Stama Paper_Final.pdf - ATENEO GRADUATE SCHOOL OF BUSINESS MBA STANDARD PROGRAM STRATEGIC MANAGEMENT PAPER ON GLOBE TELECOMS INC Submitted to Professor

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Unformatted text preview: ATENEO GRADUATE SCHOOL OF BUSINESS MBA STANDARD PROGRAM STRATEGIC MANAGEMENT PAPER ON GLOBE TELECOMS INC. Submitted to: Professor Edgar Juan Surtida III, MBA STRAMA S07 (SY 2014 – 2015) Submitted by: Molave Erik G. Nazaret June 22, 2015 1|Page Contents I. EXECUTIVE SUMMARY ........................................................................................................ 6 II. COMPANY INTRODUCTION ............................................................................................. 7 1) AREAS OF OPERATIONS AND HEADQUARTERS ........................................................... 8 2) SHAREHOLDERS STRUCTURE ...................................................................................... 8 3) MANAGEMENT TEAM ................................................................................................. 9 4) CONGLOMERATE MAP AND SUBSIDIARIES ............................................................... 10 5) SIZE IN 2014 REVENUES ............................................................................................ 12 6) NUMBER OF EMPLOYEES .......................................................................................... 12 7) MARKETS COVERED .................................................................................................. 13 8) MARKET POSITION AND MARKET SHARE.................................................................. 13 9) PRODUCTS AND SERVICES PORTFOLIO ..................................................................... 15 10) DISTRIBUTION STRATEGY AND CHANNEL PARTNERS ............................................... 16 III. RESEARCH DESIGN AND METHODOLOGY ..................................................................... 17 IV. CORPORATE VISION, MISSION AND CORE VALUES....................................................... 18 1) VISION, MISSION STATEMENT & CORE VALUES OF GLOBE TELECOMS .................... 18 2) EVALUATION OF GLOBE TELECOMS VISION STATEMENT ......................................... 19 3) EVALUATION OF GLOBE TELECOMS MISSION STATEMENT AND CORE VALUES ...... 20 V. EXTERNAL ANALYSIS...................................................................................................... 21 1) MACRO ENVIRONMENTAL ANALYSIS........................................................................ 21 i. ECONOMIC FACTORS ................................................................................................ 21 ii. SOCIAL / CULTURAL FACTORS ................................................................................... 33 iii. POLITICAL / LEGAL FACTORS ................................................................................. 41 iv. ENVIRONMENTAL FACTORS .................................................................................. 45 v. TECHNOLOGICAL FACTORS ....................................................................................... 46 2) INDUSTRY AND COMPETITOR ANALYSIS ................................................................... 50 vi. PORTER’S FIVE FORCES ......................................................................................... 51 vii. INDUSTRY VALUE CHAIN AND WATERFALL CHART............................................... 56 2|Page viii. STRATEGIC POSITIONING ...................................................................................... 58 ix. MARKET SIZE, SHARE AND GROWTH TRENDS ...................................................... 61 x. MARKET ANALYSIS .................................................................................................... 64 xi. MARKET FORECAST ............................................................................................... 79 VI. COMPARATIVE PROFILE MATRIX (CPM) ....................................................................... 83 1) CRITICAL SUCCESS FACTORS ..................................................................................... 84 2) BENCHMARKING VERSUS KEY COMPETITORS .......................................................... 87 3) COMPARATIVE PROFILE MATRIX .............................................................................. 92 4) CONCLUSION ............................................................................................................. 93 VII. EXTERNAL FACTOR EVALUATION (EFE) ......................................................................... 93 1) OPPORTUNITIES AND CORRESPONDING IMPORTANCE WEIGHTS ........................... 93 2) THREATS AND CORRESPONDING IMPORTANCE WEIGHTS ....................................... 96 3) OPPORTUNITIES AND COMPANY RESPONSIVENESS................................................. 98 4) THREATS AND COMPANY RESPONSIVENESS .......................................................... 100 5) EFE MATRIX ............................................................................................................. 102 6) SUMMARY AND CONCLUSION ................................................................................ 103 VIII. INTERNAL FACTORS..................................................................................................... 103 1) MCKINSEY’S 7S FRAMEWORK ................................................................................. 103 i. STRATEGY ................................................................................................................ 103 ii. STRUCTURE ............................................................................................................. 105 iii. SYSTEMS .............................................................................................................. 107 iv. STYLE ................................................................................................................... 110 v. STAFF ....................................................................................................................... 110 vi. SKILLS .................................................................................................................. 111 vii. SHARED VALUES .................................................................................................. 113 2) COMPANY INTERNAL AUDIT ................................................................................... 114 i. MANAGEMENT AUDIT ............................................................................................ 114 ii. MARKETING AUDIT ................................................................................................. 115 3|Page iii. FINANCE / ACCOUNTING AUDIT ......................................................................... 117 iv. OPERATIONS AUDIT ............................................................................................ 117 v. RESEARCH AND DEVELOPMENT AUDIT .................................................................. 118 vi. COMPUTER INFORMATION SYSTEMS AUDIT ...................................................... 119 3) IX. KEY FINANCIAL ANALYSIS ........................................................................................ 120 i. GLOBE TELECOMS SALES ANALYSIS BY PRODUCT .................................................. 120 ii. GLOBE TELECOMS SALES ANALYSIS BY SEGMENTS ................................................ 122 iii. GLOBE TELECOMS GROSS PROFIT ANALYSIS ...................................................... 124 iv. GLOBE TELECOMS OPERATING EXPENSE ANALYSIS............................................ 126 v. LIQUIDITY RATIOS ................................................................................................... 128 vi. LEVERAGE RATIOS ............................................................................................... 129 vii. ACTIVITY RATIOS ................................................................................................. 130 viii. PROFITABILTIY RATIOS ........................................................................................ 131 ix. GROWTH RATIOS ................................................................................................ 133 INTERNAL FACTOR EVALUATION (IFE) ........................................................................ 134 1) STRENGTHS AND IMPORTANCE WEIGHT................................................................ 134 2) WEAKNESSES AND IMPORTANCE WEIGHT ............................................................. 135 3) STRENGHTS AND COMPANY RATINGS .................................................................... 137 4) WEAKNESSES AND COMPANY RATINGS ................................................................. 138 5) INTERNAL FACTOR EVALUATION (IFE) MATRIX ...................................................... 139 6) CONCLUSION ........................................................................................................... 140 X. STRATEGY FORMULATION .......................................................................................... 141 1) STRENGTHS, WEAKNESSES, OPPORTUNITIES, THREATS (SWOT) MATRIX .............. 141 2) STRATEGIC POSITIONING AND ACTION EVALUATION (SPACE) MATRIX ................. 147 3) BOSTON CONSULTING GROUP (BCG) MATRIX ........................................................ 149 4) GE MCKINSEY MATRIX ............................................................................................ 150 5) GRAND STRATEGY MATRIX ..................................................................................... 153 6) IE MATRIX ................................................................................................................ 154 4|Page 7) SUMMARY OF STATEGIES ....................................................................................... 155 8) QUANTITATIVE STRATEGIC PLANNING MATRIX (QSPM) ........................................ 155 XI. CORPORATE OBJECTIVES, STRATEGIES, RECOMMENDATION AND ACTION PLAN ..... 156 1) RECOMMENDED COMPANY VISION STATEMENT................................................... 156 2) RECOMMENDED COMPANY MISSION STATEMENT................................................ 157 3) RECOMMENDED STRATEGIC OBJECTIVES ............................................................... 158 4) RECOMMENDED STRATEGIES ................................................................................. 160 5) RECOMMENDED DEPARTMENTAL PROGRAMS AND ACTIONS .............................. 164 6) FINANCIAL PROJECTIONS ........................................................................................ 167 XII. STRATEGY IMPLEMENTATION, EVALUATION, MONITORING AND CONTROL ............ 175 1) RECOMMENDED BALANCE SCORECARD ................................................................. 175 i. STRATEGY MAP ....................................................................................................... 175 ii. OBJECTIVES AND INITIATIVES MATRIX.................................................................... 177 iii. PERFORMANCE MONITORING DASHBOARD ...................................................... 178 2) CONTINGENCY PLAN ............................................................................................... 180 XIII. APPENDIX .................................................................................................................... 182 5|Page I. EXECUTIVE SUMMARY Globe Telecoms is one of the two biggest telecommunication companies in the Philippines. The company is one of the pioneers in the GSM, 3G and LTE technologies in the country. Currently, the company ranks 2nd in terms of total assets, revenues and number of subscribers in the telecommunication industry in the country. The company also offers a wide array of products and services to its subscribers under one brand; this includes mobile voice and data, SMS, fixed-line voice and data, and broadband. The telecommunication industry in the Philippines is capital intensive and is highly regulated by the government, various fees and licenses are needed in order to operate. This makes it hard for new players to enter the said industry. This kind of business environment creates a duopolistic structure in the telecommunication industry in the country. Also, the current good fiscal environment in the country coupled by the strong growth of internet usage makes the telecommunication industry in the Philippines an attractive industry to invest in even if the products and services which were major contributors to the past revenues of the industry are either already slowing down or in decline. Globe Telecoms is one of the two big players in the telecommunication industry in the Philippines. Due to those factors, the company got an EFE rating of 2.66. When it comes to critical factors to succeed in the telecommunication industry in the Philippines, the most important factors that were identified were the reliability of the products and service the telecommunication players provide and the degree of customer satisfaction their subscribers have. This is where almost all the telecommunication players, including Globe Telecoms, lagged on. Getting those factors right will surely spell success for a telecommunication company. But due to the better financial standing of the company compared to other smaller players, wide market reach, modern products and services and an effective and wide reaching marketing, the company still got a satisfactory score in CPM of 2.73. When it comes to the internal capabilities of Globe Telecoms, one of the critical factors that was noted was the company lacks customer service training to its employees and high corporate hierarchy which somewhat explains the low customer satisfaction its customers are getting and the slow decision making of the company’s management. Globe Telecoms must improve on this together with network speed and reliability wherein the company, and other major telecommunication industry players, is lagging compared to its ASEAN counterparts. But on a positive note, Globe Telecoms has a wide subscriber base and the top brand when it comes to the lucrative mobile postpaid segment of the industry. 6|Page These factors, coupled with modern products and services being offered to its customers, enabled the company to get a satisfactory rating of 2.45 in IFE. Finally, upon studying the said factors, both external and internal, the proposed overall strategic objective for Globe Telecoms will be to gain leadership on the key areas of the telecommunication industry that offer strong growth potentials namely mobile data, broadband and the postpaid segment of the industry. The key strategies that can be implemented are investing on improvement on quality of the said key growth areas by improving the speed, capacity and reliability of the core network, improve customer satisfaction by minimizing corporate hierarchy, increase management visibility and putting clear procedures in dealing with customer issues and finally, training and hiring new employees with customer service skills. II. COMPANY INTRODUCTION Globe Telecoms is a major provider of telecommunication services in the Philippines, it has a wide array of telecommunication products and services that it offers to its customers. The company is also one of the pioneers, not just in the Philippines but also worldwide, of cashless mobile payment and remittance services via its GCash brand. This wide range of products and services being offered by the company is supported by a workforce of around 6,200 employees not just in the Philippines but also overseas, through regional overseas branches and global partners. And also, to supplement this workforce, Globe Telecoms have over 967,000 networks of different suppliers, retailers, distributors and business partners all over the Philippines.1 Globe Telecoms also operates one of the biggest and most technologically advanced telecommunication networks in the Philippines, with services ranging from the fixed line, wireless and the latest broadband network technologies. As of the latest annual report of Globe Telecoms, they currently has over 40 million subscribers of mobile products and services which is roughly around 40 percent of The Philippines population, and over 2,700,000 subscribers of broadband products and services and also around 700,000 subscribers of its fixed-line and landline services. Globe Telecoms is also a recipient of various licenses and service authorizations from the National Telecommunications Commission that adds to the assets and goodwill 1 Globe 2014 Annual Report 7|Page accounts of the company’s balance sheets. Here are a few of the licenses the company receives. License to offer and operate facsimile, other traditional voice and data services and domestic line service using Very Small Aperture Terminal (VSAT) technology License for inter-exchange services Certificate of Public Convenience and Necessity (CPCN) for the following: i. International digital gateway facility (IGF) in Metro Manila ii. Nationwide digital cellular mobile telephone system under the GSM standard (CMTSGSM) iii. Nationwide local exchange carrier (LEC) services after being granted a provisional authority in June 2005 iv. International cable landing stations located in Nasugbu, Batangas and Ballesteros, Cagayan 2 1) AREAS OF OPERATIONS AND HEADQUARTERS The principal headquarters of Globe Telecoms is located at the 32nd Street corner 7th Avenue, Bonifacio Global City, Taguig, Metro Manila, Philippines.3 They also have various offices, data centers and cell sites located in different city centers and remote locations all around the Philippines. As of the latest update on the corporate website, the company has over 6,227 cell sites deployed all around the Philippines.4 2) SHAREHOLDERS STRUCTURE Globe Telecom’s principal controlling shareholders are Ayala Corporation, which has around 30.4% stake on the company’s common shares, and Singapore Telecommunications Inc., which owns around 47.2% of the company’s common shares. The remaining common shares of the company which is roughly around 22.4% is held by different public investors. Also 100% of the company’s issued preferred shares is currently owned by Asiacom 2 Globe 2014 Annual Report 4 Globe 2014 Annual Report 3 8|Page Philippines Inc., a subsidiary of Ayala Corporation. Below is a table of the company’s shareholders structure. Stockholders Common Ayala % of % of Preferred Common Total Preferred % of Total 40,351,591 30.40% - - 40,351,591 13.90% Singtel 62,646,487 47.20% - - 62,646,487 21.50% Asiacom - - 158,515,021 100% 158,515,021 54.50% Public 29,732,500 22.40% - - 29,732,500 10.20% Total 132,730,578 100% 158,515,021 100% 291,248,111 100% Corporation SOURCE: 3) MANAGEMENT TEAM Below are tables of Globe Telecom’s management team and their respective positions in the company. Board of Directors: Name Position Jaime Augusto Zobel de Ayala Chairman Gerardo C. Ablaza, Jr. Co-Vice Chairman Mark Chong Chin Kok Co-Vice Chairman Ernest Cu Director, President and CEO Delfin L. Lazaro Director Samba Natarajan Director Remeo L. Bernardo Director Fernando Zobel de Ayala Director Rex Ma. A. Mendoza Independent Director Manuel A. Pacis Independent Director Saw Phaik Hwa Independent Director SOURCE: 9|Page Key Officers: Name Position Ernest L. Cu President and Chief Executive Officer Alberto M. de Larrazabal Chief Finance Office & Chief Risk Officer Chief Operating Officer for Business and International Markets Gil B. Genio Chief Strategy Officer President, Innove Communications, Inc. Renato M. Jiao Chief Human Resource Officer Rebecca V. Eclipse Chief Customer Experience Officer Henry Rhoel R. Aguda Chief Information Officer Vicente Froilan M. Castelo General Counsel Carmina J. Herbosa Chief Audit Executive Bernard P. Llamzon EVP, Consumer Sales Solomon M. Hermosura Corporate Secretary Marisalve Ciocson-Co Compliance Officer, Assistant Corporate Secretary and VP, Legal Services SOURCE: Key Consultants: Name Position Daniel James Horan Senior Advisor for Consumer Business Rodolfo A. Salalima Chief Legal Counsel and Senior Advisor Robert Tan Chief...
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