Findings on marketing for Maxis

Findings on marketing for Maxis The objectives of this report is to present the findings of the strategic analysis conducted for Maxis company and recommend the key strategies that the organisation should embark in order to remain competitive. This report is also to allow us, Management of Strategy students to apply the fundamental concepts and skills of strategic management to a real-life scenario in order to get a better understanding. This practical approach of learning would allow us to gain better understanding compared to theoretical way of learning. Other than that, this assignment gave us the opportunity to demonstrate competency in both written and oral communication skills in formal business settings. Lastly, it helps us to gain more knowledge in create and integrate business knowledge, decision making, interpersonal, leadership and entrepreneurial skills in proposing strategies and evaluating them. This assignment is a really great opportunity for us to know more about outside world which is not in books . Scope This report shall cover the operations of Maxis company in Malaysia. In this report, all the significant information required for business and competitor analysis are included. It also contains the study of analysing an organisation, its industry, its closest competitors (immediate, impending, invisible) before devising several strategies for it to pursue, selecting the most appropriate strategy and outlining recommendations for its implementation in a formal business report which will also involve a formal business presentation at completion of these tasks. Limitations The limitations of this report are the short duration for the assignment to be completed. The short duration of this assignment did not permit us the time to conduct an interview with Maxis for more accurate information. However, we find information based on valid sources through online. Some information may be outdated with the current company situation so our knowledge of the current situation would not be as accurate as first-hand information. 2.0 Background to the organization Maxis Berhad, with its consolidated subsidiaries is the leading mobile communications service provider in Malaysia with over 11.4 million subscribers starting from 30 June 2009.  [1]  It is established in year 1993 and has been publicly listed in year 2002. The company started its operation in the year 1995. 012, 017 and 0142 dialing prefix is normally identified as Maxis dialing prefix.  [2]  The company mobile services are provided over different Global System for Mobile Communications (GSM) such as 900 1800 MHz GSM band. As of July 2005, the 2100 MHz Universal Mobile Telecommunications System (UMTS) band was used by Maxis. Other than that, Maxis is also the pioneered in the Malaysian market in delivering innovative mobile products and services. In July 2005, Maxis was the first to launch 3G services in Malaysia. In September 2006, Maxis became one of the worlds first to use High-Speed Downlink Packet Access (HSDPA), a high-speed enhanced version of its 3G network, to provide wireless broadband services. The 3G services coverage is up to 740 sites across Malaysia and still expanding now. The 3G services of Maxis enable the users to enjoy the internet access throughout Malaysia. Maxis was also the first operator to bring in and sell the Blackberry and Apple iPhone smart phones to Malaysia. Maxis was also the first to unveiled near field communications (NFC) service in Malaysia. Maxis vision is to bring advanced communications services to enhance its customers lives and businesses, in a way that is simple and personalised, by efficiently and creatively harnessing leading edge technology, and delivering a brand of service experience that is reliable and enchanting.  [3]   3.0 Situation Analysis Situation analysis is a systematic collection and evaluation of past and present economical, political, social, and technological data. It is aimed at the identification of internal and external forces that may influence the organizations performance and choice of strategies, and the assessment of the organizations current and future strengths, weaknesses, opportunities, and threats.  [4]   3.1 General environment analysis General environment analysis includes factors such as demographic, economic, political/legal, sociocultural, technological, global and physical environment that generally affect everyone in an industry or market in a similar manner. 3.1.1 Demographic Maxis invested RM1.24 billion to upgrade and modernize their 3G network in year 2009 in order to increase the population coverage from 50% to 57%, which represents the single largest yearly deployment in Maxis history. In the first quater of 2010, Maxis mobile internet users grew from 1.2 million to 6.4 million which is a large increase in customers accessing the internet from their mobiles. The statistics showed that more than 50% of the Malaysias population is under the age of 25 years old, a sizeable number of whom enter the phone owning category each year. It is because the youth segments are now the largest and fastest growing segment. Maxis is a leading regional content player with 39.2% of non-voice revenue as part of mobile revenue and 7.1 million active mobile internet users, more than 50% of its customer base. As a result, Maxis became the most attractive in high-growth, low-penetration markets and diversifying the market base as well. http://i.pictr.com/rjw9vg6zsl.jpg http://t0.gstatic.com/images?q=tbn:ANd9GcRWQfeG7nn0fvz1I_YW6VQ53_r0iiRNNeY66EGgX0euoeEMUbQ-TA 3.1.2 Economic In year 2010, Malaysias economy was expected to grow. This improved outlook is expected to stimulate consumer and business spending for telecommunication services. Malaysias determine to achieve a broadband household penetration rate of 50% by 2010 for Maxis growth in the immediate future. The Malaysian telecommunications industry remains flexible even though the challenging global economic climate. In 2009, the overall growth of the mobile industry was satisfactory and the mobile subscriber penetration crossed 100%. The basic salary of the Maxis employees are fixed for the duration of contract. It can be reviewed into account the individual performance, the inflation price index, and information from independent sources on the rates of salary for similar positions in other comparable companies. Maxis is returning to list on Bursa Malaysia in November or December and its draft prospectus is posted on the Securities Commission website. Maxis was taken private in 2007 and de-listed from Bursa the same year. In a challenging global economic climate in year 2009, Maxis delivered another strong year. http://biz.thestar.com.my/archives/2009/11/20/business/p1-maxischt.JPG 3.1.3 Political/ Legal The government had chosen Telekom Malaysia Bhd (TM) and Maxis Broadband Shd Bhd (Maxis) at 14th December 2010 to sign a landmark of 10 years agreement for TM to undertake the High Speed Broadband (HSBB) services to Maxis. As we know that, this project was able to offer more quality broadband services. Malaysia government limits the level of playing field for foreign players in the industry. The countrys major telecom players, Maxis and Celcom won the bid together with subsidiary of Time Dot Com and MiTV Corp for the 3G license. However, DiGi was not awarded a 3G license as it has a high foreign ownership. The Maxis website contents are owned or controlled for the purposes by Maxis or its content suppliers and are protected by copyright, trademarks and other laws. The compilation of all content on the website and the service are the exclusive property of Maxis or its content supplier and protected by copyright. Maxis also has a strict condition to avoid broadband user abuse, that is why Maxis specify that every customer must be at least 18 years old to be a Maxis customer. Sub-users under this age must have authorization from the account owner to access the Maxis Broadband service. Before using the Maxis Broadband service, the person must obtain permission from the registered customer. Customers also must not attempt to gain unauthorized access to any computer system. 3.1.4 Sociocultural Maxis provides guidelines for the manner in which all employees should conduct themselves at the work place, while performing their daily duties for Maxis and as a Maxis employee in order to provide better services to customers. Key factors of this growth included the availability of more advanced smartphone models in Malaysia and the strong growth of social networking. Maxis was the first to offer the popular iPhone to Malaysians, achieving annual targets, and it continued to boost the sale of BlackBerry phones. Maxis has Business Value Plus Plans for business people. Business Value Plus Plans have many ways to help save money when calling. Data Plans exclusive to iPad for iPad users to enjoy online entertainment with a much lower price. Maxis prepaid Hotlink come out with a new plan which is much cheaper than other competitors. Maxis focused on minimizing carbon footprint to care for the environment. As such, Maxis partners with Malaysia Airline Systems to reduce the impact to the environment, as well as an in-house recycling campaign. At their work place, efforts are taken to reduce wastage and disposal, reuse existing resources and recycle fully exhausted materials. 3.1.5 Technological Malaysia is set to get a HSBB internet support allowing fast internet access by utilizing fiber optic technology to transfer data. It will allow network operators to take part in and compete with each other in this new network. TM had already commissioned foreign major vendors to lead the project. RM11.3bil national HSBB project is a partnership between TM and our government to expand next-generation, high-speed broadband infrastructure and services for the country. As we know that, HSBB offers bandwidth at network speeds of 10Mbps and above, through fixed line only, as compared to regular broadband services which are delivered at network speeds ranging from 384Kbps to less than 10Mbps through fixed line which also known as DSL and wireless mode, such as 3G, HSDPA, WiMAX and WiFi. Maxis commercially launched the first-in-the-world contactless integrated mobile payment services that utilizes Near Field Communication technology, with partners Nokia, Visa, Maybank and Touch n Go to pay for purchases and transportation charges using mobile phones in year 9 April 2009. 3.1.6 Global Maxis brings excellent coverage in almost every corner of the country and their services are rapidly expanding. In addition to voice, GPRS and EDGE coverage, Maxis also offer Maxis 3G in Penang, Langkawi, Alor Setar, Kuantan, Genting, Klang Valley, Johor Bahru, Kota Kinabalu, Kuching, Kota Bahru, Ipoh, Malacca and Kuala Terengganu. In India, Global Communication Services Holdings (GCSHL), a wholly-owned subsidiary of Malaysian telco, Maxis Communications Berhad, has applied to the Foreign Investment Promotion Board (FIPB) to increase its direct and indirect shareholding in Aircel from 26 percent to 73.9 percent. In year 2009, Maxis and the Western Union Company announce to launch of mobile money transfer service In Malaysia. It allows 11 million Maxis subscribers and 1.9 million foreign workers in Malaysia to send cross-border remittances directly from their mobile phones. 3.1.7 Physical environment The issues that Maxis concern is effective and efficient services, operating hours, and user-friendly facilities in order to improve the values the company can provide to its customers. Maxiss main challenge today is adapting well to a fast changing and often hostile environment of telecommunication industry. Things change very fast until the company is unable to cope with the rapid pace. As a result Maxis shifts at the top management team in order to tackle the changing business environment and global competition. As we all know that, the changes in Maxis is because of trying to deal with shifting market environment and to shift to the updated telecommunication technology, 3G. With the increasing demand for IT to achieve and support corporate objectives, IT department of Maxis must manage with a continuous barrage of changes such as changes in product requirements, technology, development processes, and deployment environments. As a result Maxis deliver newer technology assets and applications to their current customers and attract new customer base through proactive management of change. 3.2 Industry conditions (Porters Five Forces Analysis) Five forces which would impact an organizations behaviour in the market. Understanding the nature of these forces provides organizations the required insights to enable them to formulate the appropriate strategies to be successful in their market (Thurlby, 1998). 3.2.1 Threat of new entrants (high entry barriers) High capital investment for competitor entry into telecommunication industry. Companies in this industry incurred high fixed costs and spend fairly large amount of capital on network equipment and maintain development. Besides, technologies are also considered as barriers for new companies to enter the market. Maxiss reputation has been built around their superior customer service and quality network. Due to high expectations and standards that come with the Maxis brand it is not without reason that customers are more demanding of Maxis. As a result, Maxis always think that their business on being the customers first choice. Capital requirement usually build up a firm which is the high capability to compete in the industry. However, telecommunication is a high competitive industry in order to gain large market share. Therefore, new entrants have to ensure that they have ample financial resource to sustain in this industry. 3.2.2 Bargaining power of suppliers (high bargaining power of suppliers) Telecommunications industry in Malaysia is dependent on imports for the majority of its network components as most of the network equipment cannot be sourced locally. Maxis networks utilize standard equipment which is available from a limited number of suppliers. Most of the GSM equipment for Maxis mobile network operations is purchased from Motorola, Siemens and Trisilco Folec, and Maxis maintains close working relationships with its key network equipment suppliers. Since the suppliers of Maxis are limited, hence Maxis suppliers are powerful when the product they provide are differentiated or it has built up by switching cost. When there is occasional requirement by the buyers such as high investment in submarine fiber optic cable, and replace the copper cable and old satellite dishes that may provide reliable broadband connectivity. Maxis have high competitive environment causes existing entrants need to invest in high modernization technologies to enable the company to support and compete in this industry. Therefore, it is important for service providers to make sure the quality of the technology equipment. This makes the supplier group become more powerful. 3.2.3 Bargaining power of buyers (low bargaining power of buyers) In the era of globalization, advance of technology could increase the bargaining power of buyer, high available of information make it easier for buyer to evaluate sources of materials about telecommunication. There are many alternatives product such as fax, email, and internet which enhance the bargaining power of buyer to the mobile service provider. For the moment, high level of competition between the major telecommunication companies that exists in current market leads to low switching cost for the buyer to change their mobile service provider. Customers are highly price sensitive and easy to switch brand. It also means that customer will not be faithful to Maxis if they find out other brand provides better services than Maxis so they will change brand. As a result, this contributes to concentration of the buyers industry. Besides this, the buyers have high switching cost in this industry. As a result, the industry is more profitable when the buyers have low bargaining power which means the buyers are unable to affect the setting of prices in the industry. Maxis has came out with many Business Value Plus Plans for business people. It has so many methods to help save money when talking on the phone. Maxis wants to make sure that their customers can enjoy using Maxis services with a much lower price than other competitors. 3.2.4 Threat of substitute product (high threats of substitute) Maxis have many substitutes in the mobile industry. For instance, from traditional way which are using the letter, fixed home line telephone, fax and email to communication with other people till currently mostly everyone using broadband Internet services, which enable faster and always-on connection to the worldwide web, offer more promising growth potential. Furthermore, the pressure on the very low cost to use the phone calling via internet or communicate via online messenger had threatened the mobile industry. For example, nowadays many people use MSN, Facebook, and Skype to communicate rather than use their mobile. Threat of substitute product also will directly affect the profitability of Maxis. Substitute product is the product or services in other industries that is different from the existing product or services but serves the similar needs. Hence, threat of substitutes exists when a products demand is affected by the price change of a substitute product. This threat is supposed to be a strong point for Maxis because these substitute products such as letter or e-mail are unable to fulfill or completely replace the mobile services. 3.2.5 Intensity of rivalry among competitors (low intensity of rivalry) Telecommunication industry consists of only several mobile operators such as TM, Maxis, Digi, Celcom, Umobile and so on due to the entry restriction that imposed by the government. Profitability of the industry also affected greatly by the intensity of competition among existing competitors in the industry. Therefore, rivalry among competitors telecommunication industry in Malaysia is oligopoly structure nowadays and the level of competition in this particular industry is believed that to be low one. Maxis have two main competitors, they are Digi and Celcom. Cannot be denied that, Maxis lead the telecommunication industry. They largely compete on differentiate product and services on how to improve their features and implementing innovation to the customers. In addition, Maxis will definitely compete on the call rates, package price and so on with other two main competitors. Hence, Maxis try to gain competitive advantage through low call rate and price such as Youth Club. As we all know that Maxis, Digi and Celcom invested a lump sum of the money on advertising to promote their products and to attract more customers choose them. Summary of environmental scanning Basically, environmental scanning is about the careful examining of a firms internal and external environment for spotting early signs of opportunities and threats that may influence an organisations decision making process and its current and future plans. In the case of Maxis, they can spread and even penetrate into new market or other countries. Too much dependence on Malaysia as their main market is not enough in order to compete with its close competitors. Thus, Maxis can somehow implement its weakness into opportunities that might bring them into a new future plan. Plans such as adjustments to interconnect rates and ways to overcome the threats from its competitors are soon to be implemented. In the sense of customer care, lots of threats such as worms, Trojans, spyware and so forth would harm the special rights of customers as a Maxis user. Thus, Maxis requires certain software and devices so as to protect their customers from being tracked or harmed by unnecessary parties. Experts who can trace hackers or protect customers from being hacked are encouraged to stay in the management team in order to help overcome this threat. Although Maxis is the first telecommunication company to launch iPhone, the recent launch of Digis iPhone had posed further pressure on Maxis. In order to retain and attract more customers, Maxis would have to execute a better package with affordable rates for its users. Customer services must be improved to cater most of its customers needs. Also, they must keep upgrading their features or functions of its technological devices so as to lure more people in purchasing their products. It is normal to see some aggressive broadband promotions by wireless competitors. Therefore, Maxis must stand out as being more important than the rest to win over this challenging game. In addition to promotions, some other marketing strategies like collaboration with big companies in organizing an event, sponsorship from government agencies and what not can be carried out in order to gain good image from the public as a whole. 3.3 Description of key stakeholders Key Stakeholders are a subset of Stakeholders who, if their support were to be withdrawn, would cause the project to fail.  [5]   3.3.1 Capital Market Stakeholders Major suppliers of capital (e.g: banks) Shareholders Individuals, Bank/Finance Companies, Investment Trusts/Foundations/Charities, Other types of companies, Government Agencies/Institutions/Nominees In the company (Directors Interest in Shares) (Maxis Berhad Annual Report 2009, 2009) -Raja Tan Sri Dato Seri Arshad bin Raja Tun Uda -Robert William Boyle -Dato Mokhzani bin Mahathir -Asgari bin Mohd Fuad Stephens -Eng. Saud Majed A. AlDaweesh -Dr. Fahad Hussain S. Mushayt -Ghassan Hasbani -Augustus Ralph Marshall -Chan Chee Beng -Sandip Das 30 Largest Shareholders (Maxis Berhad Annual Report 2009, 2009) 1. Maxis Communications Berhad 2. Kumpulan Wang Persaraan (Diperbadankan) 3. Employees Provident Fund Board 4. Amanahraya Trustees Berhad Skim Amanah Saham Bumiputera 5. HSBC Nominees (Asing) Sdn Bhd Exempt AN For JPMorgan Chase Bank, National Association (U.S.A) 6. Amanahraya Trustees Berhad Amanah Saham Wawasan 2020 7. Amanahraya Trustees Berhad Amanah Saham Malaysia 8. Citigroup Nominees (Tempatan) Sdn Bhd Exempt AN For Prudential Fund Management Berhad 9. Amanahraya Trustees Berhad Amanah Saham Didik 10. HSBC Nominees (Asing) Sdn Bhd Exempt AN For J.P. Morgan Bank Luxembourg S.A 11. HSBC Nominees (Asing) Sdn Bhd Exempt AN For The Bank Of New York Mellon (Mellon Acct) 12. Malaysia Nominees (Tempatan) Sendirian Berhad Great Eastern Life Assurance (Malaysia) Berhad (Par 1) 13. Permodalan Nasional Berhad 14. HSBC Nominees (Asing) Sdn Bhd BBH And Co Boston For Vanguard Emerging Markets Stock Index Fund 15. Valuecap Sdn Bhd 16. Amanahraya Trustees Berhad A s 1Malaysia 17. HSBC Nominees (Asing) Sdn Bhd Exempt AN For JPMorgan Chase Bank, National Association (U.A.E) 18. Amanahraya Trustees Berhad Public Islamic Dividend Fund 19. HSBC Nominees (Asing) Sdn Bhd TNTC For Saudi Arabian Monetary Agency 20. Citigroup Nominees (Tempatan) Sdn Bhd Exempt AN For American International Assurance Berhad 21. DB (Malaysia) Nominee (Tempatan) Sendirian Berhad Exempt AN For Deutsche Trustees Malaysia Berhad (MYET F-DJIM25) 22. HSBC Nominees (Tempatan) Sdn Bhd Nomura Asset Mgmt Malaysia For Malaysia For Employees Provident Fund 23. HSBC Nominees (Asing) Sdn Bhd TNTC For Mondrian Emerging Markets Equity Fund L.P 24. Cartaban Nominees (Asing) Sdn Bhd State Street For IS hares, Inc. 25. Lembaga Tabung Angkatan Tentera 26. SBB Nominees (Tempatan) Sdn Bhd Kumpulan Wang Persaraan (Diperbadankan) 27. CIMSEC Nominees (Tempatan) Sdn Bhd CIMB For Gegas Cekap Sdn Bhd (PB) 28. CIMSEC Nominees (Tempatan) Sdn Bhd CIMB For Tiara Gateway Sdn. Bhd. (PB) 29. Amanahraya Trustees Berhad Public Islamic Equity Fund 30. Citigroup Nominees (Tempatan) Sdn Bhd ING Insurance Berhad (INV -IL PAR ) 3.3.2 Product Market Stakeholders Primary customers All users which subscribe Maxis line (either prepaid, postpaid or 3G) or buy the products such as Mobile Internet, Iphone, Blackberry, Android, Wireless and Wired broadband from Maxis. Primary customers for Maxis IP VPN (IP VPN, 2010) Customers Name Van Wijnen Groep N.V. Solvay Group Industry Construction Pharmaceuticals, chemicals, plastics Business Challenge Develop employee and customer satisfaction by establishing an ERP system and enhancing information flows through an improved private network. Facilitate business restructuring and support innovation. Network Solution Versatels IP VPN service is based on a Cisco MPLS network to provide a data solution that is managed end to end and gives excellent capabilities for supporting ERP. à ¢Ã¢â€š ¬Ã‚ ¢ BT Infonets IP VPN service is brought over an MPLS network built end to end with Cisco equipment and possesses a Cisco Powered Network designation. à ¢Ã¢â€š ¬Ã‚ ¢ The service sustains Solvays global ERP and intranet developments. à ¢Ã¢â€š ¬Ã‚ ¢ The managed network offers a flexible and protected foundation for new services, such as voice and video over IP. Suppliers (Authorised Distributors, 2010) ZyXEL Communications Corporation (M) Sdn Bhd ZyXEL, founded in 1989 in Hsinchu, Taiwan, is a pioneer manufacturer and supplier of DSL Customer Premise Equipment. ZyXEL is now worlds largest DSL router vendor and Europes second largest router supplier. In addition to its innovative products and solutions, ZyXEL has strong relationships with worldwide COE vendors such as Alcatel, Lucent and Nokia; ILECs such as Verizon and Chunghwa Telecom; international carriers such as France Telecom, Deutsche Telekom, and Telefonica; ISPs such as EarthLink, Worldonline, Hinet, Seednet, Maxis and many others. Working closely with these and other partners, ZyXEL is committed to helping businesses succeed in the booming broadband market by providing them with value-added service and outstanding performance solutions at the most competitive price. Advanced Broadband Communications Sdn Bhd Advanced Broadband Communications Sdn Bhd is a newly formed company incorporated in April 2001. The company is a private joint venture, high-tech based company between Advanced Broadband Communication Sdn Bhd and Prestige Sierra Sdn Bhd. The company is 100% locally owned to provide total telecommunication solutions and services for both conventional IP Systems. The new technology that bridges conventional Circuit Switch communication to Internet Protocol (IP) communication. All IP-based solutions and services that will be developed and deployed by the company are targeted at business and personal users at all levels. Host communions Unions 3.3.3 Organizational Stakeholders Employees All employees who work under Maxis Managers (Malaysia Equity Research PP, 2010) Name Positions Sandip Das Chief Executive Officer Jean Pascal Emmanuel Dominique Van Overbeke Chief Operating Office Rossana Annizah binti Ahmad Rashid Chief Financial Officer Mark Guy Dioguardi Head of Network and Technology Stephen John Mead General Counsel Mohamed Fitri bin Abdullah Head of Enterprise Carrier Business Matthew Charles Willsher Chief Marketing Officer Azmi bin Ujang Head of Human Resources Chow Chee Yan Head of Internal Audit Chua Seok Theng Chief Information Officer Non-managers 3.4 SWOT analysis based on stakeholder groups 3.4.1 Capital Market Stakeholders Strengths Strong and competitive regional player. Association with MEASAT Satellite System. Weaknesses Depends too much on Malaysia as their main market. Opportunities Potential for triple play if tie-up with content provider/broadcaster, e.g. Astro. Association with Microsoft. Broadband market in Malaysia is growing. Wireless market in Asia Pacific has experienced a rapid growth. Threats Modifications to interconnect rates may pressure Maxis earnings as the company is a net receiver of calls. Regulatory framework. Mobile number portability in Malaysia. Intense competition from other telecommunication companies. 3.4.2 Product Market Stakeholders Strengths Premium branding and customer care persist to attract and retain subscribers. This is further followed by long term iPhone plans. Much broader 3G/3.5G coverage than Digi and similar coverage as Celcom. Largest subscriber base in Malaysia with c. 39% share. Largest postpaid subscriber base of c. 43% is vital to future market trend towards more postpaid subscribers. Its transparency and ability to deliver performance. Good loyalty programmes and perhaps the best family plan in Malaysia in our view. Weaknesses Maxis does not offer triple play of mobile, broadband and pay TV. Opportunities 32% of the Malaysian population is under 15 years old, which is a main target for broadband services over the next 15 years. New mobile devices, e.g. iPhone (4G) and recently launched iPad drive demand for broadband services. Under-served broadband population provides great growth opportunities. Selective enterprise opportunities as Maxis build backhaul capacity mainly for wireless broadband, thus it can target some lucrative enterprise businesses by using the same backhaul network. Threa