Corporate and Business Strategy Personal Assignment

Corporate Strategy Of XL Axiata Pramita Wardani | 1140003121

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About XL Axiata

External Analysis • Macro Economy • Industry Perspective • Competitive Environment

Internal Analysis • Resources • Capabilities & Core Competences • Value Chain Analysis

• VRIN Analysis

Conclusion & Recommendation • Conclusions • Recommendation

Analysis on XL Axiata Business Strategy • SWOT Analysis & Strategy Diamond Model • Generic Strategy & Value Discipline • Business Model

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1 T h e J o u r n e y o f

X L A x i a t a

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PT XL Axiata Tbk is one of Indonesia’s leading cellular service provider, offering various types of telecommunications products and services such as :

Voice | SMS | Data | Other value-added mobile products & services 4 Corporate Strategy of XL Axiata

Feel 3.0 Fierce | Focus, Ambition, Persistent

Excellent | Accurate and quality services, deliver experience

Leading | Think ahead

New XL transformation mindset is

5 Corporate Strategy of XL Axiata |

XL Axiata Structure Organization

6 Corporate Strategy of XL Axiata |

Revenue Growth XL Axiata 2011 Q3

XL Axiata Revenue Composition

Source : XL Axiata, 2011

53%

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No Provider 2009 2010 2011 2012f 2013f 2014f 2015f

1 Telkomsel 48,000 40,000 32,065 28,440 25,672 23,571 22,249

2 Indosat 37,330 34,700 26,692 23,327 20,850 19,144 18,070

3 XL Axiata 38,000 32,000 28,761 26,260 23,704 21,549 20,341

4 Bakrie Telecom 29,000 24,000 17,879 14,925 13,076 11,768 10,888

Market Average 38,083 32,675 26,349 23,238 20,825 19,008 17,887

ARPU

• The revenue trend is increasing while the ARPU trend is declining.

• Telecommunication industry is a very competitive industry

Corporate Strategy of XL Axiata |

Average Revenue Per Usage

2 External Analysis • Macro Economy • Industry Perspective • Competitive Environment

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• There is no political events related to telecommunications

Good economic growth, and Indonesia is having a raise in GDP.

The social networkers are also expanding as well

The technology changes is rapidly

Go green society

The telecommunication law prohibits monopolistic practices and unfair competition

Corporate Strategy of XL Axiata |

M a c r o E c o n o m i c P E S T E L A n a l y s i s

I n d u s t r y P e r s p e c t i v e

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• The buyers in the mobile phone market grew by 23,55 and the trend is increasing.

• In the 3G usage are also increasing 25% in year 2011.

Source : BMI, 2011

Mobile Phone Trend in 2009-2016

• This is the impact of the increasing usage of Blackberry, Iphones, Ipad, and others smartphones or tablets.

C o m p e t i t i v e E n v i r o n m e n t

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Telecommunication Market Share (Indonesia, 2011)

The competitive landscape of Telecommunication industry in Indonesia year 2010

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Porter 5 Forces

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Potential New Entrants |

MODERATE

Buyers Bargaining

Power | HIGH

Substitute Products |

HIGH

Industry Rivalry | HIGH

Alcatel-Lucent is targeting Asia. Now they already have a strong relationship with Indosat and Telkom to expand their business in Indonesia.

Most people are not only price sensitive but also wants a good services and networks

The substitute of mobile phone is fixed line and also internet

connection through laptops using lan cable

Suppliers Bargaining

Power | HIGH

Ranging from the packaging, card production, BTS rental, headphones, IT provides, music label.

Telecommunication Industry in Indonesia Year 2012

Substitute Products | MODERATE

3 Internal Analysis • Resources • Capabilities & Core Competences • Value Chain & VRIN Analysis

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R e s o u r c e s

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Tangible XL Centre, Traditional Dealer, Non-traditional Dealer, Dealer Modern

Mobile Data Service, BTS

Infrastructure

GSM 900/DCS 1800; IMT-2000/3G, Licenses of closed regular network (leased line), internet service provider (ISP), Voice over internet protocol (VoIP), and internet interconnection services (NAP).

Technological

By the end of 2011, XL Axiata recorded 1,75 Trillion IDR free cash flow (FCF)

Financial

XL Axiata Knowledge Management System, Intelligent Canvasser System (ICS), Intelligent Merchandiser System (IMS).

Organizational

In-Tangible In 2011, XL Axiata has 2,390 employees. Every year the employees increased 3%.

Human Resources

as the 3rd biggest market share in the telecommunication Industry in year 2011, XL Axiata has proven to have a good brand name.

Brand, image and

reputational

XL Axiata has a relationship with 52,000 non-traditional retail outlets and 9,000 modern channel outlets. Besides of that, XL Axiata also partner with 1,133 stores.

Relationship

C a p a b i l i t i e s

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XL Axiata main capability is in technology. XL Axiata has the most modern core network NGN capabilities, better capacity and operation management and is expandable to match future technology requirements.

C o r e C o m p e t e n c i e s

XL Axiata’s core competencies : mobile and corporate solutions by providing various types of telecommunication products and services : Voice, SMS, Data and other value–added mobile telecommunication services.

Va l u e C h a i n

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Service Design

Knowledge Management

Marketing and Sales

Distribution Channel

Human Resources

Procurement

Research & Development

Infrastructure

X L A x i a t a Va l u e C h a i n

Information Technology

Dealers Marketing

&SMD High

Technology KMS, ICS, IMS XL Center

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No Components Valuable Rare Imperfectly

Imitable

Non

Substitutable

1 Resource v v x x

2 Buildings v x x v

3 Workflow System v v x x

4 Database v v x x

5 Reputation v v x x

6 Staffs v v x x

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V R I N A n a l y s i s

Valuable Rare Inimitable Non Substitutable

owns an extensive fiber optic backbone network

XL Axiata has a Service

Management Department

XL Axiata use Knowledge

Management System to

integrate all the

knowledge

It can be substitute with fixed lines and internet

through lan cable

V R I N F r a m e w o r k

4 Analysis on XL Axiata Business Strategy • SWOT Analysis & Strategy Diamond

Model • Generic Strategy & Value Discipline • Value Propositions & Business Model

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S W O T A n a l y s i s

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Strengths • The 3rd largest

telecommunication provider in Indonesia

• Mobile-centric operator

Weakness • Low product quality

(network)

Opportunity • Market penetration in internet

users are increasing • Changing of people lifestyle

and habits

SO Strategies • Global expansion to South

East Asia • Create new application which

gives value added to the customers

WO Strategies • Diversify into new product

markets

Threats • Market competition : price

war, competitors heavy advertising

ST Strategies • Keep low price but still

maintain the services

WT Strategies • Strategic alliance with

third party

S t r a t e g i c D i a m o n d M o d e l

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Arena

Vehicle

Economic Logic

Differentiators

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XL Axiata have their expertise in the telecommunication industry.

To achieve their goals, XL Axiata do an internal development by training their employees

Based on the usage revenue contribution of XL Axiata in year 2011, the trend in the

telecommunication industry is Data.

The 4 key initiative transformation of XL Axiata : 1. Focusing to MDS 2. Enhancing service

quality 3. Increasing Customer

Retention 4. Strengthening brand

positioning

Staging

Brand Name, Number Subscribers, Data, SMS, Voice

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G e n e r i c S t r a t e g y

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Va l u e D i s c i p l i n e

Operational Excellence : • Providing low price with

reasonable quality • High quantity • Focus on efficiency

No Strategy Before After

1 Grand Strategy Hi Price-Low Volume Low Price- High Volume

2 Functional Strategy

A Price High Low

B Product Many brands Single

C Place Direct Dealerships

D Promotion Complicated Simple

B l a c k b e r r y S e r v i c e P r i c e C o m p a r i s o n y e a r 2 0 1 2

Va l u e P r o p o s i t i o n s & B u s i n e s s M o d e l

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• Personal • Corporate

• Customer Care 24 hours/day

• Website • Branches • Mobile

Applications • Dealerships

• Internet Services

• Customer Services

• Simple and attractive promotions

• Packaging Vendors

• BTS Rentals • IT Providers • Music Labels • Collaboration

with 3rd parties : Blackberry, Iphone, Ipad, Samsung

• Marketing • Sales • IT Services • Call Center

Services • Outsourcing

• Low Price-High Volume

• Single product • Voice-Centric • Data-Centric • Domestic

Backbone

Voice | SMS | Data | Other value-added mobile products & services | Ringtones | collaboration with 3rd parties

BTS Rental | Network and infrastructure expand | Maintenance equipment's | promotions

5 Conclusion & Recommendation • Conclusions • Recommendation • Implementation Issues

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C o n c l u s i o n

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• Telecommunication industry is a very competitive industry. To maintain their customers, XL Axiata not only competes in price but also innovation of its products.

• Xl Axiata is very concern to their customers. In this year they established Service Management Directorate which coordinates strategy to give XL Axiata’s experience to their customers and also employee.

• XL Axiata’s transformation to become a leader in data-centric is a good step. By changing their business model, it could give a good impact to XL Axiata in the future.

R e c o m m e n d a t i o n s

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Stars

Cash Cow

Question Marks

Dog

Mar

ket

Gro

wth

Low

High Low

Low

H

igh

Voice – centric

Cloud Computing and e-Money as a solution to provide a go green environment and reduce cost.

• 4G Technology • HSPA+ , • WIMAX • LTE

Maintain and Building a BTS by

the outsource company

Telecommunication industry is becoming a prospect industry in the future, even though the ARPU (average revenue per user) is declining because of the competition among providers. Providers try to decrease their expenses to keep maintain their profits. To keep their competitiveness in the telecommunication industry, XL Axiata could implement new strategies by using BCG Matrix.

High

Market Share

Corporate and Business Strategy Personal Assignment

Corporate Strategy Of XL Axiata Pramita Wardani | 1140003121

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