Econet Wireless International and the African Telecommunications Industry Essay

Activities to be completed in this presentationCarry out a SWOT analysis for Econet receiving set global, identifying the key issues that Econet take to address from the tops of your analysis. Undertake an industry analysis of the African Telecommunications merchandise using Porters quintuple Force Model. exploitation a competitor analysis framework of your choice, analyse the Big louvre unst adequate operators in the African commercialize Econet Wireless International is veneer or faced challenges in a number of markets it entered. Identify these challenges and the sources of these challenges. What market st arraygy options should Econet use at it tries to grow its exertions (Justify your options) and what should it do to self-madely implement these strategies?IntroductionThe selection of a growth strategy is finally determined by the companys strategical goals, core competencies and strategic assets as well as by its target customers, collaborators and the overall ec onomic, technological, socio cultural, restrictive and physical context. An integrative approach of analysing these factors is essential for the maturation of a successful growth strategy.OverviewEconet Wireless International (hereafter to be referred to as EWI) is a Zimbabwean owned international telecoms group. The result of Dr. Strive Masiyiwas vision, Econet began in mobile telephone religious service in July 1998, after years of legal battles. frankincense it began leading the change in the telecommunications terrain. Zimbabwe has issued moreover 3 mobiletelecommunication passs to EWI, Orascom-owned Telecel and the governance-owned NetOne.SWOT Analysis for Econet Wireless InternationalAs a result of the internal and external analysis, our SWOT analysis is as followsStrengthsGrowth by and by means of international expanding upon. As EWI expands onto 3 continents in 10 countries, they are able to develop global footprint, therefrom increasing their capital base and sec uring their company. innovative product send. They continuously developed product range, they developed into becoming a full-service communications company offering mobile telephony, traditional land line telephony, earnings services, data streaming services, transactions systems and contract services for other operators. For utilization, in Zimbabwe alone, they concur a number of viable product offerings, namely Buddie, Ecocash, EcoFarmer, EcocashSave, Econet Solar, Econet broadband and BusinessPartna Contract Lines.Their calling model enabled them to offer quality products at competitory prices. They collaborated in the form of kitty partnerships and also joint ventures. For example, it was able to cluck markets such as Nigeria, Kenya, Botswana, red-hot Zealand, Lesotho, Malawi and Burundi. Their joint venture was with Altech in reciprocal ohm Africa. The benefit of this partnership firm was listed in the Johannesburg Stock Exchange therefrom exposing them to a juveni le source of capital. Their mutually formed company, Newco, would have lastly taken over al well-nigh all of Econets companys, allowing EWI to backward intergrate with a supplier which in name of future growth, would enable them to develop an regular(a) wider product offering. This alliance would have been mutually beneficial, with Econet getting access to engineering products, finance and administrative constructions while Altech would get the prospect to diversify riding on EWIs mobile network.Multi-branding. EWI used its name in countries where it had a controlling stake such as in Nigeria, Lesotho, New Zealand, Malawi and Burundi. In countries where it was the minority shareholder, it operated under different names, namely Mascom ( Botswana), Gulfsat Maghreb SA ( Morocco). Their management structure was such that in each country, the operation was headed by a national, who knew the rail line climate in that country but the financial aspect was headed by an expatriate from headoffice thus maintaining effective control and providing bridge over. This further business relations in those nations as the national heading the operation was able to negotiate deals from a knowl beachable point.WeaknessesLimited capital for operations, thus curtailing their growth, especially in New Zealand and Nigeria as the lineament study says, the consortium partners resisted a higher stake in Econet, believing they did not have the financial means and/ or resources to invest. In addition, Econet did not have teeming money to finance the upgrading of its network and it came under government threat of having its authorise revoked, thus they had to borrow $75 million Export-Import Bank. Also, in Kenya, their endorse was scratch due to failure by the consortium to fully honour the license fee obligations within the given time frame. They failed to provide a service recovery alternative for the suspended Buddie card game in 2002 in Nigeria. The price reduction here wa s that they created low reverse costs for their subscriber base, boosting the sales of their competitor.Econet gave their competitors an edge over them in Nigeria, as evidenced by the out stick of their purposes to suspend Buddie cards and also, during their subsequent reintroduction. Both generation, MTN gained from these moves. In reintroducing the cards, they were not able to support the resulting call volumes. They had not had the foresight to prepare for this possibility as a result of their reintroduction. Network quality troubles resulting from failure to support capacity when the Buddie lines were reintroduced. It was a situation of demand outstripping supply.They had also not expected this outcome as a result of reintroducing the previously popular lines. Its strong addiction on their Zimbabwean operations means they weakened their efforts at expansion due to the unfavourable economic climate. They had raised capital via the Zimbabwe Stock commercialize but could not use it externally due to stringent government controls on the basis of hard currency remittance limitations. Their failure to render on the license in New Zealand meant a loss on their part.OpportunitiesTheir listing on the Zimbabwe Stock Exchange gave them the opportunity to raise more than capital. Acquisition of licenses in various(a) countries through consortium partnerships meant they gained a ground in countries such asNigeria, Kenya, Botswana, Morocco, New Zealand, Lesotho, Malawi and Burundi though from a minority position in the consortium. They were able to obtain licenses in various countries.ThreatsStringent government controls. Restrictions to remit its immaterial currencies to finance its operations in other countries, e.g. in New Zealand Intense opposition, e.g. in New Zealand where the market was duopoly delaying their entry into that market. Low switching costs. In most of their markets, subscribers are multi-networked. As subscribers used a number of networks to maximise on particular network availability and promotions, EWI could not in depend totally on that these subscribers would be faithful. spot IssuesLimited capital for operations. They could list on the Stock Exchange to attract investors. They could offer rights issues to subsisting shareholders, thereby attracting new capital. Network challenges. They need to upgrade their systems. They need to picture they have comme il faut technological infrastructure, e.g. base stations, to be able to cater for network loads. collaboration with suppliers. administration regulations and restrictions. They need to form relationships with the host governments. Decision making. Improve their decision approach at corporate level, e.g. their decision to limit the number of long time subscribers had access to the network. From the above analysis, the following threats are of high importance and Econet would do well to take noticeStringent government controlsIntense competitionLow switching costsMergers and acquisitions present an attractive and profitable opportunity thus Econet should explore this avenue further.Industry analysis of the Big Five using Porters Five Forces model. Threat of new entrants steep because in that location are strong barriers to entry in scathe of obtaining an available license due to government restrictions, e.g. Zimbabwe, as shown in the case when Masiyiwa argued the case that the Telecel consortium should bedisqualified as they did not meet complaisant specifications. Restrictive license fees in terms of costs of getting the license such as in Kenya when EWI had their license cancelled after only two months due to failure to meet their obligation in terms of the license fee. A lot of capital is needed to start the business. It is estimated that $14 billion on average is needed as investment in the mobile phone business. talk terms role of buyers mellowed becauseLow switching costs such as in Nigeria when Econet opted to suspend the sale of its prepaid Buddie cards for 6 months due to quality problems, resulting in them losing subscribers. The buyers power is strong in Burundi because they have a cosmos of 7 million people with only 4 mobile subscribers.Bargaining power of suppliers High becauseThe government controlled operator supplier, Nitel, had strong bargaining power, as evidenced by their holding back to supply Econet with transmission golf links for more than a year and Econet had no option but to wait. There were few suppliers.Industry rivals High becauseCustomer base grew rapidly amidst year 2000 and 2005Intense competition among players in the mobile industry.Substitutes Low becauseLandlines sharpness rates were low, for example, in Chad, the rate was on average one landline per 70 people while the mobile phone users expanded between year 2000 and 2005 from 15.6 million to 135 million. The overall rating is high because argument is high, threat of new entrants is high, bargaining power of supp liers is high and bargaining power of buyers is high.Competitor AnalysisCompetitorKey StrengthsKey WeaknessesPerceived StrategiesKey SegmentsMillicomFirst-mover position merchandise loss leader statusCost leadershipMulti-branded coarse market coverage within South AmericaLess hostile business approachEasy to attackLow revenues in the enlarged fiveMass-marketingMulti-brandingCost leadershipLow population marketsInternational marketsMTC innovatorHigh capital baseStrong market coverage foodstuff strength through acquisitionAn aggressive playerHigh rate of economic growthNarrow product rangeMulti-brandingFull market segmentationHigh population areasMTNMarket coverageMarket leaderStrong capital baseEconomies of scaleResource utilisation gigantic product rangeNo multi-brandingBlue oceanLeveraging existing businessGrowing new markets through acquisitionsResearch and developmentHigh population areasNiche, e.g. Middle EasternOrascomStrong capital base through conglomerationMulti branding Cost leadershipWide product rangeMarket leaderMulti-brandingRemoved operations in AfricaMarket developmentHigh populationVodacomStrong revenue baseMarket leaderAdequate resources for expansionInvestment opportunitiesLeast internationalisedMarket growth limitations fetching unnecessary risksJoint venture franchisingForward integrationDomesticInternationalTable 2CompanyCapital/ Revenue (in billions $)Market coverage (number of countries)Mobile Subscriber Number (in millions)Millicom1.41613MTC32023MTN32132Orascom2.1941Vodacom3527From the analysis above, the market leaders are MTC, MTN and Orascom in terms of revenue. Millicom and Vodacom take the role of market challengers. In looking at mobile subscriber, Orascom and MTN are the market leaders followed by Vodacom, MTC and Millicom respectively. In terms of market coverage, MTN leads followed by MTC. Millicom is the market challenger. Orascom and Vodacom are nichers as they focus on specific markets.ChallengesLegislationGovernment con trols in the form of price controls, proscribe establishment of private mobile networks Trading policiesLicense to operateGovernment regulations licensing boardIntense competitionDuopoly in New ZealandInfrastructure problemNetwork supportLack of foreign currencyGovernment foreign currency regulations in ZimbabweChanges in exchange rateEconomical nuclear meltdown in ZimbabweLack of capitalDelay in listing on stock exchangePoor quality Buddie cards in Nigeria harvest-tide development and testing was poorMarketing Strategy OptionsAnsoff MatrixMarket penetration The organisation tries to grow its market share through sales of existing products to the present market, for example Econet Zimbabwe trying to grow its market share from 70% to 80%. They could achieve this through promotions such as offering discounted tariffs. This can be done through ensuring that they have got teeming capital to support the reduction of cost on pricing. The company needs to develop budgets to steer ample resources towards promotion and advertising.Product Development advance up with new or modified products, for example Ecocash has been modified to intromit an account, that is, EcocashSave. They need to invest in a Research and Development department, tasked to come up with more innovative products. They also to need to emphasize on Total Quality Management to avoid product recalls, for example, in Nigeria where the cards had quality problems.Market development The company seeks for and finds new markets in which to expand, for example they go into a totally new market such as penetrating Canada. They can do this through acquisition of licensing in that country. to begin with acquiring the license, they would need carry out market research to moderate that that market is attractive and can be profitable for them. They should also pick up that they have enough capital to successfully implement this marketing strategy. In addition, they need to have the right management and org anisational structures.Blue oceanThe performance of identifying an untapped market in an effort to run away from competition. For example, Econet came up with Econet Solar where they tapped into the solar provision market in an effort to ensure that their customers phones battery life did not affect their network accessibility. In these topsy-survy times where clients have become complicated, the only way to survive in business is through eliminating competition through investing in new engineering and/ or Research and Development. As a result, they can realise a good deal in terms of profit. We advise Econet to take the Ansoff matrix strategies because it covers the wide ambit of marketing strates or options of growth.