Strategic Analysis of Dialog Axiata: A Management Report

This report provides a comprehensive strategic management analysis of Dialog Axiata, a prominent telecommunications provider in Sri Lanka. It begins with an executive summary and table of contents, followed by an in-depth examination of the company's background, including its founding, market share, and revenue. The report then delves into an analysis of the external environment using PESTLE and Porter's Five Forces frameworks to assess political, economic, social, technological, legal, and environmental factors, as well as industry competitiveness. Further, the report evaluates Dialog Axiata's strategic positioning through a SWOT analysis, highlighting its strengths, weaknesses, opportunities, and threats, and identifies its competitive advantages. The report also outlines the company's objectives for the next five years, framed using the SMART criteria. Finally, the report explores strategic directions using the Ansoff Matrix to identify potential growth strategies, with a focus on diversification as a key approach for future success. References are included to support the analysis.

Running Head: MANAGEMENT 0
STRATEGIC MANAGEMENT

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Executive Summary
This report outlines strategic management practices and positioning of Dialog Axiata, one of
the prominent telecommunication provider of Sri Lanka founded in 1993. Various strategic
management frameworks and models are being used to analyse company internal and
external environment, strategic positioning and strategic directions. It was found that there
are various complexities in the company external analysis and the industry environment is
also quite challenging. It requires Dialog Axiata to come up with innovative plans and long
term objectives and they should be SMART (Specific, measurable, achievable, relevant and
time-based).

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Table of Contents
Company background and environment Analysis.....................................................................3
Strategic Positioning..................................................................................................................5
Company objective within the next five years...........................................................................7
Strategic Direction.....................................................................................................................7
References..................................................................................................................................9

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Company background and environment Analysis
Dialog Axiata comes under the Sir Lanka telecommunication provider founded as MTN
Networks Pvt Ltd in 1993 and presently has 80% market share in the region (dialog.lk, 2018).
In 2018, the revenue of Dialog Axiata stands out to LKR84. 5 billion, increase with 9% in
comparison of previous year (commsupdate.com, 2019). Dialog Global, the global arm of
Dialog Axiata offers international services with voice and roaming services crossways an
international footprint including of more than 200 nations. The company has successfully
established a unique service portfolio over time comprising Dialog Television, Dialog
Mobile, Dialog Broadband Networks, Dialog International and so forth. One thing that is
unique about Dialog Axiata is their innovation such as South Asia’s First Pilot Mobile 5G
Service Powered up by Dialog Axiata at the end of 2018 (dialog.lk, 2019).
PESTLE Analysis
In relation with political factors, presently the government in Sri Lanka is stable, however,
there are too many influences in the company due to its structure of being a public company.
There is always risk of changes in the regulatory environment which stops the company for
innovation. Considering economic factors, the level of inflation is presently stable in the
country however, cost living is high and it may stimulate people to reduce their
communication cost. In social factors, Sri Lanka is a country who follows and respects
various traditions and religions (Schonthal, 2014) and therefore, it will be challenging for the
company to make people understand the benefit of innovative technology as there is chance
of resistance. Global technology changes are faster in Sri Lanka such as 5G technology
already been initiated at the end of the year 2018 and it will keep up the company and country
name. However, Sri Lanka government spending research is low and this may be considered
as a disadvantage to both country and company (dailynews.lk, 2015). In terms of legal
factors, government tax system is complex and high in considering telecommunication sector
as Mobile-specific consumer taxation constitutes 51% of the total tax payments made by the
mobile sector (gsma.com, 2018). Ultimately, Dialog needs to ensure that best environmental
practices are followed while contributing to energy management and other provisions

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PORTER Five Forces Analysis
The company external and industry environment is highly competitive and complex in nature
and requires Dialog Axiata to come up with the customer centric strategy bounded by rapid
innovation practices. The Pestle analysis looks into greater Uncontrollable environment and
insight about the industry in which Dialog is practising. On the other hand, the five forces of
Dialog telecommunication industry states about attractiveness of the industry as well as long
–run industry profitability.
Though, Dialog Axiata performs well in the marketplace currently, with the technology
improvements of rivals and due to various key factors, the company requires to undertake
various practices while ensuring its sustainability for a longer period of time.
Rivalry is moderate as
Dialog have attained 80%
market share in the region
offering quality service
with wider portfolio
following innovation too
such as 5G technology
initiatives.
Treat of new entrants is low Dialog Axiata Plc is one of
leading organization in Sri Lankan telecommunication
industry in terms of buyer base and revenue model.
Threat of substitute products is moderate. Buyers may
shift to online calling services provided by mobile
applications such as Viber.
Buyer’s power is
high as due to
presence of
numbers of
competitors such
as Lanka Bell, Sri
Lanka Telecom,
Airtel, Hutch and
also online service
providers.
Supplier’s power
is moderate as for
network
connectivity back
haul is critical and
Dialog telecom
has to depend on
local providers.

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Strategic Positioning
Dialog Axiata as the telecommunication leader in the Sri Lankan telecommunication sector
follows differentiation strategy to be competitive in the industry.
SWOT Analysis
Strengths -
The first strength of Dialog Axiata is their customer base where the company is serving a
customer base of more than 9.5 million Sri Lankans considering its great speed mobile
broadband and telephony services (businesstoday.lk, 2018). It gives a competitive advantage
to the company in terms of brand and product reach as well as achieving economy of scale.
The company also develop strong public relationship since 1995 and this has contributed
Dialog to establish its brand name all over the country and Dialog was also the first digital
High Price
Low Quality High Quality
Low Price
Airtel
Hutch
Dialog

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channel in South Asia. Technical innovation is another strength of the company such as
Dialog 5G services (South Asia’s First Pilot Mobile 5G Service) (dialog.lk, 2019).
Weakness –
In relation with weakness, the company have a high price on IDD and roaming packages in
comparison of its competitors including Hutch and Airtel. Unlike Airtel, the company has
weak packages for professionals and corporates and even have low credit margin for business
packages. With increasing digital and online network, there is also a weak consumer demand
characterised the contemporary and challenging environment.
Opportunities -
Dialog Axiata can penetrate more into internet segment as it is still low in Sri Lanka. In 2017,
it was projected that nearly 34.11 % of the population in Sri Lanka had access to the internet
(statista.com, 2019). In Sri Lanka, there is also rapid growth of the telecommunication,
computer and information services within the services sector while delivering steady growth
in 2018. Smartphone penetration is increasing and Dialog can introduce new plans with
smartphone under Vodafone UK as the authorised dealer. In the end, Dialog also has an
opportunity with diversification of business to target other market segments.
Threats –
With digitalisation, rapid innovation of online applications and constant change in
technology, Dialog business sustainability has been threatened. In addition, the company is
facing tough competition from the competitors including Airtel and Hutch resulting in
decreasing market share year by year. In comparison with past years, there is also a low usage
of fixed telephone lines and this considerably influence various plans and schemes of the
company in the particular regulatory environment.
Competitive Advantage
This study aims at identifying the competitive strategy for the company, the provider of
telephony services which is the core business of Dialog Telecom PLC. Dialog Axiata
competitive advantage against the competitors lies in company competitive and innovative
practices. Dialog Axiata prides themselves on being a pioneering corporation and has attained

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many accomplishments comprising as the first operator to provide international roaming in
Sri Lanka and paramount to launch commercial set-ups of 3G in South Asia. Some of the
company other big innovations include Ideamart, South Asia’s First Pilot Mobile 5G Service
Powered up by Dialog Axiata (dialog.lk, 2019) and the Digital Innovation Fund to invest in
start-ups such as InsureMe, MyDoctor.IK and Roar.
Company objective within the next five years
Below are mentioned three to four qualitative and quantitative objectives need to be met by
the Dialog Axiata within next five year time and are SMART. SMART positions for Specific,
measurable, achievable, relevant and time-based objectives, and all these criteria help
business for measuring progress and increases the chances for achieving of goals (Giol,
2018).
 To offer the existing and new services of the company to their customers at
competitive and reasonable rates while increasing the market penetration by 8% by
the end of 2020.
 To realise new customers, hold the current ones, present new services and advanced
technologies and endure to grow the brand by 10% over the next five years.
 To continue to develop products and services depends on market trends and customer
needs and offer much more value added services to the users with their increase in
demand.
Strategic Direction
Dialog Axiata requires to take on strategies such as to expand existing activities, investing
more in research and development, targeting different segments of the market, introducing
new product or service line and all these practices will ensure that the corporation is
practising in the right way. To better identify the external growth strategy in terms of future
strategic direction, Ansoff Matrix is being used. It is one of the effective tools to map out
organisation options and to use as starting point to associate growth strategies built on criteria
including strategic significance, vagueness and speed (Hussain et al, 2013). Furthermore, it

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helps marketers devise strategies for future growth. Below is the diagram for the Ansoff
Matrix divided into four quadrants i.e. market development, product development,
diversification and market penetration.
The best external growth strategy for Dialog Axiata can be the diversification in terms of
future strategic direction. Bowen, Baker and Powell (2015) defined diversification as
developing new products, exploring new markets and practicing new risks to hedge the bets
effectively while extending the product lines and operate in several different markets. To
ensure its mark-up at mature stage of business life cycle, it is important for the company to
bring diversification into their product line including new product and service selection as
well as market segments. Taking an example of merger of Telenor and Dialog Axiata, there
will be significant diversification and both the companies will be having an opportunity to tap
into new market with achieving greater economy of scale. It will also help them to understand
Product Development
South Asia’s First Pilot Mobile 5G Service
Powered up by Dialog Axiata. The company can
also introduce mobile TV that showing foreign
content to Sri Lanka population.
Market Penetration
Dialog Axiata try to achieve increased market
share through aggressive advertising and
raising budget in comparison of 2018 year i.e.
12,314,871 (Sir Lanka Rupees thousands)
Market Development
Dialog Axiata should expand their business to
overseas in order to increase the revenue
generation. Example, Dialog and VIZZ Mobile
collaborate to provide best rates from UK to SL
in 2011.
Diversification
Telenor and Dialog Axiata’s parent in talks to
unite Asian businesses with a goal to form a
well-diversified pan-Asian telecom and
infrastructure organisation with considerable
synergy potential.
Products
Existing New
INCREASING RISK
INCREASING RISK
Existing
Market
New

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consumer behaviour in relation with the newer market segment and therefore, personalize
products and services according to that.

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References
businesstoday.lk. (2018) Dialog Axiata [ONLINE] Available from:
https://businesstoday.lk/article.php?article=10342 [Accessed 16/12/2019].
Bowen, H.P., Baker, H.K. and Powell, G.E. (2015) Globalization and diversification strategy:
A managerial perspective. Scandinavian Journal of Management, 31(1), pp.25-39.
commsupdate.com. (2019) Dialog Axiata FY18 net income hits LKR7.5bn; CAPEX tops
LKR30bn [ONLINE] Available from:
https://www.commsupdate.com/articles/2019/02/19/dialog-axiata-fy18-net-income-hits-lkr7-
5bn-capex-tops-lkr30bn/ [Accessed 16/12/2019].
dailynews.lk. (2015) Lanka’s spending on R&D lowest in the region [ONLINE] Available
from: https://www.couriermail.com.au/news/queensland/ekka-fireworks-are-better-than-
riverfire/news-story/b62881b50366c272d140eaa98ea8d022 [Accessed 16/12/2019].
dialog.lk. (2018) Annual Report 2018 [ONLINE] Available from:
https://www.dialog.lk/dialogdocroot/content/pdf/annual_reports/2018-annual-report.pdf
[Accessed 16/12/2019].
dialog.lk. (2019) South Asia’s First Pilot Mobile 5G Service Powered up by Dialog Axiata
[ONLINE] Available from: https://www.dialog.lk/south-asias-first-pilot-mobile-5g-service-
powered-up-by-dialog-axiata/ [Accessed 16/12/2019].
Giol, E. (2018) SMART goals in artistic management. Bulletin of the Transilvania University
of Braşov, Series VIII: Performing Arts, 11(2), pp.103-108.
gsma.com. (2018) Reforming mobile sector taxation in Sri Lanka [ONLINE] Available from:
https://www.gsma.com/publicpolicy/wp
content/uploads/2018/07/GSMA_Taxation_Report_Sri_Lanka.pdf [Accessed 16/12/2019].
Hussain, S., Khattak, J., Rizwan, A. and Latif, M.A. (2013) ANSOFF matrix, environment,
and growth-an interactive triangle. Management and Administrative Sciences Review, 2(2),
pp.196-206.

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Schonthal, B. (2014) Constitutionalizing religion: The pyrrhic success of religious rights in
postcolonial Sri Lanka. Journal of Law and Religion, 29(3), pp.470-490.
statista.com. (2019) Internet penetration rate in Sri Lanka from 2005 to 2017 [ONLINE]
Available from: https://www.statista.com/statistics/765516/internet-penetration-rate-sri-
lanka/ [Accessed 16/12/2019].