ALLAMA IQBAL OPEN UNIVERSITY ISLAMABAD

(Department of Business Administration)

BUSINESS POLICY AND STRATEGY (887)Submitted By: Husnain Khalid

Roll # AD511764

Submitted To: Mr. Ateeq ur Rehman

An Assignment is submitted in partial fulfilment of the requirement for the degreeof MBA

ASSIGNMENT No. 2

ISSUE

STRATEGY FORMULATION

ACKNOWLEDGEMENT

First of all, I would like to say Alhamdulillah, for giving me the strength and

health to do this project work until it done Not forgotten to my family for

providing everything, such as money, to buy anything that are related to this

project work and their advise, which is the most needed for this project. Internet,

books, computers and all that as my source to complete this project. They also

supported me and encouraged me to complete this task so that I will not

procrastinate in doing it.

Then I would like to thank my teacher for guiding me and my friends throughout

this project. We had some difficulties in doing this task, but he taught us patiently

until we knew what to do. He tried and tried to teach us until we understand what

we supposed to do with the project work.

Last but not least, my friends who were doing this project with me and sharing

our ideas. They were helpful that when we combined and discussed together, we

had this task done.

As there are four topics, you will select the topic according to the last digit mentioned as

under:

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Table of Contents

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It is

INTRODUCTION

It is useful to consider strategy formulation as part of a strategic management

process that comprises three phases: diagnosis, formulation, and implementation.

Strategic management is an ongoing process to develop and revise future-oriented

strategies that allow an organization to achieve its objectives, considering its

capabilities, constraints, and the environment in which it operates.

Diagnosis includes: (a) performing a situation analysis (analysis of the

internal environment of the organization), including identification and evaluation

of current mission, strategic objectives, strategies, and results, plus major

strengths and weaknesses; (b) analyzing the organization's external environment,

including major opportunities and threats; and (c) identifying the major critical

issues, which are a small set, typically two to five, of major problems, threats,

weaknesses, and/or opportunities that require particularly high priority attention

by management.

Formulation, the second phase in the strategic management process,

produces a clear set of recommendations, with supporting justification, that revise

as necessary the mission and objectives of the organization, and supply the

strategies for accomplishing them. In formulation, we are trying to modify the

current objectives and strategies in ways to make the organization more

successful. This includes trying to create "sustainable" competitive advantages --

although most competitive advantages are eroded steadily by the efforts of

competitors.

A good recommendation should be: effective in solving the stated

problem(s), practical (can be implemented in this situation, with the resources

available), feasible within a reasonable time frame, cost-effective, not overly

disruptive, and acceptable to key "stakeholders" in the organization.

important to consider "fits" between resources plus competencies with

opportunities, and also fits between risks and expectations.

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There are four primary steps in this phase:

* Reviewing the current key objectives and strategies of the organization,

which usually would have been identified and evaluated as part of the

diagnosis

* Identifying a rich range of strategic alternatives to address the three

levels of strategy formulation outlined below, including but not limited

to dealing with the critical issues

* Doing a balanced evaluation of advantages and disadvantages of the

alternatives relative to their feasibility plus expected effects on the issues

and contributions to the success of the organization

* Deciding on the alternatives that should be implemented or

recommended.

In organizations, and in the practice of strategic management, strategiesmust be implemented to achieve the intended results. The most wonderful

strategy in the history of the world is useless if not implemented successfully.

This third and final stage in the strategic management process involves

developing an implementation plan and then doing whatever it takes to make the

new strategy operational and effective in achieving the organization's objectives.

THREE ASPECTS OF STRATEGY FORMULATION

The following three aspects or levels of strategy formulation, each with a different

focus, need to be dealt with in the formulation phase of strategic management.

The three sets of recommendations must be internally consistent and fit together

in a mutually supportive manner that forms an integrated hierarchy of strategy, in

the order given.

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Corporate Level Strategy: In this aspect of strategy, we are concerned with broad

decisions about the total organization's scope and direction. Basically, we

consider what changes should be made in our growth objective and strategy for

achieving it, the lines of business we are in, and how these lines of business fit

together. It is useful to think of three components of corporate level strategy: (a)

growth or directional strategy (what should be our growth objective, ranging from

retrenchment through stability to varying degrees of growth - and how do we

accomplish this), (b) portfolio strategy (what should be our portfolio of lines of

business, which implicitly requires reconsidering how much concentration or

diversification we should have), and (c) parenting strategy (how we allocate

resources and manage capabilities and activities across the portfolio -- where do

we put special emphasis, and how much do we integrate our various lines of

business).

Competitive Strategy (often called Business Level Strategy): This involves

deciding how the company will compete within each line of business (LOB) or

strategic business unit (SBU).

Functional Strategy: These more localized and shorter-horizon strategies deal

with how each functional area and unit will carry out its functional activities to be

effective and maximize resource productivity.

CORPORATE LEVEL STRATEGY

This comprises the overall strategy elements for the corporation as a whole, the

grand strategy, if you please. Corporate strategy involves four kinds of initiatives:

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* Making the necessary moves to establish positions in different

businesses and achieve an appropriate amount and kind of diversification.

A key part of corporate strategy is making decisions on how many, what

types, and which specific lines of business the company should be in.

This may involve deciding to increase or decrease the amount and

breadth of diversification. It may involve closing out some LOB's (lines

of business), adding others, and/or changing emphasis among LOB's.

* Initiating actions to boost the combined performance of the businesses

the company has diversified into: This may involve vigorously pursuing

rapid-growth strategies in the most promising LOB's, keeping the other

core businesses healthy, initiating turnaround efforts in weak-performing

LOB's with promise, and dropping LOB's that are no longer attractive or

don't fit into the corporation's overall plans. It also may involve

supplying financial, managerial, and other resources, or acquiring and/or

merging other companies with an existing LOB.

* Pursuing ways to capture valuable cross-business strategic fits and turn

them into competitive advantages -- especially transferring and sharingrelated technology, procurement leverage, operating facilities,

distribution channels, and/or customers.

* Establishing investment priorities and moving more corporate resources

into the most attractive LOB's.

It is useful to organize the corporate level strategy considerations and

initiatives into a framework with the following three main strategy components:

growth, portfolio, and parenting. These are discussed in the next three sections.

What Should be Our Growth Objective and Strategies?

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Growth objectives can range from drastic retrenchment through aggressive

growth.

Organizational leaders need to revisit and make decisions about the growth

objectives and the fundamental strategies the organization will use to achieve

them. There are forces that tend to push top decision-makers toward a growth

stance even when a company is in trouble and should not be trying to grow, for

example bonuses, stock options, fame, ego. Leaders need to resist such

temptations and select a growth strategy stance that is appropriate for the

organization and its situation. Stability and retrenchment strategies are

underutilized.

Some of the major strategic alternatives for each of the primary growth

stances (retrenchment, stability, and growth) are summarized in the following

three sub-sections.

Growth Strategies

All growth strategies can be classified into one of two fundamental categories:

concentration within existing industries or diversification into other lines of

business or industries. When a company's current industries are attractive, have

good growth potential, and do not face serious threats, concentrating resources in

the existing industries makes good sense. Diversification tends to have greater

risks, but is an appropriate option when a company's current industries have little

growth potential or are unattractive in other ways. When an industry consolidates

and becomes mature, unless there are other markets to seek (for example other

international markets), a company may have no choice for growth but

diversification.

There are two basic concentration strategies, vertical integration and

horizontal growth. Diversification strategies can be divided into related (or

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This

concentric) and unrelated (conglomerate) diversification. Each of the resulting

four core categories of strategy alternatives can be achieved internally through

investment and development, or externally through mergers, acquisitions, and/or

strategic alliances -- thus producing eight major growth strategy categories.

Comments about each of the four core categories are outlined below,

followed by some key points about mergers, acquisitions, and strategic alliances.

1. Vertical Integration: This type of strategy can be a good one if the company

has a strong competitive position in a growing, attractive industry. A company

can grow by taking over functions earlier in the value chain that were previously

provided by suppliers or other organizations ("backward integration").

strategy can have advantages, e.g., in cost, stability and quality of components,

and making operations more difficult for competitors. However, it also reduces

flexibility, raises exit barriers for the company to leave that industry, and prevents

the company from seeking the best and latest components from suppliers

competing for their business.

A company also can grow by taking over functions forward in the value

chain previously provided by final manufacturers, distributors, or retailers

("forward integration"). This strategy provides more control over such things as

final products/services and distribution, but may involve new critical success

factors that the parent company may not be able to master and deliver. For

example, being a world-class manufacturer does not make a company an effective

retailer.

Some writers claim that backward integration is usually more profitable

than forward integration, although this does not have general support. In any case,

many companies have moved toward less vertical integration (especially

backward, but also forward) during the last decade or so, replacing significant

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amounts of previous vertical integration with outsourcing and various forms of

strategic alliances.

2. Horizontal Growth: This strategy alternative category involves expanding the

company's existing products into other locations and/or market segments, or

increasing the range of products/services offered to current markets, or a

combination of both. It amounts to expanding sideways at the point(s) in thevalue chain that the company is currently engaged in. One of the primary

advantages of this alternative is being able to choose from a fairly continuous

range of choices, from modest extensions of present products/markets to major

expansions -- each with corresponding amounts of cost and risk.

3. Related Diversification (aka Concentric Diversification): In this alternative,

a company expands into a related industry, one having synergy with the

company's existing lines of business, creating a situation in which the existing and

new lines of business share and gain special advantages from commonalities such

as technology, customers, distribution, location, product or manufacturingsimilarities, and government access. This is often an appropriate corporate

strategy when a company has a strong competitive position and distinctive

competencies, but its existing industry is not very attractive.

4. Unrelated Diversification (aka Conglomerate Diversification): This fourth

major category of corporate strategy alternatives for growth involves diversifying

into a line of business unrelated to the current ones. The reasons to consider this

alternative are primarily seeking more attractive opportunities for growth in which

to invest available funds (in contrast to rather unattractive opportunities in

existing industries), risk reduction, and/or preparing to exit an existing line of

business (for example, one in the decline stage of the product life cycle). Further,

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For

this may be an appropriate strategy when, not only the present industry is

unattractive, but the company lacks outstanding competencies that it could

transfer to related products or industries. However, because it is difficult to

manage and excel in unrelated business units, it can be difficult to realize the

hoped-for value added.

Mergers, Acquisitions, and Strategic Alliances: Each of the four growth

strategy categories just discussed can be carried out internally or externally,

through mergers, acquisitions, and/or strategic alliances. Of course, there also can

be a mixture of internal and external actions.

Various forms of strategic alliances, mergers, and acquisitions have

emerged and are used extensively in many industries today. They are used

particularly to bridge resource and technology gaps, and to obtain expertise and

market positions more quickly than could be done through internal development.

They are particularly necessary and potentially useful when a company wishes to

enter a new industry, new markets, and/or new parts of the world.

Despite their extensive use, a large share of alliances, mergers, and

acquisitions fall far short of expected benefits or are outright failures.

example, one study published in Business Week in 1999 found that 61 percent of

alliances were either outright failures or "limping along." Research on mergers

and acquisitions includes a Mercer Management Consulting study of all mergers

from 1990 to 1996 which found that nearly half "destroyed" shareholder value; an

A. T. Kearney study of 115 multibillion-dollar, global mergers between 1993 and

1996 where 58 percent failed to create "substantial returns for shareholders" in the

form of dividends and stock price appreciation; and a Price-Waterhouse-Coopers

study of 97 acquisitions over $500 million from 1994 to 1997 in which two-thirds

of the buyer's stocks dropped on announcement of the transaction and a third of

these were still lagging a year later.

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Many reasons for the problematic record have been cited, including paying

too much, unrealistic expectations, inadequate due diligence, and conflicting

corporate cultures; however, the most powerful contributor to success or failure is

inadequate attention to the merger integration process. Although the lawyers and

investment bankers may consider a deal done when the papers are signed and they

receive their fees, this should be merely an incident in a multi-year process of

integration that began before the signing and continues far beyond.

Stability Strategies

There are a number of circumstances in which the most appropriate growth stance

for a company is stability, rather than growth. Often, this may be used for a

relatively short period, after which further growth is planned. Such circumstances

usually involve a reasonable successful company, combined with circumstances

that either permit a period of comfortable coasting or suggest a pause or caution.

Three alternatives are outlined below, in which the actual strategy actions are

similar, but differing primarily in the circumstances motivating the choice of a

stability strategy and in the intentions for future strategic actions.

1. Pause and Then Proceed: This stability strategy alternative (essentially a

timeout) may be appropriate in either of two situations: (a) the need for an

opportunity to rest, digest, and consolidate after growth or some turbulent events -

before continuing a growth strategy, or (b) an uncertain or hostile environment in

which it is prudent to stay in a "holding pattern" until there is change in or more

clarity about the future in the environment.

2. No Change: This alternative could be a cop-out, representing indecision or

timidity in making a choice for change. Alternatively, it may be a comfortable,

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even long-term strategy in a mature, rather stable environment, e.g., a small

business in a small town with few competitors.

3. Grab Profits While You Can: This is a non-recommended strategy to try to

mask a deteriorating situation by artificially supporting profits or their appearance,

or otherwise trying to act as though the problems will go away. It is an unstable,

temporary strategy in a worsening situation, usually chosen either to try to delay

letting stakeholders know how bad things are or to extract personal gain before

things collapse. Recent terrible examples in the USA are Enron and WorldCom.

Retrenchment Strategies

Turnaround: This strategy, dealing with a company in serious trouble, attempts

to resuscitate or revive the company through a combination of contraction

(general, major cutbacks in size and costs) and consolidation (creating and

stabilizing a smaller, leaner company). Although difficult, when done very

effectively it can succeed in both retaining enough key employees and revitalizing

the company.

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PRACTICAL STUDY

PAKISTAN TELECOMMUNICATION COMPANY LIMITED

(PTCL)

Established on January 1, 1996

Head Office: - Pakistan Telecommunication Company Limited ,G-8/4,

Islamabad

INTRODUCTION

Ten years into a new century, the telecom sector of world finds itself at crossroads

after changing itself almost beyond recognition over the last 25 years.

Privatization and competition are the order of the day, with a majority of countries

having adopted these policies to advance their telecom sector. The results have

been impressive; the industry has grown at unprecedented pace. Although there

has been a phenomenal growth in Pakistan, especially in the cellular mobile

communication and in the internet, yet the late density remains almost stagnant.

So far PTCL is the sole land line service provider of Pakistan. PTCL is the giant

of Pakistan telecommunication industry and enjoying the monopoly. This part of

the report contains a brief introduction of PTCL. This introduction is divided into

two parts,

HISTORY AND CURRENT SITUATION

BRIEF HISTORY

Over the years, technology has changed the concept of communication and what

was thought to be a fictional only a decade ago, has actually made its way through

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to our hands today. This is the future we dreamt of so fondly. Welcome to the

modern age, of telecommunication, which have become complementary to our

lives. But there must also be an anchor to introduce, allow, improve and

channelize all these services and innovations sweeping through the globe. In

Pakistan same anchor is Pakistan Telecommunication Company Limited from the

humble beginnings of posts & Telegraph Department in 1947 and establishment

of Pakistan Telephone & Telegraph Department in 1962, to this very day, PTCL

is a story of commitment and vision. Pakistan Telecommunication Corporation

(PTC) set sails for its voyage of glory In December 1990, taking over operations

and functions from Pakistan Telephone and Telegraph Department under Pakistan

Telecommunication Corporation Act 1991. This coincided with the Government’s

competitive Policy, encouraging Private Sector participation and resulting in

award of licenses for Cellular, card-operated Payphones, paging and, lately, data

communication Services.

Pursuing a progressive policy, the Government in 1991, announced its Plans to

privatize PTC, and in 1994 issued six million vouchers exchangeable into 600

million shares of the would-be PTCL in two separate placements. Each had a par

value of Rs.10 per share. These vouchers were converted into PTCL Shares in

mid 1996.In 1995, Pakistan Telecommunication (Reorganization) Ordinance

Formed the basis for PTCL monopoly over basic telephony in the country. It also

paved the way for the establishment of an independent regulatory regime. The

Provisions of the Ordinance were lent permanence in October 1996 through

Pakistan Telecommunication (Reorganization) Act. The same year, Pakistan

Telecommunication Company Limited was formed and listed on all stock

Exchanges in Pakistan. Since then, PTCL has been working vigorously to meet

the dual Challenge of telecom development and socio-economic uplift of the

country. This is characterized by a clearer appreciation of ongoing telecom

scenario where in convergence of technologies continuously changes the shape of

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the Sector. A measure of this understanding is progressive measures such as

Establishment of the company’s mobile and Internet subsidiaries (U-fone &

Paknet) in 1998. As telecommunication monopolies head towards and imminent

end, services and infrastructure providers are set to face even bigger challenges.

Pakistan also entered post-monopoly era with deregulation of the sector in

January 2003. On the Government level, a comprehensive liberalization policy for

Telecom sector has already been announced now. Now PTA have issued License

to two new telecom companies in Pakistan TELENOR international and WARID

TEL this act will put some challenges for PTCL to cope with. PTCL is in process

of enhancing organizational and business Proficiency through vertical integration

and horizontal diversification. At the same time, cross-national ownerships,

operations and partnerships are being evaluated with a view to developing and

diversifying the business.

CURRENT SITUATION OF ORGANIZATION

After having brief introduction from past end of PTCL now we move towards the

current situation of the company .In this part focus will be on the:

Structure of organization

Technical & operational Net work

Services provided by PTCL

Financial front of PTCL

Competitors and subsidies

Structure of organization

An Organizational Structure clarify the roles of personnel of an Organization and

to determine who has to do what task, which is responsible for what, objectives to

be achieved, who is to report to whom and to remove the obstacles for

performance caused by confusion and uncertainty of job assignment as well as to

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make easy decision- making and communication networks reflecting and

supporting organization objectives.

The head of Pakistan Telecommunication Company Limited is called “President”.

Then come the SEVPs (Senior Executive Vice Presidents), i.e. SEVP (Finance),SEVP (Operations), SEVP (Technical), and SEVP (Human Resource

Management), SEVP (Marketing & Business Development). Then there is a chain

of Executive Vice-Presidents (EVPs) like EVP (Finance Central), EVP

(Marketing), EVP (HR Central), EVP (Accounts), EVP (Operation), EVP

(Information Technology, Training & Research), and EVP (Revenue). All these

are appointed at Pakistan Telecommunication Company, Headquarters at G-8/4,

Islamabad. Apart from these EVP, there are also EVP (Operation), EVP (HR) etc

who are heading the other regions of PTCL in major cities country wide. Then

there are Chief Engineers and General Managers at H/Qs who report to their

relevant EVP. Then there are Senior Managers, Deputy Directors, Assistant

Directors, Account Officers, Assistant Account Officers, Financial Analysts,

Marketing Managers, Computer Programmers, and IT Specialists etc.There are

also Regional Heads (General Managers) to head PTCL Regions then come the

Senior Managers (Operations), Senior Engineers (Operations), Engineers to look

after the telecom system of Regions. There are also Senior Managers Finance,

Account Officers and Accountants to Handle Regional account and billing matters.

Manager HR & his staff are responsible to take care of Personnel affairs at

Regional Level. In non-gazetted staff there are Engineering Supervisors

Operations /Switching /Power plant /Optical Fiber system/M.W Media, Account

Assistants, Stenographers, Assistants, Key Punch Operators, Telecom

Technicians, Upper Division Clerks, Lower Division Clerks, Line Men, Wire

Men, Drivers, Exchange Cleaners, Naib Qasids and Peons etc. All the staff is

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a

recruited by the HR Department headed by SEVP HR. The HR experts are

responsible for hiring & to further streamline its recruitment process.

MAIN OFFICES

The Head Office of Pakistan Telecommunication Company Limited is situated in

Sector G-8/4, Islamabad, which is headed by the “President”. Besides, it has

Regional Headquarters like:

Islamabad Telecom Region,

Rawalpindi Telecom Region,

Hazara Telecom Region Abottabad,

Northern Telecom Region-I Peshawar,

Lahore Telecom Region (South),

Lahore Telecom Region (North),

Multan Telecom Region,

Faisalabad Telecom Region

Southern Telecom Region-I Hyderabad

Southern Telecom Region-II Karachi

Southern Telecom Region-V Sukkur

Western Telecom Region Quetta.

Switching network Central region Lahore.

These Regions provide Telecommunications services to the customers in their

respective areas. Apart from these, PTCL has an Optical Fibre Construction

Region Lahore and Optic Fiber System Islamabad, each headed by a General

Manager to install, operate and look after optic fibre systems/cables.

Technical & Operational Net Work

Pakistan telecommunication Corporation under the Act 1996, PakistanTelecommunication Authority (PTA) issued license to Pakistan

Telecommunication Company Limited for the provision of telecom services

within Pakistan to private sector and the general public as the Federal

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Government may determine and during the exclusivity period of the Pakistan

Telecommunication Company Limited (PTCL) specified in above-mentioned Act.

PTCL has 25 years license to provide telecom services in Pakistan with Stake in

the Company with about 62% equity. PTCL has largest network and huge

infrastructure for it’s more than 4,405,161users as on (Mar,2008).

Switching Technology

There are 7 different kinds of switching technologies currently operational in

PTCL network.

Alcatel

Siemens

NEC

Erricsson

Huawi

J.S telecom

ZTE

With these different switching technologies PTCL is running its huge network

and providing different communication facilities to its customers.

TECHNICAL AND OPERATIONAL MILE STONES

PTCL is continuously improving its network. During the year 2007 PTCL

installed capacity was 4940154 but now in current year the installed capacity is

improved. PTCL achieved 100% digitalization in this year.

Computerized Fault Management SystemThis feature of PTCL improved network & is being used to register & rectify

Land Line Faults in a computerized way. This system was working in few cities

but now it is available all over the Pakistan. (18)

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Launch Of IN Platform

To augment the capacity and introduce additional value added services a new

Intelligent Network (IN) Platform was launched in October 2003.This platform

has higher capacity for prepaid calling cards and provision for introduction of new

services.

Optical Fiber Junction Access Network

To further support the launch of new services the optical fiber junction access

network has been in implementation phase. This system further supports the

upcoming project of PTCL WLL (wire less local loop), Broad Band Services &

IPTV. This was the brief introduction of PTCL network now we move further and

develop our understanding about PTCL services and offerings.

SERVICES OF PTCLPakistan Telecommunication Company Limited not only Provides Conventional

telephone facilities, it also offers optical fiber services to the private sector. We

will briefly discuss below the product lines being offered by the PTCL. Basically

PTCL divide their services into two parts.

services for consumers

services for corporate customers

Services for Consumers

These services are basically for the common users (Individual/home users) those

use telephone in their home/work place and they are basically non business users.

a) New Telephone Connections:As mentioned earlier, PTCL is presently the only telecom company, who

provided fixed-line telephony in the country. So whenever, any Private business

concern or any individual needs a new telephone connection for provision of

telephone service.

b) Value Added Services:

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t

CLI (Caller’s Line Identification)

Caller Line Identification (CLI): Calling line Identification (CLI) allow customers

to identify the caller before picking up the phone receiver. To subscribe to CLI

services, a customer needs a telephone set with display capability or a CLI device

attached to the phone.

Advantages:

A Check on obnoxious calls.

C Complete record of incoming / outgoing calls with time & date.

C User Friendly

PREPAID CALLING CARDS:

PTCL calling card is the most popular choice of millions of customers all over the

country. It is now available with balance transfer facility and follow on call

facility.

Comes in easily affordable denominations of Rs. 100, 250, 500, 1000

and 2000.

Easily available throughout the country

Easy to use from any PTCL digital phone (Dial 1010)

Fast and easy, nationwide and international access

No line rent and no Phone bills

24 hours customer services through toll free number (0800-80800)

How to use it:

Scratch off the security coating on the indicated strip to get your card

Pin Number.

Dial PTCL’s toll free number 1010 from any digi al phone.

Dial 1 for Urdu & 2 for English Instructions, Enter your card Number &

Press #. For International Call Dial

00+CountryCode+CityCode+PhoneNumber+#.

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E-BILL PAYMENT

Billing system is a part of customer services so providing connivance to its

valuable customers PTCL launched a new billing service which is available

through “ PTCL Calling Card” This is another service from PTCL. This service is

basically providing billing solutions for the users.

FINANCIAL ANALYSISFinancial analysis of any organization is very necessary for the evaluation and

assessment of a firm. The information derived from these types of analysis should

be blended to determine the overall financial position. This analysis includes ratio

analysis, common size analysis and the study of differences in components of

financial statement. One of the primary objectives is identification of major

changes in trends, amounts and relationship and investigation of the reasons

underlying those changes. In the financial analysis of P.T.C.L we will analyze

some important information about the company. As I did my internship in human

resource management, but it has not an independent organization so I have to

analyze the P.T.C.L for the analysis purpose.

Current ratioCurrent Ratio is an indicator to determine the short term debt paying ability or the

liquidity of a company. It tells us that how many current assets are available to

pay for the current liabilities of the company. Current ratio of the company in 31

Mar 2008 is 1.67& is favorable for a company. The ideal condition is 1.1 but ratio

is quite reasonable. Quick ratio:

Quick ratio or the acid test ratio also performs the same task as is performed by

current ratio but with more sophistication. Quick ratio of the company is 1.5 up to

Mar 31, 2008 its quick ratio is decreasing. As P.T.C.L is a service organization

there fore the quick ratio is very good because there is not need of inventory as

any manufacturing organization needs. As already mentioned, presently PTCL

has to face war with major competitors in mobile phone & WLL telephony

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operators, however, there are also competitors of its following

subsidiaries/products: -

SUBSIDIRAY/PRODUCT COMPETITOR

Multimedia & Broad Band (ISP Product) There is about 100 competitors of

product throughout the country to provide Internet service to the customers.

However, some of the major competitor ISP’s of product are Cyber net, World

online, Apollo, World Call, and Comsats WOL etc. U-fone (Cellular service

provider). There are five competitors of Ufone in cellular phone industry i.e.

Mobilink, Instaphone and C.M Pak, Telenor, Waridtel. PTCL Calling Cards

(Product) Hello Cards, Call Point Cards, Call Mate Cards, Global Telecom Cards.

Wireless Local Loop (V-Fone) Go CDMA, Wateen Telecom & World Call are

the Fixed Wireless Telephone competitors of V-PTCL. Marketing Department is

called a revenue-generating department of an organization. Marketing Department

undertakes market research and gives feedback to management about customers

needs and wants on the basis of which, products and services are developed and

positioned to give value to the customers. Thus Marketing department of an

organization plays a pivotal role in its business development, growth & expansion.

During my internship I worked with PTCL marketing department. Through

working there I gain so much practical knowledge that will help me during my

practical life. For understanding the work flow and the operation of the

department we have to move in certain manner. We have to look the key

operation the structure of the department and in the end the focus will be on the

critical analysis.So we will move in the pattern describe below:-

Marketing strategy of PTCL

Market segmentation of PTCL

Marketing mix of PTCL

Promotional strategy of PTCL

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1. Marketing Strategy of PTCL

For understanding the marketing department work flow and its function we must

have clear picture of the PTCL’s marketing strategy. For developing clear

understanding of marketing strategy of PTCL there is no one line statement or

clear vision of marketing department so we have to move traditionally .Classically,

Marketing has been all about the “four P’s”: Product, Place, Price and Promotion.

The marketer identifies a target market, defines the product and Pricing to appeal

to this market and a strategy to deliver the product to the market. Thus the

marketer is the steward of the value proposition, ensuring that the firm is

delivering maximum value to its customers. We will briefly discuss below the

marketing strategy, product planning, development & management, Pricing

strategy, distribution strategy and promotional strategy: -

Marketing StrategyNormally, a marketing strategy identifies the target markets, the desired position

in each market and the marketing mix that will persuade those target markets to

part with their money. Market is targeted through market segmentation.

Segmentation can be done on four types i.e. Demographic Segmentation (age,

gender, race/ethnicity, household type, home ownership, education, employment,

income etc.), Geographic segmentation. Positioning oneself by product can do

positioning differentiation, positioning by product usage, positioning against a

particular competitor, positioning against an entire product category, positioning

by association and positioning by problem, Marketing Mix includes P’s i.e.

Product, Price, Promotion and place.

TARGET MARKETPTCL’s 80% revenue comes from just 20% customers, who are corporate

customers and other big and small business organizations. The main focus of

PTCL marketing efforts is on retaining and satisfying that 20% chunk of key

customers at any cost. For this purpose, PTCL is now established Corporate

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Customer Services Centers in major cities to take care of these vital customers.

Apart from these important customers, PTCL targets general public and other

small business companies for sale of its landline telecom services like telephone,

fax, Internet, as well as other services like CLI, VMS, and Digital Facilities etc.

Market SegmentationBasically PTCL segmented its market on two bases

To better implement customer services features, segment the market on a

customer basis:

– Corporate

– Resident ional

on the basis of services as:

– Telephony

– Data

– Video

PTCL has segmented its market for its services and products to effectively deal

with its customers. Some of its services like Universal Access Number, Co-

Location centers and virtual private network are specially targeted at corporate

customers and business concerns. The other services like new telephone

connections, digital services etc. are meant for mass market. The services like

Internet, fax facility etc. are targeted at both the corporate and general customers.

POSITIONING STRATEGYAs PTCL is the sole provider of the landline telecom services in the country; it is

the market leader in providing these services because there are no competitors to

challenge its market leader status. Thus presently PTCL is facing no problems in

positioning its services in the market as a market leader because it enjoys

monopoly in the industry. However, with the deregulation of telecom sector

PTCL is gearing up itself to maintain this market leader position, on the other

hand competitors are doing to challenge it.

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MARKETING MIX

Product Planning:

In PTCL, so far products had been planned and developed by the engineering

department and marketing professionals had no role in product planning as there

was no marketing department in the Company. But now marketing professionals

have been inducted in the Company and they will definitely have a close

coordination with engineering department in planning and development of

products to satisfy customers’ desires. It should also be kept in mind that PTCL is

a technical organization enjoying state-of-the-art telecom technology. The

services offered by PTCL are built in the technology and with the passage of time;

PTCL rolls out these products in the market. even many products, which have

become obsolete in developed countries, are launched as new products by PTCL.

But we cannot deny the fact that being monopolist, PTCL is depriving customers

of many digital services that are available free in many other countries. However,

as the Marketing department has been established now, it is expected that in

future there will be close coordination and liaison between marketing

professionals and engineers for planning and developing customers oriented

products.PTCL is also in the process of hiring brand Managers to manage its

different products in a thorough professional way.

Pricing Strategy:

Being a government organization, PTCL is not authorized to determine the prices

of its products itself, the Telecom Regulator Authority viz. Pakistan

Telecommunication Authority (PTA) fixes the prices of telecom services. The

process is such that whenever PTCL intends to increase or reduce the rates of its

services, it submits its Proposal to PTA for approval. PTA then calls consumers’

representatives, journalists and other interested groups for discussion on the

proposal. After listening to the viewpoints of all the interested parties, PTA gives

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its decision. If PTA approves PTCL’s proposal, the new rates are enforced. It may

be mentioned here that telecom technology is only technology whose rates are on

the decline with the passage of time. PTCL also rationalizes its tariff with the

passage of time. Tariff rationalization process started in 1997 as part of GoP

Telecom Sector policy for privatization of this sector. It was mainly focused on

rebalancing the domestic process like NWD, international, local call, line rent etc.

Rebalancing is completed by the end of 2003 (as per Tariff rates) with the

objective to position PTCL for competition.

PROMOTIONAL STRATEGYPTCL is using following components of promotional mix for the promotion and

Publicity of its product/services.

P Advertising:

In promotional mix, PTCL’s main stress is on advertising in print and electronic

media. PTCL periodically places its advertisements in print media on services like

“H/Qs hotline 0800-44544”, “Caller line identification (CLI)”, “Voice Messaging

Service”, “Digital Facilities”, “PTCL Prepaid Calling Cards”, “Inquiry 17”,

“Complaint 18”, phone bill cards prepaid telephone etc. to remind the customers

of these services. Sometimes, corporate ads are also released to print media to

mark special occasions. PTCL’s Commercials on “Prepaid Calling Card”, “CLI”,

“Voice Messaging”, “Digital Facilities” etc. are also broadcast immediately on

electronic media as reminders to Customers.

Sales Promotion:PTCL charges 1/3rd rates on national calls from 06:00 pm – 07:00 am and local

calls are free from 11:00 pm to 06:00 am to promote the usage of its telecom

network. Moreover, PTCL offers special rate packages on special occasions like

Ramadan Package and EID package, which offer customer reduced rates for

specific timings. For Example, In EID Package PTCL charges half rates from

6:00am - 6:00pm and quarter from 6:00pm – 6:00 am to attract customers to use

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its telephone service. These rates result in increased revenue for PTCL and also

facilitate the customers to talk to their near and dear ones on these special

occasions on affordable rates.

o Personal Selling:

As PTCL is enjoying monopoly in fixed-line telephony, the Company has no

Professional sales force because the company has not felt any strong need to use

the Services of a sales force for increasing the sale of its products. At the moment,

PTCL’s Customer Services Centers are playing the role of sales outlets.

Customers can make telephone calls; send fax messages from these Customer

Services Centers. They can also get connected their telephone bills and get

duplicate bills from these outlets. However, with the establishment of Marketing

Department in PTCL, The marketing professionals are now in the process of

inducting professional sales force for the company.

SWOT ANALYSIS OF PTCL

S STRENGTH

S PTCL enjoy monopoly

P State of the Art International Gateway Exchanges & Satellite Earth Stations

S large earnings

l good quality international connectivity

g Customer Base of over 4 million

C Government support

These are the few basic strengths of the PTCL now we look each one in isolation.

PTCL Enjoy MonopolyPTCL is sole provider of land line services in Pakistan .so there is no competition

regarding their basic service. it means that there is a monopoly of PTCL.

• International Submarine Cables

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• High Capacity National Fiber Optic Backbone Ring

• 36 Transit Exchanges with easy Facility of Expansion

• About 99% Digitization of Country Network

• Strong Platforms & Exchanges for Value added Services

• Access Network & Customer Base of over 04 millions

State Of The Art International Gateway Exchanges & Satellite Earth

Stations

PTCL have largest net work with its state of art technology and new digital

exchanges. These are the few important characteristics of PTCL network.

• International Submarine Cables

• High Capacity National Fiber Optic Backbone Ring

• 36 Transit Exchanges with easy Facility of Expansion

• About 99% Digitization of Country Network

• Strong Platforms & Exchanges for Value added Services

Large Earnings

As described earlier that PTCL with more then 4 million users having greet

revenues this is another strength of the company

Government supportAs you know PTCL is government organization so it has great support and it is

strength for PTCL.

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Seven Key Internal Forces

ManagementMarketing

Research &Development

Purchasing

Manufacturing

Finance/Accounting

InformationSystems

Why do firms in the same industry pursuing the same strategies vary

by performance?

Ebay versus Ubid

Walmart versus Kmart

Best Buy versus Radio Shack

Often the top performing firm(s) possesses a Competitive Advantage

over its rivals

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r

SWOT ANAYLASISWEAKNESS

Image– Government organization

Image– Lack of customer focus

Image– Outdated people and technology (perception)

Lack of aggressive marketing

Lack of customer services

Ambiguous management style

Lack of corporate culture

Social responsibility

OPPORTUNITY

Growth in telecommunication industry

More aware and technology understanding consumer – a base that is

growing at a fast rate

Market open for more number of products – less dependence on single

category or product

Opportunity to introduce High Value Added Products / High margin

products for the new, more aware consumer

Time to establish brand loyalty, Pre-empt competitors, co-opt partners,

invest in technology and networks

THREATS

Internet Telephony & othe rapidly evolving technologies

Expected competition due to the deregulation in December 2003

New technologies

Efficient operators

International players, reduction in settlement rates,

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Migration to satellite and cellular telephony

REVIEW OF LITERATURE

Organizations have to formulate strategies at three major levels: Corporate,

Business and functional.

1. Corporate strategy: Determines the business or businesses in which the

firm will or should compete and how it will fundamentally conduct the

business or businesses. Corporate strategy answers these questions:

Does the organization have a strategic advantage?Does the company want to compete or find a niche?

Does the company seek to concentrate on one product or product line, or

on multiple products or products line?

Will the corporation be innovative?

Does the company want or need to grow, stabilize, reduce its investment,

turn company fortunes around, or defend itself against a takeover?

2. Business (SBU) strategy: Answers the question, how do we compete in

this business? (This is the focus of many grand strategies)

3. Functional level strategies: Supports other strategies and answers the

question, how do we obtain the most effective and efficient use of our

resources?

Economic Functional strategies

1. Marketing

2. Operations-production or service generation

3. Finance

4. Human Resource management

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5. Information Systems/Research and Development/Other

significant areas

1. Management Functional Strategies

1. Planning, organizing, Leading, Controlling, Problem Solving

2. Communicating, integrating

3. Management Systems

4. Organizational culture

CORPORATE OR GRAND LEVEL STRATEGY:

Growth Strategy

Integrative

Market penetration

Forward

Market Development

Backward

Product Development

Horizontal

Diversification

Stability

Holding

Harvesting

Divestment

Retrenchment

Turnaround

Liquidation

Selling out

Investment ReductionFUNCTIONAL STRATEGIES

Functional strategies are relatively short-term activities that each functional area

within a company will carry out to implement the broader, longer-term corporate

level and business level strategies. Each functional area has a number of strategy

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The

choices, that interact with and must be consistent with the overall company

strategies.

Three basic characteristics distinguish functional strategies from corporate

level and business level strategies: shorter time horizon, greater specificity, and

primary involvement of operating managers.

A few examples follow of functional strategy topics for the major functional

areas of marketing, finance, production/operations, research and development,

and human resources management. Each area needs to deal with sourcing

strategy, i.e., what should be done in-house and what should be outsourced?

Marketing strategy deals with product/service choices and features, pricing

strategy, markets to be targeted, distribution, and promotion considerations.

Financial strategies include decisions about capital acquisition, capital allocation,

dividend policy, and investment and working capital management.

production or operations functional strategies address choices about how and

where the products or services will be manufactured or delivered, technology to

be used, management of resources, plus purchasing and relationships with

suppliers. For firms in high-tech industries, R&D strategy may be so central that

many of the decisions will be made at the business or even corporate level, for

example the role of technology in the company's competitive strategy, including

choices between being a technology leader or follower. However, there will

remain more specific decisions that are part of R&D functional strategy, such as

the relative emphasis between product and process R&D, how new technology

will be obtained (internal development vs. external through purchasing,

acquisition, licensing, alliances, etc.), and degree of centralization for R&D

activities. Human resources functional strategy includes many topics, typically

recommended by the human resources department, but many requiring top

management approval. Examples are job categories and descriptions; pay and

benefits; recruiting, selection, and orientation; career development and training;

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evaluation and incentive systems; policies and discipline; and

management/executive selection processes.

THE DATA COLLECTION METHODS

Remembering that data form the basis for the effective, unemotional

communication without which no process improvement effort can succeed,

you need to avoid two significant problems associated with Data

Collection. You need to define, not simply identify, the following: ! When

and how often you will collect the data

! How you will collect the data

! Units of measurement you will use in collecting the data

! The criteria for defects

! How you will handle multiple defects on single products

If you haven't thought about these issues, your Data Collection process

may be doomed from the start. This is especially true when more than one

person is collecting data. What is meaningful to one worker might not be

to another. You have to take the time to develop adequate, clear-cut

definitions, and train each collector to use those definitions. You can never

eliminate bias, but it is important to minimize it. Here are some ways your

data can be biased (Viewgraph 9):

On the one hand, the workers may speed up the way they work in

the process, thus skewing the data in their favor. This may occur if

they have a perception that the variables data they are collecting

will show that they could be more efficient, productive, or effective.

Once the Data Collection effort ceases, they may return to their old

pace of operations.

On the other hand, the burden of Data Collection may cause a

slowdown in the natural flow of the process.

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DATA ANALYSISAnalysis of data is a process of inspecting, cleaning, transforming, and modeling

data with the goal of highlighting useful information, suggesting conclusions, and

supporting decision making. Data analysis has multiple facets and approaches,

encompassing diverse techniques under a variety of names, in different business,

science, and social science domains.

Data mining is a particular data analysis technique that focuses on modeling and

knowledge discovery for predictive rather than purely descriptive purposes.

Business intelligence covers data analysis that relies heavily on aggregation,

focusing on business information. In statistical applications, some people divide

data analysis into descriptive statistics, exploratory data analysis, and

confirmatory data analysis. EDA focuses on discovering new features in the data

and CDA on confirming or falsifying existing hypotheses. Predictive analytics

focuses on application of statistical or structural models for predictive forecasting

or classification, while text analytics applies statistical, linguistic, and structural

techniques to extract and classify information from textual sources, a species of

unstructured data. All are varieties of data analysis.

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CONCLUSIONSDecision making is a complex subject, worthy of a chapter or book of its own.

This section can only offer a few suggestions. Among the many sources for

additional information, I recommend Harrison (1999), McCall & Kaplan (1990),

and Williams (2002). Here are some factors to consider when choosing among

alternative strategies:

* It is important to get as clear as possible about objectives and decision

criteria (what makes a decision a "good" one?)

* The primary answer to the previous question, and therefore a vital

criterion, is that the chosen strategies must be effective in addressing the

"critical issues" the company faces at this time

* They must be consistent with the mission and other strategies of the

organization

* They need to be consistent with external environment factors, including

realistic assessments of the competitive environment and trends

* They fit the company's product life cycle position and marketattractiveness/competitive strength situation

* They must be capable of being implemented effectively and efficiently,

including being realistic with respect to the company's resources

* The risks must be acceptable and in line with the potential rewards

* It is important to match strategy to the other aspects of the situation,

including: (a) size, stage, and growth rate of industry; (b) industry

characteristics, including fragmentation, importance of technology,

commodity product orientation, international features; and (c) company

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position (dominant leader, leader, aggressive challenger, follower, weak,

"stuck in the middle")

* Consider stakeholder analysis and other people-related factors (e.g.,

internal and external pressures, risk propensity, and needs and desires of

important decision-makers)

* Sometimes it is helpful to do scenario construction, e.g., cases with

optimistic, most likely, and pessimistic assumptions.

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RECOMMENDATIONSFollow the Leader: when the market has no more room for copycat products and

look-alike competitors. Sometimes such a strategy can work fine, but not without

careful consideration of the company's particular strengths and weaknesses. (e.g.,

Fujitsu Ltd. was driven since the 1960s to catch up to IBM in mainframes and

continued this quest even into the 1990s after mainframes were in steep decline;

or the decision by Standard Oil of Ohio to follow Exxon and Mobil Oil into

conglomerate diversification)

Count On Hitting Another Home Run: e.g., Polaroid tried to follow its early

success with instant photography by developing "Polavision" during the mid-

1970s. Unfortunately, this very expensive, instant developing, 8mm, black and

white, silent motion picture camera and film was displayed at a stockholders'

meeting about the time that the first beta-format video recorder was released by

Sony. Polaroid reportedly wrote off at least $500 million on this venture without

selling a single camera.

Try to Do Everything: establishing many weak market positions instead of a

few strong ones

Arms Race: Attacking the market leaders head-on without having either a good

competitive advantage or adequate financial strength; making such aggressive

attempts to take market share that rivals are provoked into strong retaliation and a

costly "arms race." Such battles seldom produce a substantial change in market

shares; usual outcome is higher costs and profitless sales growth

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Put More Money On a Losing Hand: one version of this is allocating R&D

efforts to weak products instead of strong products (e.g., Polavision again, Pan

Am's attempt to continue global routes in 1987)

Over-optimistic Expansion: Using high debt to finance investments in new

facilities and equipment, then getting trapped with high fixed costs when demand

turns down, excess capacity appears, and cash flows are tight

Unrealistic Status-Climbing: Going after the high end of the market without

having the reputation to attract buyers looking for name-brand, prestige goods

(e.g., Sears' attempts to introduce designer women's clothing)

Selling the Sizzle Without the Steak: Spending more money on marketing and

sales promotions to try to get around problems with product quality and

performance. Depending on cosmetic product improvements to serve as a

substitute for real innovation and extra customer value.

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REFERENCES

1. Harrison, E. Frank (1999). The Managerial Decision-Making Process (5th

ed.). Boston: Houghton Mifflin.

2. McCall, Morgan W., Jr., & Kaplan, Robert K. (1990). Whatever it takes:

The realities of managerial decision making (2nd ed.). Englewood Cliffs,

NJ: Prentice-Hall.

3. Porter, Michael E. (1980). Competitive Strategy: Techniques for analyzing

industries and competitors. New York: Free Press.

4. Porter, Michael E. (1985). Competitive advantage: Creating and sustaining

superior performance. New York: Free Press.

5. Williams, Steve W. (2002). Making better business decisions:

Understanding and improving critical thinking and problem solving skills.

Thousand Oaks, CA: Sage Publications.

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