MTN Group: Analysis of Internationalization Strategies in Telecom

This report provides an in-depth analysis of MTN Group's internationalization strategy, focusing on its potential expansion into the markets of Ukraine and China. The executive summary highlights the importance of evaluating factors that could hinder growth. The report utilizes SWOT and PESTLE analyses to assess the internal and external business environments, considering factors from employee impact to foreign investment policies. It identifies Ukraine as a more sustainable and feasible expansion market compared to China. The report explores internationalization motives, modes of entry, and the evaluation of national competitive advantages. It also addresses the current competitive landscape, emphasizing the need for unique products and services to achieve a sustainable competitive advantage. Recommendations are provided to strengthen future strategies, considering market relevance and reducing threats from competitors. The report concludes by offering insights into the telecommunications industry's growth, the role of technology, and the impact of mergers and acquisitions.

Evaluating
Internationalization
strategy

EXECUTIVE SUMMARY
Internationalisation is the spreading of business functions of a company across the
international borders or in different continents. MTN Group is aiming a business expansion in
markets of Ukraine and China. Before implementing any international expansion plan, it is
important to analyse and evaluate the factors which can hinder growth or progress in these regions.
Business environment is made up of different components that are involved in the functioning of an
enterprise (Allen, 2016). The effect can be positive or negative depending on the implemented
strategies of MTN.
The environmental audit for MTN Group has been performed using the internal and external
analysis tool i.e. SWOT and PESTLE. These two help in assessing the impact of activities in both
external and internal business environment of the company. From employees to impact of foreign
investment policies on the operations of MTN Group are presented. Despite of having a strong
strategic position in the market of South Africa, the sustainability and feasibility factors are
favouring expansion in Ukraine rather than China (Barton and Bruder, 2014). It is important to
understand all the dimensional aspects of international expansion because large number of resources
are at stake. Any sort of negligence at this point can lead to huge loss to the company.
The two target countries that are chosen for international developments are China and
Ukraine. The entry mode and strategies which are adopted by MTN Group in this approach are
identified after evaluating the outcomes of SWOT. The purpose or motive behind operation of MTN
Group is to provide mobile communication services to people worldwide. This motive can be
achieved only when proper utilisation of opportunities is done (Bernard, Grazzi, and Tomasi, 2015).
The company's motive behind international expansion in these targeted countries has been
explained. Current status of competition in both international and domestic markets is quite fierce.
The telecommunications giants like Vodafone and Virgin mobile are leading the markets with
maximum customer share.
In such a situation there are certain difficulties that can be experienced by MTN Group in
the near future when business operations will be expanded. The situation of competitive advantage
with sustainability can be achieved by the company only when there is scope of development. It is
possible only when the products and services are unique and hard to be reciprocated. Hence, it is
realised that organisation has to make certain changes in its operations and current production
process. When customers feel that their purchase or investment in company's products and services
is worth, then market position is said to be strengthened. On the other hand, it is recommended that
MTN Group should develop its strategies by checking relevance in the targeted markets. The threats

from substitution and existing competitors will be reduced if strategies are prepared with proper
analysis of current market situation (Brouthers, 2013).

TABLE OF CONTENT
EXECUTIVE SUMMARY..................................................................................................................3
INTRODUCTION................................................................................................................................6
ENVIRONMENTAL AUDIT OF CURRENT MARKET...................................................................7
SWOT Analysis of MTN.................................................................................................................7
INTERNATIONALISATION...............................................................................................................9
Macro analysis for Ukraine .............................................................................................................9
Micro analysis of Ukraine................................................................................................................9
Macro Analysis of China.................................................................................................................9
Micro analysis of China.................................................................................................................10
Internationalisation motives...........................................................................................................10
Mode of Entry................................................................................................................................11
Evaluation of National Competitive Advantage............................................................................13
CONCLUSION .................................................................................................................................13
RECOMMENDATIONS ...................................................................................................................14
REFERENCES...................................................................................................................................16
.......................................................................................................................................................18

INTRODUCTION
Business organisations function towards certain goals and objectives which are defined by
the leaders. Once these objectives are accomplished, further expansions are planned to increase the
current profit margins and customer share. These business expansions can be in both domestic and
international markets depending on the resource capacity and competencies of the company. MTN
Group is leading telecommunications company based in South Africa. The current functioning of
the organisation is guided with strong ethical functioning background and strategic approaches
towards sustainability (Cavusgil, and et. al., 2014).
In this report, the basic concept of internationalisation and the perception of business
organisations towards expansion in foreign countries has been explained. A summarised form of
environmental audit has been depicted in this report. SWOT analysis tool is used for understanding
the internal environment functioning of MTN Group. There are two types of environments
surrounding a business organisation i.e. external and internal. For understanding the internal
conditions of the company SWOT analysis is performed and external factors surrounding MTN
Group are evaluated using PESTLE tool. It includes the political, economical, social, technological,
legal and environmental factors that influence the business functioning of a company.
The audit that has been carried out in this report aims to analyse the factors of business
expansion in two target markets of telecommunications industry which include China and Ukraine.
The potential customers and market structure of both the countries is quite diverse and entirely
different from that of the domestic marketsb (Clarke, Tamaschke, and Liesch, 2013). This report
will help in understanding the suitability and feasibility of operations in both the markets and
certain conclusions can be achieved through this analytical approaches. The national competitive
advantage and the motive of internationalisation for MTN Group has been described in this
assessment so that main purpose behind entire functioning is clearly communicated. Lastly, the
modes of entry for the company in foreign markets have also been evaluated in this report. This will
help in making effective judgements regarding what options are suitable and feasible (Assessing
and evaluating internationalization strategies of American higher education institutions, 2015).
Certain recommendations have also been provided in this report which can be implemented for
strengthening future strategies.

ENVIRONMENTAL AUDIT OF CURRENT MARKET
The environmental audit is the assessment of identification of various agreements and
management system. Compliance audits includes all the legal agreements made in the operation of
the company. These can be local permissions, regulations, settlements etc. The growth of telecom
industry in telecommunication industry is expected to enhance in 2017 (De Beule, Elia and
Piscitello, 2014). Use of smart phones has become an addiction rather than necessity. Increasing
consumption of mobile phones will continue the growth of this sector as the penetration upto 10
percent is constant from years and is expected to be so in the coming years. The telecom market is
focusing on the effective delivery of the contents to the screens and on improved internet
connections. Internet of things (IOT) Includes systems like phone connectivity to cars, homes,
parkings, cities etc and also introduction of 5G network is trending in telecom companies. On the
other hand mergers and acquisitions with other companies has also boosted the growth like
Motorola and Google etc, Microsoft and Nokia etc. Also increase in consumption of autonomous
vehicles adds to the rise in this sector. A survey shows that these cars are in great demand and many
customers are intending to buy these cars.
SWOT Analysis of MTN
Strengths – A strong position in the market is difficult to obtain and once done then it boosts up the
resource capacities of the company. The cited company has established its name as a big brand in
the market which is a major strength to introduce any new product or selling of existing products.
Brand name retains the belief and trust of the customer in their products. Being first amongst the
telecom company is another aspect which helps it to gain trust in the market (Dunning, 2013). This
company is serving from years ago and was the first one to do so. Another strength is that the
company has efficiently done advertisement part and good advertisements helps a lot in selling the
product as the message that is conveyed by the company is proper and reached to every audience.
This company has an efficient brand visibility. Moreover, the company is good in terms of
understanding of customer's business and also supports all the sales activities. Another strength is its
sales team and its service provided for the customers.
Weakness - Usage of phones is increasing worldwide and its advantage could be taken by spreading
the business to the international markets. Globalisation has given major profits to many of the
industries and has opened up many choices for the customers too. The major weakness of the cited
company is that it has not yet extended its roots in the global market. International market shares are
limited to several countries (Earnhart and Leonard, 2013). The limited global market consumption
of the company needs to be taken into considerations. Another weakness of the company is the

rivalry of price of products in the market. Many other companies are offering more features at a
considerable price to the customers, the result of which is the fluctuations of the customers. The
company is still in the process to use fibre optics cables. Installation of these kinds of cables eases
the communication process. Other companies have already taken it into use which is a major
drawback. Also, transportation is another weakness of the cited firm.
Opportunities – Global market is rising year by year in the telecom sector and also internet and
digitalisation has given a tonic boon to the telecom bodies. Increasing consumption of phones has
opened up many opportunities for telecom companies. The cited company can make use of these
opportunities by keeping a good foresight of the future demands. Being upto date with activities of
market and with the actions and strategies of competitors will help in gaining the knowledge and
responding to the needs of the customers accordingly(Fernández-Méndez, Garcia-Canal and
Guillen, 2016). Company has undertaken many acts to reach to the unserved areas and provide the
best possible service to them also. Expansion of its business in the international markets and
exceeding its limits is another opportunity for the company and it is on the route of expansion. Free
mid night calling is another feature of the company as it allows the loved ones to talk without any
fiscal boundation. More and more customers are attracting to this feature and are aiding in the
growth and development of the company. Companies vision to provide better and good quality
voice and internet service is expected to serve as great aspect for enhancement of the company's
share.
Threats – Increasing number of rivalries has made it difficult for the quoted company to hold to its
brand position. Many other companies are in the race of providing more featured service with
reduce prices. They are introducing new schemes like offers on internet and voice calling, reduced
call rates, special tariffs etc. All such factors are challenging the market shares and customers of the
quoted company. Other companies such as Vodafone, Three mobile, Telenor etc are the major
competitors of the company (Ferreira, Pinto and Serra, 2014). Also, expansions in too many
markets can deviate the focus from the objectives of the cited company and deviation in focus can
lead to disadvantages. Moreover, porting of mobile numbers and hence the telecom company has
become easier and customers more frequently fluctuates from the existing company. Such kind of
practices may result in reduction in growth of company. The issue of destruction of the cables and
structure is another threat for the company as the organisation has to invest a lot of money for the
rectification of the materials and equipments in order to ensure continue and quality service.

INTERNATIONALISATION
Macro analysis for Ukraine
Political Factor- Internal and external inverters have noticed a positive change in the competitions.
Many laws for the employee have been proposed but the Labour Laws are still the same and no
norms of WTO have been changed (Genç, 2016). But Ukraine has recovered from the recession
after 2008.
Economic factors-The inflation analysis shows that highest inflation was recorded in 2008 and after
that it has continuously decreased which indicated that economy of the country is getting better
after the recession of 2008 . After, it joined the world bank it has taken loans more than $5 billion.
Social Factors-There are two big groups Ukrainians(77.8%) and Russians(17.3%). There is a
decline in the age group of 0-14 years and more population is covered by age group of 65 years and
is expected to increase by 22% by 2030. IT has more educated population and less workforce cost.
Technological Factors- The government here is not contributing much to enhance existing
technology. Orange revolution has lead to an increase in interaction between legislatives,
businessman and customers (Gonzalez-Perez, Vasquez-Melo and Rios-Molina, 2015). The
collaboration has opened up many opportunities. A programme for enhancement of information and
communication has been developed by the Ministry Of Transport and Communications
Micro analysis of Ukraine
Ukraine has well organised structures and the labours are hard working and skilled. The
companies get low loans and it has a large coverage in the market. The disadvantage is that there are
no reliable contacts of business within Ukraine. There is much possibility to increase revenue
slowly. The major threat is the state of war and there may be economic drop because of unsettled
issues. But most of the feedback from the customers and from the market is positive. There is less
competition therefore have higher opportunities of expansions. Orange revolution has given a boon
to the telecom sector and more profitability is observed after that. New companies can find larger
opportunities in the market of Ukraine because the market is open and a major recovery after 2008
has been observed. In 2008 highest inflation was observed and inflation has constantly decreased
and is expected to reduce further in the coming years. Although, literacy rate is low but analysis
shows that telecom industries are successful in the expansion of their business.
Macro Analysis of China
Political Factors - The political force in China is one of the most unsettled force. The e-commerece

structure is still in initial stage. There are many digital issues, privacy is not much supported,
updation of electronic equipments is not yet done, consumers rights are still not regulated.
Economic Factors – The growth rate of GDP has seen a significant rise over the years. This rise has
lead to an increase in purchasing power of customers. The bank of China has increased their
interests rates. Also, commercial banks reserves are increased very much. More limits are to be
imposed on customers on home purchases which affects the e-business and the telecom companies.
Social Factors – Frequent fluctuations in choices and trends are major social problems. Lifestyles,
education etc are also affecting the companies. Literacy rate of China is high and more people have
access to internet. E-business is growing fast and is expected to grow more in the future years.
Technological Factors – The major problem in China is it has weak and insecure online payment
system. The credit card penetration is very low. Chinese customers face larger uncertainty New
technology and manufacturing is also enhancing in the market and there is more competition in
Chinese market.
Micro analysis of China
The market of china has the largest wireless Wifi networks over 30,000 located hotspots.
China offers good services and good increase on returns. It stands third in telecom sector (Huang
and Li , 2013). They adopt more activities like awards and rewards. But the market share in this
industry is not growing rapidly. It is successful in providing strong subscriptions. It has over 45
million subscribers. The geographical area is limited and restricted. Increase in 3G technology
demands has created new opportunities for telecom companies (Yoder, Visich and Rustambekov,
2016). The competition in China is also rising with its market growth. More and more companies
are in the race of providing better and cheaper services. Also, Chinese market undergoes through
rapid changes in trends and technology which requires more amount of investment and also the
regulations keeps varying which are affecting the companies to a great extent. Licensing of many
companies is also a major threat.
Internationalisation motives
In the modern contemporary world many companies are seeking to expand their business in
international markets. They intend to expand their business in abroad. Most of the companies start
with a small vision but with their business growth they tend to cross the boundaries in order to serve
large number of audience and increase their profits (Karagiannakis and et.al., 2014).
Internationalisation not only benefits the companies as well as the customers as they have wide
range of options and can choose the best for themselves. There are two main motives for

internationalisation of the cited company: Market seekers and strategic resource seekers. Market
seekers are the ones who focuses on the demand and profit. The company has gone for
internationalisation in order to gain advantage of the market demand and increase profit. Another
motive is to seek strategic resource. The company aims to benefit from the other competitors as
they are fewer competitors in Ukraine (Ying, Ping and Yang, 2016).
Mode of Entry
These are the following mode of entry to the company can chosen by the MTN Group for
expanding business
 Exporting
 Licensing
 Franchising
 Exporting – it allow to the small business to hold their current model and trade line goods in
the foreign market benefit of the export is that it reduce the low implementation cost and
low level of risk to the owner of the company. in the export this is the mode of export the
foreign country - transportation cost,government tariff market demand and preferences of
the customer ,repackaging ,infrastructure of market. this is the feasible and suitable option
for the china the MTN group can adopt the mode of entry (Langbein, 2015).
Advantages-
 it required the limited finance for the international business.
 It also motivate the country for proactive and reactive both the way.
 Maximizing the scale and existing facility for the users.
 Licensing – it is the way to enter into the international market establishing the presence in
the market. it is the process where the company granted the permission in the written format
for established the company. It does require the monitoring training and renew le in the
timely. every country have a different rules for making the license (Laufs and Schwens,
2014).

Advantages-
 It reduce the risk related to the financial to the licensor.
 It get the benefits with the less investment on research and development.
 It also reduce the risk which related to product failure.
 Franchising – It is the independent organisation is known as the franchisees it operate the
business the name of another entity .it is the written agreement between the franchisee and
franchisor. the franchisor pay the fees to the franchisor. the franchisor provide the services to
the franchisees like -trade mark ,oration system of the product,continued support to the
advertisement of the product,training and resolution of the training of product which
existing in the market.
Advantages-
 No experience require and training require for receiving the franchise.
 The market share are in the market they have not need for research and need of the market
(Maftei, constantinescu and Cojocea, 2013).
 The franchisee also comparing the big business for generating profitable in the market.
 The relationship of the stakeholders are their not require for the suppliers identity in the
market.
 Feasibility
feasibility refer to the analysis and evaluation of the project market trend and government
regulation cost will be profitable to the expanding the business business (Wild, Wild and Han,
2014). it create the minimizing the risk and increasing value of portfolio.
 It prevent the help to identifying the risk and opportunity in future market trend in the china
 It give the information related to primary and secondary market data and also understand the
regulatory environment and expanding the business (Mudambi, Piscitello and Rabbiosi,
2014).

 Suitability- it describe the requirement to determined the investment strategy are
appropriate or suitable for the given project of the investors this is related to the investor
goal and financial situation for the business.
Evaluation of National Competitive Advantage
In order to establish in new market, there are different type of strategies that can be
implemented in order to attain competitive advantages. There are many companies similar to MTN
telecom that provide their customers with products and services. In order to be competitive in
market of China and Ukraine, below given are the few of the strategies that will be implemented to
attain competitive advantage:
Low price: Price can be determined as an effective factor that highly affects the buying
behaviour of customers (Norton, 2014). In this context, the services delivered by MTN telecom at
China and Ukraine will be at low price when compared with other competitors. This will be helpful
enough to attract customers and they will make use of the services that are delivered by cited firm in
order to get benefits of lower cost.
Marketing strategy: This can be determined as the strategy, that enables to provide
information to customers related with the products and services that cited firm provides. With the
help of marketing tools like television, newspaper, radio, social media, etc. MTN telecom will
provide information about the product and services and this will help to make customers informed
and this will also raise the sales and profitability (Osemene, Kasum and Yahaya, 2016).
Skilful employees: Workers can be determined as the main source for develop business. They
are the one who have direct interaction with customers. They are the one who present the products
and services delivered by the firm. There will be strict policies that will be applied for recruitment
and section so that skilful and capable workers are hired. This will be helpful enough to present the
services to customers (Vida, 2015). This way strong customers base will be developed and desired
goals can be achieved. Further, this is also an effective way through which competitive advantage is
attained.
Porter's diamond model distinguishes four of its vital determinants as referred below to
evaluate the national competitive advantage:
11 Factor condition – This involves skilled labour, production aspects, infrastructures etc are in
purpose for competition in different industries. It can be grouped into Human resources
which includes cost of workers, qualification of workers etc. or material resources which
include natural resources, agriculture etc. or knowledge, resources etc. Every country have