JIMMA UNIVERSITY

COLLEGE OF BUSINESS AND ECONOMICS

DEPARTMENT OF MANAGEMENT

STRATEGIC MANAGEMENT ASSIGNMENT

PREPARED BY:
1. DERARTU WAGARI

2. MEKONNIN DHABA

3. WOSEN MAMO

4. EYUEL DERIBE

5. GUTA HAILE

6. WUBALEM

PROGRAMME: - MBA WEEKEND

SUBMITTED TO: -Dr. Shimels Zewdie (PhD)

MARCH, 2022

JIMMA, ETHIOPIA
Contents
1. Introduction......................................................................................................................................... 3
2. Mission/Vision..................................................................................................................................... 5
A. existing mission and vision statements Ethio telecom..................................................................... 5
B. Improved mission and vision Statement and reason for improvement........................................... 5
C. Comparison of mission and vision statements to leading competitors............................................ 6
3. Internal Assessment............................................................................................................................ 8
A. Financial ratio analysis..................................................................................................................... 8
B. firm’s organizational chart............................................................................................................... 9
C. improved/recommended organizational chart.............................................................................. 10
D. market positioning map with firm and competitors...................................................................... 11
E. marketing strategy of the ethotelcom........................................................................................... 11
sterangth........................................................................................................................................... 14
weakenesse....................................................................................................................................... 15
F. Internal Factor Evaluation (IFE) Matrix........................................................................................... 15
4. External assessment............................................................................................................................. 17
A. major competitors of ethotelocm..................................................................................................... 17
B. Competitive Profile Matrix of Ethio telecom..................................................................................... 17
D. list of threat and opportunities of Ethio-telecom.............................................................................. 18
Opportunities.................................................................................................................................... 18
Threats............................................................................................................................................... 19
E. External Factor Evaluation (EFE) Matrix......................................................................................... 20
5. Strategic formulation,............................................................................................................................ 22
A. SWOT MATRIX................................................................................................................................... 22
B. SPACE Matrix,.................................................................................................................................... 24
C. Boston Consulting Group (BCG) Matrix............................................................................................. 26
D. Internal-External (IE) Matrix.............................................................................................................. 27
E. grand strategy matrix......................................................................................................................... 27
F. Quantitative strategic planning matrix QSPM................................................................................ 29
Recommendation.............................................................................................................................. 33

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6. Strategy Implementation................................................................................................................... 33
A. EPS/EBIT analysis............................................................................................................................... 33
B. Projected income statement............................................................................................................. 34
C . Projected balance sheet................................................................................................................... 35

D. Projected financial ratio................................................................................................................. 36

7. Strategy Evaluation............................................................................................................................ 37
A. Balanced scored card..................................................................................................................... 37
Conclusion................................................................................................................................................. 37

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 1. Introduction
The introduction of telecommunication in Ethiopia date back to 1894, Ethiopia
telecommunication corporation is the oldest public telecommunication operator in Africa Ethio
telecom is located in Addis Abeba, Ethioia and its parts of the telecommunication service
industry Ethio telecom has been serving the nation for 125 years.

Present status of the telecommunication are exchange capacity; total number of exchange
capacity of 780000 lines , out of this 171 are automatic digital exchange with 760,368 capacity
line .The total numbers of fixed telephone subscribers has reached 484,368

Ethiotelecom is an integrated telecommunication solution provider operation in Ethioia . we offer

internet,data, VAS, international and voice services. we offer internet ,data ,VAS , international
and voice services.Ethio telecom provides interconnects voice ,SMS, and transit services . we
have active voice partners in Africa , Europe , America and Asia ( to locate on world map )
currently Ethio telecom points of presence in London tele house , Djibouti landing station.

Following the announced market reform to create a competitive market structure, it has been
decided to prepare a three-year new strategic plan to get ready for the upcoming change and to
reshape the company to be run with business orientation and competitive mindset.This strategy
mainly followed emergent strategy approach to accommodate a changing reality, considering the
nature of the business and the ongoing market change in our context. Balanced Scorecard
framework has been used as a planning tool while preparing this strategy.

Ethio telecom to develop strategic plan assess the identified SWOT analysis Enabler and
challenges are identified, organization capacity resource value chain market offer, industry trend
key factor shaping telecom business operators experience , customer need current customer need
expected ,and expectation market.

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This strategy development has been led and coordinated by Strategy and Program Management
Division, from preparing high level draft strategy elements, benchmarks, roadmap, mobilizing
the technical team and alignment of strategies to the final validation of the document. A
dedicated technical team composed of commercial, technical and support domains has been
established to accommodate end to end business needs and perspectives in the strategy. The
strategy development exercise has been conducted twice at senior management levels by focus
group (selected chief officers) and by all executive management team.

To ensure competitiveness and sustainable growth of the company, this strategy document has
been prepared by reviewing relevant government policies, stakeholders ‘interest analysis on top
of the below major elements.

By 2025, Ethiopia is expected to grow 11% and generate 18m new mobile subscribers,
according to a recent report by telecom trade body GSMA (Global System for Mobile
Communications).Now a day at the consultation the Ministry of Finance held with ICT, banking
professionals and relevant parties on the bidding process and current preparation of selling 40
percent share of the state owned Ethio Telecom for foreign operators. Out of the remaining 60
percent share 55 percent will remain to be Government share while 5 percent will be sold for
Ethiopians. In addition to partially privatizing Ethio Telecom, the government has also decided to
bring in two new international telecom operators opening the industry for competition.

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 2. Mission/Vision

A. existing mission and vision statements Ethio telecom

Vision: To become a world-class provider of telecom services.

Mission: To provide world-class, modern and high-quality telecom services for all citizens
equitably so as to transform the multifaceted development of the country to the highest level.

B. Improved mission and vision Statement and reason for improvement

To provide secured, reliable and high quality and delivery more value our customer at
reasonable cost, developing, with emphasis on innovation, technology,encouraged and
reward superior performance of our employee, sustainable social responsibility and
strength mutually beneficial relationship with our stake holder with long term focus,
excellent assets and service -------------

Reason of Improved the mission statement of Ethio telecom

The mission statements are its can be clear, short simply,the mission statements of the Ethio
telecom are not fil-fill the basic components of mission specially,customer, survival and growth,
self-concepts ….

- Mission statements of the telecom are not explaining the firm responsive in social and
community, not specify the competitive advantage and aspiration of the firm and
financial soundness are not clearly set on the statement based up on this reason the
mission statements improved the statement by using the nine components, and shortly
set.

Its must be the include the customer and employee perspectives can motivate the staff and
employee to achieve, growth development and social responsibility of the for the society.

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Improved Vision statements of the Ethio telecom

Aspire to be most competitive in world class, lead innovative and digital services provider of
telecom. Reason of the improved the vision statements of the Ethio telecom because of the
able to more attractive and to set more clear vision statements

C. Comparison of mission and vision statements to leading competitors.

Ethio telecom state monopoly’s privatization, part of Prime Minister Abiy Ahmed’s
extensive economic reform program, is underway as the Ethiopian government processes
the dozen bids it received for a minority stake from multinationals and consortiums in
June.

The deal, probably the most anticipated corporate restructuring on the

Continent, attracted bids from nine telecoms companies including MTN Group of South
Africa, Saudi Telecom, Atisalat, Telkom SA, and a consortium of the Vodafone group
which includes Kenya’s Safaricom, and its parent company, Vodacom of South Africa. It
also includes two non-telecom operators, ethio telecom are sell 49 % of market share for
MTN and Vodacom telecom operation company but the 51 % of market share are control
for ethio telecom company .

D. Comment on your vision and mission in terms of how they support the
strategies you envision for your firm.

EthioTelcom the vision an mission statements are supports the strategy that are financial capacity

, quality of services , customer experience continuous incremental improvements , modern

technology , accessibility and affordability and quality of services are the sub issues of the
strategy but in the broad stream the strategy between2019- 2022 BRDGE strategy on the best
customer experience , reputable brand , innovative product and service and technology

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experience , developed people oriented learning organization , growth in financial capacity and
excellency in operation .

The first of the strategy ofEthiotelecom are best customer experience this strategy are
supported by the mission components of customer and products this are by provided sustainable
products and services , by similar quality of service to the customer , customer of this are well
know the products and services of the Ethiotelecom , so this strategy are supports the mission of
the first Ethiotelecom strategy

Innovation products , services and excellency this strategy are drive from the mission statements
of the components of technology and products , the vision of Ethiotelecom are supports the
strategy that means the vision are competitive on the world class of the telecom services
regarding to this its required the good and capable of innovation strategy of good and services to
compete in world class , and it must be used good technology are reliable and high quality of
good and services this supports the strategy of the innovation products , services and
technology excellency

Growth in financial capacity are the another strategy of the Ethiotelecom this strategy are
supported the vision and mission of the telecom company that are its are concerned for growth
and survival, its strength finical benefits by achieving the growth strategy

Excellency in operation activity this strategy highly linkage on the employee and technology
usages of the firms that means firms excellency determine by the skills of the employee and
technology advancements are great roll, and the mission and vision of the organization are
supported this strategy and the strategy of the firms are drive from the mission of the
organization.

Reputable brand and develop people-oriented learning organization are highly linkage on the
mission and vision of the organization over whole and this strategy are drive from the
components of the public image, philosophy and its critical image of the company

In general the mission and vision of the Ethiotelecom are support the major six strategy and its
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has high related because of the strategy of the firm are developed from the mission statements,
and the mission statements are developed from the vision of the firm so it’s are supported for
each other’s.

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 3. Internal Assessment

A. Financial ratio analysis.

2016 2017 2018

Current ratio 2.97 2.87 2.95

Fixed asset 2.58 2.5 2.7

Total asset turn 2.90 3.00 3.21

Over

Gross profit 1.65 1.35 1.95

Margin

Net profit margin 2.65 2.5 2.3

Return on 1.42 1.5 1.6

Investments
Debt ratio 1.54 1.75 1.65

Time interest 0.78 0.65 0.82

earned ratio

Receivable turn 0.97 0.85 0.9

over ratio
Average 1.2 1.52 1.35
collection

Period
TABELE 3.1 financial ratio analysis

Financial ratio of Ethio telecom current ratio of the company are has 2 birr and 97 cents for one
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birr of its current liability, this are show the company has good performance and its current
liability of are covered by the current assets of the company

Fixed assets of the turnover ratio are company has 2 birr and 58 cents in net sales for every birr
invested in fixed assets

Total asset turnover ratio of the Ethio telecom are generated 3 birr and 20 cents in net sales for
every birr invested in total assets. Based on this ratio analysis the company are capably to
generated high profits.

Profitability ratio analysis are the gross profit margin are profit are 1.65 cents for every birr
this are show the company are its used cost leadership strategy and it has good selection of the
material to company

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Net profits margin based on the data show the net income and net sales This means that Ethio
telecom has acquired 2 birr and 35 cents profit from each birr of sales. The ratio is indication of
cost minimization strategy and less expenses management

Ethiopia’s external stock total was around $28 billion. Leverage ratio of the overall activity of
the Ethiotelecom are its has good capability of solvency ratio the amount are low ratio to cover
the liability of the firms that’s indicated the firm’s assets are high ratio that the long term
liability of the company. Borrowings ,Deferred tax liabilities, Other non-current liabilities,
Provisions

In addition to increasing revenue, ethio telecom was able to decrease operating costs from 45%
of total revenue to only 30% of total revenue during that same timeframe. These costs savings
initiatives are focused in the areas of transmission, inventory, network operating costs (including
fuel), and IT costs. Total capital expenditures amounted to 11.88 , of which 90% went to
improvements in network quality, capacity, and coverage. Net income increased from 47.63
billion birr to 17.54 billion birr. . Free cash flow saw a 55% improvement from 9.35 billion to

14.51 billion birr. Ethio telecom dividend policy pays used of free cash flow in dividends.
Financial statements are prepared according to the International Financial Reporting Standards

Considered the effectiveness of the internal audit function and monitored adherence to the annual
internal audit plan. Reviewed the performance over activity of the telecom are business risk
officer to which the internal audit function reported to during the yearend , In today progress of
the Ethiotelecom incurred cost are mostly for the ,Intangible assets such as , Software, Capital
work-InProgress.in large part due to network expansion and a 5.8% increase in its subscriber
numbers.At 46.2million subscribers, the company now covers account nearly half of the
country’s population.

B. firm’s organizational chart

Organizational chart of the Ethiotelecom are its are some parts are goodThese organizations have
direct, vertical relationships between different levels and also specialists responsible for advising
and assisting line managers , chief executive officers are directly linkage to the chief
communication officers , chief customer care officers , chief human resources officers and chief

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information officers , this relationship are strongly positive effects on the all activity of the

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organization because of the communication back bone of the each activities of the whole
organization. Such organizations have both line and staff departments. Staff departments provide
line people with advice and assistance in specialized areas (for example, quality control advising
production department).Even through an organization structure allows higher flexibility and
specialization it may create conflict between line and staff personnel. Line managers may not
like staff personnel telling them what to do and how to do it even though they recognize the
specialists’ knowledge and expertise. , Some staff people have difficulty adjusting to the role,
especially when line managers are reluctant to accept advice. Staff people may resent their lack
of authority and this may cause line and staff conflict.

Mostly this type of the organizational structure created some negative impacts of the overall
systems of the company that are Co-ordination between line and staff may become difficult.
Because of the authority are not specify between them Committee Organizational Structure
Features: Formed for managing certain problems/situations.

C. improved/recommended organizational chart

Our group recommend are Line and staff organizational chart types are important because of the
line relationships are formal and a position in the direct chain of command that is responsible for
the achievement of an organization’s goals and the principle of unity of command is violated
when functional authority exists on Ethio telecom company the services are international that
means direct, vertical relationships between different levels and also specialists responsible for
advising and assisting line managers. Because of the communication of each workers are has
great roll for archiving the goal of the organization

Chief of strategy and program chief of telecom excellence academic, chief of marketing and
international business it must be specialized staff expertized staff and give some responsibility
and authority its need unique powers are need.

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 D. market positioning map with firm and competitors

This map show the market penetration strategy by creating image of there prodact on customer
maind through greatest market effort and how we’ll differentiate” our offering and create value
for our market. It’s about carving out a spot in the competitive landscape, putting our stake in the
ground, and winning mindshare in the marketplace – being known for a certain “something.”

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 E. Marketing strategy of the Ethotelcom of good and bad points competitors and in light of strategies you
envisionfor the firm.

Good point

Ethio Telecom has rolled out a three year development strategy which it said would enable it to
thrive in a competitive market.

The development strategy dubbed Bridge is believed to transform the state-owned monopoly
into a competitive company as the government is working to liberalize the telecom sector. This
strategy assumes that in the first year of the strategic period (2020), market reform activities may
not be completed, thus Ethiotelecom will continue as a sole telecom operator and there will not
be ownership change.
In the following two fiscal years (2021 & 2022), the strategy assumes competitive market
environment.
This strategy will be revised according to government decision on the modality of the telecom
market restructuring
The strategy focuses on the delivery of incomparable experience to potential and existing
customers throughout their interaction with Ethio telecom by being customer centric using
analytical marketing through mining big data to respond to behavior of individuals and micro-
segments; providing easy to use, tailored and affordable solutions; simplifying customers’
journey through digitalization and enhanced customer service management; improving service
availability and quality; securing customer privacy. Following these accomplishments, Ethio
telecom can ensure customer satisfaction and build strong and long-lasting relationship with its
customers

Bad point
➢ Size, competitors, stage of growth not more known.

➢ No Customer segments or Groups of prospects with similar wants & needs

➢ The firm strategy not more shows Competitive analysis orStrengths, weaknesses,
opportunities and threats in the landscape.

➢ Method for delivering value orHow firm deliver value to your market at the highest
level not more clear.
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 The strategy we envision for the firm is product development strategy

F. Show a map locating the firm’s operations and Discuss in light of strategies you
envision. Also, perhaps show a Value Chain Analysis chart.

The strategy we envision for the firm is market penetration strategy by using economics scale and
detrmaing the price of product by considering there compotator price. This map show how well the Ethio
telocm competing with their major compotator by providing quality service and how they determent there
competitive price related to their compotator.

Value chain analysis chart

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 cos
no operation

Cost =12345 58954 34678 45692 35781

The above value chain analysis chart show the company cost form purchasing to selling of
product .in above map show

G. Discuss (and perhaps show) show the ethotelocm Web site and e-commerce efforts/abilities in terms of
good and bad points.

Good point

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Developed countries approach the goal by card-base payment;

Developing countries approach the goal by mobile payment, and realize corner transcendence
Huge market development potential. Mobile operators are in excellent position to harness this
opportunity

Bad point

Contact information is buried or missing

Something as simple as having your (clear) contact information in an obvious place can add
legitimacy to your site and go a long way in building trust with potential customers

Design not user-friendly

Sometimes it’s the little design elements that get overlooked. Even a minor tweak can have a
significant impact, so don’t neglect to take into account details such as font styles and size

have poor or no content

Imagine arriving at a website and there’s nothing (or almost nothing) there

Site is not responsive : The number of people using mobile phones keeps ticking upwards and
needs to be taken into considerations when you design your website

site loads painfully slow: People are inherently impatient. Even if company has gripping content
and a gorgeously designed site, they’re not going to sit around and wait for it to load.
h. Show your “value of the firm” analysis.

Committed for quality and efficiency and able to ensure excellent customer experience

the value chain analysis of the ethotelocm is used to calculate total cost the company out flow

i. List up to 20 of the firm’s strengths and weaknesses. Go over each one listed without “reading”
themverbatim

sterangth.

➢ Large customer base

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 ➢ Drastic tariff adjustment, introduction of new packages, multiple new products and
services
➢ Regular surveys and events to respond to customers’ needs.
➢ Strong financial capacity System
➢ Scalable and wide telecom infrastructures
➢ Deployment of process based work management
➢ Implementation of modern technologies
➢ Acquisition of multiple office buildings, warehouses, infrastructure sites
➢ Young and educated employees that can simply adapt to changes, new systems and
technologies
➢ Having a telecom academy center (TExA)
➢ Smooth relationship between the management and employees
➢ Collaboration between the labor union and executive management Skill
➢ Knowledge sharing practices across the company
➢ Strong community services like school-net, Woreda-net, rural connectivity and Agri-net

weakenesse

➢ Delay in service provisioning and maintenance

➢ Limitation in ensuring quality of service.
➢ Limited geo-marketing practices
➢ Weak customer experience management System
➢ Systems synchronization problems
➢ Weak OLA management
➢ Limitation on project management
➢ Gap in domain expertise knowledge
➢ Limitation in talent acquisition, development and retention
➢ Lack of dominant leadership style
➢ Management team highly engaged in operational activities
➢ Limitation in internalizing vision, mission and adherence

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 ➢ Limitation in promoting company brand.
F. Internal Factor Evaluation (IFE) Matrix.
Sterangth Weight Rat WS
Large customer base 0.08 4 R

Drastic tariff adjustment, introduction of new packages, multiple new 0.07 3 0.32

products and services 0.21

Regular surveys and events to respond to customers’ needs. 0.11 4

Strong financial capacity 0.09 3 0.44

0.27

Scalable and wide telecom infrastructures 0.08 4

Deployment of process based work management 0.06 3 0.32

Implementation of modern technologies 0.06 2 0.18

Acquisition of multiple office buildings, warehouses, infrastr 0.07 4 0.12

0.28

Young and educated employees that can simply adapt to changes, 0.02 4

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new systems and technologies 0.08
Having a telecom academy center (TExA) 0.06 4

Smooth relationship between the management and employees 0.01 3 0.24

• Collaboration between the labor union and executive management Skill 0.01 3 0.03

Knowledge sharing practices across the company 0.02 4 0.03

Strong community services like school-net, Woreda-net, rural 0.08

connectivity and Agri-net

Weakness
Delay in service provisioning and maintenance 0.02 3 0.06
Limitation in ensuring quality of service. 0.02 3 0.06

Limited geo-marketing practices 0.03 3 0.09

Weak customer experience management 0.03 3 0.09

System

Limitation on project management 0.02 3 0.06

Systems synchronization problems 0.03 4 0.12

Weak OLA management 0.01 3 0.03

Limitation on project management 0.01 2 0.02

Gap in domain expertise knowledge 0.01 3 0.03

Limitation in talent acquisition, development and retention 0.01 1 0.01

Lack of dominant leadership style 0.02 2 0.04

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 Management team highly engaged in operational activities 0.01 3 0.03

Limitation in internalizing vision, mission and adherence 0.02 4 0.08

Limitation in promoting company brand 0.02 4 0.08

Total =1 =3.4

4. External assessment

A. major competitors of ethotelocm

The top 10 competitors in Ethio Telecom's competitive set are Cell C,

Telkom SA SOC Limited, Neotel, Vodacom Pty. Limited, MTN Group,
Econet Group, Umoya, SEACOM, Ltd., IS, Afrihost (Pty) Ltd., Emirates
Telecommunications Group Company PJSC, Mascom Wireless, Ooredoo,
Adapt IT, Saudi Telecom Company and Nmisa Use pie charts, maps,
tables, and/or figures to show the intensity of competition in the industry.

B. Competitive Profile Matrix of Ethio telecom.

least 12 factors and two competitors

Factor W S ws Compotat or Competitor Weigh
1 Score 2 ted
Weig Score Score
ht ed
Scor
e
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Marketing 0.25 4 1 4 1 4 1
Product 0.1 2 0.2 4 0.4 4 0.4
quality
 D. list of threat and opportunities of Ethio-telecom

Opportunities

Political

➢ Government's commitment to support and promote the sector

➢ Peaceful relations and economic ties with neighboring countries

➢ The nation is being seat of international organizations and avenue for many economic,
social and political conferences.

Economic

➢ Increasing economic growth the country

➢ Emerging industrial parks, small and medium enterprise, technology based service
delivery business models

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Social

➢ Growing population number with high young segment

➢ Increasing urbanization, digitalization and technology attachment with day to day life of
the society.

Technology

➢ Rapid technology growth & alternatives solutions

➢ Availability of competitive technology providers

➢ Growing number of startup and innovators in the ICT sector

➢ Digitalization and smart phone growth

Legal

➢ Establishment of Independent communication service regulations body

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Environmental

➢ Suitable climatic conditions for infrastructures deployment and day to day

operations

Threats

Political

➢ Neighboring countries political instability impacts international get ways functionality.

Economic

➢ Higher inflation rate

Social

➢ Low digital literacy rate

➢ Lack of reliable data on demographic & different institutions

➢ Vandalism on telecom infrastructures

➢ Integration gap with stakeholder (ERA, EEU, Regional governments)

Technology

➢ Dynamism and short life cycle of telecom infrastructures

➢ Dynamism of fraud and security risks

Legal
➢ Competitive telecom market

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 ➢ Limitation on awareness and acts of law enforcements for damages on telecom
infrastructures and fraudulent activities

Environmental

➢ The countries landscape, mountainous terrains and canyons challenging for

infrastructural deployment.

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E. External Factor Evaluation (EFE) Matrix.
Key external factors Weight Sco Weighted

re score

Opportunities

1. Government's commitment to support and promote the sector 0.02 3 0.06

2. Peaceful relations and economic ties with neighboring countries 0.01 1 0.01

3. The nation is being seat of international organizations and avenue for many

economic, social and political conferences. 0.04 2 0.08

4. Increasing economic growth the country

5. Emerging industrial parks, small and medium enterprise, technology based

service delivery business models 0.03 4 0.14

6. Growing population number with high young segment 0.05 2 0.1

7. Increasing urbanization, digitalization and technology attachment with day to

day life of the society.

8. Rapid technology growth & alternatives solutions 0.07 4 0.28

9. Availability of competitive technology providers 0.05 3 0.15

10. Growing number of startup and innovators in the ICT sector

11. Digitalization and smart phone growth 0.04 3 0.12

12. Establishment of Independent communication service regulations body

13. Suitable climatic conditions for infrastructures deployment and day to day 0.05 3 0.15

Operations

0.06 3 0.18

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 0.08 4 0.32

0.07 2 0.14
0.03 2 0.06

Threats

0.01 1 0.01
1. Neighboring countries political instability impacts international get ways
functionality.

2. Higher inflation rate 0.05 3 0.15

3. Low digital literacy rate 0.08 2 0.16

4. Lack of reliable data on demographic & different institutions

0.06 2 0.12
5. Vandalism on telecom infrastructures 0.05 2 0.1

6. Integration gap with stakeholder (ERA, EEU, Regional governments) 0.03 2 0.06

7. Dynamism and short life cycle of telecom infrastructures 0.02 2 0.04

8. Dynamism of fraud and security risks 0.03 3 0.09

9. Competitive telecom market 0.00 2 0.00

10. Limitation on awareness and acts of law enforcements for damages on telecom 0.03 2 0.06

infrastructures and fraudulent activities

11. The countries landscape, mountainous terrains and canyons challenging for 0.04 2 0.08

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 infrastructural deployment.

Total 1 2.66

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 5. Strategic formulation,

A. SWOT MATRIX
Strengths Weakness
1. Large customer base 1. Delay in service
provisioning and
2. Strong financial capacity
maintenance
implementation of modern
technology 2. Limited geo-marketing
practices
3. Young and educated employees that
3. Gap in domain expertise
can simply adapt to changes, new
knowledge
systems and technologies
4. Limitation in talent
4. Knowledge sharing practices across
acquisition, development
the company
and retention
5. Learning curve ( long term
5. Limitation in promoting
year experience)
company brand.
6. flexible company structure
6. Limitation on project
7. Scalable and wide telecom
management
infrastructures

Opportunities - expanding its product through market

1. Government's commitment development strategy within the country
- Promoting the brand of the
to support and promote the to provide the telecom service, in place
company by using the
sector where telecom service is not yet been
advantage of the countries
fully addressed, this can be done by the
2. The nation is being seat of bring the hub of regional,
strength of strong financial base and the
international organizations and continental , and
opportunities of digitalization and smart
avenue for many economic, international organizations
phone growth. Besides it is possible to
social and political conferences
develop new market In the neighboring
3. Peaceful relations and countries to generate additional revenue,
- Making joint venture with
economic ties with neighboring thus it can be possible exploiting the
well known telecom
countries strong financial base of the company and
companies abroad which
30
 the opportunity of peaceful relation and has quit intensive
4. Growing population number
economic tie with the neighboring innovative skill and
with high young segment
countries. technological advancement
5. -Rapid technology growth - New product development, introducing so as to learn project
& alternatives solutions new products which are not currently in management experts
use. By using the opportunity of
6. Growing number of startup
government’s commitment to support and
and innovators in the ICT sector
reform the sector and the advantage of
7. Digitalization and smart having modern technology and strong
phone growth financial base.
- Concentric diversification for growing
population number with high young
segment to exploit company’s flexible
structure and financial base

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Threats -Adopting market penetration strategy in - Cost reduction through
-Neighboring countries political order to reduce the adverse effect of low centralized resource allocation
instability impacts international get digital literacy rate by strong financial and mobilization ranging from
ways functionality. base. headquarter to different
- new product development strategy to by districts,
-Higher inflation rate
using learning curve and financial base to - Developing tight policies to
-Low digital literacy rate
reduce the effect of dynamism and short keep the telecom infrastructure
-Lack of reliable data on life cycle of telecom service. from theft fraud and damage
demographic & different - Back ward integration strategy to - engaging on aggressive
institutions reduce the cost of supply advertisement campaign to
promote the image and brand of
-Vandalism on telecom
the corporation and increasing
infrastructures
awareness of the nation on
-Integration gap with stakeholder telecom services
(ERA, EEU, Regional
governments)

-Dynamism and short life cycle of

telecom infrastructures
-Dynamism of fraud and security
risks
-Competitive telecom market

-Limitation on awareness and acts

of law enforcements for damages
on telecom infrastructures and
fraudulent activities

32
B. SPACE Matrix,

List of factors used in developing space matrix

Internal Strategic Position External Strategic Position

Financial Position (FP) Stability Position (SP)

Return on investment Technological changes

Leverage Rate of inflation

Liquidity Demand variability

Working capital Price range of competing

products Cash flow Barriers to entry into
market

Inventory turnover Competitive pressure

Earnings per share Ease of exit from market

Price earnings ratio Price elasticity of demand

Risk involved in business

Competitive Position (CP) Industry Position (IP)

Market share Growth potential

Product quality Profit potential

33
Product life cycle financial stability

Customer loyalty Extent leveraged

Capacity utilization Resource utilization

Technological know-how Ease of entry into market

Control over suppliers and distributors Productivity,

capacity utilization

Factors Average weight

Financial position 6.2
Industry position 5.28
Competitive position -3
Stability position -3.1

According to the evaluation average score of financial position is 6.2, industry position is 5.28,
competitive position is -3 and stability position is -3, 1. Besides the value of X axis is 6.2 + (-3.1

) = 3.1 and the value of Y axis is 5.28+ (-3) = 2.28

Thus value of directional vector shows that the company’s position is in the first quadrant (in
aggressive quadrant)

34
FP

35
 5

3 *

CP 1 IP

-7 -6 -5 -4 -3 -2 -1 1 2 3 4 5 6 7

-3

-4

-5

-6

36
 -7

SP

Based on the space matrix above the company is in a good position the exploit opportunities
hamper the effect of threats, effectively using its distinctive quality and minimizing its weakness.

So the strategic implication of this matrix is that the company can engage in different intensive
strategies integration and diversification.

Market penetration, especial by price adjustment or big discount on its product it can increase the
market share and revenue of the company.

Forward integration acquiring different agents and shops especially in different remote areas of
the country even at kebele level can maintain its market share and profitability.

Diversification of its product for example by devoting its resource on research and development
department it can diversify its product on different software programming application.

C. Boston Consulting Group (BCG) Matrix

Relative market share

37
Stars (II) Question Marks (I)

?
Cash Cows (III
Dogs (IV)

38
Quadrant II businesses (Stars) represent the organization’s best long-run opportunities for growth
and profitability. Divisions with a high relative market share and a high industry growth rate
should receive substantial investment to maintain or strengthen their dominant positions.

According to the matrix the relative position of Ethio telecom is in the second quadrant, which is
star. Because, it has high market share (as it is a monopoly in the industry) and the telecom
industry is highly growing sector.

- expanding its product through market development strategy within the country to provide the
telecom service, in place where telecom service is not yet been fully addressed, this can be done
by the strength of strong financial base and the opportunities of digitalization and smart phone
growth. Besides it is possible to develop new market In the neighboring countries to generate
additional revenue, thus it can be possible exploiting the strong financial base of the company
and the opportunity of peaceful relation and economic tie with the neighboring countries.

- New product development, introducing new products which are not currently in use. By using
the opportunity of government’s commitment to support and reform the sector and the advantage
of having modern technology and strong financial base.

- Concentric diversification for growing population number with high young segment to exploit
company’s flexible structure and financial base.

39
D. Internal-External (IE) Matrix

The IFE total weighted scores

average
Strong weak
2.0-
the EFE 3.0- 4.0 1.0- 1.99
2.99
High
3.0-4.0 I II III
t
o
t
a IFE = 3.4 IV V VI
l EFE =2.66
e medium
v 2.0- 2.99
VII VIII IX
l
u
t
i
o low
n 1.0 -1.99

The result of internal external evaluation matrix depict that Ethio-telecom stands on IV place
which is average weight of external factors evaluation which is 2.66 and average weight of
internal factor evaluation matrix which is 3.4 is in the range of strong weight

So, accordingly with the above result obtained by internal external evaluation matrix it is
possible to pursue growth strategies and further building the potential of the firm, because the
result lies on the range of grow and build the organization.
40
E. grand strategy matrix

The Grand Strategy Matrix is based on two evaluative dimensions: competitive position and
market (industry) growth.

And it has four quadrants which shows the combination of competitive position and
market( industry growth . Firms located in Quadrant I of the Grand Strategy Matrix are in an
excellent strategic position. For these firms, continued concentration on current markets (market
penetration and market development) and products (product development) is an appropriate
strategy.

41
Firms positioned in Quadrant II need to evaluate their present approach to the marketplace
seriously. Although their industry is growing, they are unable to compete effectively, and they
need to determine why the firm’s current approach is ineffective and how the company can best
change to improve its competitiveness, Because Quadrant II firms are in a rapid-market-growth
industry, an intensive strategy (as opposed to integrative or diversification) is usually the first
option that should be considered. However

Quadrant III organizations compete in slow-growth industries and have weak competitive
positions. These firms must make some drastic changes quickly to avoid further decline and
possible liquidation. Extensive cost and asset reduction (retrenchment) should be pursued first.
An alternative strategy is to shift resources away from the current business into different areas
(diversify). If all else fails, the final options for Quadrant III businesses are divestiture or
liquidation.
Quadrant IV businesses have a strong competitive position but are in a slow growth industry.
These firms have the strength to launch diversified programs into more promising growth areas:
Quadrant IV firms have characteristically high cash-flow levels and limited internal growth
needs and often can pursue related or unrelated diversification successfully. Quadrant IV firms
also may pursue joint ventures

Ethio-telecom can be traced in the first quadrant where market growth and strong competitive
position. So the strategies to be pursued are intensive strategies. Market penetration which
increasing is the sale of products or service through different mechanisms like increased
promotion sales discount, price discount and additional package.

42
 F. Quantitative strategic planning matrix QSPM

Table: Quantitative Strategic Planning Matrix, QSPM

S. Key Factors weigh Adding Only

No t Operators EthioTelecom
AS TAS AS TAS
Opportunity
1 Government's commitment to 0.02 2 0.04 4 0.08
support and promote the sector
2 Peaceful relations and 0.01 4 0.04 2 0.02
economic ties with neighboring
countries
3 The nation is being seat of 0.04 4 0.16 3 0.12
international organizations and
avenue for many economic,
social and political conferences.
4 Increasing economic growth the 0.03 3 0.09 4 0.12
country
5 Emerging industrial parks, 0.05 4 0.20 2 0.10
small and medium enterprise,
technology based service
delivery business models
6 Growing population number 0.07 4 0.28 3 0.21
with high young segment
7 Increasing urbanization, 0.05 4 0.20 2 0.10
digitalization and technology
attachment with day to day life
of the society.
8 Rapid technology growth & 0.04 3 0.12 2 0.08
alternatives solutions

43
9 Availability of competitive 0.05 3 0.15 2 0.10
technology providers

10 Growing number of startup and 0.06 3 0.18 2 0.12

innovators in the ICT sector

11 Digitalization and smart phone 0.08 4 0.32 2 0.16

growth
12 Establishment of Independent 0.07 3 0.21 2 0.14
communication service
regulations body

13 Suitable climatic conditions for 0.03 3 0.09 2 0.06

infrastructures deployment and
day to day operations
Threats
1 Neighboring countries political 0.01 2 0.02 1 0.01
instability impacts international
get ways functionality.

2 Higher inflation rate 0.05 2 0.10 3 0.15

3 Low digital literacy rate 0.08 4 0.32 2 0.16

4 Lack of reliable data on 0.06 2 0.12 3 0.18

demographic & different
institutions

5 Vandalism on telecom 0.01 2 0.02 3 0.03

infrastructures
6 Integration gap with 0.03 2 0.06 1 0.03
stakeholder (ERA, EEU,
Regional governments)
7 Dynamism and short life cycle 0.02 3 0.06 2 0.04
of telecom infrastructures
8 Dynamism of fraud and security 0.03 3 0.09 2 0.06
risks

44
9 Competitive telecom market 0.04 4 0.16 2 0.08

10 Limitation on awareness and 0.03 2 0.06 3 0.09

acts of law enforcements for
damages on telecom
infrastructures and fraudulent
activities
11 The countries landscape, 0.04 2 0.08 1 0.04
mountainous terrains and
canyons challenging for

infrastructural deployment.

Weight 1

Strength

1 Large customer base 0.08 4 0.32 2 0.16

2 Drastic tariff adjustment, 0.07 2 0.14 3 0.21
introduction of new packages
3 Multiple new product and 0.11 4 0.44 1 0.11
service
4 Regular surveys and events to 0.09 3 0.27 2 0.18
respond to customers’ needs
5 Strong financial capacity 0.08 4 0.32 3 0.24
6 Scalable and wide telecom 0.06 2 0.12 4 0.24
infrastructures
7 Deployment of process based 0.06 3 0.18 2 0.12
work management
8 Implementation of modern 0.07 4 0.28 2 0.14
technologies
9 Acquisition of multiple office 0.02 2 0.04 3 0.06
buildings, warehouses, infrastr
10 Young and educated employees 0.01 3 0.03 2 0.02
that can simply adapt to
changes,

45
 new systems and technologies
11 Having a telecom academy 0.01 1 0.01 2 0.02
center (TExA)
12 Smooth relationship between 0.02 2 0.04 3 0.06
the management and employees
13 Collaboration between the labor 0.01 2 0.02 1 0.01
union and executive
management Skill
14 Knowledge sharing practices 0.06 3 0.18 2 0.12
across the company
15 Strong community services like 0.06 1 0.06 3 0.18
school-net, Woreda-net,rural
connectivity and Agri-net
Weakness
1 Delay in service provisioning 0.01 2 0.02 3 0.03
and maintenance

2 Limitation in ensuring quality 0.02 2 0.04 1 0.01

of service.

3 Limited geo-marketing 0.03 3 0.09 2 0.06

practices
4 Weak customer experience 0.03 4 0.12 3 0.09
management System
5 Limitation on project 0.02 2 0.04 1 0.02
management
6 Systems synchronization 0.03 2 0.06 3 0.09
problems
7 Weak OLA management 0.01 3 0.03 4 0.04

8 Limitation on project 0.01 2 0.02 4 0.04

management
9 Gap in domain expertise 0.01 3 0.03 2 0.02
knowledge

46
10 Limitation in talent acquisition, 0.01 3 0.03 1 0.01
development and retention
11 Lack of dominant leadership 0.02 2 0.04 3 0.06
style

12 Management team highly 0.01 4 0.04 2 0.02

engaged in operational
activities
13 Limitation in internalizing 0.02 2 0.04 3 0.06
vision, mission and adherence
14 Limitation in promoting 0.02 4 0.08 1 0.02
company brand
Weight 1
STAS 6.30 4.72

Based on the result from the Quantitative Strategic Planning Matrix, the sum of the total
attractiveness score is 6.30 for adding an operator and 4.72 for EthioTelecom. Hence the result
clearly shows the best alternative strategy is adding operators.

47
Recommendation

It is important to invite and add operators for the country. Ecommerce will have an opportunity
to be experienced by the population as additional operator is coming to the market. There will be
also knowledge transfer from the newly coming operator, because they have global experience
on telecom industry. This alternative also creates a huge amount of job opportunity for the newly
graduate professionals as well as the experienced personnel. Finally, this is a possible means to
achieve the targeted objective on growth and transformation.

6. Strategy Implementation

A. EPS/EBIT analysis

Since it is a state owned company, the possible means for supporting the recommendation is via
government. The state should give due attention for selling part of the company to increase the
income and service provided by the company. So that there will be possible rise of income before
tax and technological transfer for the expansion of ecommerce for the country market.

There are Limitations of the analysis for earning per share on the operator side. It is well known
that the company has no share holders rather; it is a state owned operator so difficult to analyze.
But it is possible to increase the revenue of the government by adding two or more operators in
the market. There are two possible means of collecting revenue are, through tax system and
foreign currency earnings during services abroad.

48
B. Projected income statement.
Revenue 2016 2017 2018 Projected

Revenue 20.7billion 30.2 billion 35 billion 47.7 billion

Other income 859000 9135000 1056000 1152428

Direct network and technology (2450000) (2435000) (2700000) (2445600)

Operating cost
cost of hand sets and other accessories (154000) (1456000) (1656500) 1560000

Interconnect and roaming cost (135000) (137000) (185000) (196600)

Staff cost (1020000) (1134000) (1154000) (100733)

Selling distribution and market expense (19000) (19700) (19850) (9516000)

Government and regulatory cost (212000) (214000) (214780) (1135900)

Impairment of trade receivables and (38000) (39500) (39800) 15691000

contracts assets

CBN resolution (485000) (490000) (483000) (8266980)

Other operating expenses (213412) (212726) (214085) (213411)

EBITDA 31,981,082,07 34,956,236,88 47,661,126,18

26,996,132,58 4 5 4
6
Deprecation of properties , plant and (246850) (284520) (275630) (269000)

equipment

Amortization of intangible assets (81200) (76500) (74270) (71730)

Impairments of good will (19781) (15485) (16785) (17350)

Operating profits 26995784755 31,980,706,56 34955870200 47660768104

Tax 9448524664 11193247299 12234554570 16681268836

NI 17547607922 20787459270 22721315630 30979499268

49
The income statements of the ethio telecom are its has good position and the profits are increased
on the ascending orders that means by showing the three years income statements are increases
at increase level,

50
C . Projected balance sheet

Total Current Assets 259000000

Cost

Direct network and technology (2445600)

Operating cost
cost of hand sets and other accessories 1560000

Interconnect and roaming cost (196600)

Staf cost (100733)

Selling distribution and market expense (9516000)

Government and regulatory cost (1135900)

Impairment of trade receivables and contracts assets cost 15691000

Deprecation (213411)

Total cost 3085859244

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D. Projected financial ratio

2016 2017 2018 Projected

Current ratio 2.97 2.87 2.95 2.93

Fixed asset 2.58 2.5 2.7 2.59

Total asset turn 2.90 3.00 3.21 3.03

over

Gross profit 1.65 1.35 1.95 1.65

margin

Net profit margin 2.65 2.5 2.3 2.48

Return on 1.42 1.5 1.6 1.5

investments
Debt ratio 1.54 1.75 1.65 1.64

Time interest 0.78 0.65 0.82 0.75

earned ratio

Receivable turn 0.97 0.85 0.9 0.9

over ratio
Average 1.2 1.52 1.35 1.35
collection

period

The financial ratio are its has benefits for the strategic plan of the
telecom services , the strategic plan are best customer service
financial ratio performance are support this strategic because the to
maintain the customer satisfaction its by using digitalization and
enhancing customer managements on focused on the activity
financial ratio it can be provided easy to use the products

52
 incomparable experience to potential of existing the customer
interaction with the company .financial capacity ;- to maximizing the
profitability of the company the financial ratio of the firms are benefits
to know and examine the profitability of the service indifferent
districts, by show the activity or management ratio and profit margin of
the company , its are benefits the strategic to expanded investments in
urban and rural area of the country by expanding the infrastructures
and different digital systems. Product / service excellency; - financial
ratio are explain the capacity of the firms in the over whole, product
and service excellence is it’s the provide value based , innovative and
diversified products and service for the customer . for improvements
and expansion products financial ratio capability are its have great
roll ,Operational excellence ; - operational effectiveness of the
company in the activity and interaction to partner and stake holder so
this are basic for the assets management ratio capacity of the company ,
however the financial ratio has benefits on the strategic of the company
accomplishments

7. Strategy Evaluation

A. Balanced scored card

The balanced score card is prepared and attached as an annex

because it is computed by excel format and quit difficult to prepare
by word. So kindly find it on annex.

Conclusion

This term paper is evaluated the strategic management of the company

found in Ethiopia, EthioTelecom. The company is working as a
telecommunication operator. The review includes strategic formulation,

53
strategic implementation and strategic evaluation. The company under
review is one of the company among the various types of state owned
companies in the country.

The company under review is the only company providing a service

across the country. As the operator is the only service provider, it is
difficult to compare it performance with in the country. Hence there is
no competition in the country, so it is difficult to compare the ratio with
the respective companies working in Ethiopia. The only possible option
that can be evaluated is Operator working across the Globe and
working in the continent. Based on the industry average, EthioTelecom
is experiencing the lowest grade in every aspect. Based on the strategic
evaluation, EthioTelecom achieved the lowest annual revenue per
employee and Annual revenue in terms of USD. Number of country
being served and number of customers are very far from the industry
average. The other important issue is related to the technology use.
Ethio Telecom is still using 2G and 3G and a very small percent on 4G,
however most of the operators are working with 4G and 5G. One of the
big revenue streams for mobile network operator is Digital transaction,
Mobile Money, which allows to access financial services around the
world.

However, Ethio Telecom is being serving with the nation with more of
traditional services such as like voice which is the dominate; data
which is currently is growing, and SMS which is an infant stage. At the
end, It is known that, Ethiopia has got a very huge population in Africa
next to Nigeria. Telecommunication operators have a various
opportunity for their profit as well as to have a positive impact on the
growth and transformation of the country. One of the important area
operators should play is the electronic commerce. Ethio Telecom
should take a leading role in the development of Ecommerce in the
country. It is an infant stage and the country is very far from the globe

54
market. Government should also prepare a legal document for the
establishment of ecommerce in the country together with stake holders.
Finally, the population of Ethiopia will have an opportunity to enjoy
and see the trophy of the ecommerce in the near future.

Finally, the government is currently trying to invite operators from

abroad, at least two additional in the market. The existing Operator,
Ethio telecom will be divestiture part of it for preparing for a better
competition. It is believed that the transformation taken by the
government is part of home grown economic development sector, the
coming few years, the telecom industry will be flourishing and will be
advanced in the market.

55