GTEL Corporation and VimpelCom penetrated in Vietnamese telecommunication market in 8th July 2008 under the brand name Beeline VN to provide GSM/EDGE voice and data services to cover all Vietnam with over 86million people. Until now, Beeline wants to select more strategies in order to achieve their objective which is growing their market share to 30% like the three giants: Mobilephone, Vinaphone and Viettel. From the last study, IBD strategic counseling center have identified and analyzed Beeline’s strategy as well as the position of the company in Vietnamese market. Furthermore, some suggestions for improving were also given. This report, hence, will evaluate every possible strategy for Beeline in many aspects as well as propose a plan for the most appropriate future strategies.
I. Possible alternative strategies for Beeline
1. Identify possible strategies.
According to the last study, Beeline’s position in the BCG matrix is question mark due to the high growth rate of the industry while the market share of Beeline is relatively low (only 4%). Moreover, in the product life cycle, Beeline has launched and introduced their services not for long. As a result, for three others stages in the product life cycle (growth, mature and decline), Beeline can implement most of the substantive growth, limited growth and retrenchment strategies. In order to identify those strategies, the most effective tool is Space matrix.
Figure 1. BCG matrix
Figure 2. Product life cycle
a. Environmental stability
By using the information from the external environment, we can identify as well as score the options in this factor. First of all, telecommunication market in Vietnam especially mobile network services has recently rocketed significantly. From the limited network until now, most of the places in Vietnam are coverage by applying many new technologies and liquidate the outdated one (GSM/EDGE, IP utilizing the NGN technology with frequency band of 1800MHz) so as Beeline will not be lagged behind by the three giants. Secondly, according to many economists, the inflation rate of Vietnam is still a double digit (14%) and it is considered as really high compared to other developing country (in 1 digit).
Now, the Vietnamese government is using ceiling and floor price as well as tariffs to modulate the inflation rate back to one digit. Furthermore, at the beginning, Beeline launched the most extraordinary cheap services (Big zero) to market while other three giants’ price is much higher than Beeline. Therefore, the price range of Beeline with the average price of the industry is really high. Nevertheless, the last thing belongs to the environmental stability is barrier to entry into the market.
From the political factor in the previous study, Vietnamese government is encouraging investments from oversea to increase the FDI (Foreign direct investment), so that the tariffs and policy are absolutely motivating every foreign business like Beeline. Moreover, telecommunication is the most vital service in the modern world and this is also an industry which gains the most attention from the politician. As a result, besides high initial investment, the barrier to entry of this industry can be scored
4. b. Financial strength
Financial strength is a strong point of Beeline. According to the annual report of Beeline, the return on investment rate of Beeline remains in 4.2%for each billion of dollars invested after payback. Besides, the profitability ratio of Beeline always stands above 50% (50.4%) and nearly equal to Mobilephone (53%). In another aspect, Beeline has 16years of history in the telecommunication market which means Beeline has experience in the current market.
Until now, Beeline has provided 86 million mobile subscribers in total and it is till increasing while the price of services become cheaper and cheaper. Thus, they are able to have a large economy of scale. If there is a potential plan, Beeline will not hesitate to invest because they have the capital required for most of the plan by extracting a part in the total revenue of $2.27 and from the huge capital of Beeline. In the future, Beeline can maintain this strength to obtain their objectives especially updating new technology.
c. Industry strength
In this aspect, we can concern on three main factors: Financial stability, resource utilization and capital intensity. Firstly, the demand of using telecommunication services is always stable in most of the time, so that the revenue and financial status of this industry will always in a stable position. In the modern world, telecommunication is no longer a demand but a need of every citizen in the world. Thus, 6 will be the score for this option. On the other hand, the utilization of resources can also be taken full advantages by every business not only capital but also human resources (think global, act local).
For instance, Beeline hired a professional force from both oversea (Mr. Alexey Blyumin, CEO) and Vietnam (Mr. Nguyen The Binh, Deputy CEO) to administrate the company in Vietnamese market. From the professional force, they will propose the best way of utilizing the financial resource in the most economical way. Last but not least, Beeline is a foreign group with a huge amount of capital available. Consequently, the capital intensity of Beeline deserves to receive the highest score.
d. Competitive advantage
As aforementioned, Beeline has the capacity of providing services for more than 86 million people which is equal to the population of Vietnam while other three giants are in the process of signal coverage for the whole country. For Beeline, this objective will be obtained more easily than competitors (5years while others may take 10 years). From the statistic above, Beeline market share at the moment remain in 4% which is not high compared to the three giants. However, the service of Beeline quality is quite acceptable according to the opinion of the students who are the target customers of Beeline. Moreover, the time for Beeline to launch a new service is quite short (about 3 months) whereas Viettel or Mobilephone takes 6 months or a whole year to release a new service (3G). To sum up, the whole information and analysis will be shown in the table below to identify the position of Beeline in Space matrix.
Diagram 1. Space matrix of Beeline
When Beeline takes market penetration into consideration, they should invest more on PR and marketing campaign to create awareness and reputation in the public. Moreover, improving after sales service will help Beeline gain customer loyalty for repeat purchasing. For market development, Beeline may find some other potential market in Vietnam especially in the rural areas but the living standard of the citizens at that place is at medium level (Dien Bien, Sapa, Tam Dao, etc). This strategy can be apply easily thanks to the development of technology, so that Beeline just have to concern about human resource or others factors. However, Beeline still have to use other strategies as well at the rural area to compete with Viettel who have coverage most of the places in Vietnam. Next, product development strategy is about focusing on R&D.
Beeline needs to create the new product line or add more value to the services like packaging, online counseling, etc. However, no matter what they do, they have to assemble to maintain their corporate image, their style (black and yellow) during the campaign. Finally, diversification will be the last secret weapon in the aggressive strategies. Specifically, Beeline can use forward , backward integration and horizontal integration like building more agencies throughout Vietnam or even providing mobile phone and internet, wireless, etc with the attractive price like Viettel sell Iphone 3, internet network Dcom 3G.
Invest more on new technology| v| v| x| x| 13| 3rd | Table 3. Ranking and scoring
From the table, it is noticeably that there are some tactics have the same score. Thus, it is depend on the manage board to decide which activities should do first or they need to have a strategic allocation of capital to do these activities simultaneously (find the critical path). If Beeline allocates the resource as well as schedule in the most effective way, they will not only minimize but also increase their profit and market share. The first thing they have to do is all about people. Hiring the right people is the most important for all business because it is the people who create the product, seek for customer and bring back profit for the company. This activity will lead to a good result of other activities of Beeline. That’s why, they hired a professional Vietnamese person to be the vice deputy of Beeline. It is obviously that when you do nothing, you gain nothing but sometimes during the economist crisis, do nothing is a good strategy unless the cost of doing nothing lower than making a new plan.
II. Strategic plan of the most appropriate strategies for Beeline 1. Select the final strategies:
At the end of the day, after analyzed and evaluated every available strategy, IBD agency will propose Beeline to apply market penetration and product development. Others strategies like market development or diversification are slightly risky according to some internal stakeholders. Moreover, the three giants have successfully applied market development and if Beeline do so, it is really hard to compete because even Ha Noi and Ho Chi Minh City which are the most potential market of Vietnam, Beeline have to endeavor to survive.
For diversification, this kind of services play a role as a contributor only and most of the telecommunication company create their own supply, so that Beeline could hardly to do so. Making a new product seems to be hard for Beeline because they have to maintain their style and corporate image. Thus, just do what you are best. At the moment, there are some strategies which is work for Beeline like Cost leadership or differentiation (for different services). However, when Beeline success like Viettel, cost leadership will not necessary like Viettel in the past, they launch out many cheap services but now it rarely has new promotion.
2. Strategic plan
Implementation is most difficult part which every company faces. Making a plan is easy but when they implement it, they will face many unexpected problem like physical risks (an manager may got an accident, etc) or business risks, financial risks, natural risks, etc. As a result, there need to be a detail plan and closely control system. This plan will be taken charged by the management board as well as every departments of the company.
a. Management board
Management board is the head of the company, so that Beeline needs to hire a professional person to take charge this position. First of all, the senior manager have to make a clear vision and mission as well as objectives for every department to explain deeply for them to work in the right direction. This is called envisioning. Apart from that, controlling and encouraging will ensure every department especially Marketing and Financial Department support each other and the manager also have to support them not only for professional issues but also ratify their plan. By recognizing contribution with fair wages and salaries, Beeline’s manager will not only motivate them for increasing productivity but also gaining their respect.
Last but not least, in order to implement well, Beeline need to apply both intended (deliberate) and emergent (realize) strategies because by doing so, they will not only have clear and reality mission from the information gather from functional department but other department also have a clear mind about their mission to implement the strategy. For the managers, by creating the responsibility charts will help Beeline manager have a clear and logistic plan. A clear objectives, sub-objectives, general program and make an assumption will set a mile stone for the employees to achieve and also make a competitive environment when the manager utilize with his/her motivation program.
Working as a team is not about in a inside but also among departments together. Marketing department will take charge of making plan to build reputation and promote the profit of Beeline. However, Beeline cannot use all of their money for advertising. This is the time for financial department, the CFO (Chief Financial Officer) will calculate the cost of advertising and ask the CMO (Chief Marketing Officer) to adjust the plan to match with the budget of the company.
However, in order to have such a professional labor to do so, the Human resource department has to ask other department for their demanded labor. Base on that, the manager of HR department will seek and find the right person for that position especially the labor force for PR activities. There are others department which Beeline needs to concern but as a telecommunication provider, those three departments are the most important.
c. Allocate resources
As a contributor of mobile network, the human resource of Beeline need to be allocate most in the sales department while other professional one will place in the vital position (manager, team leaders). Moreover, Beeline also needs to contribute the services fairly between the southern and northern of Vietnam so as not face the overload problem in one territory. About financial issue, minimize expense by hiring the local people and maximize the profit because the local people know their customers best. Moreover, always checking the budget will help Beeline have a timely adjustment. All of the resource are available in the society both HR (in the society or university) and financial (bank, issuing share, etc). When Beeline become the one of the heavenly king of Vietnamese telecommunications market, they can have another network system to allocate the resource not only the urban areas but also the entire country.
This report has made a comprehensive evaluation of many strategies available for beeline. However, the most effective strategies which Beeline needs to take into consideration are market penetration and product development. Furthermore, not only the management board of Beeline must envision but also make sure every department support and working together as a team.
* Product life cycle: http://www.businessdictionary.com/definition/product-life-cycle.html * Beeline VN information:
* http://www.maivoo.com/2011/03/29/Suc-tang-truong-cua-thi-truong-vien-thong-manh-tro-lai-n324141.html * http://en.beeline.vn/en/pages/content.aspx?id=100
* http://ebrandium.com/thu-vien/marketing/mot-chien-luoc-tiep-thi-toan-dien-case-beeline-vietnam.html * http://vccinews.vn/?page=detail&folder=96&Id=276 http://vnexpress.net/gl/kinh-doanh/2009/08/3ba11ea3/
* Secondary data:
* BPP Professional Education, 2004, Business Strategy, London: BPP Professional Education * BPP Professional Education, 2004, Business Environment, London: BPP Professional Education * Duc, Nguyen Anh (2010), “Marketing research of transmission and recommendations for VIETTEL” NEU’s MBA course. * Tuan, Doan Anh (2010), “Developing the services of Hanoi telecommunication company”, NEU’s MBA course. * General Statistic Office, 2011. Social – economic in 2010 [Online] Available at: http://www.gso.gov.vn/default.aspx?tabid=621&ItemID=10835 [Access: April 11, 2011] * Scribd.com, 2010. Beeline Vietnam marketing strategy [Online] http://www.scribd.com/doc/28790390/chi%E1%BA%BFn-l%C6%B0%E1%BB%A3c-markeeting-c%E1%BB%A7a-beeline * Binh, Vu Quoc (2011) “Báo cáo về tình hình và những vấn đề đặt ra trong phát triển kinh tế xã hội của thủ đô Hà Nội và cả nước những tháng đầu năm 2011; những kiến nghị, giải pháp” Hanoi researching socio-economic development study published. * Cuong, Vu Huy (2011) “Business strategy assignment 1” * Beeline strategies: