This report discusses the strategic evaluations of Digi in Malaysia, including detailed analysis of the industry, core values for future alignment, and strategies to defend the core business.
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Strategic Management1 Strategic Management
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Strategic Management2 Executive Summary Strategic management is the concept which includes planning on continuous basis, monitoring, analysis and assessment of all the necessary aspects which is important for an organization to fulfil its goals and objectives. There are number of factors which forced the organizations to think about the future perspectives and make strategic decisions in this context, as some of these factors are innovations, emerged technologies, and expectations of customers. This process helps the leaders of the organization in assessing their company’s present situation, chalk out the strategies, deploy them, and evaluate the effectiveness of the implemented strategies. This assignment is divided into five tasks and all the tasks are completed on the basis of the Digi.
Strategic Management3 Contents Executive Summary.....................................................................................................................................2 Introduction.................................................................................................................................................4 Task 1- Strategic Direction...........................................................................................................................4 Marketing capabilities.............................................................................................................................4 Manufacturing capabilities......................................................................................................................4 Human resource management capabilities.............................................................................................5 Task 2- Detailed analysis of the industry.....................................................................................................5 Appropriate framework for strategic analysis-........................................................................................5 Critical evaluation of organizations competitive advantage-...................................................................6 Industry scenario.....................................................................................................................................6 Task 3- Analysis............................................................................................................................................7 Core values for future alignment.............................................................................................................7 Analyse mission and vision......................................................................................................................7 Task 4-Startegies to Defend.........................................................................................................................8 Task 5- Evaluate resource implications....................................................................................................9 Conclusion...................................................................................................................................................9
Strategic Management4 Introduction Strategic management is the process which involves the documentation and explanation of the strategies that can be carried by managers of the organization for achieving the improved performance and also the competitive advantage. It is believed that organization holds the competitive advantage if their productivity in organization is more than the normal productivity of all the organizations operated in that industry. In this context, it is necessary that manager must conduct the required assessment and evaluationof thegeneral environmentof the organization and competitors moves in terms of making the right strategies. This report mainly discusses the strategic evaluations of the Digi in Malaysia, as structure of this report is divided into five tasks and all the tasks answer different questions related to the organization. At the end of the report, brief conclusion is stated to conclude the report. Digi is the organization which provides services related to the mobile connectivity and internet services which enables the 11.7 million Malaysians to receive the advantageous offers in terms of connecting with the world. In context of the products and services innovation, organization holds the ambition to become the Malaysians best digital partners and provide them best facilities that will permit all the Malaysians to experience a digital lifestyle on their solid 4G+ network. Task 1- Strategic Direction Marketing capabilities The main aim of the Digi is to delivering the profitable growth by heavy more worth from the business, and activating the growth in terms of the new digital ventures for the long time period. In context of this, organization delivered best connectivity and best digital services to their customers, ensure more access with the help of strong digital channels, and are sustained by superior quality and reliable network experience across the globe. Organization framed solid strategy in terms of ensuring growth of the organization and also for improvingitsmarketcapabilities.Inthiscontext,organizationcontinuouslychallenging themselves in terms of delivering the consistent 4G internet experienced on their 4G plus networks which is accompanied with the internet speed of minimum 10mbps for 4G LTE and 20Mbps for LTE-A (DIGI, 2017a). Manufacturing capabilities In this context, organization focuses on managing the resources in smarter way and also in more efficient way. This is done by discovering and accepting the new operating models and digital tools through which network and IT assets of the organization can be optimized. Further, Digi focus on giving the priority to the financial discipline of the organization, pursue the process simplification and also streamline the way in which work is conducted. In other words, organization focus on improving its manufacturing capabilities and this is reflected through the improvement of 7.7% in the COGS to RM1.52 billion as the outcome of the lower traffic cost
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Strategic Management5 from the legacy prepaid facilities. Their persistent charges mainly emphasize on increasing the gross profit at RM4.83 billion or 76.1% gross margin, a lift of the 1.0pp beforea year. Organization further excludes the cost and exit fees of RM6 million, opex decreased by 2.8% that is from RM2.01 million to RM1.96 million ((DIGI, 2017a). Human resource management capabilities Employees of the organization are considered as key factors for success, and they are determined to build the inclusive and dynamic workplace that promotes the culture of learning, responsive, cooperative and innovation 360°. High performance talent continuously develop the digital capabilities of the organization and further exercise the autonomy to make innovations in delivering the purpose to connect with the customers (DIGI, 2017b). Task 2- Detailed analysis of the industry Appropriate framework for strategic analysis- In this context, VRIO framework is used for the strategic analysis of the DIGI. This framework is the strategic analysis tool which includes four aspects that are value, rare, imitability, and organization. All these aspects in terms of Digi is defined below- Value- Digi holds the resources that mainly offer the value for the customers and these resources are in the form of new-digital ventures of the organization for the long-term. Further, its sustainable approach builds faith and creates shared values for all the sections of the society. This mainly consists of the advocacy related to the safe internet usage and also builds digital flexibility among the youth and ecosystem. These programs are the initiates through which organization is committed from last seven years. Rare- Capability of Digital resilience and these new-digital ventures of the organization for the long-term are the rare resources, as no organization in Malaysia initiate any such programs while working. Imitability-Ventures in which organization is involves is difficult to copy because all these ventures are exclusively initiated by the organization and required secrecy is also maintained by the organization in this context ((DIGI, 2017a/ Clear strategy, 2018). Organization- Number of changes is made in the management approach for capitalizing these resources such as advancement in technology of the process and procedures of the organization. All these potentials and possibilities of the organization to create the value for the customers in the form of different initiates taking by organization are managed by the organization in proper manner. Further, organization focuses on creating the healthy stream of innovation for providing high and valuable experience to their customers (DIGI, 2017c).
Strategic Management6 Critical evaluation of organizations competitive advantage- In this context, Digi used the Grant 5 step model which is introduced by the Hamilton Grant Formulation in the form of Management Maturity Model. This model mainly evaluates the organization formulation management maturity. Following are the five important steps of this model through which competitive advantage of the organization is evaluated- ï‚·Employees of the organization are considered as biggest competitive advantage for the organization, as people with high-talent is the main reason of all the innovations. ï‚·Employees are the most important resource of the organization because they are willing to give their 100%, and also focus on fulfilling all the resources of the organization in effective manner. ï‚·Almost 86% from the top 49 leaders of the organization are from the internal succession program of the organization, and this includes 4 out of the seven management team members. Organization further focuses on gender balance and diversity in the workforce, because it is the most important elements for the competitive advantage and shareholder value. ï‚·Gender balance and diversity in the workforce automatically enhance the effective working environment in the organization, and this helps the organization in retaining their talented employees. ï‚·In this context, numbers of opportunities are available to the organization such as these employees hold the high-experiencing decision making and it provide ultimate benefit to the organization in future. Industry scenario Relativeposition of the organization in the industry is determined through the profitability, which means, whether the profitability of the organization is above or below the industry average. The basic element of the above average profitability in the long run is the sustainable competitive advantage of the organization. In this context, Digi used two porter generic strategies that are cost leadership and differentiation. Both the strategies of the Digi are defined below- Cost Leadership- For this purpose, organization try to become the low cost producer of the industry. For becoming the low cost producer, Digi manage its resources in smarter way and also in more efficient manner. Organization also adopt new operating models and digital tools through which the network and IT assets of the organization can be optimized. Differentiation- In this context, Digi introduce freedom to internet innovations programs, s this program differentiate the organization from its competitors spend more time on the internet. In this context, number of data plans are introduced by the organization that provide elasticity to the
Strategic Management7 complete family such as extra entertainment on-the-go, borderless roaming, wide -range of time- based data passes, etc (Porter, no date). Task 3- Analysis Core values for future alignment Core values of the Digi include the responsible and sustainable methods through which value is created for all the stakeholders of the organization. In this term, organization focus on creating the high standards of reliability and governance, supplying such services to the clients who guarantees the security and privacy of the customers. Organization further leverage their expertise in reducing the inequalities faced by the society and the environment also. All these values of the organization help the organization in creating the future capabilities, and further actions are taken by the organization in this context- Supply chain sustainability is the concept through which organization ensures fair and safe workplacefor almost75000 individualsworking in thesupplychainof the organization. This is accompanied with the pledge of the organization to reduce the inequalities and building capacity for their supply chain. All these initiatives of the organization reflect the rise of 38.7% in the total suppliers who signs the agreement with the organization. On the basis of responsible business conduct, almost 165 suppliers of the organization make commitment to promote the ethical conduct, best practices in responsibility related to the sustainability and environmental. Organization further focus on ensuring the growth through its core business and also by implementing its core digital strategy. In this terms, Digi mainly focus on three aspects that are driving growth from the core business, digitalize the core, and also grow new digital businesses. Another action taken by organization is capacity building through the training, which means, numerous workshops amounting to 2690 man-hours being conducted by the organization for structuring the capacity of contractors and sub-contractors on safety awareness and also the proper way through which these equipment’s are used. Analyse mission and vision The vision statement of the organization states that organization wants to be the Malaysians best digital partners and provide them best services that will allow all the Malaysians to experience a digital lifestyle on their solid 4G+ network. In this term, organization conduct efforts on the spectrum re-farming, fast deployment of LTE 900MHz and 2600MHz overlay sites, and 4G upgrades at nationwide fuelled strategic coverage expansion of their LTE-A network. Further, 4G plus network quality is strengthening by strong indoor quality, wider outdoor coverage, and enhancement in the strategic capabilities (Digi, 2017a.
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Strategic Management8 Vision of the Digi mainly focuses on becoming the star in the best customer experience by improving the communications for enhancing the quality of life of customers at home, work, and play. Digi holds very good statement of Vision. Strategists of Digi believe that vision of the organization attracts the promise and motivate the employees of the organization to strive for an excellent performance from them. On the other hand, mission statement of the organization focus on giving the best solutions to the customers for meeting their individual needs related to the communication, connectivity, and access to information and security. It further ensures such working environment in which employees of the organization can grow and fulfil their needs. Digi also gives superior returns to their shareholders and also contribute in improving the life of Malaysians. Task 4-Startegies to Defend AS numbers of corporate strategies are there which can be opt by the organization in terms of ensuring growth of their core business in future. Some of these strategies which can be used by the Digi to defend their core business are stated below- Merger/Acquisition- This is the most important business strategy which can be used by the Digi to ensure growth of their business in future. In this strategy, organization buy, sell or combine the different companies across the globe for making more opportunities in the future. Mergers and acquisitions are the popular business strategy through which organization expands their business in new markets or territories, it further gain the competitive advantage, or focus on acquiring the new technologies and skills sets (Bruner, 2004). In this context, organization focus on being the part of Telenor which allow them to control scale and opportunities in different areas such as acquisition on global platforms, strategic partnership withtheglobaldigitalcompanies,andtheexpansionoftheadjacentdigitalbusiness opportunities. This further covers the expansion of business in the potential areas of growth such as financial and cloud storage services. It further includes the capabilities for personalization of digital services, and recommends engines for the growth of product and digital distribution (Sudarsanam, 2003/ Digi, 2017a). Growth strategy- This is the competitive strategy which can be used by the Digi in terms of ensuring its future growth. Following re the two methods of this strategy which can be adopted by Digi- ï‚·Horizontal integration is another competitive strategy in which Digi can acquire the business activities which are occurred at the same level of value chain either in related industry or dissimilar industry. Under this, Digi can acquire those organizations to which they outsource their important tasks under their value chain. ï‚·Vertical integration is another competitive strategy through which complete control is exercised by the organization over one or more than one phases in the manufacturing or
Strategic Management9 dissemination of the product. In this Digi, can focus on the value chain activities of the organization related to their distribution chain (Suttle, 2018). Diversificationstrategy-diversificationstrategyisthegrowthstrategythroughwhich organization can expand its business activities in other markets or industry as well. In other words, this strategy can be used by Digi for expanding its processes by adding markets, products, services or stages of production to the existing businesses. The main aim of this plan is to permit the organization to enter into the line of business that is completely different from their current business processes. For Digi, concentric diversification is more suitable because in this new venture initiated by the organization is strategically connected with the existing operations of the business (Newton, no date/ Hyland, 2013). Task 5- Evaluate resource implications Following are the basic tools which can be used by the Digi for evaluating and analysing the aspects which stated in above tasks- ROI- ROI stands for return on investment which is used for measuring theperformance of the organization in terms of evaluating the efficiency of the investment or comparison between the efficiency of different number of investments. In terms of Digi, there are number of investments made by Digi and all these investments give profitable return to the organization. These profitable returns clearly states that all the above mentioned strategies work well for the organization. This can be understood with the example, as organization witnessed their best post-paid revenue growth of 12.1% which shows the further enhancement from the year 2016 when post-paid revenue grew 10.2%. Service revenue of the organization remain resilient at RM5.91 billion, albeit single digit decline at 5.0%, in line with guidance. Internet revenues of the organization strengthen 16.5% to RM 2.70 billion or 45.6% of service revenue;alongsideitincreaseinthesmartphoneadoptionto72.7%andactiveinternet subscribers to 73.7%, as it also represents almost 8.7 million customers (DIGI, 2017a). Achievement- Organization achieve number of milestones with the help of above strategies and aspects, as there is increment of 12.1% post-paid revenue, 16.5% in the internet revenue, 0.7% in EBITDA margin, and 40% call reduction to call centre margin (DIGI, 2017d). Conclusion After considering the facts of above report that that Digi mainly follows the strategy related to the high quality digital provider, as it main aim is to give best services to the customers and meet eachandeveryrequirementofthecustomerbygivingthembestserviceexperience. Organization framed solid strategy in terms of ensuring growth of the organization and also for
Strategic Management10 improving its market capabilities. The main aim of the Digi is to delivering the profitable growth by driving more value from the company, and engaged in new digital undertakings. Organization also delivered best connectivity and best digital services to their customers; ensure more access with the help of robust digital channels. Digi holds the resources that mainly offer the value for the customers and these resources are in the form of new-digital ventures of the organization for the long-term. Further, its sustainable approach builds faith and creates shared values for all the sections of the society. This mainly covers the advocacy related to the safe internet usage and also builds digital flexibility among the youth and ecosystem. These programs are the initiates through which organization is committed from last seven years. In this term, organization focus on creating the high standards of reliability and governance, distributing such services to theclients who guarantees the safety and privacy of the customers. Organization further leverage their expertise in reducing the inequalities faced by the society and the environment also. All these values of the organization help the organization in creating the future capabilities References Bruner, R. F. (2004). Applied Mergers and Acquisitions. Hoboken, New Jersey: John Wiley&Sons, Inc. Clear strategy, (2018). Explaining the VRIO Framework (With A Real-Life Example). Available athttps://www.clearpointstrategy.com/vrio-framework/. Accessed on 24thOctober 2018.
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Strategic Management11 DIGI, (2017a). Annual Report 2017. Available at http://www.digi.com.my/annualreport/images/pdf/download/full-annual-report.pdf. Accessed on 24thOctober 2018. DIGI, (2017b). Our Business. Available at http://www.digi.com.my/annualreport/images/pdf/download/our-business-strategy.pdf. Accessed on 24thOctober 2018. DIGI, (2017c). Management discussion and analysis. Available at http://www.digi.com.my/annualreport/images/pdf/download/management-discussion- analysis.pdf. Accessed on 24thOctober 2018. DIGI, (2017d). Corporate Governance Overview Statement. Available at http://www.digi.com.my/annualreport/images/pdf/download/corporate-governance-overview- statement.pdf. Accessed on 24thOctober 2018. Hyland, B. (2013. Growth Strategies for SMEs. Available athttps://www.enterprise- ireland.com/en/events/ourevents/finance-for-growth/growth-strategies-for-smes.pdf. Accessed on 24thOctober 2018. Newton, P. Organizational Growth Strategies. Available athttp://www.free-management- ebooks.com/dldebk-pdf/fme-organizational-growth-strategies.pdf. Accessed on 24thOctober 2018. Porter, M. COMPETITIVE ADVANTAGE. Available at https://www.albany.edu/~gs149266/Porter%20(1985)%20-%20chapter%201.pdf. Accessed on 24thOctober 2018. Sudarsanam, S. (2003). Creating Value from Mergers and Acquisitions The Challenges. Prentice Hall Publication. Suttle, R. (2018). Growth Strategies in Business. Available at https://smallbusiness.chron.com/growth-strategies-business-4510.html. Accessed on 24thOctober 2018.