed the sale of its 88.86 per cent shareholding in Paktel Limited to China Mobile Communications Corporation which finalized Millicom’s exit from Pakistan. Soon after, china mobile company bought all the assets of Paktel, the new management seems busy, to tie up promotional strategies, with the intention to win the telecom market slowly & silently. Well that is just a prediction I have made because in Pakistan Chinese products mostly are famous due to their cheap prices. & more the 90% population in Pakistan is price conscious due to their lower or medium income level, so lets see weather ZONG is facilitating mobile users specially youngsters by providing lowest calling, SMS, MMS as well as GPRS rates or not. •
MISSION STATEMENT ANALYSIS
MISSION STATEMENT ANALYSIS
Customer Product and services Market No Yes No
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Technology Survival, growth, profit Self concept Public image Employees Psychology
Yes Yes Yes Yes No Yes
•
PRODUCTS AND SERVICES
Packages
PREPAID ZONG 65
Ladies and Gentlemen, we bring you ZONG 65, the new pre-paid package of ZONG that delivers 100% on economy and guarantees lowest call rates to any network in Pakistan
12 Aanay Package
Talk for an entire hour - any hour, for only Rs.4.99 and for the first time in Pakistan you can change the hour everyday!
50 Paisa/Call (8 Aanay)
People claim of simplicity and yet give you half the truth. Only ZONG gives you the full truth at half the price. Now make calls to any other mobile network for 8 Aanay.
Free Package
For the first time in Pakistan you can make free calls for life!
ZONG Super Free Number
That 's right you can literally talk your heart out 24 hours a day everyday to that special someone - all for FREE!
Break Time Offer
For the first time in Pakistan, ZONG offers you the benefit of calling your friends and family freely during daytime.
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Aik Second Package
Make call for just 4 paisa’s per second!
Unlimited SMS Package
ZONG offers unlimited message package only for 3RS per day.
Postpaid Packages
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Line Rent (Rs) 100 300 600 1200 2000
On-Net Calls Airtime 0.5 0.45 0.375 0.3 0.1 Off-Net Calls Airtime 0.5 0.45 0.375 0.3 0.2 FNF 0.4 0.3 0.2 NA N/A Spouse Number N/A N/A N/A Free N/A Free SMS (On & Off-Net) 20
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Interconnect Charges Other Mobile Operators PTCL Per/ min 1 0.52 Per /30 Sec 0.5 0.26
Details
• • • • • • • • • • •
30 Sec billing Air-time rate for both On-Net & off-Net calls are same Off-Net Calls i.e. Calls to other mobile operators & PTCL will be subjected to Interconnect charges given above Free minutes will be calculated on per minutes basis We will offer 5 FnF (on-net only) numbers on 100, 300 & 600 package FnF addition charges will be Rs 15 for each addition For FnF Addition / Modification dial 1313 from your Mobile Spouse number will only be applicable on Rs 1200 price plan with zero charges Spouse number can be added / changed once in a month Free minutes calculation for Rs 1200 price plan will be exclusive of Spouse number as the charging on Spouse number will be zero Free Minutes on 1200 package are exclusive of Spouse number
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• •
Spouse number can be added by calling our help line or visit our Customer services centre Rs 2000 LR package will have 6800 free minutes in total, 6000 minutes will be On-Net with a daily cap of 200 Minutes (Fair usage policy) The first 200 minutes of the day will be charged at Rs 0 after which charging will be done at On-Net Airtime rates i.e. 0.1 per 30 sec
•
• Mobile Number Portability – MNP
Mobile Number Portability (MNP) enables customers to retain their mobile telephone numbers (including the three digit prefix) when changing from one mobile operator to another mobile operator.
Benefits
• •
You will be able to take advantage of ZONG’s attractive tariffs and service offerings without even changing your mobile number. You will save the inconvenience of informing all your contacts as is faced in the changing your number.
You will experience cost saving by avoiding stationary cost (letterheads and business cards) printing since your number will remain the same.
• Customer service centers
“The beacon of ZONG’s impression and torch bearers of a new era in customer interaction, taking customer service into a portal of customer excitement. These are the doors to ZONG’s first and foremost realization of its promise to excite customers with a new trend in service. Setting the tone and ambiance which is second only to your home, these are ZONG’s arms across the country to welcome everyone to experience the comfort when a true promise is fulfilled.”
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Zone
Address
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1. S.A 16, 17 & 18, Plot # FL 17, Block 5, KDA Scheme 5, Clifton KARACHI Karachi 2. Gulshan-e-Iqbal Opposite Batul Mukaram Masjid Karachi Big City, Shop No G 59 & 60. 3-E-2, Liberty Roundabout. Main LAHORE Boulevard. Gulberg III ISLAMABAD 68-E Jinnah Avenue, Blue Area Islamabad RAWALPINDI Plot # 7, 8 ,9 Bank Road Rawalpindi FAISALABAD Lucky Plaza, 213 Main Susan Road. Faisalabad MULTAN Multan Arcade Main Katchery Road Multan QUETTA Fayyaz Lab, Jinnah Road- Quetta PESHAWAR Burjaman Centre, University Road, Peshawar Shop # 5, Ali heights, Auto Bhan Road, near CitiBank, HYDERABAD Hyderabad JHELUM Old Al-Bilal Hotel, Cantt chowk ,GT Road, Jhelum SAHIWAL 511/BVII, Jail Road, Civil Lines. Sahiwal DG KHAN Azmat Road DG Khan GUJRAT Euro Heights GT Road Gujrat GUJRANWALA Near Traffic Police Office, GT Road, Gujranwala SIALKOT Shop No. 17, Aziz Shaheed Rd. Sialkot Abbotabad Business Complex, Supply Bazar, Manshera RoadABBOTABAD Abbotabad MARDAN Zong Plaza, Mall Road, Mardan Cantt SARGODHA Parhar Plaza, Railway Road Sargodha Baghdad UL Jadeed Road DIG Chowk Near Al Haq House BAHAWALPUR Bahawalpur RAWALPINDI SATELLITE TOWN SUKKUR Plot # B130, B block- Satellite town- Rawalpindi Shop # 421-422.C Minara Road Sukkur
Careers
ZONG is committed on attracting and retaining the best human resource from all over Pakistan. Its also provides a working environment which satisfies the professional and personal needs of its employees.
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• ZONG Mobile Internet GPRS Coverage
Fastest growing coverage in Pakistan.
ZONG Unlimited ZONG Free MMS
@ Rs. 400+Tax/month
@ Rs. 10+Tax/M
The epoch of multimedia content is upon us and the last thing we’d want is to stick to the age old conventional messaging techniques.
•
ZONG Mobile Internet Hourly Package
Another spectacular service from ZONG that will keep you entertained 24/7. After rocking the market with our services and all the amazing call rates, we are back with an outstanding feature for all packages; ZONG hourly based Internet package.
•
ZONG Internet USB Card
The ZONG Internet USB Card is a device (with a SIM inside it) which can be inserted in your laptop/desktop PC (in the USB Slot) to provide you with access to the internet. It works on the EDGE/GPRS network and gives you wireless Internet connectivity, anytime anywhere!
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• ZONG Mobile
Zong has come up with another interesting Promotion…. you get a phone, almost free but With a year’s payment in advance. This is equivalent to the US model where customers have to sign a contract to get a discounted phone. In Zong’s case they just get the money in advance (great for them) and hope that users will stay with Them after 12 months.
• •
External Assessment:
PEST Analysis of Pakistan in Telecom Industry
In order to survive and remain profitable in today’s competitive marketplace, Zong need to be able to react and adapt to changes in the external environment and ideally be proactive in impacting these forces. External environment factors can be classified into five general categories: competitive, social/cultural, legal, economic, political, and technological.
Political Factors • Political Instability:
Pakistan is facing political instability causing danger for the telecom industry. But the political factor does not effect on Zong so high because Zong related from china and relationship of china and Pakistan is very strong.
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• Deregulation:
The telecom sector of Pakistan has successfully liberalized in an
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efficient, transparent and fastest deregulation of telecom in the region. The Government of Pakistan gave the status of Industry to Pakistan Telecommunication Sector.
• Changes in Tax Laws:
Tax rates have been increased day by day government tax rate of call is 15% and recently government increased it by 6 % more.
Economic Factors:
• Gross Domestic Product:
Telecom sector of Pakistan has a share of almost 2 percent in National GDP.
•
Average Revenue per User (ARPU):
The average revenue per user is falling. It does not affect value able on Zong. Because Zong started in same condition.
• Decline in Money Value:
The decline in Rupee value against the US Dollar, the decrease in the interconnect charges and lower priced tariffs have resulted in an overall decrease of ARPU in US Dollar terms.
• Outflow of Capital:
The ongoing economic turmoil along with the worsening of security conditions in Pakistan has caused an increased outflow of capital from the country.
Technological Factors:
• Technological Development:
Companies are investing in their infrastructure to not only expand but
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also to upgrade their existing structure. As the competition is strong Zong is focusing on its value added services
• Technological Advancement:
Currently all companies are providing Multi-media Messaging Services (MMS), General Packet Radio Service (GPRS), Virtual Private Network (VPN), Pocket Stocks, Conference Calling, Wallpapers Animated pictures Polyphonic ring tones (WAP), and Voice Mail at low price.
Technological Trends:
The well-recognized technology trends that are influencing the evolution of the network indicate that: o The cost of a call is becoming even more insensitive to the distance; o The modularity of the network is increasing; o The networking is shifting from circuit-switched to packet-routing; o The voice communication is now independent of the network; o The geographic boundaries are irrelevant for emerging technology; o The intelligence and function are moving away from the central office. In these conditions competition is very strong among competitors. Zong is improving itself in technology.
•
Five Forces Porter Model
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Five forces looks at five key areas namely threat of new entry, power of
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buyers, power of suppliers, threat of substitutes, and competitive rivalry.
Threat of New Entry
• As government of Pakistan is showing liberalism in case of telecommunication sector and opened its policies to award new licensees to new mobile service providers so threat of new entry is high. • As set-up cost is in billions of dollars so in this case threat of new entry is low, but there are companies who are working to achieve licenses and approaching PTA to know terms and conditions for this. • As for this business companies need a well established distributions and franchises network so threat of new entrant is high in this case.
Bargaining Power of Buyers
• Power of buyer is high in telecommunication sector. There are six market players and players are offering different packages at different prices and a situation of price war is running. Buyers have a power to buy any package which is suited to them. • Cost of switching from one company package to other company package is low. Hence, power of buyers is high.
Bargaining Power of Suppliers
• The power of suppliers is low in case of telecommunication sector. • But the fact is that numbers of suppliers are few in the market but they are competing in the market to make agreements with mobile service providers.
Threat of Substitute Products
• Government also gave so many land lines and wireless local loop licenses to different companies like PTCL wireless local loop, GO CDMA, WORLD CALL etc. these services in future will be like mobile phone services like they are
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planning to offer services a lot but currently they are offering SMS and CLI services to their customers.
Rivalry among Competing Firms in Industry
• Currently there are six market players but in future they will be eight and nine or even more. • Thuraya satellite service is offering subscribers freedom of mobility and uninterrupted service. Thuraya 's satellite technology supplements of existing mobile service providers, overcoming the challenges of large geographical areas and insurmountable terrain.
•
Competitive Analysis
Major competitors of ZONG include
Mobilink Ufone Telenor Warid
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Mobilink GSM
Pakistan Mobile Communications Ltd (PMCL)
Type Private Limited Company
Genre Subsidiary
Founded 1994
Founder Motorola USA
Headquarters Islamabad, Pakistan 42 Kulsum Plaza, Blue Area
Area served 5000 cities, towns, and villages across Pakistan
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A Comprehensive Strategy-Formulation Framework
Important strategy-formulation techniques can be integrated into a threestage decision-making framework, as shown below. The tools presented in this framework are applicable to all sizes and types of organizations and can help strategists identify, evaluate, and select strategies.
Stage-1 (Formulation Framework)
1. External factor evaluation 2. Competitive matrix profile 3. Internal factor evaluation
Stage-2 (Matching Stage)
1. 2. 3. 4. 5. TWOS Matrix SPACE Matrix BCG Matrix IE Matrix GS Matrix (Threats-Opportunities-Weaknesses-Strengths) (Strategic Position and Action Evaluation) (Boston Consulting Group) (Internal and external) (Grand Strategy)
Stage-3 (Decision Stage)
1. QSPM (Quantitative Strategic Planning Matrix)
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• Stage-1 (Formulation Framework)
Industry Analysis: The External Factor Evaluation (EFE) Matrix
An External Factor Evaluation (EFE) Matrix allows strategists to summarize and evaluate economic, social, cultural, demographic, environmental, political, governmental, legal, technological, and competitive information. The EFE matrix consists of five steps process.
Five-Step process:
• List key external factors (10-20) Opportunities & threats. You have to prepare a list of all external factors which will affect the EFE matrix. These factors should be two points to be kept in mind these are opportunities and threats • Assign weight to each (0 to 1.0) Sum of all weights = 1.0 Now you have to arrange them according to their weight age that which factor is most important. It should be weight age in % ages. The sum of the total of all the factors should always be one. • Assign 1-4 rating to each factor Firm’s current strategies response to the factor: how well firms response to these factors. • Multiply each factor’s weight by its rating Produces a weighted score How the firm will respond to these factors external factors. Such criteria are known as rating.
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• Sum the weighted scores for each Determines the total weighted score for the organization. Highest possible weighted score for the organization is 4.0; the lowest, 1.0. Average = 2.5
• EXTERNAL FACTOR EVALUATION (EFE) MATRIX
EXTERNAL FACTOR EVALUATION (EFE) MATRIX
Key External Factors Opportunities 1 2 3 4 5 6 Globalization Marketing Acquisition New Product Development Northern Areas Pak China Borders 0.10 0.15 0.08 0.07 0.10 0.13 3 4 2 3 3 3 0.30 0.60 0.16 0.21 0.30 0.39 Weight Rating Weighted Score
Threats 1 2 3 4 Old Stable Companies Attractive Packages By Others Price War Government 0.12 0.10 0.06 0.09 4 3 3 3 0.48 0.30 0.18 0.27
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Interference TOTAL 1.00 3.19
•
Total weighted score for the ZONG external factor is 3.19 which is above average
The Competitive Profile Matrix (CPM)
The Competitive Profile Matrix (CPM) identifies a firm 's major competitors and their particular strengths and weaknesses in relation to a sample firm 's strategic position. The weights and total weighted scores in both a CPM and EFE have the same meaning. However, the factors in a CPM include both internal and external issues; therefore, the ratings refer to strengths and weaknesses, where 4 5 major strength, 3 5 minor strength, 2 5 minor weakness, and 1 5 major weakness. There are some important differences between the EFE and CPM. First of all, the critical success factors in a CPM are broader; they do not include specific or factual data and even may focus on internal issues. The critical success factors in a CPM also are not grouped into opportunities and threats as they are in an EFE. In a CPM the ratings and total weighted scores for rival firms can be compared to the sample firm. This comparative analysis provides important internal strategic information. Zong’s Competitive Profile Matrix is provided in Table. In this matrix market share, growth rate and financial strength are the most important critical success factors, as indicated by a weight of 0.60. in market share Mobilink is leading but in the growth factor zong is leading with the weighted point of 0.40
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• Competitive Profile Matrix (CPM)
Competitive Profile Matrix (CPM)
Critical Success Factors (CSF) Market Share Growth Rate Financial Strength Management Coverage CCS Advertising Brand Name Packages
Weig ht 0.15 0.10 0.08 0.12 0.10 0.13 0.06 0.10 0.09
Ratin g 4 1 3 4 4 4 2 4 2
Weight ed Score 0.60 0.10 0.24 0.48 0.40 0.52 0.12 0.40 0.18
Ratin g 3 3 3 3 3 3 3 2 3
Weight ed Score 0.45 0.30 0.24 0.36 0.30 0.39 0.18 0.20 0.27
Ratin g 1 4 4 3 2 3 3 3 3
Weight ed Score 0.15 0.40 0.32 0.36 0.20 0.39 0.18 0.30 0.27
Ratin g 3 3 3 3 2 2 4 3 4
Weight ed Score 0.45 0.30 0.24 0.36 0.20 0.26 0.24 0.30 0.36
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Price Competitivenes s TOTAL
0.07
2
0.14
3
0.21
3
0.21
3
0.21
1.00
3.18
2.90
2.78
2.92
The ratings values are as follows: 1 = major weakness, 2 = minor weakness, 3 = minor strength, 4 =major strength. As indicated by the total weighted score of 2.78, Zong is weakest. because it is at its initial position as compare to competitors. With the point of 3.18 Mobilink is leading. Only eight critical success factors are included for simplicity; this is too few in actuality.
The Internal Factor Evaluation (IFE) Matrix
A summary step in conducting an internal strategic-management audit is to construct an Internal Factor Evaluation (IFE) Matrix. This strategy-formulation tool summarizes and evaluates the major strengths and weaknesses in the functional areas of a business, and it also provides a basis for identifying and evaluating relationships among those areas. Intuitive judgments are required in developing an IFE Matrix, so the appearance of a scientific approach should not be interpreted to mean this is an all powerful technique. A thorough understanding of the factors included is more important than the actual numbers. Similar to the EFE Matrix and Competitive Profile Matrix, an IFE Matrix can be developed in five steps: List key internal factors (10-20) o Strengths & weaknesses Assign weight to each (0 to 1.0) o Sum of all weights = 1.0 Assign 1-4 rating to each factor o Firm’s current strategies response to the factor Multiply each factor’s weight by its rating o Produces a weighted score Sum the weighted scores for each
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o Determines the total weighted score for the organization Highest possible weighted score for the organization is 4.0; the lowest, 1.0. Average = 2.5
• INTERNAL FACTOR EVALUATION (IFE) MATRIX
INTERNAL FACTOR EVALUATION (IFE) MATRIX
Key Internal Factors Strengths 1 2 3 4 5 6 7 Investment High Growth Rate Advertising Net Work Portability Zong Mobile Resources Assets And People Location And Geographical Coverage Government Dealing 0.09 0.11 0.12 0.12 0.07 0.08 0.10 4 4 3 3 3 3 3 0.36 0.44 0.36 0.36 0.21 0.24 0.30
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Weight
Rating
Weighted Score
8
0.09
3
0.27
THE UNIVERSITY OF LAHORE
ZONG ( Su b Kah Do)
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Weaknesses 1 2 3 4 Bad Image Of Paktel Coverage Low Market Share Weak MIS 0.06 0.07 0.05 0.04 1.00 2 1 2 2 0.12 0.07 0.10 0.08 2.91
TOTAL
•
Total weighted score for the Zong’s internal factors is 2.91 which is above average
• Stage-2 (Matching Stage) • Threats-Opportunities-Weaknesses-Strengths (TOWS) Matrix
The Threats-Opportunities-Weaknesses-Strengths (TOWS) is also named as SWOT analysis. A TWOS Analysis is a strategic planning tool used to evaluate the Threats, Opportunities and Strengths, Weaknesses, involved in a project or in a business venture or in any other situation requiring a decision. This is an important tool in order to formulate strategy. This Matrix is an important matching tool that helps managers develops four types of strategies: SO Strategies (strength opportunities), WO Strategies (weakness- opportunities), ST Strategies (strength-threats), and WT Strategies (weakness-threats).The most difficult part of TOWS matrix is to match internal and external factor. Once the objective has been identified, TOWS are discovered and listed. TOWS are defined precisely as follows: Strengths are attributes of the organization that are helpful to the achievement of the objective. Weaknesses are attributes of the organization that are harmful to the achievement of the objective. Opportunities are external conditions that are helpful to the achievement of the objective. Threats are external conditions that are harmful to the achievement of the objective.
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Steps for developing strategies:
There are eight steps involved in constructing a TOWS Matrix: 1. Rank external opportunities 2. Rank external threats 3. Rank internal strength 4. Rank internal weaknesses. 5. Match internal strengths with external opportunities and mention the result in the SO Strategies cell. 6. Match internal weaknesses with external opportunities and mention the result in the WO Strategies cell.. 7. Match internal strengths with external threats and mention the result in the ST Strategies cell. 8. Match internal weaknesses with external threats and mention the result in the WT strategies cell.
•
TOWS MATRIX OF ZONG
Strengths–S S1. Capital S2. Network Portability S3. Resources S4. Location S5. Government Dealings S6. High Growth Rate S7. Advertising Weaknesses – W W1. Coverage W2. Bad Image Of Paktel W3. Low Market Share W4. Weak MIS W5. Old Staff
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Opportunities – O O1. Globalization O2. Marketing O3. Acquiring O4. Covering Pak China Border O5. Covering Northern Areas O6. New Product O7. Penetration Threats – T T1. Old Stable Companies T2. Attractive Packages By Competitors T3. Price War T4. Government Interference
SO-Strategies S1,O1 Expand S3,O7 Penetration S1,O3 Acquisition
WO-Strategies
W3,O3 Acquisition
ST-Strategies S1,T3 Cost Leadership S3,T2 Penetration
WT-Strategies
W3,T2 Downsizing
STRATEGIES FROM TOWS MATRIX
SO-Strategies Matching the strength 1 and opportunity 4 Zong can expand their business. From S1 and O7 they can use the strategy of penetration. From S1 and O3 they can use the strategy of acquisition. ST-Strategies Matching the strength 1 and threat3 Zong can use the strategy of cost leadership. Matching the strength 3 and threat 2 Zong can use the strategy of penetration.
THE UNIVERSITY OF LAHORE 45
ZONG ( Su b Kah Do)
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WO-Strategies Matching the weakness 3 and opportunity 3 Zong can use the strategy of acquisition. WT-Strategies Matching the weakness 3 and threat 2 Zong can use the strategy of downsizing.
• The Strategic Position and Action Evaluation (SPACE) Matrix
The Strategic Position and Action Evaluation (SPACE) Matrix is another important Stage 2 matching tool of formulation framework. It explains that what is our strategic position and what possible action can be taken. It is not closed matrix. It is prepared on graph. It is closed matrix. This follow counter clock wise direction. It contains four-quadrant named aggressive, conservative, defensive, or competitive strategies. The axes of the SPACE Matrix represent two internal dimensions financial strength [FS] and competitive advantage [CA]) and two external dimensions (environmental stability [ES] and industry strength [IS]). These four factors are the most important determinants of an organization 's overall strategic position.
•
A SPACE Matrix for a Zong
Financial Strength (FS) RAITNGS 1. Revenues 2. Return on investment
3.
5.0 4.0 5.0
THE UNIVERSITY OF LAHORE 45
Working capital
ZONG ( Su b Kah Do)
.
14 Competitive Advantage (CA) 1. Resources Assets 2. High growth rate 3. Advertising
4. Competition capacity utilization
-2.0 -1.0 -2.0 -3.0 -8.0
Environmental stability (ES) 1. Technological changes 2. Rate of inflation 3. Demand variability
4. Barriers to entry into market
-3.0 -4.0 -2.0 -1.0 -10
Industry Strength (IS) 1. Deregulation increase completion in telecom industry 3.0 2. Financial stability 3. Resources utilization 4.0
4. Profit potential
5.0
4.0 16
Conclusion FS average is 14/3 = 4.67
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CA average is ES average is IS average is
-8/4 = -2.0 -10/4 = -2.5 16/4 = 4.0 4.67+ (-2.5) = 2.17 4.0+ (-2) = 2
Directional Vector Coordinates: x-axis: Directional Vector Coordinates: y-axis:
The Zong should peruse Aggressive strategies
• SPACE MATRIX FOR ZONG
Conservati ve (2, 2.17) Aggressiv e
Defensive
Competiti ve
• BCG GROWTH-SHARE MATRIX
Companies that are large enough to be organized into strategic business units face the challenge of allocating resources among those units. In the early 1970 's the Boston Consulting Group developed a model for managing a portfolio of different business units. The BCG growth-share matrix displays the various business units on a graph of the market growth rate vs. market share relative to competitors.
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BCG Growth-Share Matrix
On the vertical axis, market growth rate provides a measure of market attractiveness. On the horizontal axis, relative market share serves as a measure of company strength in the market. The growth-share matrix defines four types of SBUs:
CASH COW - (LOW GROWTH, HIGH MARKET SHARE)
A business unit that has a large market shares in a mature, slow growing industry. Cash cows Require little investment and generate cash that can be used to invest in other business units.
STAR - (HIGH GROWTH, HIGH MARKET SHARE)
A business unit that has a large market shares in a fast growing industry. Stars may generate Cash, but because the market is growing rapidly they require investment to maintain their lead. If successful, a star will become a cash cow when its industry matures.
QUESTION MARK - (HIGH GROWTH, LOW MARKET SHARE)
A business unit that has a small market shares in a high growth market. These business units
THE UNIVERSITY OF LAHORE 45
ZONG ( Su b Kah Do)
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Require resources to grow market share, but whether they will succeed and become stars is unknown.
DOG - (LOW GROWTH, LOW MARKET SHARE)
A business unit that has a small market shares in a mature industry. A dog may not require Substantial cash, but it ties up capital that could better be deployed elsewhere. Unless a dog has some other strategic purpose, it should be liquidated if there is little prospect for it to gain market share.
Zong SBU
Post paid Prepaid Zong mobile Zong USB
Zong postpaid has low market share of 0.25% and high growth rate of16% so in BCG matrix it lies in 1ST quadrant of question marks. Zong prepaid has high market share of 0.7% and high growth rate of15% so in BCG matrix it lies in 4TH quadrant of stars. Zong mobile has low market share of 0.4% and high growth rate of11% so in BCG matrix it lies in 1ST quadrant of question marks. Zong USB has low market share of 0.25% and no growth rate. So in BCG matrix it lies in 2ND quadrant of dog.
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Zong Mobile Strategic Business Unit Of ZONG Telecom
Zong has come up with another interesting promotion …. You get a phone, almost free but with a year’s payment in advance. This is equivalent to the US model where customers have to sign a contract to get a discounted phone. In Zong case they just get the money in advance (great for them) and hope that users will stay with them after 12 months.
Strengths of ZONG mobile
Zong is the first company who introduced mobile With the brand name of ZONG. Zong is benchmark leader in this SBU. It is available at very cheap price. Anyone can get it paying Rs 1900 with Rs 1900 balance. Large number of people appreciates and gets the mobile immediately.
Weakness
Mobile is totally made by china and people’s perception about china mobile is not good. So its resale value is low. Zong mobile is only made for zong network. Other networks cannot operate in this mobile.
THE UNIVERSITY OF LAHORE 45
ZONG ( Su b Kah Do)
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Zong is depending on ZTE.(Zheng Telecommunication Electronics) ZTE
is the vender of zong. Zong purchase mobile from ZTE.
Internal Factor Evaluation
Internal Factor Evaluation Of Zong Mobile
Strengths Benchmark Leader Cheep Rates People 's Appreciation Weakness Resale Value Restriction Of Other Networks Dependent On ZTE Total 0.18 0.05 0.07 1 2 2 1 0.36 0.1 0.07 3.24 Weights 0.26 0.35 0.09 Rates 4 4 3 Score 1.04 1.4 0.27
Highest possible weighted score for the organization is 4.0; the lowest, 1.0. Average = 2.5 Total weighted score for the Zong mobile is 3.24 which is above average in its overall internal strength. Total weighted score by Zong in internal factor evaluation is 3.24 which is above average.
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Threats of ZONG mobile
Other competitors can introduce like this mobile in market. It is very simple mobile which has no extra features but the other
companies have stylish and attracting mobiles in market.
Opportunities for ZONG mobile
It can improve its features like other cell companies. And can attract the people. Zong can manufacture the mobile its own. Because it depends on others
External Factor Evaluation Of Zong Mobile
External Factor Evaluation Of Zong Mobile Opportunity Improving Features Manufacture Mobile Threats Threats Of Competitors Threats Of Cell Companies Total 0.35 0.15 1 2 1 0.7 0.15 1.7 Weights 0.35 0.15 Rates 2 1 Score 0.7 0.15
Total weighted score by Zong in external factor evaluation is 1.7 which is below average.
45
• The Internal-External (IE) Matrix
THE UNIVERSITY OF LAHORE
ZONG ( Su b Kah Do)
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This is also an important matrix of matching stage of strategy formulation. This matrix already explains earlier. It relate to internal (IFE) and external factor evaluation (EFE). The findings form internal and external position and weighted score plot on it. It contains nine cells. Its characteristics is a s follow • Positions an organization’s various divisions in a nine-cell display. • Similar to BCG Matrix except the IE Matrix: o Requires more information about the divisions o Strategic implications of each matrix are different • Based on two key dimensions o The IFE total weighted scores on the x-axis o The EFE total weighted scores on the y-axis • Divided into three major regions o Grow and build – Cells I, II, or IV o Hold and maintain – Cells III, V, or VII o Harvest or divest – Cells VI, VIII, or IX
Internal External Evaluation Matrix
Total weight of IFE
4 1 i. 1
3.4
3
2 3
i.
2
ii.
3
Total weight Of EFE
iii.
4
iv.
5
v.
6
2 vi. 7 vii. 8 viii. 9
45
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Steps for the development of IE matrix
Based on two key dimensions IFE and EFE. • Plot IFE total weighted scores on the x-axis and the EFE total weighted scores on the y axis • On the x-axis of the IE Matrix, an IFE total weighted score of 1.0 to 1.99 represents a weak • Internal position; a score of 2.0 to 2.99 is considered average; and a score of 3.0 to 4.0 is strong. • On the y-axis, an EFE total weighted score of 1.0 to 1.99 is considered low; a score of 2.0 to 2.99 is • Medium; and a score of 3.0 to 4.0 are high. • IE Matrix divided into three major regions. • Grow and build – Cells I, II, or IV • Hold and maintain – Cells III, V, or VII • Harvest or divest – Cells VI, VIII, or IX The SBU of Zong (mobile) lies in 3, 5, 7 quadrant. So the strategy of these quadrants (hold and maintained) will be apply here. •
Grand Strategy Matrix
This is also an important matrix of strategy formulation frame work. Grand strategy matrix it is popular tool for formulating alternative strategies. In this matrix all organization divides into four quadrants. Any organization should be placed in any one of four quadrants. Appropriate strategies for an Organization to consider is listed in sequential order of attractiveness in each quadrant of the matrix. It is based two major dimensions 1. Market growth 2. Competitive position All quadrants contain all possible strategies there are four quadrants in grand matrix that further contain various set strategies. Quardrant-1 Market development Market penetration Product development Forward integration Backward integration Horizontal integration
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Concentric diversification Quardrant-2 Market development Market penetration Product development Horizontal integration Divestiture Liquidation Quardrant-3 Retrenchment Concentric diversification Horizontal diversification Conglomerate diversification Liquidation Quardrant-4 Concentric diversification Horizontal diversification
GRAND STRATEGY MATRIX FOR ZONG
Rapid Market Growth Quadrant II Quadrant I
Weak Competit ive Position Quadrant III Quadrant IV
Strong Competit ive Position
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.
Slow Market Growth
ZONG lies in first quadrant so the all strategies of 1st quadrant can be apply on zong
Stage-3 (Decision Stage) The Quantitative Strategic Planning Matrix (QSPM)
The last stage of strategy formulation is decision stage. In this stage it is decided that which way is most appropriate or which alternative strategy should be select.
Steps in preparation of QSPM
1. List of the firm 's key external opportunities/threats and internal strengths/weaknesses in the left column of the QSPM. 2. Assign weights to each key external and internal factor 3. Examine the Stage 2 (matching) matrices and identify alternative strategies that the organization should consider implementing 4. Determine the Attractiveness Scores (AS) 5. Compute the Total Attractiveness Scores 6. Compute the Sum Total Attractiveness Score
Quantitative Strategic Planning Matrix (QSPM) SELECTIVE STRATEGIES Key External Factors Weight MARKET PENETRATION Attractivene ss Scores (AS) Total Attractivene ss Scores MARKET DEVELOPMENT Attractiven ess Scores Total Attractiven ess Scores
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(TAS) Opportunities 1 2 3 4 Globalization Marketing Acquisition New Product Development 5 Northern Areas 0.10 3 0.30 0.10 0.15 0.08 0.07 3 4 2 3 0.30 0.60 0.16 0.21
(AS)
(TAS)
2 3 2 3
0.20 0.45 0.16 0.21
2
0.20
6
Pak China Borders
0.13
3
0.39
2
0.26
Threats 1 Old Stable Companies Attractive Packages By Others Price War Government Interference 0.12 4 0.48 3 0.36
2
0.10
3
0.30
3
0.30
3 4
0.06 0.09 1.00
3 3
0.18 0.27
2 2
0.12 0.18
TOTAL Strengths 1 2 3 4 5 6 Investment High Growth Rate Advertising Net Work Portability Zong Mobile Resources Assets And
0.09 0.11 0.12 0.12 0.07 0.08
4 4 3 3 3 3
0.36 0.44 0.36 0.36 0.21 0.24
4 3 3 3 3 3
0.36 0.33 0.36 0.36 0.21 0.24
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People 7 Location And Geographical Coverage Government Dealing 0.10 3 0.30 3 0.30
8
0.09
3
0.27
3
0.27
Weaknesses 1 2 3 4 Bad Image Of Paktel Coverage Low Market Share Weak MIS 0.06 0.07 0.05 0.04 1.00 2 1 2 2 0.12 0.07 0.10 0.08 6.10 1 1 2 1 0.06 0.07 0.10 0.04 5.14
SUM TOTAL ATTRACTIVENESS SCORE
We select the two strategies market penetration and market development. There total attractive score is 6.10 and 5.01 respectively. The strategy market penetration has big score.
• CONCLUSION
Zong has strong financial position and growing fast. That is the reason we didn’t found much discrepancies. As seeing the growth rate of Zong it may be possible that Zong can be the leading mobile operator in Pakistan. There are some minor discrepancies but they are adjustable with little effort.
• Recommendation
•
Zong Telecom should be increasing their network coverage and foot prints in every corner of the country to capture the market.
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•
Zong should adopt the strategies of market penetration market development and related diversification, but the most effective strategy would be market penetration. In the SBU of Zong mobile Zong should use the strategy of hold and maintain. Zong should hire the skilled management. Zong should not waste their opportunities and get more help as possible.
•
• •
•
• • •
References www.zong.com. www.google.com www.pta.com.pk Rana Armughan Zong Garden Town Ali Block Lahore Rao Farhan Ali Khan Zong Kchehri Chowk Multan
• •
The end
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THE UNIVERSITY OF LAHORE
References: www.zong.com. www.google.com www.pta.com.pk Rana Armughan Zong Garden Town Ali Block Lahore Rao Farhan Ali Khan Zong Kchehri Chowk Multan • • The end 45 THE UNIVERSITY OF LAHORE
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