The MTN firm is established in 1994 and their headquarters is located in the South Africa. With the sustainable development in more than 20 years, the company has achieved a wide range of outstanding achievement. Specifically, the MTN company contribute considerably to providing a modern lifestyle with achievable connectivity and adequate freedom to the residents living in African continent because of their affordable telecommunication service. For example, the scope of their telecommunication service has been available within more than 20 countries and regions, involving in both African and Middle Eastern areas by 2014 (O’Neill, 2014). Due to the availability of telecommunication service in these regions, people there are able to enjoy the convenience and mobility led by the mobile phones. From this perspective, the MTN play a crucial role in facilitating the social development in these countries. The group, therefore, have been awarded for several times due to their remarkable contribution to the social development sector.
The MTN, in fact, also have excellent performance in advancing the economic development of the African continent. This is partly because that the telecommunication service itself could be a strongly driving force behind the advancement of the regional economy (Wilson, David, Beatrice& Mary, 2014). Also, the MTN group contribute to the economic development from paying considerable taxes and creating more job opportunities in many host countries. Take the 2013 year as example, the MTN organization generate approximate $13billion US dollars this year and enlarge the scale of their subscribers to 207.8 million.
On the other hand, it also should be noticed that the global telecommunication industry is facing with the increasingly fierce competition (Zenaide & e Castro, 2015). The MTN, therefore, should continue to explore new possible markets in order to strengthening their competitive capabilities.
table of content
SWOT analysis for the MTN 4
Analysis and evaluation of two new host regions 5
PESTLE analysis for Hong Kong and Taiwan 5
Porter’s 5 Forces analysis for Hong Kong and Taiwan 6
Industry lifecycle analysis for Hong Kong and Taiwan 8
Motivations for the MTN to open new markets 8
National advantages analysis for Hong Kong and Taiwan 8
MTN’s entry strategy in Taiwan 9
Conclusion and recommendation 10
As one of the most multinational telecommunications companies, the MTN group is exerting the increasingly significant influence on the people’s daily life in a number of countries and regions. As mentioned before, however, there is still a real need for the MTN to extend their current business scope by entering new foreign markets so that they are able to keep their sustainable competitive advantages. Thus, the fundamental purpose of this management report is to evaluate two potential host regions (Hong Kong and Taiwan) and select the most proper one to for the MTN to enter in the near future. Before the evaluation of those two new regions, there will be a round analysis of the internal environment in the MTN, where the SWOT framework will be applied. Along with that, the evaluation of new host regions will be conducted, in which the PESTLE framework, Porter’s 5 Forces theory and the industry life cycle analysis will be applied. Then, based on the comprehensive assessment of two new regions, this report will analyse the motivation for the MTN to implement the internationalizing strategy. Meanwhile, the national advantages of the MTN will also be discussed in both of two host regions and enter strategy for a most suitable host region will be suggested. In addition, there will be a set of recommendation for helping the MTN make better performance in the chosen host region.
SWOT analysis for the MTN
The definition of the SWOT analysis is involved in evaluating a specific organization from four main perspectives, which are strength, weakness, opportunities and threats respectively. In terms of the strength, it is no doubt that there are several advantages in the MTN group. For example, their highly respected brand reputation could be a strong strength for the MTN firm. In the past 20 years, the MTN has invested enormous resources in constantly improving the quality of their service and therefore win vast customers’ praise. Such respect from customer could be viewed as one of the most evident strength for the MTN. Another remarkable strength for the MTN could be their proficient experience in the telecommunication industry. As an emerging industry, the operating period of many firms in telecommunication industry is less than 12 years (Bilbao-Osorio, Dutta & Lanvin, 2013, April). Compared with them, the MTN has obvious advantage in terms of the operating experience.
Nevertheless, it seems that the MTN has adverse weakness as well because of their limited operating experience in host countries with diverse cultural background. Specifically, although the current business scale of the MTN has covered more than 20 countries, most of them are located in the African continent and a few of them are located in the Middle Eastern area. Hence, current customers of the MTN are mainly form countries sharing the quite similar culture with the South Africa. That means that, the MTN lack experience of entering a new foreign market with different culture to some extent.
Regarding as the opportunity for the MTN, it is clear that there is a wide range of emerging markets in the global scale, which could be the potential market for the MTN. This view is based on the fact that an increasing number of foreign markets are emerging with considerable demand for the telecommunication service. Such trend could endow the MTN with substantial chances to enlarge their current business scope.
When it comes to the threat, it should be realized that the whole telecommunication industry is filled with intensive competition, which could be the adverse threat for the MTN to keep continuous growth. According to the research, the competition within the telecommunication industry in involved in a number of aspects, including technology, fund and human resource. The MTN group should be cautious about such competitive threat and make sure that their advantages will not be damaged by the fierce competition.
Analysis and evaluation of two new host regions
PESTLE analysis for Hong Kong and Taiwan
The PESTLE framework mainly refers to the evaluation of a certain country or region from the political, economic, social, technological, legal and environmental perspectives (Newton, 2014). To be specific, the political factor is mainly involved in the political stability and the approach for the government to govern companies. In terms of the political stability, it seems that both of the Hong Kong and Taiwan have the stable political system. Moreover, governments in these two regions tend to implement a set of relative policies to encourage the development of the business sector. Therefore, the political environment in both Hong Kong and Taiwan are suitable for the MTN.
For the economic factor, it particular emphasizes the economic situation of a certain region, such as the GDP level, GDP growth rate and capital cost. Compared with Taiwan, Hong Kong tend to have both relatively higher GDP level and capital cost. By contrast, the GDP growth rates in these two areas are quite similar, with the speed of approximate 3% every year to grow (Chiang, Tao & Wong, 2015; Yeh & Liao, 2017). Such evidence shows that both Hong Kong and Taiwan have the growing potential to satisfy the MTN’s demand.
The social factor refers to assessing a country according to their cultural background, and several social features. Regarding as the cultural background, Hong Kong seems have both the Asian and Western cultural backgrounds, while Taiwan could be regarded as the typical example of a region with Asian culture. As far as the core social features are concerned, there is not obvious difference between the Hong Kong and Taiwan. Hence, the MTN need to adapt to a totally different culture if they plan to enter either the Hong Kong or Taiwan market.
In terms of the technological factor, it is apparent that the technology in a specific region should be taken into consideration. Compared with Taiwan, Hong Kong seems have the more advanced technology level in a wide range of industries, including the telecommunication field. Meanwhile, it is noticeable that the technology capabilities in these two regions are far higher than the average level of the technology capabilities in the African continent.
The legal factor pays particular attention to the law environment within a certain region, including employment law, labor law and consumer-protecting law. Both Hong Kong and Taiwan’s law system are famous for their justice and evidence. This could be a positive factor to the MTN to open a new market there.
For the environment factor, it contains the consideration of local climate and weather. In fact, the climate and weather in Hong Kong and Taiwan does not have obvious difference. Meanwhile, for the MTN group, the environment factor could be regarded as the least important aspect to consider.
Porter’s 5 Forces analysis for Hong Kong and Taiwan
Porter’s 5 Forces framework, in general, is applied into the micro analysis level to evaluate the competition presence within a specific industry (Porter, 2008). The 5 forces refer specifically to the threats of new entrants, threats of substitutes, barging power of customers, barging power of suppliers and industry rivalry. Regards to the telecommunication industry, it could be common sense that the threat of new entrants is relatively less than other industries with lower entry barriers. Generally, it is difficult for a company to enter the telecommunication field since it requires a great deal of both technology and fund capacities. This is also true for the MTN group. Furthermore, it should be recognised that the threat of new entrants could be comparatively lower in Taiwan than Hong Kong. In other words, the new entrants of telecommunication industry are less like to be successful in Hong Kong than in Taiwan. After all, Hong Kong have strong pros in both the technology and fund capabilities compared with Taiwan.
Threats of substitutes are involved in the consideration of possible alternatives of a specific technology or item. For the telecommunication service, there is no apparent or potential technology that can replace it in the short-term. Thus, the threats of substitutes in the telecommunication industry of both Hong Kong and Taiwan tend to be at a relatively lower level.
The barging power of customers implies the customers’ sensitivity toward the pricing change. Generally, the barging power of customers differs from one type of industry to another according to their different market structures. Customers in the perfect competition market tend to have the highest barging abilities, while they have the lowest barging power in the perfect monopoly market. In both Hong Kong and Taiwan, their telecommunication industry is now facing with the oligopoly competition. As a result, the barging power of customers in this industry is pretty lower compared with other complete and incomplete competition markets.
Likewise, the barging power of suppliers describes the pricing sensitivity from the supplier perspective. Usually, suppliers of either an oligopoly or a monopoly are less likely to have high barging power. Therefore, the barging power of suppliers in the telecommunication industry in both Hong Kong and Taiwan is not so powerful as it is in other complete and incomplete competition markets.
The industry rivalry indicates the competitive extend in a specific field. For the Hong Kong, as a highly modern city, the demand of the telecommunication is still increasing, thereby attracting plenty of investment in this industry. By contrast, there is comparatively less available fund in Taiwan to invest in the telecommunication. Therefore, the industry rivalry in Hong Kong is more intensive that it is in Taiwan.
Industry lifecycle analysis for Hong Kong and Taiwan
The industry lifecycle analysis primarily discuss the different development period of a certain firm from the industrial level (Covin & Slevin, 1990). Based on the above analysis, by comprehensively taking a set of relevant factors into consideration, it seems that the telecommunication industry in Hong Kong is at the mature growth stage, while it is at the growth phase in Taiwan.
Motivations for the MTN to open new markets
Obviously, there are both internal and external motivations for the MTN to enter a new foreign market. To be specific, the purse of maximizing profits could be one of the vital internal motivations to force the MTN to implement their internalization strategy. Also, the purpose of enlarging their brand influence in the global scale could be another crucial internal motivation for the MTN. In terms of the external motivation, it is also clear that a number of emerging markets are generating the increasing amount of demand for the telecommunication service, like the Hong Kong and Taiwan. Such potential market opportunities could serve as the main driving force to drive the MTN to open their operating globally.
National advantages analysis for Hong Kong and Taiwan
In general, the Porter’s diamond framework is a commonly used tool for examining the national advantages. This framework primarily assesses the national strength from the factor conditions, demand conditions, competitive rivalry and related supplier of support industry in a certain country. When it comes to the Hong Kong market, it seems obvious that there abundant technology and fund resources available for supporting the progress of the telecommunication industry. Hence, Hong Kong have the apparent advantage in the factor condition. Similarly, Hong Kong also have the advantageous demand condition because of their increasing demand for the telecommunication service. By contrast, the industry rivalry in Taiwan is relatively less intensive, which offers the local market with advantage in terms of the competitive rivalry. Meanwhile, the support industry of telecommunication field in Taiwan is experiencing the rapid growth as well. Therefore, the telecommunication industry could benefit the boost of their supporting industries from receiving supply with lower price. Thus, Taiwan tends to have the strong advantage in terms of the relevant suppliers of support industry.
According to the above comprehensive analysis, it could be concluded that Taiwan is more proper for the MTN group to invest, where there is lower entry barrier and competitive rivalry compared with Hong Kong.
MTN’s entry strategy in Taiwan
Theoretically, the main entry strategies could be categorized into four main types, which are FDI, collaborative ventures, licensing and franchising (Green, Barclay & Ryans, 1995). The criteria for the MTN to make entry strategy should focus on both the suitability and feasibility of each entry strategy. For instance, in terms of the FDI approach, it requires the MTN organisation to invest tremendous fund in establishing a new firm in Taiwan. Therefore, this mode is not feasible for the MTN.
For the collaborative ventures strategy, it means that the MTN firm can cooperate with the local company in Taiwan in order to open their business operation in Taiwan. Since the MTN group have proficient experience in the telecommunication industry, there must be local enterprises willing to collaborate with the MTN to operate the telecommunication business together in Taiwan. Hence, this approach is feasible for the MTN company. Furthermore, as one of the emerging markets, Taiwan will be able to provide enormous chances for the MTN firm to enlarging their business scope. Thus, the collaborative ventures mode is also suitable for the MTN.
However, either the licensing or the franchising approach is involved in the risk of damaging the MTN’s technological advantages. Therefore, these strategies are neither suitable nor valid for the MTN company. After all, the technology patent is invariably viewed as one of the core competitive advantages in the telecommunication industry.
Conclusion and recommendation
In conclusion, it is necessary for the MTN group to internalization worldwide and the Taiwan could be a potentially suitable market for them. Apparently, the MTN should follow make efforts from two aspects so that they can enter the Taiwan market successfully. First of all, the MTN firm should take the conscious attitude when they try to select their collaborating partner in Taiwan. They will play a vital role in deciding the final result of the MTN’s performance in Taiwan. Moreover, the MTN need to respect and trust their chosen partner once they decide to cooperate with eeach other. Such trust and respect is vital in enabling the MTN company to achieve their original goals.
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