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MAPA INSTITUTE OF TECHNOLOGY

School of Industrial Engineering & Engineering Management

A Strategic Management Paper


For

Tata Communications

Submitted by:

Rabe, Geraine Anne Zarene S.


As partial fulfilment of the requirements of
EMG166 A1
Strategic Planning and Management
2nd Quarter SY 2014 - 2015

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EXECUTIVE SUMMARY

Tata Communications is currently a Market Challenger in the telecommunication industry


who owns and operates data centres on three continents and occupies approximately 1 million
square feet of space. The companys hosting capabilities integrate directly into its global IP
network to offer maximum traffic capacity into and out of facilities. Today, Tata Communications
is the market-leading provider of Telepresence services. The service includes public
Telepresence rooms located in hotels and business centres in all major cities, a growing private
room customer base and hosted and managed services. On top of this robust backbone, sits
Tata Communications voice and data businesses, serving service providers, multi-national
corporations and large & medium-sized enterprises globally. Tata Communications currently
carry 40 billion minutes of international wholesale voice traffic annually and 1,600 Petabits of
Internet traffic, with offerings ranging from very high speed connections and global MPLS virtual
private networks to managed Telepresence services and media and entertainment solutions.
Tata Communications is currently the backbone of PLDT for the outbound and inbound calls.
There are 3 major competitors of Tata Communications, the 1st on the list and has the
biggest market share is the AT&T, the other competitors were Telstra and Hutchison Global
Communications. The different frameworks used were EFE, IFE, I-E, CPM, 7S, 8-SIT, and
Balanced Scorecard. Based on the CPM, Tata Communications is leading in the market
compared to Telstra and Hutchison Global Communications as it got a total score of 3.55. EFE
Matrix is based on the evaluation of economic analysis of the external factors affecting the
business in getting the potential opportunities and minimizing threats for Tata Communications.
The EFE Matrix of Tata Communications is based on the evaluation and analysis of the
opportunities and threats or the external factors affecting the business The result of the EFE
Matrix is 2.69 which is above average and means that the company is doing well with the
factors and the effects were positive. International Market has the highest rate because it is the
most important factor that companies are considering. The highest rating of the threat external
factors is the entry of new rivals because as time passes by, many companies enter into the
telecommunication industry.
The IFE Matrix analysis identified the internal strengths and weaknesses of Tata
Communications. The highest weight for the internal strength is the Ethernet Provider Backbone
Bridge. In the Philippines, it is the reason why International calls can be made. It is new to the
Tata Communications and has shown great contribution in the revenue of the company.
Meanwhile, the factor of subscribers loyalty and high competition in the market are the biggest
due to tight competition, head-to-head. Especially at PLDT because there are a lot of
telecommunications provider under it. At the same time, the number of subscribers from
different corporations or businesses in the Philippines that they cater. The total weighted score
is 2.64, which is above average.
The researcher recommends Market Penetration as a result from the QSPM Matrix.
Based on every single strategy and matrix that was used to identify what type of strategy, it all
boils down to Market penetration. They should establish a strong relationship with its suppliers
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and also with the customer offering them a high quality of service. The use of corporate
communications strategy is also essential in improving its internal functional strategies in
implementing the new strategy.
Improve Shareholder value

Customer

Internal Business
Processes

Growth in voice
revenue and data
revenue

Innovations

Strong Market
Penetration

Customer Intimacy

Product Development

Customer Loyalty

Customer Relation
Management

Improve Marketing

Internal Business
Processes

Learning and
Growth

High Employee
Retention

High Knowledge
Management

Increase market
Share

High Quality Services

Provide trainings for


employees

Technology Innovation

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TABLE OF CONTENTS

LIST OF TABLES AND FIGURES

I. INTRODUCTION

II. EXTERNAL ANALYSIS


A. Industry Definition and Overview

11

B. Industry Analysis

14

1. Driving Forces

14

2. Macro-Environmental Analysis

14

3. Analysis of Task Environment

17

4. Threats and Opportunities

23

C. Market Analysis

24

1. Market Size/Major Players/ Strategic Group Map

25

2. Competitor Analysis

26

3. Possible Strategic Moves of Competitors

28

4. Key Success Factors

28

D. Assessment of Industry Attractiveness

29

III. INTERNAL ANALYSIS


A. Nature of Business

30

B. Value Chain Analysis

32

C. Financial Analysis

33

D. Strengths and Weaknesses

35

E. Competitive Strength Assessment

35

F. Values, Ethics, and Corporate Social Responsibility

36

G. Evaluation of Present Corporate Strategy/ Business Strategy

38

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1. Existing Company Vision and Mission

38

2. Generic Strategy Being Pursued

38

3. Source of Competitive Advantage

39

IV. STRATEGY FORMULATION


A. Strategic Choices

47

B. Evaluation and Prioritization

49

C. Proposed Vision and Mission

50

D. Proposed Corporate Strategy/ Business Strategy

50

E. Goals and Objectives

51

F. Strategy Map

52

V. FUNCTIONAL AREA STRATEGIES

53

VI. IMPLEMENTAION

56

A. Analysis of Companys Capabilities to Implement Strategy

56

B. Managing Internal Organization for Strategy Execution

59

C. Balanced Scorecard

61

VII. FINANCIAL PROJECTIONS

64

A. Detailed Assumptions

64

B. Financial Tables

66

C. Financial Analysis

68

VIII. APPENDICES and REFERENCES

70

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List of Tables and Figures


List of Tables
Table 1- Mobile Phone Subscriptions

12

Table 2- Market Share

17

Table 3- External Factors Evaluation Matrix

23

Table 4- Major Players

25

Table 5- Financial Ratios

33

Table 6- Ratio Comparisons

34

Table 7- Internal Factors Evaluation Matrix

34

Table 8: Competitive Profile Matrix

35

Table 9: TOWS Matrix

41

Table 10: Space Matrix

42

Table 11: Boston Consulting Group Matrix

44

Table 12: Internal-External Matrix

46

Table 13: Quantitative Strategic Planning Matrix

48

Table 14:
List of Figures
Figure 1- Proportion of households with computer

13

Figure 2- Porters 5-Forces of competition

17

Figure 3- Strategic Group Mapping

25

Figure 4- Tata Business Excellence Model

31

Figure 5- Primary Value Chain

32

Figure 6- Support Activities Value Chain

32

Figure 7: Space Matrix Quadrants

43

Figure 8- Overall Revenue Mix

45

Figure 10- Grand Strategy Matrix

46

Figure 11: Strategy Group Map

52

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Figure 12: Different Levels of Strategy

53

Figure 13: The 7-S Framework

56

Figure 14: The 8-SIT Framework

59

Figure 15: The Balanced Scorecard

61

Figure 16: Corporate Communication Strategy

63

Figure 17: Telco Carrier Challenges in Various Market Stages

63

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I. Introduction

Tata Communications, part of the $67.4 billion Tata Group, is a leading global
communications provider that has undergone a critical transformation over the past
three years to globalize its innovative service offering.
The Tata Communications brand, launched in February 2008, encompasses VSNL,
VSNL International, Teleglobe, CIPRIS and Tata Indicom Enterprise Business Unit into
one umbrella brand.
As one of the leading Indian conglomerates, the Tata Group has a long and
highly respected history of achievement and contribution to the many markets,
industries and communities it serves.
Tata Communications acts as the flagship global telecommunications and
technology solution leader, leveraging its track record of successes, global investments
and emerging market strengths to continue to forge new global ground and create
additional successful ventures as part of the Tata Group success story. In 2003, Tata
Communications (then VSNL) decided to pursue international expansion and in 2003
formed a wholly-owned subsidiary, VSNL America. The company built its first
international cable between India and Singapore that year. Part of VSNLs global
expansion strategy was to grow through acquisitions:
In 2004, VSNL acquired the narrowband and broadband businesses of Dishnet's ISP
division
In 2005, it acquired Tyco Global Network (US) submarine cable network, and in 2006
acquired Teleglobe (Canada) an international mobile, data and voice network company,
and also acquired the Indian ISP, Direct Internet Ltd
In 2007, the VSNL's name was changed to Tata Communications Limited (Tata
Communications) Subsequent global strategic investments were made in operators in
South Africa (Neotel), Sri Lanka (Tata Communications Lanka Limited), and Nepal
(United Telecom).

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In 2008, Tata Communications launched the first truly global CDN service on a
state-of-the-art, single ASN global IP network throughout Europe, Asia, North America
and India. Tata Communications' next-generation CDN service, powered by BitGravity's
technology, delivers the highest performance and reliability in the industry while
providing immediate access to content, including High-Definition Video, without delay or
jitter, and the highest levels of throughput for end users. Following this, Tata
Communications acquired BitGravity in February 2011 as part of its long term media
and entertainment strategy.
Today, Tata Communications is the market-leading provider of Telepresence
services. The service includes public Telepresence rooms located in hotels and
business centres in all major cities, a growing private room customer base and hosted
and managed services. Each public and private Telepresence room is then linked to a
wider Tata Communications Telepresence network via its Global Meeting Exchange
(GMX). The GMX enables meetings to take place between any private or public room
on its network; as well as rooms on the networks of Tata Communications IntercarrierExchange partners, BT and Telefonica, and the National LambdaRail network, which
links leading US universities.
The company is constructing a new TGN Eurasia System linking Mumbai directly
to Paris, London and Madrid via Egypt. When combined with Tata Communications
strategic significant capacity ownership on other cable systems and its privately owned
TGN Atlantic and TGN India Asia systems, the TGN Eurasia System will enable the
company to offer seamless and diverse connectivity between India, South East Asia,
South Africa, Western Europe and the USA.
Tata Communications owns and operates data centres on three continents and
occupies approximately 1 million square feet of space. The companys hosting
capabilities integrate directly into its global IP network to offer maximum traffic capacity
into and out of facilities. Most recently, in 2010, Tata Communications added two new
state-of-the-art data centre facilities located in Singapore and Pune to its global
portfolio. These global data centres are centrally managed to provide consistent service
delivery allowing customers to scale seamlessly as their needs develop.
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Also in 2010, Tata Communications launched its next-generation Ethernet network in


24 nodes around the world, marking the industrys first use of 802.1ah Provider
Backbone Bridging (PBB) on a global scale.

This paper would want to identify both the internal and external analysis of Tata
Communications and to identify what strategy could be implemented in order to improve
the current market position they have. At the end of this paper, the researcher is
expecting to have conclusion of the problem or issues the company is encountering and
recommend a solution or strategies the company can use in order to gain a competitive
advantage against rivals.
The researcher recommends market penetration as a result from the QSPM
Matrix. Based on the QSPM, Tata Communications should improve its services that it
offers to customers.

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II. EXTERNAL ANALYSIS

A. Industry Definition & Overview


Modern telecommunications and information technology infrastructure are
vital to the economic growth of the Philippines, serving multifarious purposes in daily life
and enabling the rapid growth of the BPO sector, as well as enhancing the economys
overall efficiency. Land lines, mobile telephones, Internet, and various cable and
satellite technologies that carry voice and data connect Filipinos and foreigners alike,
within the archipelago and around the globe. In recent years, Filipinos including
presidential candidates have even become heavy users of social media
communications.
In a country where change comes slowly, reform in telecommunications during
the last 15 years has occurred very quickly. In only a decade, Philippine
telecommunications advanced from a backward, monopolistic, high-cost, and inefficient
public utility to a sector with considerable competition, enabling a majority of the
population to communicate at home and abroad at much reduced cost.
Almost 18 years ago former Singapore Prime Minister Lee Kuan Yew,
addressing the annual PCCI business conference in Manila, commented in the
Philippines, 98% of the population is waiting for a telephone, while the rest are waiting
for a dialing tone. More than a decade later, a majority of Filipinos have both.
In one of the most consequential reforms initiated by former President Ramos,
the control of Philippine Long Distance Telephone Company (PLDT) of Philippine
domestic and international telecommunications was broken in 1993 by two executive
orders, one mandating interconnection and the other requiring phone companies (in
addition to PLDT) to install specified numbers of landlines and cellphones in their
assigned areas. The executive orders were followed two years later by Congressional
passage of a telecommunications reform law.

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Today two large and two smaller companies are active in the local
telecommunications market. All four companies provide mobile and landline telephone
service as well as Internet broadband. Each holds a public utility franchise granted by
Congress, as required under the colonial era Public Utilities Act. Their foreign partners
have invested substantial equity in the sector.
In addition to increased competition and consumer choice, another critical factor
in

the countrys improved

telecommunications infrastructure has been

rapid

technological change. Landlines have been overtaken by mobile phones, and postpaid
telephone accounts by prepaid. Today Filipinos have twenty times as many mobile
subscriptions as landlines. The Philippines, called the text message capital of the world,
is the world leader in Short Messaging Service (SMS) with almost one billion daily
messages.
While the country lags in many competitiveness indicators, mobile phone
penetration is not among them. In 2009 the penetration rate per 100 inhabitants of the
Philippines (81) was higher than China (56), India (44), and Indonesia (69), while lower
than Malaysia (110), Singapore (140), Thailand (123), and Vietnam (101) (see Table 1).

Table 1: Mobile phone subscriptions

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Digital fiber connects the Philippines inexpensively to the far corners of the globe,
providing what American columnist Tom Friedman once termed the equivalent of an oil
pipeline moving services of skilled Filipino workers to North American markets. The
newest Voice over Internet Protocol (VoIP) telephone service via computers has
brought the cost of communicating on the Internet almost to zero.
As the cost of accessing the Internet falls, the next new technology for the
Philippines is the high-speed wireless broadband revolution. Although less than 5% of
mobile phones in the Philippines have 3G today, within a few years many millions more
could have cheap Internet access on their cellphones. In Asia, 3G penetration already
exceeds 50% in Australia, Hong Kong, Japan, Korea, and Singapore. One presidential
candidate in 2010 suggested providing Filipino students with mobile digital reading
devices, a visionary yet highly practical proposal.
The benefit for national competitiveness of these changes will be enormous.
Most Filipinos will be able to avail of global SMS and email communications on mobile
devices. They will leap over the relatively low household computer penetration in the
Philippines of 13% (see Figure 1.1).

Figure 1: Proportion of households with computer

The following provides a brief overview of the four major telecommunication companies in the
country. The public sector role in the sector is limited to regulation through
the National
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Telecommunications Commission (NTC).

B. INDUSTRY ANALYSIS

1. DRIVING FORCES
Telecommunication industry changed in the last 50 years. The driving forces are
government regulation, customers, technology and innovation. The government
regulation is to ensure good pricing, fair competition and good service for the customer.
In the Philippines telecommunications industry was once a monopoly of the Philippines
Long Distance Telephone Company (PLDT) overseen by the Philippines government.
The tariff was high and the service was bad. In 1995, the government decided to
privatize the industry and created the Public Telecommunications Policy Act of 1995
(RA 7925) to overcome these issues. The mission is to set up and implement a fair,
flexible, efficient telecommunications regulatory framework that will develop the industry
through a market-driven environment, ensure accessibility of all kinds of services within
limits to all, and balance the interests of all stakeholders.
The other driving forces behind telecommunication industry change are
customers, technology advances and innovation.
Customers needs and behaviors plays very important role in driving the
changes. For example, young generations want to use their mobile devices as
Walkman. The mobile companies provide service to download songs, play movies and
store photos in mobile.
In addition, customers demand better service. Such
requirements forces telecom companies improve their service or they will lose the
customer.
Technology is another reason for telecommunication industry to change. A good
example is IP phone. It is mirage between two technology data and voice. Companies
forced to adapt this change or they will lose their market shares.
The third reason is innovation. New product creates new business and new
customers. The telecommunication industry has to change to adapt new requirements.

2. MACRO-ENVIRONMENTAL ANALYSIS
Demographic Analysis
An increasing number of subscribers would also stimulate the development of its
related industries. An example would be the growing number of mobile phone users,
which results directly on the demand for both hardware and software products.
According to Porters Five Forces theory, the growth of subscriber numbers can be
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related to the strength required to compete with existing competitors. Another potential
benefit that results from the steady growth of number of subscribers in the telecom
industry is that, it gathers crucial customer related information. Operators maintain
databases with personal information and choice, which is collected during the
registration and cancellation processes. This information is valuable for the company
and the industry to understand better their customers behaviors, preferences, and
segmentations, which provides necessary statistics in order to improve the efficiency in
marketing analysis. The changing demographic profile of Philippines has contributed to
the growth of number of subscribers. A large young population, a burgeoning middle
class, with growing disposable incomes, and also urbanization, which is increasing
literacy levels and higher adaptability to technology, characterizes the changed profile.

Economic Analysis
Intense competition has lowered the prices of hardware and services in the
telecom industry. This helped in lowering the entry barrier into the market and thus
made it affordable to a large percentage of the population. At the same time,
competition among multiple operators also reduced tariffs, particularly in the Philippines
telecom industry, which is characterized by intense competition, has witnessed
continuous price wars. The expansion of wireless networks and growth in subscriber
base, both in urban and rural areas has led to a boost in the sale of mobile handsets
across Philippines.

Natural Forces
Foreign telecommunications company heavily rely on fiber optic cable which is
used for long distance telecommunication are laid cables into the sea bed via remotely
operated vehicles (ROVs). Thus, if any natural calamity occurs and these cables got
damaged, this will greatly affect their operations and which becomes unable to those
who needs to conform to the agreed service levels.

Technological Forces
Technology innovation over the last decade has enabled the expansion of
telecom infrastructure from metropolis to rural areas where the majority of Philippines
population is located. Hence, telecommunication services become easily accessible and
cover large portion of the countrys population that eventually resulted in the increase of
subscribers. Today telecommunications is a highly technical industry, which is
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constantly evolving, and inventing technologies to improve the cost, coverage and
quality of communication. A good example is IP phone. It is mirage between two
technology data and voice. Companies forced to adapt this change or they will lose
their market shares.

Political Legal Forces


The Government is set to release a new three pronged telecommunications
policy focusing on competitiveness and viability, the encouragement of mergers and
support of interconnection. This way Government can actively mediate to bring about
conditions that will attract new investors and keep existing ones happy by stepping in to
assure a level playing field and ensuring the condition needed for a competitive market.
Under the regulatory framework, NTC is mandated to set rates and tariffs which are fair
and reasonable and which provide for the economic viability of telecommunications
entities and fair return on their investments considering the prevailing cost of capital in
the domestic and international markets. The industry is currently facing a serious
problem because of failure of the regulatory framework to achieve smooth
interconnection between the incumbent PLDT and the new entrants. Interconnection or
access policy plays a critical role in fostering competition and reducing market
dominance in the telecommunications industry. Opportunities for completion can be
realized only if smooth interconnection among various telecommunications services is
possible. New industry players and smaller firms complained that it was difficult for them
to negotiate favorable interconnection deals with PLDT as, being the incumbent
operator, it has a stronger bargaining position. Some are also complaining that PLDT
has been charging them unreasonably higher interconnection fees. Other complaints
include insufficient interconnection, unequal access settlements or revenue sharing
arrangements, and the use of interconnection as leverage in other commercial
negotiations.

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3. Analysis of the Task Environment using Porters 5-Forces Model of


Competition
Philippines has a total of 6.782 million telephone subscribers, 103 million SIMs in use,
320 internet service providers, and 29.8 million internet users.
Market Structure (2013)
Average revenue per user for big players is around PHP 70Million.
Hutchison has lesser market share because of small consumer market.
Table 2: Market Share
Market leader
Market Challenger
Market Follower

AT&T
TATA, TELSTRA,
HGC, Reliance

Threat of Substitute Products or Services


-Cable TV and satellite operators now compete for buyers

Threat of New Entrants


-Capital Requirements

RIVALRY
A Cut Throat to the voice
products
Large number of vendors
Low product differentiation

Bargaining Power of Suppliers


-Many vendors are available
-Limit on personnel, talented managers and electronics
engineers

Bargaining Power of Buyers


-Cost of product relative to total cost
-low product differentiation
-Size and concentration of buyer relative to products
-Competition between buyers
-Buyers switching cost
-Buyers Information
-Buyers ability to backward integrate

Figure2: Porters 5-Forces Model of Competition

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1. Threat of New Entrants


Level: High

Capital Requirements
Access to finance is a big threat to a capital-intensive telecom industry.
The entrant must cover high fixed cost by having a large number of current
asset. When capital markets such as stock market and bond market are
generous, the threat of new entrants will rise. When there are less financial
opportunities, the entrants become slow in their gaining their market share.

In owning a telecom license here in the Philippine, it can slow down the
corporation because it must comply with all the legal entities. New entrants
should have a number of experienced and dedicated employees, also to
comply with the requirements for approval.

Lastly, there should be a lot of connections and built relationships among


the supplier and clients for profitability.

2. Bargaining Power of Suppliers


Level: Moderate

The suppliers bargaining power is moderate but influences the profitability


of the company. The increase in the bargaining power of the supplier will lead
to a decrease in profit, or increase in the price of the services offered. It
depends on the suppliers they have gotten and the margin they will make in
order to gain profitability.

At first, it might look like telecom equipment suppliers have large


bargaining power over telecom operators. Indeed, without high-tech
broadband switching equipment, fiber-optic cables, and billing software,
telecom operators would not be able to do the job of transmitting voice and
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data from place to place, client to client. But there are actually a number of
large equipment installers and makers around. Due to the large number of
suppliers, not only here in the Philippines but also around the globe, they can
get higher switching costs for larger business customers, especially those that
rely more on customized products and services.

Many vendors are available


Vendors of fiber optic cables, infrastructure, software and the like are so
many here in the Philippines. To win the client, it depends on the best cost.
There are two types of companies in the Philippines, the telecoms who own
towers or infrastructures, and the telecoms who outsource and partner with
the Philippines infrastructure. Just like HGC and PLDT, they have an
agreement and they are partner when it comes to the infrastructure.

Limit on personnel, talented managers and electronics engineers


Many companies lack personnel and talented managers. In this instance,
planning and executing strategies will rely on their employees and managers
based on the performance of their personnel. It is a challenge to the human
resources professional tasked with talent management and recruiting. Many
of the managers here in the Philippines are already hired, and some still lacks
experience. They are required to stay abreast of the latest recruitment
methodologies and processes to deliver the most effective solutions to their
clients.

3. Bargainer Power of Buyers


Level: High

Buyers in Telecom Industry generally land in two categories: Personal and


Enterprise Customers like BPO Companies, IT, Banks, etc. There are ample
number of telecom providers in the market with big service and product mix

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and cheaper prices which gives the buyer a lot of choices to select operators
and thus have a large bargaining level.
The buyers price sensitivity is high when considering the cost of product
relative to the total cost. The relative bargaining power also is high because of
the size and concentration of buyers relative to the services offered. There is
a low switching cost, high level of buyer information and low ability of the
buyer to backward integrate.

Cost of product relative to expenses


Telecom products and services offered to the enterprise market
cost 100& of the total cost of the service and buyers are more sensible to
pricing.

Product Differentiation
Telstra, TATA, HGC and all other telecommunications companies
have similar prices for similar products and services. They are less likely to
maintain product differentiation thus buyers have the option to switch over.

Competition between buyers


Enterprise customers like BPO or banks generate a major part of
the revenues for any telecom companies like AT&T, HGC or TATA which
means higher buyer power. But this is not significant for the new entrants or
the companies who deal with individual costumers.

Size and concentration of buyer relative to products

The customers of the companies analyzed here in this study


focuses on their enterprise customers. They are a big size and big
concentration of consumption accrues high buyer power.

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Buyers switching cost


Low switching cost but high buyer power. With better services
offered from one another, switching has become easier.
Buyers Information
Buyers information regarding the availability of other options of
products and services has become high. Their buyers are big corporations
and enterprises, thus having a good connection and relationship with these
can have a high buyer information.
Buyers ability to backward integrate
Not much intermediaries between the producer and the consumers.
High investment is required for backward integration. It is less likely to have a
backward integration, thus has lower buyer power.

4. Availability of substitutes
Level: Moderate
Products and services from non-traditional telecommunication industries
pose serious substitution fears. Cable TV and satellite operators now
compete for buyers. The cable guys, with their own direct lines into homes,
offer broadband internet services, and satellite links can substitute for highspeed business networking necessities. Just as worrying for telecom
operators is the internet: it is becoming a viable vehicle for to cut the rates of
voice calls, meaning that the voice is cheaper than the internet. Delivered
by ISPs - not telecom operators - "internet telephony" could take a large
revenue of telecom companies' core voice revenues.

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5. Competitive Rivalry
Competition is "cut throat", meaning that the players are fierce or relentless in
competition. The movement of industry deregulation together with the receptive
capital markets of the late 1990s paved the way for a rush of new entrants. New
technology is prompting a raft of substitute services. Nearly everybody already
pays for phone services, so all competitors now must attract their customers with
lower prices and more exciting services. This tends to drive industry profitability
down. In addition to low profits, the telecom industry suffers from high exit
barriers, mainly due to its specialized equipment and large infrastructures.
Networks and billing systems cannot really be used for much else, and their rapid
uselessness makes liquidation pretty difficult.

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4. Threats and Opportunities

Key External Factors


Opportunities
Technological
Advancement
International
Markets
Product
Innovation
Merger and
acquisitions
New customers
to enter the
market

Weight

Rating

Weighted Score

0.08

0.32

0.15

0.60

0.10

0.40

0.06

0.18

0.10

0.30

Threats
0.05
2
Economic Issues
0.09
2
Intense
competition in
the market
0.08
2
Emerging
Markets
0.10
2
Entry of new
rivals
0.06
1
Natural
calamities
0.06
2
Customer needs
0.07
1
Political
instability
TOTAL
1.0
Table 3: External Factors Evaluation Matrix

0.10
0.18

0.16
0.20
0.06
0.12
0.07
2.69

The EFE Matrix of Tata Communications is based on the analysis and evaluation
of the external factors that affects the business in attaining the potential opportunities
and threats for Tata Communications. The result of the EFE Matrix is 2.69 which is
above average and means that the company is doing well with the factors and the
effects were positive. International Market has the highest rate because it is the most
important factor that companies are considering. The highest rating of the threat
external factors is the entry of new rivals because as time passes by, many companies
enter into the telecommunication industry.

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C. MARKET ANALYSIS
1. Market Size/Major Players/Strategic Group Map
Market Size
Philippines has a total of 6.782 million telephone subscribers, 103 million SIMs in
use, 320 internet service providers, and 29.8 million internet users. Also, the clients of
the major players in the telecom industry are the BPO Sector. Below is list of the
country's 36 biggest BPO firms, based on 2012 revenues.
1. Accenture Inc. (P28.104 billion in revenues);
2. Convergys Philippines Services Corp. (P17.281 billion);
3. JPMorgan Chase Bank N.A-Philippine Global Service Center (P10.805 billion);
4. 24/7 Customer Philippines Inc. (P7.711 billion);
5. Telephilippines Inc. (P7.241 billion);
6. TeleTech Offshore Investments B.V. (P6.978 billion);
7. Sutherland Global Services Philippines Inc. (P6.805 billion);
8. Stream International Global Services Philippines Inc. (P6.738 billion);
9. Sitel Philippines Corp. (P6.364 billion);
10. Deutsche Knowledge Services Pte. Ltd. (P5.754 billion);
11. Sykes Asia Inc. (P5.617 billion);
12. IBM Daksh Business Process Services Philippines Inc. (P5.516 billion);
13. Aegis PeopleSupport Inc. (P5.445 billion);
14. TeleTech Customer Care Management Philippines Inc. (P5.402 billion);
15. IBM Business Services Inc. (P5.211 billion);
16. Telus International Philippines Inc. (P4.962 billion);
17. Shell Shared Services (Asia) B.V. (P4.821 billion);
18. HSBC Electronic Data Processing (Philippines) Inc. (P4.700 billion);
19. ePLDT Inc. (P4.147 billion);
20. SPi CRM Inc. (P3.501 billion);
21. ACS of the Philippines Inc. (P3.492 billion);
22. VXI Global Holdings B.V. (P3.266 billion);
23. Emerson Electric (Asia) Ltd. (P3.230 billion);
24. StarTek International Ltd. (P3.094 billion);
25. IBM Solutions Delivery Inc. (P3.019 billion);
26. Sykes Marketing Services Inc. (P2.760 billion);
27. SPi Technologies Inc. (P2.626 billion);
28. Genpact Services LLC (P2.552 billion);
29. Macquarie Offshore Services Pty. Ltd. (P2.522 billion);
30. Thomson Reuters Corp. Pte. Ltd. (P2.265 billion);
31. AIG Shared Services Corp. Philippines (P2.357 billion);
32. Hinduja Global Solutions Ltd. (P2.194 billion);
33. Lexmark Research and Development Corp. (P1.956 billion);
34. ANZ Global Services and Operations (Manila) Inc. (P1.869 billion);

24 | P a g e

35. Maersk Global Service Centers (Philippines) Ltd. (P1.859 billion); and
36. Manulife Data Services Inc. (P1.745 billion).

MAJOR PLAYERS

AT&T

PHP 74.5 Million

26.71%

TELSTRA

PHP 60.8 Million

21.80%

TATA
Communications

PHP 60.5 Million

21.69%

Reliance

PHP 51.6 Million

18.50%

Hutchison Global
Communications
Limited

PHP 31.5 Million

11.29%

Table 4: Major Players


Source of profitability is from each companys sustainability and annual reports, income
of 2013 was used.

STRATEGIC GROUP MAP

AT&T
TELSTRA

Market Share

TATA
Reliance

HGC

Number of Services

Figure3: Strategic Group Mapping

25 | P a g e

2. COMPETITOR ANALYSIS
Hutchison Global Communications, Ltd.
Hutchison Global Communications, Ltd. Hutchison Global Communications
Limited (HGC), a full-fledged international telecommunications operator, is a subsidiary
of Hutchison Telecommunications Hong Kong Holdings Limited (HTHKH, Stock Code:
215). HTHKH is a member of the Hutchison Whampoa group (Stock Code: 13). Since
its establishment in 1995, HGC has been fully committed to building its own state-ofthe-art network infrastructure. It owns a robust and resilient international network with a
widespread footprint in Asia and span into the Americas, Africa, the Middle East and
Europe.
The company also provides prepaid phone card, Internet access, local and
international data, telephone and fax line, wholesale and carrier data and voice, and
international direct dial services; and a cloud computing service that comprises
Infrastructure-as-a-Service and Bandwidth-as-a-Service, as well as value-added cloud
services, such as Dedicated Bandwidth-as-a-Service and On-demand Virtual Leased
Lines. It operates optical-fiber networks in Hong Kong, Mainland China, Cambodia,
Indonesia, Malaysia, the Philippines, Singapore, Japan, South Korea, Taiwan, Vietnam,
Thailand, Myanmar, the United Kingdom, and the United States.
Today, HGC runs an extensive coverage of fibre-optic network in Hong Kong, it
also provides network routings that span the globe via submarine and terrestrial cable
facilities offering a high degree of resilience. HGC's advanced voice, data and IP
network today links its home market with the rest of the world and carries traffic
between
internationally-dispersed
geographies.
A top global network service provider, HGC strives to ensure its customers total
network quality and assurance through provision of standard and customized service
pledge. Its 24-hour International Network Operations Centre also provides its customers
with around-the-clock network monitoring and immediate service support.
At HGC, our goal is to maximize global business opportunities of every
customer with the delivery of advanced fixed-line network technologies and
unrivalled total telecom solutions.

26 | P a g e

Tata Communications
Tata Communications connects each race location to the world's
largest Tier-1 networkthe Tata Global Network, thereby powering Formula One
Management's diverse global operations
Their superior connectivity solution ensures that Formula 1 gets
ten times faster than before, at every race circuit across the globe. Tata
Communications have the world's largest network footprint linking 240 countries
with city-to-city connectivity that delivers faster time-to-market and lowers costs.
As part of the $100 billion Tata Group, we have invested to become:

World's #1 international wholesale voice provider

World's #1 submarine network

World's #1 video interconnect

With over 7,500 employees in 31 countries we have the scale and reach
to meet the needs of global enterprises and service providers. Tatas global
footprint is spread across the Formula 1 race locations, giving us the scope and
strength to take complex solutions to challenging locations, be it the streets of
Monaco or the deserts of Bahrain.
Tata Communications deliver quality connections repeatedly around the
world, allowing vital real-time content to travel quickly and reliably and
continuously power innovation for the sport and its multiple stakeholders
Telstra
Despite this complexity, Telstra have to keep close to the customers, develop
new products and services, get new customers, ensure that the staff are as efficient and
productive as possible and deliver a good return to the shareholders.
IT helps them do that by fitting the right solutions into the right business strategy,
whilst demonstrating cost efficiencies and improvements in productivity.
Telstra measure success by cost savings, profitability and improved sustainable
growth. And they create this success by providing customers with innovative and
flexible global communications and IT solutions that help fuel growth and enhance the
business agility to, in and from key growth regions such as Asia.
As a network-based services provider, Telstra can foster responsiveness and
agility by providing flexible, solutions that are embedded in our networks, which include
one of the largest and most diverse in Asia Pacific.
27 | P a g e

Telstra is committed to providing people with the depth and breadth of resource,
expertise, technology and solutions to help them overcome global business challenges,
now and in the future. And whatever Telstra commit to, they fulfil. This means that the
business needs are always met or exceeded, even during times of disaster recovery.

3. Possible Strategic Moves of competitors


One possible strategic move of the rival firms against each other is having lower
costs same goes with the implementation. Another possible strategic move of
competitors is acquiring or other companies or activities in order to compete and
implement the best cost strategy considering they are all a solution provider in the
telecommunications industry. Lastly, outsource manpower and find local personnel who
are culture-driven so that, it can reduce cost and focus more on the critical or internal
activities of the value chain.

4. Key Success factors


The Key Success Factors of a Telecommunication industry were:
4.1
Network Quality: One of the key differences between the old generations
PSTN (Public Switched telephone network) used by telecom companies versus the
generation IP networks used by both the cable providers, VoIP providers is the ability to
receive phone calls on the PSTN networks when the power is out. There is difference in
quality of the voice transmitted; however the gap is closing fast.
4.2
Economies of Scale: Telecom is a huge fixed cost business; most of the
costs go into installing and maintaining the network. The marginal cost of adding a new
customer is very small.
4.3
Customer Service: Considering that the competing industries were all
solutions provider, satisfying customers are essential. In this industry, although the
customer contact with the firm is minimal, it is very critical and can define customer
experience. Customer mostly comes into contact with the employees of the firm only
during installation and service outages, the expectation of the customer is that the
service be always available and the problems be immediately fixed.
4.4
Brand Name: This will always play an important role for the customer in
choosing their desired product or service. It will take time and huge effort for a company
to be able to counter the strong brand names.

28 | P a g e

4.5
Data Speeds: The growth of internet has created so much impact on the
measurement of the ability of an electronic device or system to send and receive
information an enormous amount or what they call as Bandwidth. The service provider
who has the biggest amount of bandwidth with the last mile connectivity will have
competitive advantage over the rest of competition.
4.6
Convergence: Convergence is the ability for customers to access any data
seamlessly without restrictions and the networks and the devices to get to that data. In
future the success of the telecom companies is dependent on how effectively they can
provide converged services.
4.7
Financial Strength/Resources: With high fixed costs in this industry and
frequent network up gradation and licensing costs, it is essential for the firms in this
industry to have a strong balance sheet. The ability to raise money at cheaper rates
compared to the competition provides a significant competitive advantage

D. Assessment of Industry Attractiveness


As one of the leading Indian conglomerates, the Tata Group has a long and
highly respected history of achievement and contribution to the many markets,
industries and communities it serves.
Tata Communications acts as the flagship global telecommunications and
technology solution leader, leveraging its track record of successes, global investments
and emerging market strengths to continue to forge new global ground and create
additional successful ventures as part of the Tata Group success story.

29 | P a g e

III. Industry
A. Nature of Business
The Tata Group
The Tata Group comprises over 100 operating companies in seven
business sectors: communications and information technology, engineering, materials,
services, energy, consumer products and chemical. The group has operations in more
than 80 countries across six continents, and its companies export products and services
to 85 countries, employing over 450, 000 people worldwide. The major Tata companies
are Tata Steel, Tata Motors, Tata Consultancy Services (TCS), Tata Power, Tata
Chemicals, Tata Global Beverages, Tata Teleservices, Titan, Tata Communications and
Indian Hotels.
Tata Communications
The Tata Communications owns and operates the worlds largest fibre
network measuring 240, 000 km. It is the leading global provider of telecommunications
solutions serving voice, data and next-generation service needs of carriers, enterprises
and consumers across the world. It is also the number one global international
wholesale voice operator and Indias largest provider of international long distance,
enterprise data and internet services.
Tata Communications, part of the 64.7 Billion dollars Tata Group is leasing
global communications provider has undergone a critical transformation over the past
three years to globalize its innovative service offering.
Tata Communications businesses are broadly divided into three categories:
1) Wholesale Voice Business consisting of International Long Distance and
National Long Distance services
2) Carrier and Enterprise Data Business Consisting if IPLC, ILL, MDNS, VPN,
Video Conferencing, Inmarsat, ISDN, Corporate Dial-up, TV Uplinking , Data Center
and other services.
30 | P a g e

3) Retail (other) Business consisting of internet dial-up, broadband and calling


cards.

Tata Business Excellence Model (TBEM)


The Tata Business Excellence Model (TBEM), introduced in 1995, has played a
major role in bringing the companies together, helping to define their common purpose
and philosophy, and strengthening the Tata brand. The model has provided Tata
companies with a framework for assessing their businesses holistically, and adopting
measures to improve their competitive strength, financial performance and operational
efficiencies.
Based on the Malcolm Baldridge Model. This model shows how to bridge the gap
between expectation and capability through a series of inter-linked approaches.
The common vision and philosophy that the Tata Business Excellence Model
provides, has been an effective enabler in easing the integration of newly acquired
entities into the group fold.

Figure 4: Tata Business Excellence Model

31 | P a g e

B. Value Chain Analysis


Primary Value Chain

Logistics

Logistics

operations

Inbound

Marketing
and Sales

Outbound

Service

Figure 5: Primary Value Chain

Support Activities:

Procurement

Technological
Development

Human
Resources

Infrastructure

Figure 6: Support Activities Value Chain

Tata Communications value chain analysis describes the activities of that the
organization performs and links it to competitive position. The primary activities that
need to perform internally were: operations, logistics, Marketing and Sales, and Service.
It also has the support activities which are: Procurement, Technological Development,
Human resources and Infrastructure.
32 | P a g e

C. Financial Analysis
Financial Ratio Analysis of Tata Communications
2014

2013

2012

Current Ratio

1.49

1.33

1.39

Quick Ratio

1.45

1.32

1.32

0.51

0.53

0.47

0.50

0.51

0.39

0.11

0.10

0.13

0.07

0.08

0.11

13.5

5.49

1.29

11.20

9.90

4.08

7.25

5.38

6.86

3.25

2.91

1.23

10.08

9.25

5.19

Liquidity Ratios

Asset Management
Ratio
Fixed Asset Turnover
Total Assets Turnover
Ratio
Debt Management
Ratio
Debt-to-equity-ratio
Long-Term Debt-toequity ratio
Times Interest Earned
Ratio
Profitability Ratio
Net Profit Margin on
Sales (%)
Gross Profit Margin on
Sales (%)
Return on Total Assets
(ROA) (%)
Return on Common
Equity (%)

Table 5: Financial Ratios

33 | P a g e

Ratio Comparisons (Base year: 2013)

Tata

Current

FA

TA

Debt

Ratio

Turnover

Turnover

Ratio

1.49

0.51

0.50

0.11

0.56

0.68

1.13

1.05

0.85

0.67

TIE

Net

Gross

ROA

RCE

profit

Profit

13.5

0.1120

0.0725

0.0325

0.10

0.85

7.40

0.09

0.10

0.10

0.10

0.67

1.54

0.15

0.59

0.10

0.31

Communications
Hutchison
Global
Communications
Telstra

Table 6: Ratio Comparisons

D. Strengths and Weaknesses (IFE)


Rating: 4-Major strength 3-Minor Strength 2-Minor Weakness 1-Major Weakness
Key Internal Factors

Weight

Rating

Weighted Score

0.04

0.16

Internal Strength

Reliability/Robust
Wireless Network

Brand Awareness

0.06

0.24

Advancement of Fibre

0.09

0.27

0.07

0.28

Network

Access to Infrastructure
optical network and
satellite links

Market Positioning

0.04

0.16

High performance

0.05

0.20

Financial Positioning

0.04

0.12

Advanced Telepresence

0.04

0.12

Solution Provider

0.05

0.20

Ethernet

0.10

0.30

Provider

Backbone Bridge (PBB)


Internal Weaknesses

Declining access lines

0.05

0.10

Geographic

0.04

0.08

Concentration

34 | P a g e

High competition in the

0.08

0.06

telecom industry

On time service delivery

0.06

0.06

Number of Internet traffic

0.06

0.16

0.13

0.13

of major competitors

Subscribers Loyalty
Strategies
TOTAL

2.64

Table 7: Internal Factors Evaluation Matrix


The IFE Matrix that was obtained above, the weights was given to the specific
internal strengths and internal weaknesses. The highest weight for the internal strength is
the Ethernet Provider Backbone Bridge. In the Philippines, it is the reason why International
calls can be made. It is new to the Tata Communications and has shown great contribution
in the revenue of the company. Meanwhile, the factor of subscribers loyalty and high
competition in the market are the biggest due to tight competition, head-to-head. Especially
at PLDT because there are a lot of telecommunications provider under it. At the same time,
the number of subscribers from different corporations or businesses in the Philippines that
they cater. The total weighted score is 2.64, which is above average.
E. Competitive Strength Assessment

Wt.

Rating

Score

Wt.

Rating

Score

Wt.

Rating

Score

Service Quality

0.20

0.80

0.20

0.60

0.20

0.80

Price Competitiveness

0.20

0.80

0.20

0.80

0.20

0.80

Customers Loyalty

0.15

0.30

0.15

0.60

0.15

0.45

Financial Position in the

0.10

0.40

0.10

0.30

0.10

0.30

35 | P a g e

market

Market Share

0.05

0.15

0.05

0.10

0.05

0.15

Global Expansion

0.10

0.30

0.10

0.20

0.10

0.30

Network Quality

0.20

0.80

0.20

0.60

0.20

0.60

TOTAL

1.00

3.55

1.00

3.2

1.00

3.4

Note: (1) The ratings values are as follows: 1 = major weakness, 2 = minor weakness, 3 = minor strength, 4 =
major strength. (2) As indicated by the total weighted score of 3.2, Competitor 2 which is the Hutchison Global
Communications Limited is the weakest. (3) Only seven critical success factors are included for simplicity; this is too few in
actuality.

Table 8: Competitive Profile Matrix


The Competitive Profile Matrix had shown above among the major players in the
Telecommunications Industry shows that Tata Communications is considered to be the
most competitive.

F. Values, Ethics and Social Responsibility

Every employee of a Tata company, including full-time directors and the chief
executive, shall exhibit culturally appropriate deportment in the countries they operate
in, and deal on behalf of the company with professionalism, honesty and integrity, while
conforming to high moral and ethical standards. Such conduct shall be fair and
transparent and be perceived to be so by third parties.
Every employee of a Tata company shall preserve the human rights of every
individual and the community, and shall strive to honour commitments.
Every employee shall be responsible for the implementation of and compliance
with the Code in his / her environment. Failure to adhere to the Code could attract
severe consequences, including termination of employment.
36 | P a g e

Tata Code of Conduct


The ethical road map for Tata Employees and companies, and
provides the guidelines by which the group conducts its
businesses.

Set of principles that guide and govern the conduct of Tata


Companies and their employees in all matters relating to business.

Lays down the ethical standards that Tata employees have to


observe in their professional lives, and it defines the value system
at the heart of the Tata Group and its many businesses and
entities.

The modifications have reinforced the Code, and enable it to reflect


the diverse business, cultural and other factors that have bearing
on the health of the Tata Brand.

Core values
Tata has always been values-driven. These values continue to direct the growth
and business of Tata companies. The five core Tata values underpinning the way
we do business are:

Integrity: We must conduct our business fairly, with honesty and transparency.
Everything we do must stand the test of public scrutiny.

Understanding: We must be caring, show respect, compassion and humanity for


our colleagues and customers around the world, and always work for the benefit of
the communities we serve.

Excellence: We must constantly strive to achieve the highest possible standards in


our day-to-day work and in the quality of the goods and services we provide.

37 | P a g e

Unity: We must work cohesively with our colleagues across the group and with our
customers and partners around the world, building strong relationships based on
tolerance, understanding and mutual cooperation.

Responsibility: We must continue to be responsible, sensitive to the countries,


communities and environments in which we work, always ensuring that what comes
from the people goes back to the people many times over.
G. Evaluation of Present Corporate Strategy/Business Strategy
1. Existing Company Vision and Mission

Mission:
Tata Communications is a leading global provider of IP, telepresence and
wholesale communications services. With a leadership position in emerging markets,
Tata Communications leverages its advanced solutions capabilities and domain
expertise across its global and pan-India network to deliver managed solutions to multinational enterprises, service providers and Indian consumers.

Vision:
Unified under a single brand, Tata Communications is committed to
spearheading innovation and value in global services.
As an agile, fast-reacting partner, we are dedicated to proactively maintaining
strong client communications and forward-thinking products and solutions.
Supported by the financial stability and vertical intelligence of the 29 Billion
Dollars Tata group, Tata Communications Is focused on driving growth and expansion
of value-added services to consumer, enterprises and providers worldwide.
2. Generic Strategy Being Pursued
Tata Communications generic strategies being pursued are:
38 | P a g e

Diversification (Acquisition of an existing company)


Recently, Tata Communications have been acquiring companies from
different countries. These were the acquisitions that they made:

BT Groups (BT) Mosaic Business, UK.

Jan 2011

Stake acquired: 100%

Neotel, South Africa

Jan 2009

Stake acquired: 30%

China Enterprise Communications, China

Jan 2008

Stake Acquired: 50%


First Mover in implementing a highly scalable native Ethernet WAN
network.
Backward Integration
3. Source of Competitive Advantage
Focus on Emerging Markets. The companys strategy is based on its
strong presence in the emerging markets, its portfolio of IP and Cloud
Services, its strategic partnerships and its transformation to a Managed
Services Business Model.
Worlds largest mobile signaling inter-provider network and is supporting
mobile network operator around the globe with one of the industrys widest
reaching service offerings for mobile broadband enablement.
One of the worlds leading wholesale providers of data, Internet Protocol
(IP) and mobile signaling services. It carries 20% of worlds internet traffic.
Tata Communications owns and operates the worlds only wholly owned
fibre optic sub-sea network ring around the whole globe, the Tata
Communications Global Network (TGP).

39 | P a g e

IV.

Strategy Formulation
A. TOWS Analysis
STRENGTHS

WEAKNESSES

Reliability/Robust

Declining access lines

Wireless Network

Geographic

Brand Awareness

Advancement

of

Concentration
Fibre

Network

High competition in the


telecom industry

Access to Infrastructure

On time service delivery

optical network and

Internet Traffic

satellite links

Market Positioning

High performance

Financial Positioning

Advanced Telepresence

Solution Provider

Ethernet Provider
Backbone Bridge (PBB)

Opportunities

SO Strategy: Maxi-Maxi

Technological

WO Strategy: Mini-Maxi

Because Tata

Improve

Advancement

Communications were

assistance

International Markets

reliable and customers

declining access lines

Product Innovation

were aware of the brand

Acquire

Merger and Acquisitions

as strengths, it has an

improve market share rather

New customers to enter

opportunity of Joint

than rivals.

the market

Ventures with other

Develop new products

telecom companies for

and

new products so it can

competitive positioning.

technical
to

overcome

companies

services

to

to

gain

increase their market


share.

Market Penetration of the

40 | P a g e

customers in the
Philippines in Ethernet
WAN.

Market Development in
voice services

Research, develop, and


improve new
technologies

Threats

ST Strategy: Maxi-Mini

WT Strategy: Mini-Mini

Economic Issues

Increase brand

Intense Competition in

awareness to attract

the market

customers

Emerging markets

High performance

Entry of new rivals

products and services to

Product development

Natural calamities

provide customer needs

Blue Ocean Strategy

Customer needs

Development and

Conduct benchmark based

Political instability

improvement of Ethernet

on competitor deployment

Provider Backbone Bridge

strategies

Promotion

of

company

image

Adopt

latest

online

technologies

(PBB) to gain competitive


advantage.

Table 9: TOWS Matrix

41 | P a g e

B. Space Matrix
Internal Strategic Position
(X axis): -1 highest, -6 lowest
Competitive Advantage
Tata Communications is competitive
Market Share
Control Over Suppliers and Distributors
Customer Loyalty
Technological Know-How
TOTAL:
AVERAGE:
Internal Strategic Position
(Y axis): 6 highest, 1 lowest
Financial Strengths
Cash Flow
Revenue Growth rate, declining
Net Income Growth rate, declining
Risk in business
TOTAL:
AVERAGE:
External Strategic Position
(X-Axis): Quadrant I: 1 Lowest 6 Highest
Industry Strengths
Profit Potential
Ease of entry into telecom Industry
Growth Potential
Financial Stability
Technological Know-How
Resource Utilization
TOTAL:
AVERAGE:
External Strategic Position
(Y-Axis): Quadrant IV: -1 highest -6 lowest
Environmental Stability
Global Rapid Technological Changes
Price change by competitor
Rate of Inflation and High Interest rates
Expensive Infrastructure
Customer Switching
TOTAL:
AVERAGE:

-1
-1
-2
-4
-1
-9
-1.8

+4
+4
+5
+3
+16
+4

+6
+5
+6
+5
+6
+5
33
5.5

-1
-6
-2
-3
-6
-18
-3.6

Table 10: Space Matrix

In the Space Matrix given, both internal and external strategic position was weighted.
The Internal strategic position (x-axis) and eternal strategic position (Y-axis) both
considers -1 as the highest and -6 as the lowest rating. Meanwhile, the internal strategic
position (y-axis) and internal strategic position (x-axis) considers +6 as the highest and
+1 as the lowest rating. Having the total and average computed, the following values for
the coordinates were obtained:

42 | P a g e

x-axis: -1.8 + 5.5 = +3.7


y-axis: 4 3.6 = +0.4
The coordinate (3.7, 0.4) is obtained after getting the sum of x-axis and y-axis
respectively. It will result to the following matrix:
Conservative

FS

Aggressive

CA

IS

Defensive

Competitive
ES

Figure 7: Space Matrix Quadrants


Tata Communications is in the 1st quadrant, the aggressive quadrant. It
entails that the company should be is a risk taker, it should aggressively opt for a
growth strategy. They have a strong financial strength and competitive advantages
in a growing and stable industry.
Recommended Strategies:

Market Penetration
Market development
Product Development
Backward Integration
Forward Integration
Horizontal Integration
Conglomerate Diversification
Concentric Diversification
Horizontal Diversification

43 | P a g e

C. Boston Consulting Group (BCG) Matrix


Relative Market Share

HIGH

HIGH

Cash Generation

STARS

LOW

QUESTION MARKS

Data Services

Neotel

Service Providers

Cash Usage

CASH COWS

DOGS

Voice Services

LOW

Market Growth Rate

Enterprises

Table 11: Boston Consulting Group Matrix

The Data Services which comprises the 39% of the total market share in
the products and services that Tata Communications offer is divided into 2 segments,
the service provider (51%) and Enterprises (49%). It has high relative market share in
high growth markets and offer high profit and high growth opportunities. It is in the
Stars in the BCG Matrix and is considered in the growth stage. However, the cash flow
is neutral and needs further investments. Recently, Tata Communications added
another service that expands thru Asia in 2009, the Ethernet WAN and VLAN. Since it is
new compared to the other services that they offer, they need to invest for growth and
44 | P a g e

focus on promotion to maintain the market share and be converted into cash cows.
Market Penetration can be the strategy to be used to gain competitors customers in
different companies in the Philippines.

Overall Revenue Mix


11%

Voice
50%

Data
Neotel

39%

Figure 8: Overall Revenue Mix

45 | P a g e

D. Internal-External Matrix

The IFE Total Weighted Score


IFE = 2.64

Strong (3.00-4.00)

Average (2.00-2.99)

Weak (1.00-1.99)

II

III

The EFE Total Weighted Score

EFE = 2.45
High (3.00-4.00)

Medium (2.00-2.99)

IV

Low (1.00-1.99)

VII

VI

VIII

XI

Table 12: Internal-External Matrix

Hold and Maintain.


The total Weighted score for the IFE is 2.64 which is on average in the internal

position while the EFE is 2.45 which lies in medium, which means that the company is
not the strong externally.
In this case, Tata Communications should focus on Market Penetration and
Product development.

46 | P a g e

E. Grand Strategy Matrix


Rapid Market Growth

Weak Competitive
Position

Rapid Market
Growth

Slow Market Growth

Figure 10: Grand Strategy Matrix


The result in the SPACE Matrix of the Tata Communications lies in the 1 st
Quadrant which is Aggressive. It means that the company has a strong financial
strength and competitive advantages in a growing and stable industry. The company
can use the following strategies:

Market Development

Market penetration

Product Development

Forward Integration

Backward Integration
47 | P a g e

Horizontal Integration

Concentric Diversification

B. Evaluation and Prioritization (QSPM)


weight

Market

Market

Product

penetration

Development

Development

AS

Strengths

TAS

AS

Reliability/robust
0.02

0.06

Brand Awareness

0.02

0.06

Advancement of fibre

0.03
4

0.08
0.2

0.2

0.16

High Performance

0.05

Financial Positioning

0.04

Advanced

0.05

Telepresence
0.06

Ethernet Provider

0.05

Backbone Bridge

0.02

lines

0.03

the telecom Industry

Internet Traffic

0.05

Opportunities
Technological

0.08

0.12

0.12

0.2
0
0.08
2

0.08

0.04
3

0.08

0.12
2

0.12
2

0.08

0.06
3

0
2

0.18

0.15

3
4

0.16

0.1

0.04

0.09
0.04

0.1

0.16

Delivery

0.15

0.06
0.04

0.1

0.06

concentration

0.1

0
0.02

0.16

0.15

0.15

Weaknesses

0.06
4

0.2
2

0.08

0.24

0.12

0.15

Solution Provider

0.08

0.09

2
0.05

One time Service

0.04

Market Positioning

High competition in

0.12

0.04

Infrastructure

Geographic

0.04
2

TAS

Network

Declining Access

AS

Wireless network

Access to

TAS

0.1

0.12
0

0.2
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Advancement
International Markets

0.08

Product Innovation

0.05

Merger and

0.04

0.02

0.32
0.2

0
2

Acquisitions

0.08

New customers to

0.1

0.12

0.08

0.15

enter the market

0
3

0.16
2

0.06

0.04

Threats
Economic Issues

0.02

Intense Competition

0.03

Emerging markets

0.05

Entry of new rivals

0.02

Natural calamities

0.03

Customer needs
Political instability

in the market

TOTAL

0.08

3
4

0.09

0.15
0.08

0.02

0.03

0.04

0.12
4

0.06

0.2

0.1

0.06

0.04

0.06

0.12

0.09

0.08

0.06

0.04

0.12

0.09

0.06

3.44

1.0

0.06

2.58

2.58

Table 13: Quantitative Strategic Planning Matrix


AS = Attractiveness Score
TAS = Total Attractiveness Score

Attractiveness Score:
1 = not Attractive

2 = Somewhat Attractive
3 = Reasonably Attractive
4 = Highly Attractive

The analysis shown above is the 3 strategy alternatives; The Market Penetration,
Market Development, and Product Development. These strategy alternatives can be
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used to improve the performance of Tata Communications in the head-to-head


competition of telecom operators here in the Philippines. In this case that the
Telecommunications sector is already maturing, it needs to have a good and fit strategy
to survive in the intense competition in the industry. In assessing Tata Communications
external and internal environment, Market Penetration Strategies should be done
aggressively in order to win against rivals.
C. Proposed Vision and Mission
Proposed Vision:
Being one of the most profitable sectors of the Tata Group, and the most reliable
and fastest and preferred solution provider in the Philippines, Tata Communications
should maintain its leadership in the industry by aggressively pursuing innovations for
while focusing on the customers, making them the market leaders in the future.
Proposed Mission:
The mission of Tata Communications here in the Philippines is to gain leadership
position in emerging markets, making technical innovations and development of the
fibre optic Ethernet WANs services and operations and also to provide a competitive
edge to be the leading solution provider for all business communication needs while
delivering it in an outstanding customer service.
D. Proposed Corporate Strategy/Business Strategy
Based on the results that was obtained using the QSPM, the main strategy to
perform or should use is the Market Penetration. Tata needs to penetrate a market in
which current or similar products already exits. This can be achieved by gaining
competitors customers since Tata Communications has many rivals in the Telecom
operator industry here in the Philippines. Tata Communications is in its growth stage in
the Philippines on being the solution provider or backbone of PLDT both in providing
internet services for corporate businesses and International calls, the manager must
decide whether to seek sales growth by acquiring existing category users from their
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competitors or by expanding the total population of category users, attracting new


customers to the market. They should also improve the marketing and offer products
and services at a high quality, in order for them to do that by aggressive marketing
campaigns and distribution strategies.
E. Goals and Objectives
Strategic Objectives:

To continue to improve the Ethernet WAN and accelerated development.

To produce high quality solutions and recommendations quickly in response to


market demands.

Continuous adjusting to technological advances.

To become Global. Offer another line in a new Country across the globe. Make
calls available to another Country.

Aggressive promotions and marketing

Innovate special solutions in subscribers

Maintain high quality of customer and network service

Financial Objectives:

To increase their market share in the Philippines sector by 2%

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E. Strategy Group Map


Figure 11: Strategy Group Map

Financial

Improve shareholder value

Growth in Voice Revenue (Inbound and


Outbound)

Strong Market
Penetration

Learning and
Growth

Internal Perspective

Customer
Perspective

Growth in Data Revenue

Customer Intimacy

Innovations

Product Development

Customer Relation
Management

-Customer Loyalty

Improve Marketing

Increase market
Share

High Quality
Services

Provide trainings for the


employees

Penetration of newly covered


areas

High Employee Retention

High Knowledge management

Technology Innovation

Enhance staff Skills

xas

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V. Functional Area Strategies


Different levels of strategy

Corporate Level

Business Level

Functional Level

Figure 12: Different Levels of Strategy

Global and regional telecom operator players face increasing number of critical
challenges, from traffic monetization to capital and labor productivity in mature markets
to intensified competition in developing and emerging markets. Growth strategy in
telecom company with respect to customers, regulation, technology, and competition
and estimated the market potential for different segments in the Philippine telecom
market.
Functional strategies typically align with more narrow functional objectives. It is
used to focus on and manage the businesss constituents parts. By developing
individual goals and objectives for specific functions in the company, business owners
and managers can assign the right people and resources to the right tasks.

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Tata Communications Functional Strategies purpose is to achieve a corporate


and business units objectives and strategies by maximizing resource productivity to
have a distinctive competence that will provide a company competitive advantage over
competitors.

Some of the Functional Strategy Objectives:

Profitability producing at a net profit in a business

Market Share It is about gaining and holding a specific share of a product


market

Human Talent About recruiting and maintaining a high quality workforce.

Product Quality - Producing high quality goods and services.

Innovation Developing new products or processes.


Tata Communications Ltd will be focusing on Marketing Strategy, Research and

Development Strategy, Human Resource and Management Strategy, Financial


Strategy, and Information Management Strategy. These functional strategies were
important aspect in developing a strategic business plan. These strategies will help the
company improve its current strategy and will depend in the planning for different
departments for specific functions. Differentiate from competitors and add value to the
customer. Instead of offering generic services, innovate to offer customized services.
Marketing Strategy Capture larger market share of an existing market-market
saturation or Market Penetration

Advertising and Promotion

Product development Strategy

Distribution System

Marketing, sales and customer relationship management are some of the areas
where the returns from analytics are the highest. Ideally, analytics-driven telecom
companies must have predictive analytics embedded in all their business processes,
thereby moving away from decisions based on gut feeling or intuition.
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Financial Strategy Fundamental resource for starting and conducting a


business.

Centered around acquiring capital, reducing cost capital.

Human Resource Strategies

Manage the functions of employing, developing, compensating, and


utilizing human resources.

Utilize an able and motivated workforce and to accomplish the


basic organizational goals.

Combine human skills, financial resources, marketing/customer


needs, advertising agencies, innovations.

Performance appraisal

Research and Development

Product innovation

Process improvement

According to Porter, depending on the choice the company makes


it can either achieve
Differentiate
Overall low cost

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VI. Implementation
A. Analysis of Companys Capabilities to Implement Strategy
The 7-S Framework

Hard Elements
Strategy
Structure
Systems

Soft Elements
Shared Values
Skills
Staff
Style

Figure 13: The 7-S Framework

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Strategy is it a plan developed by firm to achieve sustained competitive


advantage and successful compete in the market. The companys strategy is
based on its strong presence in the emerging markets, its portfolio of IP and
Cloud services, it strategic partnerships and its transformation to a Managed
Services business model.

Structure The Company needs an organization that will implement a better


leadership among everyone. Since Tata Communications were big in the number
of employees in and out of India, it is important to have new positions or new
officers that share common values and has a voice among the others. All of
these are to be able to easily implement the new strategy.

System Having a new system is essential in the company as it would give


standards to all of its employees. The current system should be developed and
improved in order to have a new service development. It should have growth
opportunities to expand leadership capabilities, opportunities to develop and
have leadership and functional capabilities, an entrepreneurial environment
where people can pursue their dreams and lastly, competitive compensation.

Style/Culture Tata Communications follows the Tata Code of Conduct wherein


its ethics and values which are in turn reflected In its actions and people
practices. The managements style of companys leaders is essential to the
implementation of the strategy especially Tata Communications handles a lot of
employees that contributes to the efficiency of the service that they offer.

Staff As they say, employees or staffs are the asset of the company, without
them, the implementation of the strategy wouldnt be possible. These staffs
should be well-trained and should be good in interacting an negotiating with
customers. It consist of some of the most dynamic, motivated, and qualified
individuals to be found anywhere in the world. Highly trained individuals and
financial analysts to consistently check the profitability and especially, the
combination of bright minds in the business of Tata Communications.

Skills It is the distinctive capabilities or competences of persona or of the


organization as a whole. The company should select capable persons and well
trained persons. Should also be focused on creation and enhancement of
57 | P a g e

stakeholder value and a group of people dedicated to uphold the core values of
the group.

Shared Values Tata Communications follows the Tata Code of Conduct which
comprises of the Set of principles that guide and govern the conduct of Tata
Companies and their employees in all matters relating to business. Lays down
the ethical standards that Tata employees have to observe in their professional
lives, and it defines the value system at the heart of the Tata Group and its many
businesses and entities.

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B. Managing Internal Organization for Strategy Execution

Figure 14: The 8-SIT Framework

Exercise the strategic


leadership needed to
drive implementation
forward

Tata Communications should


build an organization with the
competencies, capabilities, and
resource strengths needed for
successful strategy execution
Prepare resources
needed; assign
someone for each team
to be able to do critical
activities

The Strategy Implementers Action


Agenda:
Shaping the
work
environment and
corporate culture
to fit the strategy

Tying rewards and


incentives to the
achievement of key
strategic targets

Market penetration

Establish strategysupportive policies


for the entire
company

Instituting best practices


and pushing for
continuous improvement
Installing information, operating
systems that enable company
personnel to better carry our
strategic roles proficiently

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The figure above, managing internal organization is one of the most important
decisions in order to successfully implement the strategy. First is to improve leadership
to drive implementation forward for the Tata Communications, good leadership and
management among employees would drive them to work efficiently and motivated, and
with this case it would be easier to implement new strategies. Next is by shaping the
work environment and corporate culture to fit the strategy, since Tata Communications
is Global and handles different cultures and practices in each Country, it is important the
they have a single norm to follow. Third is tying rewards and incentives to the
achievement of key strategic targets to drive employees to work or perform better.
Fourth is to install information and systems so that the employees will carry the strategic
goals proficiently. Fifth is instituting best practices and pushing for continuous
improvement in order to prevent the decline stage of their production life cycle, they
should always have a new strategy and development. Sixth is to establish policies and
regulations. Seventh is to secure important resources for critical activities. And lastly,
Tata Communications should build an organization with the competencies, capabilities,
and resource strengths needed for successful strategy execution.

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C. Balanced Scorecard

Financial
To increase Market Share
Customer
Provide high Quality
Services
Customer retention
Increase customer loyalty

Vision
and
Strategy

Internal Business
processes
Meet Customer's needds
improve marketing

Learning and Growth


To expand more and provide premium
service and be the preferred telecom
operator or provider.

Figure 15: The Balanced Scorecard


The BSC has provided a framework to align with customers, amongst our
leadership and TCS associates. Helping our associates direct their passions with
organizational objectives has enabled us to achieve a balance between long term
strategic thinking and short term operational precision. (Abjd Ali Neemuchwala,
Global Head of Business process Services)
The Balanced Scorecard illustrates how Tata Communications can assess
different selected strategies on different perspectives; the customer perspective,
financial Perspective, internal business process perspective, and Learning and
Growth perspective. To keep up with todays rapidly changing and complex
business landscape, enterprises must revisit their approach to achieving
business growth, staying agile and maintaining their responsiveness to the
market.
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A Corporate Communication Strategy


The integrated approach to all communication produced by an organization,
directed at relevant target groups (Van Riel, 1995:24), both internal and external.
The focus lays on other departments that have their direct impact on a
companys health: finances, sales, HR and marketing (although the latter is also cutting
budgets). The basis of corporate communication is all about the above four key
elements for getting your message across.
1.

Identify the purpose of your communication: why do you want to communicate

and what do you expect to get out of it for your business?


2.

Identify your target audience: to whom do you want to communicate? Which

target audience might benefit the most from your information?


3.

Design your message: what do you want to talk about? What are the content,

mood and language of your message?


4.

Identify the channels: reach your audience by placing your message where they

will read it.


Figure 16: Corporate Communication Strategy

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Figure 17: Telco Carrier Challenges in Various Market Stages


Growth potential on the saturated markets can be developed solely through new
services and products such as IPTV, VoD, and fixed-mobile hybrid products. More and
more often, these services are being offered in bundled form as triple-play and
quadruple-play products from a single source. As telecommunication companies are
normally not media companies, these services and products need to be purchased. If
products can be contracted exclusively, a company can gain real advantages above the
increasing competition, as in the instance of the iPhone that had a monopoly-like
position from first being introduced in Germany until November 2010.

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VII. Financial Projections


A. Detailed Assumptions

Strategies to be implemented:

Testing and Simulation of


Network Solutions
Utilize existing services in
accessing or locating
network complain
Internal Marketing of
Services through incentives
and discounts
Develop/continue mass
market promos

In house training of
personnel from Technical
Group on proper complaint
handling and customer
relations management
Career and personnel
Training

Benefits
It will provide cost effective
solutions for indoor and
outdoor coverage
Know the exact location of
the companies of complaint
for the table tap
assessment
Encourage employees to
avail their services

Assumptions (Costs)
500,000.00

Give benefits, discounts,


and life changing
alternatives to mass market
subscriber
To eliminate mishandling of
complaints

1,000,000

To Boost employees
morale in being committed
to their new key results
area and corporate goals.

500,000

1,000,000

1,500,000

800,000

Total Global Roaming users will increase by 10% (Upon Implementation)

2014
2015
2016

This will result to the increase in the number of users who will call either
outbound or inbound, and with this, having Tata Communications as the
backbone of major companies, its increase within 3 years would be:

676, 980, 000


752, 200,000
827, 420, 000
64 | P a g e

Internet Service

2014
2015
2016

Estimated No. of
subscribers
500, 000
800, 000, 000
1,500,000

80% of private business in the Philippines in over 70, 000 companies

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Financial tables

source: http://money.rediff.com/companies/Tata-Communications-Ltd/15140032/balance-sheet

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2014

2013

2012

Current Ratio

1.49

1.33

1.39

Quick Ratio

1.45

1.32

1.32

0.51

0.53

0.47

0.50

0.51

0.39

0.11

0.10

0.13

0.07

0.08

0.11

13.5

5.49

1.29

11.20

9.90

4.08

7.25

5.38

6.86

3.25

2.91

1.23

10.08

9.25

5.19

Liquidity Ratios

Asset Management
Ratio
Fixed Asset Turnover
Total Assets Turnover
Ratio
Debt Management
Ratio
Debt-to-equity-ratio
Long-Term Debt-toequity ratio
Times Interest Earned
Ratio
Profitability Ratio
Net Profit Margin on
Sales (%)
Gross Profit Margin on
Sales (%)
Return on Total Assets
(ROA) (%)
Return on Common
Equity (%)

C. Financial Analysis
On the liquidity ratios, Tata Communications, the current ratio decreased its
value from 2012-2013, however, there has been an increase of 11% in the year 2014.
This is a good sign that its financial stability have improved over a year. It means that
the company covered its current liabilities with assets. For the quick ratio, from being
stable from the year 2012 to 2013, it has increased in 2014 which is a good indicator
because it means that the company met its short term obligations without selling off its
current inventory.
In Asset management ratio, the fixed asset turnover, the measure of the sales
productivity and utilization of plant and equipment, decreased from 2013 to 2014 due to
68 | P a g e

under-utilization of fixed assets. Meanwhile, the total assets turnover also decreased in
2014 which means that the company is somewhat not generating a sufficient volume of
business given the size of its asset investment.
In the Debt management ratio, the debt-to-equity ratio had increased but still less
than 1, this means that the company has more assets than debt and still desirable.
However, the long term debt-equity ratio is continuously decreasing since 2012. The
Times Interest Earned Ratio, undergone a tremendous increase because their earnings
before tax was higher and their interest charge was much lower.
In profitability Ratio, Tata Communications the Net Profit Margin on Sales is
continuously increasing which means that the firms sales were high. The Gross profit
margin, an indication of the total margin available to cover operating expenses and yield
a profit, has also increased in 2014 although there has been a decrease on the year
2013. The return on total assets, a measure of the return on total investment in the
enterprise, have also increased as well as its return on equity ratio. However, Tata
Communications still has to improve their ratios to sustain the new strategy that they are
going to implement.

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VII. APPENDICES AND REFERENCES


http://www.telepresenceoptions.com/tata/companyprofile/tata-communicationscompany-pr.php
http://www.tatacommunications.com/tata-group
http://microsites.tatacommunications.com/about/vision.asp
http://money.rediff.com/companies/Tata-Communications-Ltd/15140032/balance-sheet
http://www.tatacommunications.com/vpn/ethernet/analyst-corner-idc.pdf
http://www.tata.com/company/articlesinside/JKPGxAXt3ZE=/TLYVr3YPkMU=
http://www.pldt.com/news-center/article/2013/06/13/pldt-deploys-innovativeconferencing-solution---telepresence#.VHujFDGUcup
http://www.tata.com/aboutus/articlesinside/Tata-Code-of-Conduct
http://goutham.wordpress.com/2008/02/07/us-telecom-industry-analysis/
https://www.hgc-intl.com/
https://www.hgc-intl.com/en_about2.html
http://www.tatacommunications.com/
http://www.telstra.com.au/
http://investing.businessweek.com/research/stocks/private/snapshot.asp?privcapId=173
3713
http://www.ptc.org/ptc13/images/papers/upload/PTC13_Thapa_Suraj%20Singh_PPS.p
df
https://www.deloitte.com/view/en_nz/nz/industries/telecommunications-media-andtechnology/telecommunications/index.htm
http://www.ehow.com/info_7910660_history-telecommunications-business.html

70 | P a g e

http://www.strategicmanagementinsight.com/tools/mckinsey-7s-model-framework.html

http://www.slideshare.net/AkashAgamya/porters-five-force-analysis-for-telecom-industry
http://www.collinsdictionary.com/dictionary/english/cut-throat
http://www.abs-cbnnews.com/business/01/01/14/36-biggest-bpo-firms-philippines
http://www.btplc.com/News/Articles/ShowArticle.cfm?ArticleID=4A065EAB-DCE8-4962A9F2-865852708173
http://www.gmanetwork.com/news/story/368398/scitech/technology/software-exec-realcompetition-among-telcos-can-fix-phl-s-slow-pricey-internet
http://en.wikipedia.org/wiki/International_telecommunications_routes#Wholesale_marke
t
http://www.itu.int/en/about/Pages/default.aspx
http://www.acestartelecoms.net/partners.php
http://microsites.tatacommunications.com/downloads/enterprise/4p_TC_case-studyend-to-end-managed-solutions-v1.1.pdf
http://www.tatacommunications.com/sites/default/files/Case%20Study_Etisalat%20Misr.
pdf
http://smallbusiness.chron.com/functional-business-strategy-61991.html
http://www.tcs.com/resources/white_papers/Pages/Predictive-analysis-telecomcompanies.aspx
http://www.tsmg.com/resources/case-profiles-functional-areas.html
http://www.mckinsey.com/client_service/telecommunications/expertise/strategy
http://www.87seconds.com/en/video-marketing-blog/read/corporate-communicationstrategy-in-9-steps

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