Group V presentation for DiGi case study for strategic management 2011-01-09

1. DiGi.com Berhad
Group Presentation
Strategic Management Presented by Group V
Team Members :
1. Chan King Hooi
2. Chong Siew Heong
3. Tan Chong How
4. Teresa Goh
5. Terry Leong
6. Leong Shyh Woei
7. Boon Keng Mui
8. Jonathan Leong
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2. Strategic Management
1. Company Introduction
2. Vision and Mission
3. Company Values and Awards
4. Internal Analysis : McKinsey 7-S and SW
5. External Analysis : OT, PEST, Porter’s 5 Forces
6. Value Chains & Growth
7. Conclusions
8. Recommendations
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3. Company Introduction
• Public listed company in Bursa Malaysia
• Telecommunications provider, mobile broadband and
mobile internet
• wholly-owned subsidiary by Telenor Group
• operations in May1995 with launched first digital
GSM1800 services
• DiGi’s approximately RM4.9 billion with a subscriber
base of 7.7 million
• DiGi providing the best deals to ensure excellent
customer experience in mobile, internet and prepaid
services
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4. Corporate Milestone
• May 1995
• April 1996
• Dec 1997
• Dec 1999
• June 2002
• Aug 2003
• April 2004
• May 2004
• Aug 2004
• Oct 2004
• Jan 2006
• Aug 2008
• Dec 2009
• April 2010
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1st digital cellular network in Malaysia.
1st digital cellular network in Sabah and Sarawak.
1st telco to be listed on Bursa Malaysia.
1st telco to introduce an e-pay system.
1st telco in Malaysia to GPRS.
DiGi becomes 1st to launch MMS
DiGi launches Malaysia's 1st Prepaid Online Billing.
Launch of DiGi's EDGE
1st mobile to launch Mobile TV
Flexi e-load and Talktime Transfer.
DiGi Flexi E-Load for Postpaid.
DiGi announced Deep Green to reduce 50% Carbon
DiGi launch 3G services
DiGi offer iPhone 3G services.

5. Vision & Mission
As stars in excellent customer experience.
establishes a standard of excellence that we
expect and strive for.
We believe our Vision attracts commitment and
energises our employees.
MISSION
to exceed our customers’ expectations, by
delivering mobile and internet services that are;
“Made for me”, “Make it Easier”
and offer the“Best deal”
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6. Company Recognition & Awards
- 200 Most Admired Companies in Asia
- Putra Brand Awards
- CCAM Awards 2009
- Starbiz/ICRM Corporate
-Responsibility Awards 2009
- Malaysia’s Most Valuable Brand Award 2009
- Malaysian Corporate
-Governance Index
- Shareholders Value Award 2008
- Asia’s Best Managed Companies2009 (Malaysia)
-Malaysian Business
- CIMA Enterprise Governance Awards 2009
- MyBranded Service Award 2009
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7. McKinsey 7-S : Strategy
• Establishes a standard of excellence that we expect and strive for.
• Emphasis on Digit’s operational efficiency initiatives.
• Improve operating cash flow.
• Prioritized investments to expand and improve network System,
• Attracts commitment and energizes our employees.
Action:
• Make things simple and easy to understand for our customers.
• Products and services provided are always practical and providing the best
deal.
• We make things happen because we make it Easy.
• Bottom-line enhancement.
• Balanced cost optimization exercise to achieve higher levels of customer
satisfaction.
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8. 7-S : Structure
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9. Structure ( cont. )
• DiGi.Com Berhad is a Malaysia-based investment holding company.
• The Company’s wholly owned subsidiary below:
• DiGi Telecommunications Sdn. Bhd. (DTSB) :establishment,
maintenance and provision of telecommunications and related
services (Include Domestic Rooming).
• Subsidiaries of DTSB include DiGi Services Sdn. Bhd., which is
engaged in property holding, renting of premises and other related
services, and Djuice.Com Sdn. Bhd., which is dormant.
• On February 10, 2009, the Company incorporated a wholly owned
subsidiary, Pay By Mobile Sdn Bhd. Its principal activity is providing
financial service in e-commerce.
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10. Systems
1. Deep Green system :
• key efficiency initiatives involving DiGi’s network, IT systems, building and facilities,
fleet and initiatives with employees, customers, partners, and the community.
• Take a lead and contributes back to society in the area of carbon emission
reduction.
2. Continue improvement system
• Relooked at all business processes and activities and found big and small ways to
make them more efficient.
3. Operation Efficiency system
• Leveraged on Telenor Group Procurement in various key spend areas
• Explore new technologies.
• Took a leading role to ensure greater infrastructure sharing among the mobile
operators.
4. Digi supply chain health, safety, security & environment (HSSE)
• Apply green practice in supply Chain
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11. Style ( Culture & Leadership )
• People are most important asset for Digi.
(Digizens)
• Positive working environment
• Open Communication system
• Clear responsibilities
• Empowerment within job scope.
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12. Skill
• DiGi benchmarked against top service Industry organization to enhance & improve
in customer service.
Staff
• Work @ program-Flexibility and promotes work-life balance.
• Recognize and motivation.
Shared value
• Continue to strive for higher standards of governance with accountable and
transparent processes in place.
• Social responsibility
• Deep Green Challenge for change (C4C) provide platform for youth of Malaysia to
discover viable energy solutions & help them to commercialize it.
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13. SWOT Analysis : Strength
1. Men :
• Flexible working hours
• Open communication – encourage co-worker and manager to exchange
idea and discussion
• Care for employee health and safety and environment.
• Provide continuously improvement to develop the talent management by
providing training and development program.
• Good reward to their shareholder – distribute 80% of the group’s annual
net profit from financial year 2010.
2. Money
• Group revenue increase by 2% to RM4.9bn in year 2009.
• Subscriber base grew by 8% compare to year 2008.
• Operation cash flow of RM1.4bn achieved in year 2009.
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14. Strength ( cont. )
3. Market
• Mobile Broadband and Mobile Network service provider
• Retail – digi Family plan
• E-Commerce
• Go to market strategy base on LAS likely average speed-promised
customer enjoy stable mobile internet connection.
4. Material
• Low cost calling and high quality voice to their own associates partners, ie.
Bangladesh ( Grameen ), Telenor network.
• Broadband Done right and Internet Done right
5. Machinery
• Mobile Virtual Network transmission system - Provide domestic roaming
• Facilities– auto reloads online payment
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15. Weakness
1. Men
• Lack of manpower and Increased HOD workload
2. Money
• More training needs to provide to upgrade and continuous improvement,
• More money needs to invest and maintain and upgrade their network with latest
equipments.
3. Market
• Market is saturated ( 106% ) and need to find innovative ways to acquire new
subscribers.
4. Material
• Lack of contents and value added services for their subscribers.
5.Machinery
• lack of base station compared to other operators/competitors
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16. Opportunity & Threats
Opportunity
• Higher Living Standard in Malaysia
• Globalization
• Increasing of foreign worker
Threat
• High inflation – increase price
• High bargaining power of customer
• Malaysian Government discourage cell phone usage among
school kids
• Continuously technology advancement in wired & wireless
technology
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17. Group V Presentation

18. External Analysis : Political
• Malaysia government has limits the palyers in the
telecommunication industry.
• The Malaysia government controlled incumbent
telecommunication operator ( TM and Celcom ) and compete
with Maxis Mobile and DiGi.
• MCMC control the spectrum and license issued.
• Number Portability which enables mobile telephone
customers to retain their existing mobile telephone numbers
when they switch from one service provider to another.
• Government initiate the policy for lower the price for
university students.
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19. External Analysis : Economic
• Malaysia economy is growing and encourages more investments.
• According to Informa Telecoms & Media 2008 revealed : Malaysia is one of
the fastest growing telecommunications companies in the world.
• Celcom, Maxis and DiGi are sharing the RM23.4 Billion mobile telecom
revenue.
• Globalization bring in more travelers and businessmen into Malaysia.
• The government of Malaysia launched 2 economy stimulus package worth
RM100Billion.
• Malaysia will reach high income nation with USD15k per annual by 2020
• The Government expects the population grow up to 50 million by 2020.
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20. Economic
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•Monthly Income less than
1 k = 8.6%
•Monthly Income less than
2 k = 29.4%
•Monthly Income more
than 2k = 62%

21. Social
• Demographic :
• Family income : 1000 ~3000
• Age: 16 and above
• The current population of Malaysia is expected to rise from 25.6
million to approximately 28.96 million by the year 2010 with a
projection annual average growth rate of 1.6%.
• The Malaysian is getting advancements towards the era of High
Definition digital distribution of contents, consumers demand
greater bandwidth capacity for their internet connectivity.
• With incomes rising, Malaysian have more disposable
income, which enables to more selective with their choice of
mobile phone.
• Social factors are getting important in Malaysian
telecommunication industry as the increasingly using the mobile
phone became a society culture even become a personal culture.
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22. Social Program for Racial Diversity
Racial diversity exercise help to balance
workforce!
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23. Technology
• Digi is still trailing behind Maxis and Celcom in
continue technology advancement in wired and
wireless telecommunication
• 2010 is the broadband year of Malaysia, Digi
need to upgrade plenty of new device and
package flooding the market place tense rivalry
• Communications and information technology
infrastructure is a key element in Malaysia’s plans
to achieve industrialized nation status by 2020.
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24. Intensive Growth
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a. Market Penetration:
DiGi Prepaid and postpaid,
mobile internet
b. Product Development :
MVNO : Baraka MVNO
business
c. Market Development: offer
iPhone and Smart plan to
expand market share
Diversification : NIL
Generic Competitive Strategy:
Low-cost provider
-1. lower mobile internet price.
-2. target foreign workers with lowest IDD
rate.

25. b. Horizontal (Merger
& Acquisition in
similar industries)
a. Vertical (growth
opportunities)
Core Business
Company
Backward Integration
Forward Integration
Unbundling / Outsourcing
(Partnerships / alliances)
cooperative & long term
relationships
Growth Strategy
Digi only Vertical Growth.
•Digi begin with basic phone communication.
•Work with iPhone, Blackberry, Android, Window phone
•Started Broadbrand, 3G, Mobile WiFi, Smart Data plan

26. Boston Consulting Group Matrix
Product Life Cycle
Sales
Time
1 2 3 4
1. Q. Mark = eCommence ( Pay By
Mobile )
2. Star = Mobile Data, iPhone – Smart
Phone Plan
3. Cash Cow = Prepaid and Postpaid
4. Dog = Digi Fix-line , D Juice
Intro Growth Maturity Decline

27. Michael Porter’s 5 Forces
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Industry
Competitors
Customer
Bargaining
Power
Threat of
Substitutes
Supplier
Bargaining
Power
Threat of
New
Entrants

28. 1. Industry Competitors
Wireless Market – Digi own 21.7% in Malaysia market share
28GROUP V
• Maxis
• Digi
Celcom

29. Competitor Analysis
Revenue ( RM $ B ) Profit After Tax
Co- 2009 2008 2007 2009 2008 2007
2009
Market %
2009
Margin
Digi 4.909 4.814 4.362 1.000 1.190 1.062 21.07% 20.37%
Maxis 12.291 11.234 9.765 1.577 (0.101) - 52% 12.83%
Celcom 6.292 5.576 - 1.516 1.294 26.93% 24.09%
Total 23.492 21.624 100%
29GROUP V
Celcom gain highest margin, however, Digi maintain stable sales
and profit margin
Source: Celcom, Maxis and Digi report 2009
HIGH

30. 2. Customer Bargaining Power
 Lack of differentiation among Service
Providers
 Cut throat Competition
 Low Switching Costs
 Number Portability will have –Ve Impact
 Businesses & Consumers
30GROUP 7
HIGH

31. 3. Suppliers Bargaining Power
1. Network Outsourcing maintenance :
Nokia Siemens, Ericsson, Huawei
2. Passive Infra-structure : Base Station,
TelcoTowers
3. Call Center : outsourcing and in-house
4. Information System : IBM, Huawei, Nokia
Siemens
GROUP V 31
LOW

32. 4. Threat of Substitutes
 Landline
 CDMA
 MVNO – TuneTalk, OKTel, XOX
Redtone
 4G WiMax players – P1, Yes
 Video Conferencing
 VOIP - Skype, Gtalk, Yahoo Messenger
 e-Mail & Social Networking Websites
32GROUP 7
Mobile
Operator
BROADBAND
SERVICES
DIMINISHING MARKET HIGH

33. 5. Threat of New Entrants
 Huge License Fees to be paid upfront & High gestation
period
 Entry of MVNOs & WiMAX operators
 Spectrum Availability & Regulatory Issues
 Infrastructure Setup Cost - High
 Rapidly changing technology
33GROUP 7
LOW

34. Conclusion
Digi’s generic strategy is Low-cost
provider that offering the lowest
overall costs than competitors.
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35. Recommendations
A. Functional Strategies:
1. Bring in competent human capital with new blood, intensive training
to present staff, and increase recruiting experienced local and
overseas talent.
2. To further focus and improve Digi Supply Health, Safety, Security and
Environment Assurance program.
3. Reduce the dependency on strategy sharing between mobile
producers application developers etc.
4. Improve and increase efficiency and capacity of base station.
5. further improve consistent good services in terms of customer
support, corporate website, FAQ, nationwide centers, specialized
store, service counters, dealers.
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36. Recommendations
B. Business Strategies
1. Increase more capacities in their biggest market share, esp metropolitan
areas.
2. Set up own R&D center and developers program to help provide better
value added services to Digi users.
3. Expedite their broadband coverage to whole Malaysia.
4. Set up reward system and encourage users referral program.
5. Increase additional E- commerce facilities , eg, auto reloads, online
payments etc.
6. More Advertising awareness to acquire and increase customers based.
7. New Slogan for Digi : Time to Change to DiGi!
8. provide new rates package.
9. Agressively promote push sales of smartphones, eg I phone, blackberry,
google, Samsung galaxy, htc.
Corporate Social Responsibility :
1. To sponsor educational program to strengthen Digi brand.
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37. Recommendations
C. Corporate Strategies:
Intensive growth :
1. Start email and social networking services, expanding Value added services
to their subscribers.
2. go for product differentiation offer ENUM services
3. Offer 5G or LTE services trial -
Long Term Evolution (LTE), is the latest standard in the mobile network
technology
Strategic Alliances : Merge with Financial institute to offer mobile wallet and e-
commence services.
Integrated growth :
Horizontal Growth :
1. Joint venture with mobile phone vendors to include latest technologies and
internet functions into mobile phone.
2. JV or Acquire other VOIP company
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38. Thank You
For enquiry: pls email to
QnA@GroupV.com
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