EMM: Supply Chain Management

Assignment Question No. 2

You have been appointed by a company as the consultant / PIC to study
the existing supply chain system and its associated problems. You are to
table them in a report to the Management and to recommend changes
for improvement. Your paper must be based on a logical approach using
practical supply chain methodologies.

Table of Contents
No.

Title

Page

1)

Introduction

2)

Business Scenario and Competition Analysis

3)

Comparative Analysis

4)

Recommendation

17

5)

Conclusion

18

6)

Reference

19

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1) Introduction
Axiata Group Berhad (Axiata), formerly TM International Berhad, is an investment
holding company. It operates in the telecommunications sector in Asia. The company
provides a wide range of telecommunication and consultancy services through its
subsidiaries in Asian countries. It has controlling interest in telecom companies in
Malaysia, Indonesia, Sri Lanka, Bangladesh and Cambodia. The company provides its
mobile communications services under various brands such as XL in Indonesia; Celcom
in Malaysia; Smart in Cambodia; Idea in India, and M1 in Singapore. Axiata
headquartered in Kuala Lumpur, Malaysia.
The Axiata Group, through Celcom, is planning to enhance its focus on mobile data and
digital services. The company initiated efforts to improve network quality and capacity to
enhance customer data experience.
Objective:
1. To determine the supply chain management strategy of direction of Axiata in the
local and international markets.
2. Identify segments within these markets.
Axiata vision, to be a Regional Champion by 2015 as Most Admired Company in
ASEAN / South Asia. There are:1. Profit Best financial performance
2. People Top employer / talent factory
3. Process World class processes
4. Planet & Society National / Social Contribution.
Strategic Approach to sustainability of Axiata is base on Holistic Four-pillar
Approach to Sustainability:
I.
Beyond Short Term Profits
a. Long Term Investment
b. Services Beyond Commercial Motivation
c. Global Mobile Development
II.
Nurturing People
a. Nurturing Future Leaders
b. Culture of Integrity
c. Inclusivity
d. Conducive Workplace
III.
Process Excellence
a. Supply chain Management
b. Customer Centricity
c. Centres of Excellence
d. Strong Governance
IV. Planet and Society
a. Greener Operation
b. Contribution Towards Society
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2) Business Scenario and Competition Analysis

Axiata current situation is to created a tremendous opportunity to penetration and exploit
new market, in analyzing the market environment; market economy is improving
gradually as shown in the Macro & Micro analysis (PESTEL & Five Porter)

Micro Economic External Analysis

PESTEL Analysis
P There is no political events related to telecommunications
E Good economic growth and having a raise in GDP
S The social networkers are also expanding as well
T The technology changes is rapidly e.g. 4G/LTE
E Go green society
L The telecommunication law prohibits monopolistic practices and unfair completion
Porters Five Forces on the Axiata

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Internal Analysis: Axiata

By referring to the above BCG matrix show that relative revenue contribution to Axiata
group. Idea, Robi & Dialog are doing well in market; XL and Celcom are in competitive
situation to penetrate the market but in improvement trend. For M1. Multinet and MTCE
are low in market.

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Commitment to People Development
At Axiata, we are committed to help our people learn, develop and enhance their
functional skills, leadership capabilities as well as their personal effectiveness.
Functional skills development focuses on developing and sharpening the technical skills
of its people towards becoming the best-in-class in their areas of expertise - technology,
marketing, sales, finance, customer analytics, strategy, human resource, internal audit,
regulatory and legal.
The Leadership development (Competency) centres on nurturing leaders who think
before they act and act according to the values that the organisation embraces (learning
the process, know-how and facts), craft (acquiring the practical experiences) as well as
art (building the ability to draw insight and form visions).
The leadership development programmes address the dimensions of:
science (learning the process, know-how and facts)
craft (acquiring the practical experiences)
art (building the ability to draw insight and form visions).
Axiata have 4 development platforms and activities for the people: Education-Based Development is where there are classroom trainings or
workshops to equip people with specific skills and knowledge. The curriculum is
designed to blend timeless Asian philosophy with efficient Western methodology,
to cultivate the desired "thinkactembrace' leadership".
ExperienceBased Development is where we provide onthejob experiences to
our people. Here, we emphasise the sharpening of the "craft" of our people.
RelationshipBased Development is where we organise network sessions for
our people to meet and learn from internal senior executives and peers from
across the region. The network sessions are carefully set up to enable our people
to learn and gain insights of key success factors of the business, leadership
journey of our leaders and/ or any other business and strategy-related topics.

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Internal Analysis: SWOT Analysis
Strengths
i.
Good financial performance
ii.
Large overall subscriber base
Weaknesses
i.
De-centralized control over regional operations
ii.
Lack of strong/cohesive differentiation with other operators
Opportunities
i.
New verticals
ii.
Well positioned in growing markets
Threats
i.
Exposure to regulatory and foreign exchange risks
ii.
OTT services that are viable substitute for core services
Strategic Direction of Celcom (Local Market)
Celcom is the oldest mobile telecommunication service in Malaysia, now moving into the
transformation phase where the company is fully geared to make mobile experience a
sailing breeze to their customers. Celcom vision is about pleasing their customer and
exceeding their expectations. It is celcom goal to empower them with choices and
innovative solutions that will give them greater control and freedom to live it to the
fullest. Celcom also participate in corporate social responsibility.
Segmentation & Target Market for Celcom
Demographic
Age group 12 ~ 25
Technology savvy, consumptive
Offered Xpax prepaid service
Psychographic
Active social life
Communicate-friends, colleagues & families
Celcom Blue prepaid service
Behavioral
Usage rate
Lite plan, basic plan & advance plan
Positioning
Good telecommunication service
Celcom blue prepaid-lower rates
Xpax prepaid youth
Celcom postpaid corporate level
High speed Broadband
Can be connected anywhere anytime
Affordable and flexible to choose
According to usage & financial needs
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Brand analysis
Brand products
Postpaid services-celcom first
o Celcom First Prime, Premier and Elite
o Celcom First Biz Prime, Premier and Elite
Prepaid services-Xpax
Broadband services
Blue Cube
The Cube

Brand Identity
Celcom broadband youll have nothing but peace of mind from the moment you
sign up
Celcom Biz- Maximize the reach of your business with celcom. Malaysias
leasing mobile network service provider with the widest nationwide coverage.
Celcom First-Celcom postpaid plan will prove to be absolutely everything you
need and more.
Xpax Got X, Got it All.
Brand Extension
School of X, University of X
Broadband
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Brand Sponsorship
Co-branding with Citibank, AirAsia
Event Sponsorship
SWOT analysis
Strengths
Establish Brand
Quality Products
Weakness
Low market share
Poor marketing efforts
Opportunities
Growth in telecommunications service industry
Promotion Opportunity
Threats
Competitive Industry
Technological Advancements
Strategic Plans to increase market share
Improve Advertising & Promotions to deliver the value to customers
Attract new customers
Increase in sales
Establishment of a loyal customer base
Brand exposure
Creates visibility
Attract investors
Improve Customer Care
Competitive advantage
Increasing image of the company
Improve market share
Increase the customer loyalty
More referrals
Continue delivering good product and maintain loyal customers
Save time
Save cost
More time focusing on loyal customer
Short Term Plan
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i.
ii.
iii.

Review targeting and positioning

External competitive analysis & consumer analysis
Launch advertising campaign

Mid Term Plan

i.
Testing and feedback
ii.
Close the sale
Long Term Plan
i.
Market research & Evaluation
ii.
Set a standard
Contingency Plan
Improve customer care
i.
Training for staff
ii.
24/7 customer support
iii.
Quick response increase customer satisfaction

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3) Comparative Analysis
Axiata Main Competitor (Maxis/Digi)
Objective:
1. To conduct SWOT analysis on Axiatas competitors.
2. To determine competitors competitive advantage
3. To determine competitors short, mid and long term plans
SWOT Analysis of Maxis
A SWOT analysis is a structured group activity that is useful in identifying the internal
and external forces that drives an organization competitive in its markets. SWOT is an
acronym for Strength, Weakness, Opportunities and Threats.
Strengths
1. Good network coverage around Malaysia.
2. Have strong brand image and as merge as the market leader in Malaysia.
3. Good deals and special offers for different age groups and also target groups.
4. The oldest and biggest in terms of size and technology.
5. Provides reasonable plans and packages for all users.
6. Always the first to introduce new mobile plans
7. All type of telecommunication and internet technology services.
Weaknesses
1. Interruption of the line at certain areas.
2. Bad customer services.
3. Deals and offers are limited to certain time and area only.
4. Lack of Maxis centers(suburban areas) to enquire information or to pay bills
5. For broadband, speed is good during the first 7 days after activation, and then the
speed goes slower later on.
Opportunities
1. New technology is developing like mushrooms, so when there are new
telecommunication gadgets, there will be opportunities to explore in.
2. Growth of people using smart phones and LTE internet services provides more market
opportunities.
3. Expanding their business to overseas.
4. Building more maxis centers especially suburban areas.
5. New events and occasions to be sponsored.
Threats
1. Competitive Pressure causing pressure on margins
2. Rapid Technology Changes needing capital
3. Global Economic Slowdown impacting growth

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Maxis Competitive Advantage

Being the oldest and most experienced amongst the three, Maxis has many competitive
advantages against its major rivals DiGi and Celcom. They currently posses the highest
trend in the market share, giving the highest coverage, many products features and having
the highest customer size in the Malaysian market. They are applying many future
strategies to maintain their position as the market leader in the Malaysian market like
niche marketing, business package development, intercontinental and international
service expansion.
Determine the Short / Mid / Long Term Plans for Maxis
To sustain the competitive in Telco market share, Maxis are continue its expansion into
the prepaid mobile data segment with additional features to its self-serve app, Hotlink
Red Application, which will be introduced in the third quarter of this year.
Initial features have been running steadily and user feedback for the app has been good so
far. Maxis first launched the app earlier in May 2014.
Maxis is targeting 200,000 to 300,000 downloads of the Red App by year-end from its
prepaid user segment. At its initial launched, the app had garnered some 5,000
downloads. Maxis target is intact. There are very happy with what have attracted so far.
The app will bring in a higher number of mobile data users from the youth segment.
The app gives customers access to year-round #LiveLifeLoud rewards as well as a new
and easier way for prepaid users to track their balance and data usage, top up and
purchase mobile internet services. Some of the new features will include sharing and
purchasing functionality.
The Red App is part of Maxis long-term plan to grow its mobile data market,
particularly among its younger users. Maxis noted that about 10 million of Maxis 13
million users are in the prepaid segment, the bulk of who are youth.
The prepaid segment is a very price-conscious category, simply because most of them
are in the younger age group. To make it easier for them to stay connected to the Internet
at all times.
Maxis had launched the #Hotlink prepaid plan last year to encourage users to stay
connected to the internet at a flat rate. According to maxis, its no pay-per-use charges
address a major pain point in the mobile data market, whereby smart phone users have
their data quota drained by automatic updates.
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The introduction of the Red App provides prepaid users with a convenient platform to
manage their accounts, which further encourages them to stay connected.
And its latest effort is #LiveLifeLoud, which gives its prepaid customers a chance at
enjoying a money-cant-buy experience. The #LiveLifeLoud campaign also enables
Maxis to engage its customers.
From the beginning, maxis had a clear proposition. Mobile data is a growing segment
and maxis want to grow that. So maxis have launched a series of efforts to encourage
connectivity all the time particularly with the prepaid segment. We are really excited with
the level of engagement weve got so far for #LiveLifeLoud,

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SWOT Analysis of Digi Telco (Celcom competitor)

SWOT analysis is an assessment technique to analyse strengths and weaknesses
comprising of positive and negative internal influences; and opportunities and threats
which are positive and negative external influences of an organisation. An accurate
SWOT analysis is important for effective organisational planning and goal setting.
Strengths
Great Value Plans
DiGi has one of the lowest price plans in the market. The table below illustrates DiGis
price plans for the iPhone 5S as compared to its competitors. On top of cheaper rates,
DiGi has a superior loyalty program called Digit Rewards where they give out rebates,
free talk time, mobile data and SMS

Source: Celcom Axiata Bhd, 2014; DiGi, 2014; Maxis Bhd, 2014

Table 1: Comparison of Maxis, Celcom and DiGi price plan for iPhone 5S
Innovation
DiGi has a good track record in product innovations. For example, DiGi was the first
Malaysian mobile operator to co-brand Opera Mini featuring a compression technology
that allows non-smart phone users easy access to internet. In 2012, DiGi established
Partnership with WhatsApp which offers subscribers unlimited access to WhatsApp at
an affordable rate.
Attractive career development
DiGi provides attractive career development prospects for employees. They have many
initiatives and programs for all levels across the organization. For example, in 2012,
targeted coaching and development programs were launched to address key skills and
leadership deficiencies of their employees.
Weaknesses
Poor network coverage
DiGis lack of base stations as compared to its competitors causes poor network and
broadband coverage which leads to dissatisfaction among subscribers and give DiGi a
bad reputation. Based on Malaysian Wireless (2013), both Celcom and Maxis have about

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80% 3G coverage with more than 7000 3G base station compared to DiGis 2000-3000
3G sites causing poor indoor coverage.
Unsatisfactory customer service
Based on several online forums, there evidence show that DiGi has poor customer
service. Customers complain about the long waiting time in service centres and call
centres, slow e-mail responses and unfriendliness of DiGi sales representatives
(Complaints Board, 2014). As stated by a DiGi subscriber in Lowyat.net, civic noob
mentions that he had to call DiGi many times to settle a simple phone billing issue.
Slow dissemination of new products information to customers
DiGi lacks marketing activities which delays the dissemination of new products
information to publics. As a result, the lack of information has caused DiGi to lose out on
potential customers and market share.
Opportunities
Globalization
The world is now borderless due to technological advancements causing an increase in
global movements and interactions of people, goods and services. Globalization has
provided DiGi with an opportunity expand their business reached in order to provide a
platform to meet these demands.
Higher standard of living
The rising standard of living in Malaysia is increasing the demand for telecommunication
devices. According to the 2012 Household Income Survey, the average monthly
household salaries have risen by 7.2% since 2009. It has become common for people to
own at least one mobile device providing DiGi an opportunity to increase sales revenue.
Influx of foreign workers and international students
According to national statistics, the influx of foreign workers and international students is
increasing. Since 2011, there are 1.5 million foreign workers and 90,000 international
students and continuously rising. Ministry of Higher Education aims to attract at least
200,000 international students to education institutions in Malaysia by 2020. Foreign
workers seek low international calling rates while international students demand cheap
mobile internet service to stay connected to with their loved ones back home providing
DiGi an opportunity to enter this new market segment.
Threats
Government regulations
According to Deputy Prime Minister Muhyiddin Yassin, Malaysia's Education Ministry
will continue to ban mobile phone usage in schools (The Straits Times, 2012). The policy
decreased demand for mobile phones and less usage by students causing a negative
impact on DiGis sales revenue.
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Industrial rivalry
Within the industry, Maxis, Celcom and DiGi continue to compete on product and service
differentiation through improvement and introduction of new innovative features
(Malaysian Wireless, 2011). The need to gain and maintain competitive advantage over
its competitors might place a heavy burden on DiGis bottom-line.
Bargaining powers of suppliers
The telecommunications industry in Malaysia is dependent on imports for its network
components. Most equipment cannot be sourced locally resulting in high bargaining
powers of suppliers (Malaysian Wireless, 2011). This has resulted in an increase in
DiGis cost, hence reducing profit margin.
Determine the Short / Mid / Long Term Plans for Digi
Based on the S.W.O.T analysis, the following were identified and a strategy is developed
to address each influence:
1. Opportunity: Influx of foreign workers and international students in Malaysia.
2. Weakness: Unsatisfactory customer service.
Low Price Plan
The first strategy is to take advantage of the opportunity of influx of foreign
workers and international students in Malaysia, Porters generic competitive strategy of
focus is proposed. The focus strategy emphasizes on cost advantage targeting a growing
niche segment which is the low priced mobile plan catered for foreign workers and
students.
The increase of foreign workers and international students has created a demand
for low International Direct Dial (IDD) calls and mobile internet service. To serve the
targeted segment better, a mobile plan is designed to suit their needs, which includes
lower IDD rates and higher data usage for mobile internet service while reducing other
services like SMS and talk time as it is not prioritized by them. Subscribers can choose to
tailor their mobile plans according to their preferences. For example, a subscriber who
does not use the mobile internet service can transfer the credits into IDD minutes. This
allows subscribers greater flexibility to manage their mobile plans, thus improving
customer satisfaction.
According to a research done, the advantage of cost focus strategy is having the
highest performance on sales. This strategy allows DiGi to increase revenue and market
share. In addition, the implementation of this strategy will make DiGi the leader of the
new emerging market segment.
The disadvantages are that DiGi sacrifices economies of scale which would be
gained by serving a wider market. The ever changing consumer preference is also a risk
as DiGi has to undertake for serving a niche market. Lastly, with the focus on non-local
consumers, DiGi runs a higher risk of default payment in monthly bills.

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Quality Customer Service
The second strategy is to rectify DiGis weakness of unsatisfactory customer service.
Porters generic strategy of differentiation is proposed which focuses on creating a
product or service with distinctive attributes that sets itself apart from the competition.
The strategy is to provide superior customer service to DiGis subscribers to differentiate
itself from competitors.
During S.W.O.T analysis, poor customer service was one of the major weaknesses of
DiGi. DiGis customers listed long waiting time at service centres and slow response
time for enquires as their main dissatisfactions. In order to provide quality customer
service, front line staff will be sent for customer service training programs. More service
centres and retail outlets will be established to provide more location options and reduce
waiting time. Feedback channels like online chat and forums will also be developed
allowing to interaction with subscribers.
The advantage of this strategy is the improvement of brand image. In the long run, DiGi
may be able charge a premium for its products or services. Another advantage is that
DiGi is able to increase customer loyalty. Having loyal customers stabilizes the
company's revenue and lessens the impacts of market downturns.
The major disadvantage of executing a differentiation strategy is the high cost required to
implement the necessary measures to differentiate the organization from its competitors.
The increase in retail outlets/service centres and shorter response time to customers
enquires more manpower. Together with the increase in feedback channels, the strategy
requires significant capital outlay for implementation. Another disadvantage is that it
takes time to change the mindset of consumers to create a strong brand image in
consumers minds. During the process, the company may not have sufficient customer
demand to offset its higher costs, which may lead to a loss.
Conclusion
DiGi Telecommunication has several internal and external influences that effect the
organization. Hence, strategies need to be imposed to address these influences to improve
the organisations overall position. The appropriate strategy to implement is the Low
Price Plan focus strategy which targets the international students and foreign workers, a
growing niche market in Malaysia. For successful implementation, the organising and
leading aspects have to be set to ensure a smooth flow of execution. This will bring more
profits and growth to the business of DiGi Telecommunications.

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4) Recommendation
A. Own brand Over The Top (OTT) Services
1. Build an Axiata branded, Mobile OS agnostic app-store that integrates with the
handsets native ecosystem, supported by a network specific cloud storage
service.
2. Provide enough incentives for developers (both established and aspiring) to
develop applications for Axiatas App Store, with a particular focus on localized
applications.
B. Differentiated Vertical Diversification
1. Negotiate payment settlement agreements with popular online digital content
stores (e.g. Apple iTunes, Google Play, Blackberry App World, etc) by leveraging
on subscriber base size
2. Develop interfaces with these stores to enable customers to pay for their
purchases using their mobile subscriptions (post-paid and prepaid)
3. Develop fraud management policies to cater for the potential for increased bad
debts by post-paid subscribers
4. Extend the payment solution to other products and services by working with
selected vendors and merchants
5. Develop a framework for the provision of micro-financing services with reputable
financial institutions and a network of individual agents

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5) Conclusion from Analysis

External Analysis
The business environment for Telcos is changing rapidly, and Axiata has
to change accordingly to stay relevant and vital in the new Telco paradigm
Internal Analysis
Axiata's current strategy has been successful so far, but it needs to:
i. Diversify its service offerings
ii. Leverage on its large subscriber base
iii.
Focus more on engaging the under-served bottom-of-the-pyramid market

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