Axiata Group: Managing International Business in Philippines

This report provides a comprehensive analysis of Axiata Group's international business strategy, focusing on its potential expansion into the Philippines market. The report begins with an overview of Axiata Group's background, services, and a PESTLE analysis to understand the political, economic, social, technological, legal, and environmental factors affecting its operations. It then applies Porter's Diamond Model to evaluate the competitive landscape. A literature review examines the Philippines as a potential expansion country, analyzing market entry strategies, risks, and opportunities. The report explores various modes of entry, such as strategic alliances and partnerships, and discusses management responses in terms of human resources, operational functions, and marketing, including cross-cultural considerations. The analysis highlights the importance of technological training, product diversification, and strategic alliances for successful international expansion. The report concludes with recommendations for Axiata Group to achieve cross-cultural proficiency and effectively manage the risks and opportunities associated with entering the Philippines market, emphasizing the need for adaptation and innovation in its 5G plans. This report provides a valuable case study for understanding international business expansion and management.

Running head: MANAGEMENT
International business of Axiata Group
Name of the student:
Name of the university:
Author note:

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Executive summary
Management is a crucial parameter for upgrading the standards and quality of the operations.
Strategic approach is beneficial in this aspect for achieving positive outcomes. These aspects
are also fruitful in terms of achieving global expansion. This report assesses Philippines as
one of the countries, into which Axiata can expand. This is through the means of examining
the effective of the infrastructure, capability to handle the external challenges and risk
assessment. Corporate social responsibilities, quality and service operations are moderate,
which needs improvisation for penetrating into the markets of Phillippines. Technological
training would generate value in the operation of Axiata, helping in the achievement of
infrastructural development, crucial for achieving global expansion through product
diversification and strategic alliance, followed by evaluation and audits.

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Table of contents
1. Introduction............................................................................................................................3
1.1 Company background......................................................................................................3
1.2 Service..............................................................................................................................3
1.3 Pestle analysis..................................................................................................................3
1.4 Porter’s diamond model of Burger on 16.........................................................................4
2. Literature review....................................................................................................................5
2.1 Expansion country............................................................................................................5
2.2 Analysis............................................................................................................................6
2.3 Expansion and risks..........................................................................................................7
3.0 Modes of entry.....................................................................................................................7
4.0 Discussion and analysis........................................................................................................8
4.1. Management response.....................................................................................................8
4.1.1 Human resources...........................................................................................................8
4.1.2 Operational functions....................................................................................................9
4.1.3 Marketing and cross cultural issues............................................................................11
5. Conclusion............................................................................................................................13
6. Recommendations................................................................................................................14
7. References............................................................................................................................16
8. Bibliography.........................................................................................................................17

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1. Introduction
1.1 Company background
Founded in 1992, Axiata Group has achieved accolades and glory by emerging as one
of the largest wireless carriers in Asia. The operations are centrally monitored from the
headquarters in Kuala Lumpur. Operating under the telecommunications industry, the
services of the company are directed towards the provision of quality mobile network
operations, supporting materials for developing the infrastructure and Digital Internet
services. According to the annual report of 2014, the revenue generated by the company was
24.4 billion MYR. In the era of 2016, the revenue mounted to 21. 6 billion (Axiata.com
2019). The net income of the company was 1.2 billion MYR in 2017. This was something
more than the earnings of 504.3 million in 2016. However, 2015 encountered the highest
income of 2.6 billion. The major drive behind this is the hard efforts of 25000 employees.
The company envisions to become new generation digital champion by the end of
2022. This justifies the purpose of the business, which is to make noticeable advances in the
markets of Asia through technological innovation. For accomplishing the goals, Axiata
complies with the values of uncompromising integrity for the display of productive
performance (Axiata.com 2019). Based on the vision, the four P’s, which defines the goals of
the company are profit, people, process excellence and planet and society.
1.2 Service
Axiata 3.0 blueprint is segmented into three core business- Digital Telco, Digital
business and infrastructure. In the Digital Telco, attempts are made to transform the pure clay
mobile service providers into converged Digital Telcos. The digital business are aimed at
advancing the solutions for achieving higher profitability. The infrastructure is of high
quality. Towers are installed for operating the services according to the performance of the

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regions. These performances are collaborated for calculating the overall contribution towards
economic growth.
In all of these services, the focus is on creating values for the stakeholders,
shareholders and investors. Commitment towards sustainable development adds value to the
business, securing the position in the competitive ambience of the market. Mention can be
made of the Axiata Young Talent Programs, which enhances the preconceived skills,
knowledge and expertise of the staffs, preparing them for the future challenges (Axiata.com
2019).
Social media marketing is adopted for enhancing the trafficking of the audience
towards the brand image. Facebook, Twitter, LinkedIn and YouTube are the platforms for
proposing feedbacks regarding the levied services.
1.3 Pestle analysis
Political  Prospective investment areas
 Colonial reign
 Poor governance
 Terrorists activities
Economic  Slow growth since globalization
 Unstable macro-economic environment
 Low exchange rates
 Liberalization insurance policy
 Foreign immediate investments
Social  High literacy rate

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 Colonial supervision reduces inefficiencies and discrimination
Technological  Foreign direct purchases
 CDMA technology
Legal  Fair enforcement of the Government policy
 Insurance policy making models
Environmental  Reduction of the carbon footprint
Table 1: Pestle analysis of Axiata
(Source: Axiata.com 2019)
1.4 Porter’s diamond model of Axiata
India’s Bharti Airtel has acquired the license of operating in the threshold of Sri
Lanka. According to the new rules and regulations of TRSCL, no more licenses would be
offered to the countries intending to expand their business. Non-existence of the consumer
protection categories adversely affects their bargaining power. However, according to the
western civilization, individuals lack clarity and flexibility in their demands. In this, quality
and aids attain a backseat in terms of the other marketing criteria. Low switch over costs
reflects the ease in the transactions through the means of product diversification. Altering
demand of the customers aggravate the complexities in terms of maintaining the balance in
supply and demand (Asmussen et al. 2015).
The threat of substitute is not a matter of that intensity. Access through CDMA helps
in integrating the systems in the supply chain network. However, the market achieved from
placing the services is much smaller as compared to the telecommunication market as a
whole. The local and international suppliers depend on VSAT service providers for accessing
the telecommunication services. Acquisitions is assistance for handling the subsidiary
operations, especially the Broadband Network (Axiata.com 2019).

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Rivalry among the firms is high, which is accompanied with the price wars. Value
Added Service and differentiation strategy enhances the customer base. Value Added
Services has attained high popularity among the customers (Axiata.com 2019).
Based on these factors, it can be said that Axiata Group needs to come up with
innovative 5G plans for expanding the business into the threshold of Philippines.
2. Literature review
2.1 Expansion country
Philippines is considered as the world’s 34th largest economy in the world according
to the GDP. As per the statistics of the International Monetary Fund, it is the 13th largest
economy in Asia and 3rd largest economy in ASEAN after Thailand and Indonesia.
Philippines is considered as an industrialized country, where the economy is in transition
stage, based on the incomes of the services and manufactures from the agriculture industry.
By 2017, the GDP for purchasing power parity was $1980 trillion. The primary exports come
from semiconductors, electronics, transport equipment, garments, copper products,
petroleum, coconut oil and fruits. The major trading partners are Japan, China, United States,
South Korea, Netherland, Hong Kong, Germany and Thailand (Gov.ph 2019). Joint venture
with Indonesia has attached the tag of Tiger Cub Economies. The major challenge in this
context is the income and growth disparities along with the socio-economic and regional
differences. This is accompanied with the issues of corruption and poor infrastructure.
The era of 2019 encountered the GDP growth rate of 6.5%. Most of the income is
generated from the labour force in the service sector, accounting for 55.9%. Technological
support enhances the standards and quality of the services (Gov.ph 2019). Therefore, Axiata
needs to install modern software for achieving infrastructural development, which would be
beneficial in terms of achieving the expansion.

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2.2 Analysis
Organizations encounter three issues while expanding. These are: marketing, sourcing
and investments. Market research suffices the need of gaining an insight into the specific
needs, demands and requirements of the customers. Sourcing relates to the act of segmenting
the operations into obtaining, producing or buying. Investments and control is the situation
when the means of joint ventures, acquisitions and global partnership is obtained. As a matter
of specification, the market entry strategies are exporting, licensing, franchising, mergers and
acquisitions among others. Along with this, Panhans and Kaufmann (2018) mentions about
counter trade, turnkey contracts and third country location, which accounts as innovative
means for penetrating into the foreign markets. In case of Axiata Group, direct investments
and franchise seems productive for achieving expansion into the Philippines market. Apart
from this, product diversification strategy can also be used for attracting new customers.
2.3 Expansion and risks
Philippines as a country is rated as A4, which indicates volatile business environment,
which adversely affects the payment modes of the businesses plying in this market. Defaults
in this case are acceptable according to the average rates. Vulnerability is added in the
political and economic outlook, which compels the business to encounter risks in dealing
with the political instabilities (Gov.ph 2019).
Therefore, for averting these issues, Axiata Group needs to indulge in alliance with
the trade union members. International Financial Reporting Standards (IFRS) would act
assistance in keeping controlling over the cash and information being transmitted from the

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internal to the external environment. The business environment is mediocre, however, easy
access to the financial environment is varied. Debt collection is sometimes very difficult,
which can increase the complexities of Axiata Group in terms of completing the trades, deals
and transactions. There are many criticisms about the frameworks for expansion, as it lacks
proper planning.
In terms of the intercompany transactions, the risks are appreciable in the unstable,
inefficient environments. Based on this, the rating for the business climate is B (Gov.ph
2019).
3.0 Modes of entry
Strategic alliance and partnership through mergers and acquisitions would be fruitful
for Axiata in terms of entering into the markets of Philippines. Sending the representatives to
Philippines for conducting market research would be effective for Axiata Group in enhancing
the awareness about planning for market entry. Financial capability is reflected from the
investment of RM 7.61 bill to market capitalization. Revision of the targets have
simultaneously projected an increase in the price. Sinha and Sheth (2018) are of the view that
increase in the market share helped the company to overcome the impending merger on a
positive note. Along with this, mention can be made of the contracts in which Axiata Group
can indulge. For this, the company needs to take prior permission from the State and the
Federal Government, which would help in averting the instances of illegal scandals and
issues. Franchise can be fruitful for expanding the scope and arena of the business in terms of
operating on the basis of sales promotion and training. Sending the list of deliverables in the

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telecommunication plans to the representatives of Philippines would be beneficial in
developing niche marketing practices.
4.0 Discussion and analysis
4.1. Management response
4.1.1 Human resource
Increasing trade agreements is an opportunity for Axiata Group in terms of upgrading
the standards of recruitment and selection. Harsh governmental guidelines and evolving
health policies require the need for technological training, which would be helpful for
enhancing the awareness of the employees regarding the efficiency, which needs to be
increased on the production of healthy food items. Slow yet stable growth of the development
countries is an opportunity in terms of hiring skilled and qualified labours (Noe et al. 2017).
On the contrary, hiring the labours from the developing countries would be productive for
Axiata Group for enhancing the sales revenue and profit margin.
Moderate research and development activities are an agent for Axiata Group to
acquire latest and modern machines for enhancing the standards and quality of the
telecommunication services. As a matter of specification, it would increase the bottom line
production. Introducing mobile app services can be effective for enhancing the trafficking of
the audience towards the brand image. Corporate environmental programs justify the
adoption of sustainable business strategies.
Economies of scale are proper in the local markets, which is apt for penetrating into
the markets of Philippines. On the other hand, Panhans and Kaufmann (2018) argues that
simultaneous funds from the home country and host countries has added adequacy in the
financial parameter. Advent of globalization has projected an unprecedented growth in the
foreign investments.

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4.1.2 Operational functions
In order to meet the target price, the management of Axiata Group has stalled the
purchase from Sum of the Parts (SOTP). This includes 15% discount for increasing the
attractiveness in the monetization. Derivation from the depressive EV/EBITDA values for
unlisted overseas opcos. The valuation in this case has been increased by 6 times. Telenor
would be a key partner for Axiata (Axiata.com 2019). This is in terms of hands-on approach,
flexible cost discipline, and long term strategic planning and value creation. Rational
planning in this case would be apt for generating value within the business. For reaching to
the target price, Axiata Group is planning to indulge in trade with five year mean calculation
for EV/EBITDA.
As the telecommunications industry is highly competitive, sizeable presence is needed
for achieving higher competitive advantage in terms of economies of scale, better negotiation
power procuring the equipment. Balance sheets are used for planning the expansions. The
nature of the industry is capital intensive. This approach has impending risks in the form of
high exposure to forex translations. Elimination of the risks with Ncell is of prime importance
for standing out as a completely new identity in mergers and acquisitions (Axiata.com 2019).
The officials of the house are of opinion that the merger with Celcom and Digi would
increase the sales revenue and profit margin. The cost estimated is EBITDA of RM 14 billion
and RM 5 billion. This merger is expected to cater to the needs, demands and requirements of
21 million customers. Rational and systematic planning towards this merger would be make
Malaysia one of the largest countries in the world in terms of revenue, customer base and
EBITDA. Flexibility in the plan offering and upper hand in the spectrum portfolio would help
Axiata Group to reach out to more customers (Axiata.com 2019). Along with this, fluctuation
in the prices of the raw materials is a matter of serious concern for disseminating the
telecommunication services in the foreign markets like that of Philippines. As a matter of

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specification, it affects the returns on investment. Franchise challenge adds an interrogative
parameter into the plans of expansion.
Triple Core Strategy is followed for executing the operations according to the plans.
The operations are mainly divided into Digital Telco, Digitalization and Infrastructure.
Technological supported has resulted in expanding the business to more than 11 countries
with an access to 3.5 billion consumers. Customization of the plans is helpful for catering to
the needs of the local as well as the foreign customers. Mention can be made of the 4Pb
Sustainability framework, which is beneficial in terms of mapping the impact of the
performance on the environment, society and market as a whole. In this process, digitalized
solutions and the expectations of the stakeholders and shareholders hold prime significance.
The four sustainability pillars are Beyond Short term profits, nurturing people, process
excellence and governance along with Planet and Society (Axiata.com 2019).
The short term profits are based on the long term investment, digital ecosystem,
digital inclusion and GSMA partnership. For enhancing the stability in the relationship with
the clients and the customers, the focus is laid on Diversity and Inclusion. Mention can be
made of Culture of Integrity and Performance, which develops the metrics for the irrelevant
materials, which can spoil the integrity of the workplace environment. Digital processes are
assistance for developing the best practices in the value chain. Strong governance is
assistance for generating customer centric elements within the telecommunication services.
Reference can be cited of Environment Management Programs, Disaster Management and
Response, which suffices the need for dealing with the external challenges efficiently and
effectively (Axiata.com 2019).