Strategic management paper: Bayan Tel

Date of Publication

2005

Document Type

Oral Comprehensive Exam

Degree Name

Master of Business Administration

College

Ramon V. Del Rosario College of Business

Department/Unit

Decision Sciences and Innovation

Abstract/Summary

The economic performance of the country for the year 2004 and its prospects for the coming years look promising. However, it will be a wait and see on the effects of the oil price increase (whether it is temporary or sustained), inflation movements and the agricultural impact of the recent typhoon. Consequently, foreign exchange movements will be affected. Government's fiscal reactions are critical. Business outlook remains positive for 2005-a good indication of confidence in business activities in the country although optimism may be lower than previous indications. For 2006 to 2007, NEDA is forecasting a stable economy with inflation and interest rate to remain at single-digit levels, and the PESO/$ rate hovering between P55-57.

The government plans of support for the telecommunications industry promotes optimism for the current players. There are great prospects for growth as government has included several positive campaigns to enliven and encourage telecommunication usage and expansion.

The telecommunications industry is expected to be the forerunner in economic development for the country. The sector will continue t o benefit from the expansion of IT-related businesses (business process outsourcing, call centers) and the continued growth in cellular phone services. The industry is an oligopoly. It is characterized by one large dominant firm in wireline and wireless, PLDT, a second sizeable firm in wireless, Globe, smaller upcoming firms like Bayan Tel and Digitel.

The Philippine telecommunications industry was deregulated in 1993. Among the available products offered by the industry are LEC or local exchange service, national and international long distance services, and data services. The markets for these products include retail (residential and Small & Medium Businesses), corporate businesses (call centers, Internet Service Providers, other companies), and other carriers (Smart, Globe, Digitel, Paptelcos - provincial carriers). Bayantel presently ranks 4th in terms of LEC subscriber share, revenue and long distance minutes and ranks 3rd in revenues for long distance and data.

Bayan Tel rolled-out its service in 1995. Since then, it has provided quality telephone services to its subscribers now numbering close to 300,000 in its franchise areas. It pioneered in the introduction of value-added telephone services in the market such as Caller-ID. Like most telephone companies, however, BayanTel's bubble was burst by the 1997 financial crisis, which led to the ballooning of its debt in peso terms. On top of which, Bayantel experienced interconnection problems with the market leader, PLDT and it had to write-off a bad investment in Extelcom in 1999. These problems contributed to Bayantel's inability to pay its debt and forced it to form a new management team in time for its debt-restructuring negotiations in 2001. With the debt restructuring plan now in place, almost three years after it started negotiating with creditors, BayanTel is poised to move forward to invest in new technologies and further enhance its network infrastructure.

Bayantel originally envisioned itself to be the main challenger of PLDT, giving itself 5 years to accomplish this task. Events, however, evolved that made Bayantel rethink this vision, thus, their new vision-TO PROVIDE QUALITY TELECOMMUNICATIONS SERVICE FOR THE IMPROVEMENT OF PEOPLE'S LIVES. Its mission statement was to BE THE BEST END-TO-END SERVICE-ORIENTED COMMUNICATIONS PARTNER. Note that during the initial stages of this strategic planning, Bayantel had financial difficulties. In order to achieve the mission, Bayantel set out to map its strategic objective keeping in mind, the need to survive in a highly competitive, continuously evolving market. The objective was two-pronged-addressing the customer and ensuring growth. The goal was CUSTOMER-FOCUSED PROFITABLE GROWTH. The strategy was LEC FOR CASH, DATA FOR GROWTH.

A market analysis shows that Bayantel, although earning a respectable growth in the LEC market in terms of subscription and revenues and International Long Distance market, did not do as well as projected in the Domestic Long Distance and the Data Service market. Performance against financial strategic objectives show that despite an 11% increase in estimated end 2004 Operating Revenues, Bayantel failed to achieve its goal of 20% revenue growth for 2004. Performance measurements against specific markets show a 50-50 split in terms of achievement. Positive achievements were reflected in the Metro Manila and International Business and Carrier markets while target achievement failures were reflected in the Corporate & Business and Provincial markets. These results clearly show that it is time for Bayantel to again realign its strategic map to gain more ground in the arena.

Based on a more in-depth analysis of competitive factors affecting Bayantel (5 Forces Model, SWOT analysis, Value Chain Analysis, and Key Succes Factors), this paper proposes a different strategic map for Bayantel. Analyzing the market using various competitive analysis tools show that Bayantel's strength lies in the areas of technology, customer support and organizational assets. Its main weaknesses is its financial status. This proposal is envisioned to give Bayantel the competitive advantage it needs.

Abstract Format

html

Language

English

Format

Print

Accession Number

OCE1178

Shelf Location

Archives, The Learning Commons, 12F Henry Sy Sr. Hall

Physical Description

93 leaves ; 28 cm.

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