Analyzing Digi Telecommunications' Global Business Strategy (MGT7203)

This report examines Digi Telecommunications, the largest mobile service provider in Malaysia, and its approach to global business. It analyzes the company's strategy, organizational structure, and financial performance, including revenue, expenses, and profit margins from 2014 to 2018. The report identifies the company's use of a transnational strategy, allowing for adaptation to different international markets, while recommending standardization to improve declining revenue and operating profit. The organizational structure is assessed, with recommendations for greater autonomy in international units. Financial data, including income statements and balance sheets, are presented and analyzed to evaluate the company's financial health and performance, highlighting the need for strategic adjustments to address fluctuating profits and liquidity issues. The report concludes with an assessment of the company's current state and recommendations for future improvements.

Running head: ISSUE IN GLOBAL BUSIENSS
Issue in Global Business
Name of the Student:
Name of the University:
Authors Note:

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ISSUE IN GLOBAL BUSINESS
Contents
1. Introduction:.............................................................................................................................2
1.1 About the company:...............................................................................................................2
1.2 Cases:................................................................................................................................2
2. Strategy:....................................................................................................................................2
2.1 Strategy of Digi:....................................................................................................................2
2.2 Recommendation:.............................................................................................................3
2.2.1 Localization of standardization:.....................................................................................3
3. Organization structure:............................................................................................................3
3.1 Organizational structure of the company:..............................................................................4
3.2 Recommendation:..................................................................................................................4
4. Conclusion:............................................................................................................................15
Company:...................................................................................................................................15
Strategy:.....................................................................................................................................15
Structures:..................................................................................................................................15
Self-reflection:...........................................................................................................................16
References:....................................................................................................................................17

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ISSUE IN GLOBAL BUSINESS
1. Introduction:
1.1 About the company:
Digi Telecommunications is the largest mobile service provider in Malaysia. The
company is the pioneer in launching and operating a fully digital cellular network in the country.
The company is also the first to provide GPRS and EDGE services to the customers in Malaysia.
The company is a listed company in the country under Infrastructure Category Act on Bursa
Malaysia.
1.2 Cases:
The company has over the years have expanded its business operations to different parts
of the world. A brief discussion on the company’s strategy and financial performance shall be
made in this document to analyse how the strategy has helped the company to achieve its
organizational objective. The state of affairs of the company and the issues it has faced in
spreading its operations to different parts of the world shall also be discussed.
2. Strategy:
Strategy can be defined as a plan of action engineered with the objective of achieving certain
goal or goal in the future.
2.1 Strategy of Digi:
Griffin has outlined the four strategic choices and options available to a business
organization to spread its business activities in different parts of the world, i.e. international
business activities.
Literature review:
The four strategic choices and options defined by the author are home replication, global
strategy, multi-domestic strategy and transnational strategy (Al- Nawafa, 2012).

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ISSUE IN GLOBAL BUSINESS
Home replication is the strategy where an organization replicates it’s tried and tested domestic
business model to carry international business activities. In multi domestic strategy an
organization uses number of different strategy to conduct business activities in international
market. The objective of using multi domestic strategy is to keep number of options open to a
business entity while conducting business activities in international market. Global strategy is a
completely different and separate strategy from its domestic strategy used by an organization to
conduct its business activities. Transnational strategy is where an organization uses different
strategy for different countries in international market.
In case of Digi Telecommunications the company has been extremely clear from the beginning
that it is open to different strategies and ideas to improve its international business. The
management knowing the limitations of home replication and multi-domestic strategies has used
transnational strategy to achieve its organization objective from international business activities.
The launch of fully digital cellular network has proved to be extremely successful to enhance
its market share in Malaysia as well as in other parts of the globe outside the country.
2.2 Recommendation:
The company despite being the pioneer in launching a fully digital cellular network in
Malaysia has used both high end and relatively low end technologies in different international
markets based on the requirements of different markets (Aishah Bua & Idayu, 2011).
2.2.1 Localization of standardization:
However, standardization of the strategy is a must as the overall revenue of the company
as well as its operating profit are declining at a constant rate over the last five years. The extract
of income statement provided in this document shows the ever deteriorating performance of the
company.

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ISSUE IN GLOBAL BUSINESS
3. Organization structure:
A system that lays down the way different activities in an organization are to be directed and
performed to achieve the goals of the organization is defined as organizational structure.
3.1 Organizational structure of the company:
From the annual report of the company it is clear that the company has top down
organizational structure as most of the companies in the country and around the globe have. The
company has Chief Executive Officer who is responsible to take all important decisions in
relation to the management of the company and its affairs. The Chief Executive Officer of the
company is however, under the authority of Board of directors. The Board is not only
responsible to carry the day to day affairs of the company but it is also responsible to appoint
different executives to conduct different activities on its behalf. The company also has a Chief
Financial Officer who is responsible to oversee all matters relating to the finance of the
company. The management of the company include both shareholders and professionals who
collaborate to take all important business related decision with the objective of improving the
financial and operational performance of the company.
3.2 Recommendation:
The units located in different parts of the globe should be allowed to function according
to the local conditions. Thus, autonomy to these units will help the company to improve its
performances as these units will be able to take operational decision according to the situation
existing in local market without have to wait for the instruction from head office.
Appraisal of financial and operational performance of the company will enlighten us about the
state of affairs of the company at present as well as in the past. Thus, all the financial data of the
company has been accumulated from its annual reports over the years to summarize its

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ISSUE IN GLOBAL BUSINESS
performance and state of affairs over the years (Bernal, 2011). The statement below shows the
amount of revenue, expenditures and profit or loss that the company has earned over the last five
years.
INCOME STATEMENT OF DIGI.COM BHD (DIGBF)
MYR in millions 2014-12 2015-12 2016-12 2017-12 2018-12
Gross revenue earned 7,019.
00
6,914.
00
6,597.
00
6,340.
00
6,527.
00
Less: Cost of revenue 2,099.
00
2,034.
00
1,641.
00
1,515.
00
1,543.
00
(A): Gross profit 4,919.
00
4,880.
00
4,957.
00
4,826.
00
4,984.
00
Less: Expenses
Sales, General and administrative 535.
00
579.
00
572.
00
558.
00
490.
00
Merger expenses 40
.00
Operating expenses (others) 1,066.
00
1,268.
00
1,373.
00
1,560.
00
1,491.
00
(B): Operating expenses (total) 1,601. 1,847. 1,945. 2,118. 2,020.

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ISSUE IN GLOBAL BUSINESS
00 00 00 00 00
Operating income (A - B) 3,318.
00
3,033.
00
3,011.
00
2,708.
00
2,964.
00
Interest Expense 39
.00
56
.00
78
.00
132.
00
131.
00
Other income (expense) (634.
00)
(668.
00)
(695.
00)
(590.
00)
(754.
00)
Earnings before income tax 2,645.
00
2,309.
00
2,238.
00
1,985.
00
2,079.
00
Less: Income tax provision 614.
00
586.
00
606.
00
509.
00
539.
00
Earnings after tax from continuous
operations
2,031.
00
1,723.
00
1,633.
00
1,477.
00
1,541.
00
Basic earnings per share 0
.26
0
.22
0
.21
0
.19
0
.20
Diluted earnings per share 0
.26
0
.22
0
.21
0
.19
0
.20

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In order to understand the financial performance of the company better let us prepare appropriate
diagram using the data and information provided in the above income statement.
It is clear from the above that the company has struggled to achieve sustainable growth in both
earning revenue and in earning gross profit. In fact the gross revenue of the company in the latest
financial year ending in December, 2018 was merely MYR 6,527 million whereas it was MYR
7,019 million in the year 2014. Thus, instead of growing the company’s gross revenue has
reduced in the current year. This is a clear indication that the company is struggling. Similarly
the gross profit of the company has fluctuated over the years as can be seen from the above
diagram.

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The operating profit as well as net earnings from continuous business operations of the company
have also shown negative fluctuations over the years. The above findings clearly indicate the
need to make necessary changes in the strategy and management of the business organization.
Before making necessary recommendations it is important to assess the financial performance
and position of an organization. In order to assess the financial position of the company the
statement of assets and liabilities of the company is summarized below.
BALANCE SHEET OF DIGI.COM BHD
Fiscal year ends in December. MYR
in millions except per share data.
2014-12 2015-12 2016-12 2017-12 2018-12
Assets
Current assets

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ISSUE IN GLOBAL BUSINESS
Cash and cash equivalents 526
.00
234
.00
377
.00
575
.00
433
.00
Receivables 326
.00
349
.00
371
.00
406
.00
439
.00
Inventories 65
.00
117
.00
48
.00
59
.00
61
.00
Prepaid expenses 344
.00
363
.00
913
.00
269
.00
327
.00
Other current assets 158
.00
358
.00
441
.00
576
.00
829
.00
Total current assets 1,419.
00
1,420.
00
2,149.
00
1,886.
00
2,090.
00
Non-current assets
Property, plant and equipment
Gross property, plant and equipment 4,801.
00
5,401.
00
5,933.
00
6,504.
00
7,123.
00
Accumulated Depreciation (2,419.
00)
(2,758.
00)
(3,101.
00)
(3,595.
00)
(4,242.
00)
Net property, plant and equipment 2,382. 2,643. 2,832. 2,909. 2,881.

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ISSUE IN GLOBAL BUSINESS
00 00 00 00 00
Intangible assets 502
.00
517
.00
454
.00
937
.00
982
.00
Other long-term assets 82
.00
63
.00
102
.00
253
.00
Total non-current assets 2,884.
00
3,242.
00
3,349.
00
3,948.
00
4,116.
00
Total assets 4,303.
00
4,662.
00
5,498.
00
5,834.
00
6,206.
00
Liabilities and stockholders' equity
Liabilities
Current liabilities
Short-term debt 796
.00
1,260.
00
473
.00
175
.00
Capital leases
8.00 9.00
10
.00
13
.00 6.00
Accounts payable 262
.00
400
.00
226
.00
256
.00
200
.00
Taxes payable 23 49

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ISSUE IN GLOBAL BUSINESS
.00 - - - .00
Other current liabilities 1,994.
00
2,089.
00
2,120.
00
2,013.
00
2,265.
00
Total current liabilities 3,083.
00
3,757.
00
2,829.
00
2,282.
00
2,695.
00
Non-current liabilities
Long-term debt 210
.00
1,784.
00
2,683.
00
2,511.
00
Capital leases 34
.00
25
.00
15
.00 8.00 2.00
Deferred taxes liabilities 263
.00
325
.00
311
.00
298
.00
276
.00
Other long-term liabilities 27
.00
35
.00
40
.00
44
.00
49
.00
Total non-current liabilities 534
.00
386
.00
2,150.
00
3,033.
00
2,838.
00
Total liabilities 3,617.
00
4,143.
00
4,979.
00
5,315.
00
5,533.
00
Stockholders' equity